Tracking Distribution's Evolution

<B> Tracking Distribution's Evolution</B>

By Mary Ann McNulty

"Distribution technology will polarize the travel intermediary market. Survivors will be the larger, global players who can compete on cost and the small niche marketers who compete on product expertise and knowledge. Many intermediaries between these two ends of the spectrum will be forced out of business," predict the authors of a new study, "Distribution Technology in the Travel Industry," published by The Financial Times Retail & Consumer Publishing.

Former Worldspan and Microsoft executive Timothy O'Neil-Dunne, now an e-commerce consultant, and Genesys management consultant Paul Richer, London, teamed up to write the 137-page book detailing the evolution of distribution technology, case studies of various technologies used by Pegasus, United Airlines and the British Tourist Authority, and an overview of distribution in Europe.

"The two major advances in electronic travel distribution are the de-skilling of the travel reservations process and the increased reach to the consumer," the authors report.

In the corporate market, the authors point to the rise and range of self-booking products available today and predict that corporate agencies will give away software to ensure that their clients' travel bookings are queued to them for administration and quality control. Agents can continue to add value through quality assurance and checking that their clients have booked the lowest fare, the authors said. Travel management companies in the future will use one-to-one relationship marketing to anticipate the needs of customers and proactively promote relevant products.

However, they also predict that intelligent agent technology soon will allow travelers to order their computers to scan Web sites for the best fare to a specific destination and book the trip when a bottom price is reached.

"Distribution is now recognized as a key strategic weapon with which to fight market share wars. The goal is to distribute product to reach a wider consumer base than the competition, but this must be achieved cost-effectively. The travel company that can sell most widely at the lowest cost should win the war for market share," the study said. "There is no right way forward. The optimal strategy for any travel company is an individual one tailored to the company's particular characteristics and the market it is addressing. One thing is certain, distribution technology can no longer be taken for granted."

The study is available for $680 from FT Retail & Consumer Publishing at www.ftretail.com.