Think about what you need to sell something. First you need
inventory. In our industry that means airline seats, cruise berths,
hotel rooms, cars to rent, seats on tour buses, etc.
Then you need pricing and distribution strategies. And that's
where the fun begins. The Internet has changed all the rules,
opening up the possibilities for a wider range of price points, and
a multi-tiered distribution approach.
Today you can buy airline tickets or hotel rooms on the Web from
the supplier sites directly, from on-line travel specialists such
as Expedia and
Travelocity, from a range of brick and mortar agencies
that have extended to the Web, and from a growing number of third
parties that are distributing last-minute inventory.
The major suppliers are playing in all these games in their
effort to get the best price at the lowest distribution cost,
otherwise known as yield.
What makes yield management tricky in this industry is the fact
that the supply-demand equation changes so quickly. It is an
industry characterized by perishable commodities: airline seats
that fly off empty, hotel rooms that end the day unoccupied, cruise
berths that sail off with no one in them.
Thus there is a need to price and distribute travel-related
products in a multifaceted fashion that attempts to sell as much as
possible early in the game but is flexible enough to capture a lot
of customers at the eleventh hour.
The Internet seems ideally suited to manage this process because
of the breadth and immediacy of communications within the medium.
Theoretically, the Web can help a supplier or distributor find the
one person on the planet who need a left-handed widget at 3 a.m. on
a Sunday.
The problem right now is that suppliers don't know how Web
distribution will shake out, so they're signing up with a multitude
of Internet intermediaries in a crazy-quilt of business
arrangements.
If those of us intently following these events are dazed by the
pace of things, imagine how the consumer must feel, trying to sort
out which option to pursue.
At the end of the day, all this commotion may work to the
benefit of brick and mortar travel agencies. They may not have all
the pizzazz of the Web, but the process of finding the right one is
easy compared to figuring out which Web provider to use.