The Travel Leaders Group last week announced the launch of a proprietary worldwide hotel program meant for use by all agents and agencies among its affiliates. Travel Weekly contributing editor Nadine Godwin discussed plans for the program with Travel Leaders' founder and chairman Michael Batt.
Q: Tell me the rationale for an all-encompassing hotel program.
A: It starts with our size. Ours is the largest organization in the traditional travel agency segment.
It boils down to this: We book $2 billion in hotels a year; for the $1 billion booked outside the GDSs, we often get no credit. The hotels give credit to the tour operators, but we want to make sure our agents are credited and get recognition.
Q: Anything else?
A: Also, our clients are more affluent than most, among the highest yielding. It makes sense to consolidate the business so suppliers are aware that this high-yield business is from us.
Suppliers sometimes look at distribution from 50,000 feet. Our business is very high-yield. Even when clients buy economy air, our yields are 20% to 30% higher than average. Bringing our hotel business together [ensures that] suppliers can see we're a great distribution channel for them.
Q: How do you know what your agents book?
A: The GDSs capture their share [$1 billion]. For non-GDS bookings, we know because of tracking for overrides.
This is not as clean perhaps as with the online travel agencies [OTAs].
One of our overarching goals is to develop the technology to have as much information as the OTAs do. But we have about 28,000 agents using different systems. We're not starting with a clean slate like the OTAs.
Q: How does the Stream prepaid merchant model and booking system fit in here?
A: Stream captures everything. It accounts for a small part of the hotel bookings, but that is growing. It guarantees 12% commission to the agents. Eventually, the goal is to make this available to consumers through our agents. They have to compete on a level playing field with the OTAs. We need to let the customer book at 3 a.m. if he wants.
The hotels are nervous about this, but they are shortsighted to let the OTAs do this but to restrict traditional agencies that are delivering higher-yield business.
Our customers know what they want and are prepared to pay for it. In Q1 this year, 43% of all Stream bookings were deluxe or luxury.
Q: Even with a refined hotel program, how will you get affiliated agents to book your preferred suppliers?
A: It starts with our philosophy and buying into it. Travel agents join groups like ours because they understand the strength and value we offer. It comes down to picking partners well and, where possible, not changing but staying loyal to partners. ... All of this is provided choices are in the interest of clients, too. ... If agents can't fully accept our philosophy, they shouldn't join us.
Technology helps, too. With Stream, we have incredible ways to influence choices through displays and prompts. It's like Walmart putting its bestsellers on the middle shelf.
Q: Is the hotel program indicative of any plans for dealings with other suppliers?
A: Where we can [create consolidated programs], we want to do that. But we realize that sometimes it doesn't make sense to squeeze everything together.
We pride ourselves on doing what is right for each group and its customers. We will do what we can to make something better, but we won't force this point.
Correction: This article has been updated to reflect that Michael Batt is founder and chairman of Travel Leaders Group, and not CEO as a previous version stated. Barry Liben is CEO.