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by lotsofpulp
692 days ago
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>To be fair they were doing amazing things with inventory and pricing that was vastly superior to what the competition was doing after the leadership turn over. This was too little too late though. These innovations could have saved the business provided more time and the same level of discipline, but not when you are already in a death spiral. I am curious what these amazing things were. |
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The real interest in the travel agency business is on hotel inventory. This is how Expedia came to dominate the industry, because they aggressively hired geographically focused hotel relationship personnel and Travelocity wasn't keeping up. So Expedia had much greater inventory from various different properties and stronger relationships with those properties for their business prioritization. Hotels, typically hate dealing with OTAs, because OTAs are a transparent barrier between the hotel and the guest staying at the hotel, but the OTAs bring people to the properties. The name of the game for hotels is "heads in beds" and while up-selling is beneficial if you get the "heads in beds" part wrong you cannot exist.
The margin on hotel properties is much higher and highly variable. Hotels in many cases will even eat the cost of airfare to get heads in beds if the pricing is right. That provides a huge opportunity for a marriage between smart hotel systems and OTAs because the hotels are doing the smarter inventory management and the OTAs are supplying the airfare volume and customers to populate that smart inventory management. The hotel data systems, Property Management Systems (PMS), were at that time much smarter than the inventory availability OTAs had, because they had to do much more to account for seasonal volume planning and various customer demands.
Where Travelocity was strong was in writing algorithms to account for these considerations and offer volume pricing discounts the competition could not and also air + hotel package pricing at massive discounts the competition could not compete with. In parallel Travelocity was slowly building up a corporate travel business to take advantage of that volume pricing intelligence and at one point had both WalMart and Lockheed-Martin as customers.
Again, both of those were amazing and could have really helped retake lost market, but conquering competition is a fragile slow process while advertising is immediate.