Arnie WeissmannAs breakups go, it was all very civil. A year ago, the two parties in question issued a joint statement. It began with a declaration that they had enjoyed an enduring and mutually successful relationship. But right on its heels came an ominous, However ...

And, ultimately, the outline of dissolution was painted with the careful, clinical language of divorce court, beginning with a Therefore and moving towards placed in abeyance.

The possibility of reconciliation was mentioned -- everything would be reviewed in half a year, and there was even the suggestion that the parties long-term relationship would benefit from a six-month trial separation.

But there was no further communication, no happy announcement of love rekindled. The travel agent group Virtuoso and the tour operator Abercrombie & Kent had what appeared to be irreconcilable differences, and A&K officially became an ex-preferred supplier. It had been, it said, disintermediated.

Traditional travel agents typically find themselves on the other side of the disintermediation equation. Theyve lost clients who prefer to use online agencies as intermediaries, or to the supplier-direct channel, which has the wishful goal of eliminating all intermediaries.

What happened between Virtuoso and A&K was, at the time, a unique situation: A&K was its preferred supplier, but Virtuoso had also acquired, as preferred suppliers, so many of the hotels and other on sites used by A&K that Virtuoso agents could get net rates on their own, mark up package components on their own, and present near-mirror images of A&Ks offerings as their own (more profitable) packages.

Virtuoso has made no secret about its ambitions to become a wholetailer that creates and sells its own packages. Ron Letterman, chairman of Classic Custom Vacations, has charged that thats the real reason his company was cut from the groups preferred supplier list.

A&K president George Morgan-Grenville is more sanguine in his analysis, noting that the disintermediation was a result of ever-changing market dynamics that are broader then Virtuosos ambitions, and that A&K is adapting happily to the new environment. Whoever is right (and they may both be), Letterman and Morgan-Grenville find themselves part of a phenomenon that has significant implications for traditional tour operators and wholesalers. And its not just occurring with the high-end products they represent.

Earlier this month at the Travel Weekly Las Vegas Leadership Forum held at the MGM Grand in Las Vegas, representatives from Certified Vacations and Travel Impressions noted that in Las Vegas they found it difficult to get net rates on air and hotel rooms (in some categories), squeezing margins and making it difficult to put together packages that were profitable, given their relatively high costs associated with customer service.

However, no such complaints came from the representatives of Travelocity, Orbitz and Expedia. These travel agencies have the distribution power and technology to get inventory and assemble packages in a way that disintermediates traditional wholesalers. (An exception may be Mark Travels Southwest Airlines Vacations brand. Marks own technology, coupled with exclusive access to Southwests bulk and published inventory, keeps it a strong player in the market.)

Ironies abound -- travel agents who supported suppliers are disintermediated by them. Tour operators that supported travel agencies are disintermediated by them. And the GDSs that conveniently linked suppliers to travel agencies for years, are being disintermediated by both.

This brings us, in conclusion, to the curious case of Travelocity, a travel agency and wholesaler that is owned by a GDS. One has to wonder: If it were to attempt disintermediation at every level possible, would it dominate travel distribution ... or cease to exist?


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