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New Technology Disrupting and Upsetting Old Travel Business Model

New Technology Disrupting and Upsetting Old Travel Business Model

We saw the final pitch of the Mississippi Braves’ season in 2012.

It was the 6th inning of the last home game of the season for the Braves’ double-A Southern League affiliate in Pearl, Miss., near Jackson. The wind had begun to rise, the trees to sway, and, finally, suddenly, it was raining hard.

There would be no rain delay on the evening of Aug. 29 because this was no normal rainstorm. Hurricane Isaac had arrived with six inches of the wet stuff in tow. The season – and our family vacation – were over.

But it wasn’t going to be too terrible. We’d thought ahead – it was no secret the storm was approaching – and we had booked a room in Meridian, Miss., about 90 miles east. We beat the storm to Meridian only to find hundreds of people sitting and waiting in the parking lot of our hotel and everywhere else in town for that matter.

When we went to the desk, we were told online reservations weren’t like actual reservations in that the hotel could give away your room under certain circumstances – and this was one of those circumstances. So, we had a 7-year-old, a 5-year-old, a storm nipping at our heels, a clock approaching 10 p.m. – and no room.

So we did what couples in the age of the smartphone do – I began to drive, and my wife began pushing buttons on her phone. We tried hotels.com and Kayak and Orbitz and Expedia and several others. We finally found a room in Decatur, Ala., not far from Huntsville near the Tennessee border. We arrived at 4 a.m.

This is why it makes me angry when people say if you book directly with the hotel, you’ll always be fine, but if you use third-party booking services, you run all these risks. Everything has risks. But it was the hotel chain directly that left us out in the rain, and it was a calm, cool lady at a third-party booking website who talked us through the night and into the hotel in Decatur.

Commerce is changing in America. As any protectionist politician will tell you, our manufacturing sector is largely gone. What they don’t tell you is it’s not coming back, no matter how high the market barriers they erect. The second generation – making products that make other products better – is fading as a source of jobs and growth as well.

What is emerging, what is growing is a third wave – services that connect buyers and sellers. There are Uber and Lyft and Sidecar in the taxi space, and AirBnB, which brings together short-term renters and short-term rentees.

In the travel business, Kayak, Orbitz, Expedia and others have now grown so large that we need still other businesses to determine among these services who has the best deal and where. Reservation Desk and Reservation Counter, which didn’t even exist until 2008, have become leaders in this field.

That apparently is a bridge too far for the big hotels. Their trade group, the American Hotel and Lodging Association, has begun what some have called a “disinformation campaign” against the firms. Five members of the Arizona delegation to the U.S. House of Representatives even have written to the Department of Justice to ask it to look into them.

Such warnings should be taken with the same grain of salt as those from taxi commissions about Uber.

For instance, if you look up the complaints against Reservation Desk, most amount to people saying, “I thought I was dealing directly with the hotel.” The name might have something to do with that, and either way, if your room is waiting when you get there for the agreed price, then what difference does it make?

And if you visit the website of the American Hotel and Lodging Association, you will see little love for online travel companies of any form. There is much verbiage about leveling playing fields—as if Reservation Desk was any threat to Hilton or Hyatt—and much heartfelt concern about local tax collections. But at root, this is about wiping out online travel services and keeping profits for themselves.

Online travel booking is not going away, and the hotels can forget controlling it all. In fact, they shouldn’t. It’s a $6.7 billion industry dedicated to sending business their way.

These businesses undeniably are good for consumers. A recent study by the Travel Technology Association, a group of online bookers, found air fares would increase more than 11 percent – or about $30 per ticket – if such firms went away. They increase economic activity throughout the travel industry, and if indeed they are making promises the hotels they book in can’t keep, they won’t be in business for long.

The bigs are protecting bigness, and bigness is not the future. Responsive, agile, quick, focused … those are the future. And Big Hotel and Big Airline need to realize it and see what can be done to improve these relationships rather than trying to destroy companies that give consumers the choice and responsiveness they demand.


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