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The last 20 years have been an unprecedented with the stated mission of the airlines to provide By investing in acquisitions and marketing instead
period of consolidation for the travel industry, comfortable and timely travel service. of developing new features for users, a certain
particularly in North America. IN A RUSH TO SCALE, sameness has settled in for travelers regardless
The global proliferation of low-cost and ultra-low- of which service they use. It’s just a matter of
The tangle of major U.S. airlines was whittled cost carriers has worked to reprogram consumers CONSOLIDATED TRAVEL which connected blob of brands offers whatever
down to three following a period of economic to expect discomfort in exchange for the blessing you need at any given moment instead of any
contraction a decade ago, while hotel chains of an affordable flight. Now that larger carriers COMPANIES FIND company offering an interlocked, indispensable
Marriott International and Hilton Hotels & Resorts are emulating the low-cost pricing model in set of services. The quest for scale has led to an
have scooped up competitors in an unprecedent- order to compete, most travelers don’t have a THEMSELVES WITH erosion of differentiation between the major
ed manner. International investment groups, choice but to deal with the unpleasant reality global players in online travel.
likewise, have bought up and sold off various of surcharges and bag fees. OUTSIZED MARKET SHARE
hotel assets during the same time period. THAT OFTEN LEADS TO Even companies like Airbnb seem to have substi-
Airline loyalty programs, too, have been tweaked tuted innovation for competition on a larger
The quest for scale has only intensified in markets to correspond to the money spent by a traveler MUSCLING CONSUMERS TO scale. The company’s announcement of a new
dominated by few players with the wherewithal instead of miles flown or other considerations. The strategic roadmap to commemorate its 10th
to push for financial and geographic domina- most valuable customer to an airline is the one THEIR ADVANTAGE. WITH NO anniversary was heavy on new product categories
tion. How these companies choose to deploy spending the most money, leaving the average that compete against Expedia and Booking as
their market-shaping power, however, causes economy passenger at a loss. Force the most GOOD ALTERNATIVES, HOW intermediaries instead of interesting new services
frustration and angst for consumers. It also limits frequent flyers to choose your carrier more often, or digital tools for travelers.
resources devoted to developing new solutions and forget about fighting for the customer who WILL TRAVELERS REACT TO
that could ease the travel booking process and only comes to you once or twice a year. As Airbnb bends to the financial necessities to
improve the travel experience itself for customers. THE PRESSURE? back its push towards an inevitable initial public
For hotels, consolidation has been accompanied offering, it seems that the innovative spirit that
These bullies tend to move in lockstep, one-up- by a fundamental shift in business models. Hotel built the platform has faded and been replaced
ping each other in ways that drive revenue and chains don’t own hotels anymore; they simply with practical growth strategies.
geographic expansion at the expense of consumer f ranchise out brands and their distribution
experience. If travelers have no choice but to use networks for a cut of a property’s profit. In online travel, the competition between Expedia Travelers have no choice but to tolerate the
your travel services, making them pay more for Group and Booking Holdings in recent years effects of consolidation on the travel ecosystem.
less becomes a competitive imperative. It also Thus, brands have proliferated with confusing has revealed a quest to muscle consumers into The good news for smaller and emerging travel
becomes less important to create powerful, names and unclear identities. Motto, Aiden, Sadie, using their platforms. companies, though, is that while big competi-
disruptive services if the corporate focus is on Clarion Pointe, and Voco are just a handful of tors are focused on beating each other, there is
incremental revenue and usership growth. the generic brands announced by hotel chains In its attempt to compete, Expedia Group has fertile ground below to work on the technology
in the last year. None bring new concepts or expanded into homesharing, vacation rental and products that will push forward the more
The airline sector, in particular, shows a follow- amenities to the table. administration, and metasearch. Booking Holdings stagnant segments of the industry.
the-leader mentality where competition leads acquired OpenTable and Kayak, furthering its
to increased costs and reduced amenities for It’s not a coincidence that resort fees are finding offerings without developing anything truly For now, though, global travelers are going to
customers. Since customers are so price-sensitive, their way into the hospitality mainstream at new. The struggling TripAdvisor has developed feel the pressure f rom brands that don’t care
airlines turned to fees and stripping inclusions this moment. A recent report f rom New York a form of travel inspiration social network for its about their comfort.
from fares to artificially decrease the cost of flights University’s Bjorn Hanson found that more urban users without altering its core product offerings,
on booking sites. The rise of basic economy fares hotels and hotels in secondary cities will begin aping countless efforts over the last decade to
among the big three U.S. airlines has increased adopting resort fees as a way to drive revenue by create an Instagram for travel. It’s more of the
complexity and confusion for travelers in order charging for elements of a stay that are normally same, all over.
to extract additional revenue from flyers. At the included. Instead of paying for Wi-Fi and a bottle
same time, the muscle deployed by airlines to of water, hotels are now forcing guests to pay Google, meanwhile, has steadily added travel
lock down gates at their primary airports has led for amenities they don’t use. Travelers now end services to its digital platform and is poised to
to less choice for flyers in major cities. up paying for access to the pool or gym even if make a major play for the wallets of consumers,
they don’t plan to use them. selling them flights, hotels, and activities before
Make no mistake: increased segmentation ends they can even click a link to an Expedia or Booking
up costing consumers more and driving more There is also the reality that in travel markets site. It’s already expensive for the online travel
revenue for airlines. It also forces flyers to adopt with a few major players, much of the investment giants to acquire customers through search
an aggravated state of constant vigilance during and effort is put toward competing effectively advertising, and the price is likely to go up as
the booking and travel process that is at odds instead of developing new products and innova- Google pushes its own options instead.
tions for travelers.

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