or three years, travel agent Richard
Nigosian was in a state he describes as "a stupor." His business,
Bond Street Travel in New York, lost money in 2001 and 2002. He
hopes to break even this year. But it was more than economics that
put him in the doldrums. He said he underwent a "changing sense of
self" during the period. Not from a personal perspective, but from
a professional one.
"As a traditional travel agent, you think you provide
convenience. You don't. Leisure travel decisions are made on
evenings and weekends, when you're closed.
"We battled the Internet. It was the wrong battle. We have to
find turf on the Internet to help us be what we want to be, that
enables us to grow where we want to grow."
Nigosian has been working to relaunch his Web site, and he's out
of his stupor. He's excited: "It's really going to be great. You'll
see the results in a few weeks."
Nigosian's adoption of online technology is another footnote in
the distribution channel battle that has raged in the industry for
the past five or six years. In its early stages, the contest had a
John Henry vs. the Steam Engine quality that made it both poignant
and, ultimately, predictable: When it's man against machine,
But there have been many interesting twists and turns in this
drama. Technology has certainly progressed, but along the way the
Steam Engine found it needed more human qualities than it first
imagined, as evidenced by Expedia's acquisitions of Mutual and
Similarly, some of the John Henrys (and Richard Nigosians) of
the world found that Steam Engine technology, applied on a
micro-scale, can be a godsend, with the potential to make them more
efficient, convenient and profitable than before.
Given the fast growth curve of large online agencies, they
haven't always looked at the drama in terms of distribution channel
competition. Their competitive energy seems always focused against
their online competitors rather than offline channel rivals. They
may believe they've already won the channel competition.
And, frankly, the fact that smaller agencies believe the channel
battle's still alive wouldn't mean much if they didn't have the
support of suppliers. Tour operators and cruise lines have kept
strong links to traditional agencies -- it's to their advantage to
have multiple channels.
Most significantly, airlines are coming back to traditional
channels. After years of focus on Internet sales, American Airlines
is entering into preferred relationships with small- and midsize
agencies. And US Airways' recent decision to pull its inventory
from Expedia will certainly have that airline reevaluating its
As time goes on and more traditional agencies follow Nigosian's
path toward significant online presence, the channel distribution
competition may be reduced to scale (boutiques vs. mega-agencies)
rather than sales environment (brick-and-mortar vs. online).
Trends that bode well for boutiques include continued supplier
resistance to the commoditization of their products and the spread
of "level playing field" marketing tactics.
Select online agencies will continue to grow. So will select
traditional agencies. In both cases, the ones that will grow the
fastest likely will be the ones that keep a close watch on channel
competition as well as on direct competitors.