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  eTourism marketplaces - a major revolution  

2 major industries have made almost simultaneous announcements indicating that the age of mega online marketplaces in the travel industry has begun.

The first announcement came from the airline reservation sector. 11 of the main European airline companies (Air France, British Airways, Lufthansa, KLM, Alitalia, Iberia, SAS, Aer Lingus, Austrian, British Midland and Finnair) have decided to get together to create a joint Internet site.

(NB: this is not the same project as the one aiming to group the purchases of several airline companies including Air France, American Airlines, United Airlines, British Airways and Delta Airlines).

The initiative is, of course, a way of responding to the famous T2 project - the common Internet platform being set up in the US by big airlines such as United Airlines, Delta Airlines, Northwest Airlines and Continental Airlines.

The philosophy behind the 2 projects is the same: to get a foothold in the virtual agency market in order to keep control of the online distribution of their products. And, when all's said and done, the airlines think its better to join up with their direct competitors and give users a wider choice of prices and flights, than leave them in the hands of virtual agencies (click-and-mortar agencies or tour operators or pure players) who might take advantage of the added-value they provide in the distribution chain and become too greedy!

We feel that the attitude behind this type of solution is an interesting one: the airlines reckon that it is better to satisfy the customer by sending him to a competitor if they don't have the product he is looking for, than to let him drop or, even worse, try to "force" him to reserve a similar product. The fact that 11 large airline companies have managed to agree on this type of customer-centric reasoning shows just how far they have come in the last couple of years: in 1998 they didn't even believe that the Web was a viable sales channel!

Apart from thwarting competition from virtual agencies, the second benefit from this joint site is expected to be reduced marketing costs for each company.

In its present form, the joint site project is still a bit vague though: no name yet, no figures and only an approximate date for going online (in principle, at the end of the year). In order to deal with the conflicting interests of the participants in this scheme (in particular, the question of ownership and use of the valuable marketing files compiled from the reservation data), the 11 founder companies have decided to create an ad hoc structure for managing the site. This will be run by a team which will not come under on any one particular company.

The alliance formed by the airline companies looks like being a general trend. In the hotel industry, Accor, Forte and Hilton have just announced that they too are setting up a joint site!

Here again, the exact date they will go live (in principle at the end of the year) and the name of the site are not known yet. The site, which is starting out with a budget of 20 million euros, wants to be a one-stop platform for the hotel business in Europe. Its founders have said that they are open to any newcomers wishing to take part in the project.



Although its easy to see what the "mechanical" benefits of such projects are (fewer unsold rooms through a more widespread offer, response to the pressure on margins exerted by the new virtual agencies) and although the European players are to be congratulated for their fast reaction to their American counterparts' initiatives, these announcements give rise, nonetheless, to a certain number of questions.

The most important one concerns these companies' capacities to fully master online distribution of travel products. This is, after all, a new profession, in which procedures differ increasingly from the ones used in the offline world. It is throwing up a whole new series of issues on the web: customer loyalty, customisation of contents, information services, CRM, new buying procedures, etc. Software tools, new skills and more generally, marketing and technological expertise (which is only just starting to exist) will all be needed to master this new environment. To meet the challenge, the large airline companies and hotel chains will have to make substantial investments and, above all, to integrate new professions into their structure.

This is even more true for the joint airline companies' site which aims to become a global site offering, not just flight-only reservations, but also hotel reservations, car rentals and even insurance policies. It's far removed from managing fleets of planes!

The second risk for this type of project comes from the complexity of the existing structures. In these days of globalisation where mergers and changes of alliances are taking place all the time, one wonders whether the companies will still be in the same relative positions when the site opens. And how will they deal with important changes that occur in the future? All these strategic questions are likely to regularly upset the balance of the platform projects, to the detriment of the quality of service provided for the user.


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