Earlier this week Travelport and HRS announced a multi-year global distribution agreement.
For Travelport such agreements are not new. GDSs regularly confirm deals with travel suppliers to ensure access to the content that their travel agencies and travel management companies want. Distributing that core content is within their DNA.
However, the deal with hotel booking agency HRS could be signalling how buyers — both leisure and business — are obtaining content as well as how the nature of that content is shifting — and shifting quickly.
Hotels have long despaired about the high cost of distribution as a percentage of total revenue. Whether the hotelier pays commission to an agent or a fee to a GDS or marketing consortium or the wages of a field sales team, the costs are high or at least all higher than the sales driven through the group or property's own website.
It is not unusual for an online travel agency (OTA) to take 25-30% of the room rate as its share of the proceeds. As one hotel industry guru put it, "Distribution channels haven't made hotels profits but they've made a whole raft of OTAs profitable."
But OTAs can make this kind of money because they are delivering what buyers want, namely a wide choice of content at a good price in a user-friendly channel. And anyone who thinks that what buyers —either leisure or business — want is located the ever-expanding brand portfolio of hotel groups need only to look at the success of Booking.com to see otherwise.
Booking.com specialises in small, independent properties that have always baulked at the fees that GDSs such as Travelport want but also know that they need to have an effective route to market.
But demand in new markets for new content is not the preserve of the independent leisure traveller. There are always businesses — from feature films being shot in Romania or news crews in Ukraine - that require volumes of accommodation in obscure parts of the world. That demand is now being swollen by the need of North American and European businesses to expand to new markets in the face of flat demand and low inflation or actual deflation in home markets.
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©iStock.com/KerrickHRS says it has more than 250,000 properties of which 150,000 are privately owned. The deal will add 70,000 — "the majority of which are independent" — new properties to Travelport's content. As well as being exceptionally strong in its home market of Germany, it should be noted that HRS is also very well-embedded in China, a market where many properties are not on the GDS.
The profile of the content needed is not changing in isolation from the way it is delivered to market. Travelport now describes itself as a "travel commerce platform" and its strategy includes a "Beyond Air" initiative which simply put is to focus on expanding its non-air offering.
Travel buyers used to feel constrained to use only their TMC or perhaps their TMC and a specialist hotel or ground transport booking channel. However, the ability to collect and manage multi-source data has improved. That, in combination with the recent explosion in new channels from OTAs to sharing economy sites at the same time that many of the original, sell-direct-to-market-only mavericks such as low-cost air and budget hotels have begun also to distribute via traditional channels, makes it is clear that buyers no longer need to remain monogamous and use only one channel. Nor do their travellers.
And intermediaries will continue to use content to make their channels more attractive in the race for that market share.