Monday, 23 September 2019

Thomas Cook bankrupt - another one down, many more to come?

The museum of Islamic art in Doha

The tragic bankruptcy of Thomas Cook, one of the largest travel groups in Europe, reveals the truth about the future of mainstream package travel: there is none. As much as the traditional travel industry claims there will be a steady demand for package travel including transport, transfer and accommodation, changing travel behaviour will marginalise this segment of the market.

Really, who's still making a booking through a traditional high street travel agency? Browsing through catalogues with similar looking beach properties in locations that have become the relics of sixties' and seventies' mass travel? Obviously, younger generations make their own arrangements through new channels.

And, yes, of course, there is still demand for such package holidays, but it is decreasing and it will keep on decreasing for years to come. Margins are so thin that one wonders who still wants to be in that business. It's not a coincidence that so many hotel inventory is 'leaking' through online travel agencies (despite the demise of just last week).

The 'margin game' is being played elsewhere, not in traditional package travel, but online. And although by the signs of it the game has ended in favour of the large online travel agencies (OTAs) such as Booking and Expedia, it actually hasn't. Signs are there that OTAs are stalling - which makes sense.

An ever larger choice of accommodation and an interface full of psychological tricks are starting to frighten bookers away. If you visit Booking, you're made to believe that even the darkest shithole in London is a great place to stay - just because its review scores are pumped up by its central location and great wifi.

Moreover, how to make a decent selection from thousands of accommodations (nowadays including many of the properties that are on Airbnb) when the ranking is mostly driven by the commissions paid, not by the customer's interests? Is the new adage of the travel industry: if you can't convince them, confuse them?

Yes, then there should be a market for parties who give a clearer overview of relevant options. But my guess is that it won't be traditional package travel companies that will take up this role. There's a market for personalised travel looming, based on technology rather than human agency. With knowledge of individual preferences, it should be possible to automate large parts of one's travel planning.

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