In what it says is the latest example of the merging of online and offline worlds, Orbitz has created a booking site for a group long considered one of its fiercest competitors: travel agents.
The new site, OrbitzForAgents.com, enables agents to book hotels and assemble custom packages for clients while earning commissions. The platform also enables agents to add their own fees and markups.
Orbitz’s new program is the first of its kind to be offered in the U.S. by the major online travel agencies.
"The word is 'convergence,' " said Brian Hoyt, vice president of communications and government affairs for Orbitz Worldwide. Moreover, he said, it’s part of an ongoing evolution, since Orbitz already uses offline agents in several of its programs.
While the move surprised some, Henry Harteveldt, vice president and principal analyst at Forrester Research, said it simply "institutionalizes behavior already taking place."
"We’ve learned in our research that about one-third of U.S. travel agents make reservations for their customers using online travel agencies," Harteveldt said. "Orbitz’s move allows them to potentially capture more of that share while also increasing its overall revenue base."
Some in the travel agency community, however, were more skeptical of the site’s motives and potential.
"If you go back to some of the research that has come out recently, especially on PhoCusWright, [OTA] sales have plateaued with consumers," said John Lovell, vice president of industry relations for Vacation.com. "They are shifting more to the travel agents because they want validation from the travel agent. The OTAs are searching for alternative distribution channels when, in fact, they have kind of plateaued out recently."
And while Lovell acknowledged that a number of agents, particularly home agents, probably use OTAs for airline tickets, he said he questioned whether there would be great uptake of Orbitz’s site in the traditional and fiercely competitive world of agents.
"They’re all competing for the basic dollar," Lovell said. "Our agents are competing against any other agency, and any other OTA, for the client. And I think that’s where a lot of agents might be a little resistant, especially based on who owns the client and will they market to them? You are not booking it opaquely. It is not John Q. Public who is going to take the hotel room; it’s John Lovell. And will [Orbitz] then market to him online and offline?"
Hoyt said the site was developed based on what the company’s research told them agents want.
"Travel agents told us they were hungry for additional sources of revenue, and we saw a business opportunity there," he said.
The site, Hoyt said, does two key things: "It makes sure the customer relationship does stay in hands of travel agents" and makes it easier for agents to build packages on Orbitz.
"Travel agents were telling us that the package deals were too rigid," he said. "This gives them the ability to build a custom package. Prior to this, the agent had no incentive to come use our site other than to make sure their customer got the lowest price and was satisfied."
For business and leisure
Hoyt emphasized that the site is intended for both leisure and business bookings.
Hoyt emphasized that the site is intended for both leisure and business bookings.
"People talk about vacation packages, but this is also a tool for corporate bookings," he said. "We’ve heard from a lot of corporate travel agents that in this desperate environment, the promotional offers that any business traveler can get on consumer sites are cheaper than negotiated rates."
Lovell called the site "a bold step" in the OTA world. While most OTAs have revenue-sharing plans for agents and other companies that use direct links to their sites, OrbitzForAgents.com pays more competitive commissions: 10% on hotel reservations and 4% on travel packages. It also offers an easy-to-use platform that enables agents add their own fees and other charges to the bookings.
The first 500 travel agents to sign up and make their first booking by March 15 will earn 12% commission on hotels and 5% on travel packages through March 31, 2011.
"This is more than just a simple revenue-share deal, because we built in functions travel agents need to run their business," Hoyt said.
Hoyt said the program was just the latest move by Orbitz to work more closely with agents.
"We employ hundreds of home agents for our corporate travel program, Orbitz for Business," he said. "We also have hundreds of home agents trained to be experts on places like Hawaii. So these are folks who go to a place and get immersed in it. Then, if we have customers who say they are interested in going to Vegas or Hawaii, they can talk to a destination expert who has actually seen the hotels."
For its corporate travel program, he said, Orbitz hires agents to actually work at the companies that use the service.
"We have a lot of customers who want a physical body in their office," he said.
The new agent site does not require an IATA card or other travel agent identification to sign up. But the terms say that "at any time, Orbitz may request and subscriber shall provide evidence of subscriber’s status as a travel agent."
Hoyt said that because the site is global, Orbitz decided against requiring such identification numbers.
"A lot of agents don’t have IATA numbers," he said. "What we do have is a fraud protection program in place … and as part of the contract, there is a sign-up process where you need to affirm that you are a travel agent. And we have the right to suspend the service until we have the appropriate information to confirm that you are an agent."
