Online onslaught: how worried should traditional agents be by the OTAs?
Gary NoakesAfter Loveholidays recently became the UK’s third-largest Atol holder, should agents be worried about OTAs going after more of their business?
Jet2holidays may have grabbed all the headlines in March when it claimed top spot as the UK’s largest Atol holder, but with Tui, it has a new rival in the top three from an altogether different mould.
Loveholidays is one of eight OTAs among the CAA’s top 20 Atol holders, together licensed for sales of just over eight million passengers. Loveholidays accounts for 2.45 million of these – a quantum leap for a brand that did not exist 10 years ago.
It has displaced On the Beach (two million), set up in 2004, as the UK’s largest OTA by Atol size. Loveholidays’ planned 2023 growth is also huge in proportion to its size. Jet2’s 560,000 increase in planned passenger numbers to 5.86 million is surpassed by Loveholidays’ 600,000.
Percentage wise, Jet2 plans to grow by 10.6%, while Loveholidays plans to grow by almost a third. Twenty years after its first flight, Jet2 is in reach of six million passengers, but it has had to invest in an airline, employ almost 13,000 staff (at its summer peak) and pay commission.
Loveholidays, with currently only around 240 staff and much lower overheads, is now of comparable size to Thomas Cook when it collapsed together with its airline and network of shops.
Donat Retif, Loveholidays’ chief executive, continued investing during Covid. “Everybody knew travel would bounce back, so we doubled down on our investment,” he told TTG. “If someone had told me we would double the number of passengers after Covid I would not have believed them.”
He is understandably “very optimistic” about 2023. “We have not seen softness in any of our markets,” he added.
Muscling in
So should traditional agents be worried by the OTAs?
Their growth is exponential, but many OTAs specialise in low-margin commodity-type sales, which agents often avoid, although Loveholidays says its sales are mainly four- and five-star properties, and has plans to move into long-haul and city breaks this year.
Similarly, On the Beach, which claims a 35% market share of shorthaul “value” packages, has this year pledged to expand premium sales. It also owns popular trade brands Classic Collection Holidays and Classic Package Holidays.
Many consumers, however, remain wary of OTAs, as service levels during Covid saw some – including Loveholidays – get roasted. It blamed the airlines for late refunds totalling £18 million, which prompted the Competition and Markets Authority to get involved.
Many traditional agents later claimed to have gained, or regained, disgruntled OTA clients.
Something else in agents’ favour is that OTAs cannot tailor-make itineraries, but even this is changing. And in the not-so-distant future, OTAs will appear more human thanks to innovations like ChatGPT.
Sam Clark, cofounder of Asia specialist Experience Travel Group, believes these kinds of AI will be game changing. “ChatGPT4 gives reasonable itinerary suggestions. It’s not at the level of a decent travel agent yet, but convenience tends to trump quality,” he wrote recently.
Embracing tech
Brands like Kayak and Expedia are already on the case; Expedia’s use of ChatGPT app automatically saves hotels to an itinerary, adding flights, cars or activities.
The app then becomes a virtual agent, checking availability, suggesting places to go and how to get around. Plus, it is integrated with other AI capabilities, like hotel comparison and flight price tracking.
Expedia also has a plug-in for the ChatGPT site, as does Kayak, which marked the launch in March with a post written by the app “edited by humans”.
It said: “ChatGPT will act as a virtual travel assistant, allowing for more conversational interactions with Kayak’s search engine,” adding users “can ask it questions in the same way they would a human”.
Kayak gives an example of queries, such as “a hotel in New York close to Central Park”, from which “personalised” recommendations would follow. It sounds almost human – but will AI help clients stranded in a far-flung airport at 11pm when humans are in short supply?
Not yet. For a while, real agents still have the upper hand.
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Gary Noakes
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