The Quiet Revolution in the Travel Industry

The Quiet Revolution in the Travel Industry

Itself a quiet and self-paced city, Dublin is rapidly becoming a hub for innovation in the travel sector. No surprise a year ago an idea caught shape here only to grow into a fully formed business plan about 12 months later. It has the potential to change revenue distribution in the travel industry. To succeed though, its go-to-market strategy must be architected more as a revolution than a marketing campaign.

I will give a succinct background here to what I set up to do back in 2017. If it makes little sense please do let me know. If an obvious connection comes out of this, I would be very grateful for helping me move forward. I know it's a lot to ask.

I have experience selling accommodation bookings online using technology and an omni-channel approach. Being good at it lead to a very particular point of view on how hotel revenue distribution works currently, and by extension how revenue re-distribution could operate in the whole travel industry.

The facts I used in my model:

  1. Over 50% of bookings worldwide are still made offline, 20 years after the first online booking was placed over the Internet.
  2. We say colloquially "travel broadens the mind" but by now we had a few academic studies to draw from proving it does indeed change the psychological profile of an individual in a measurable way. I claim that travel, mostly leisure travel, satisfies the need for self-actualisation found at the top of the Maslow pyramid (if you are into that kind of stuff).
  3. In driving user acquisition strategies, marketing managers look for people planning to travel in a transactional way (by destination and arrival date). But we can infer people most likely to travel in the future (say in the coming 12 months) are easier to find physically than identify on the internet. Some of them are very likely staying in a hotel as you read this article.
  4. Hotels have traditionally lower customer lifetime value compared to Online Travel Agencies such as Booking.com and Expedia because only 5-40% of their guests ever return. But those very guests are highly likely to travel and stay at another hotel in the next 12 months. A peer-to-peer referral network between hotels could disintermediate the online travel websites and allow hotels to regain some degree of control in the form of direct bookings.
  5. The hotels' secret weapon, the loyalty program, is under siege - only 39% of millennials think there is value in joining one (according to a survey done on US millennials in 2017).

I propose a referral business model based on direct distribution that in the beginning can ring-fence a significant share of the most lucrative international guests (Affluent Frequent Travellers) for the benefit of hotels, protect them from defecting to OTAs and further insulate the brands from erosion in Google and Facebook as advertising channels.

The simulated model shows it can bring direct bookings at 0-12% commission cost and was validated by several trusted sources. We already engaged at strategic level with some of the largest hotel operators in the world. This initiative can be easily defined as "peer-to-peer trustless marketplace for hotels" but won't move forward without building consensus between enough industry leaders from the hotel industry.

With it, in 5 years we can do to Online Travel Websites what WhatsApp did to telecom companies between 2009-2014. We can reduce the waste represented by advertising in Google and Facebook and give control of distribution back to hotels.

The end goal of this quiet revolution is to make travel more affordable for everyone.

Lindy King

I help students get to the UCs. Also a fiction writer.

6y

No offense, but this is written in a most confusing way. “disintermediate” ??? Is that even a word? Plus, the diagram is just absolutely not understandable. I had to read it twice to figure out the gist. I think if you write it in a more direct manner it would be helpful. 😀 It sounds promising.

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✔ Steve Rigby

The Perpetual Income Strategy ✅ YEP! The Youth Entrepreneur Project ✅ Startup Club for Teens ✅ Master the 100 most common GCSE Maths topics ✅ 🌏 Workplace Bullying Author & Speaker ✅

6y

Game changer...

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🌏 Peter Syme 🌍

Strategic Travel & Tourism Advisor | Speaker | Travel Tech Advisor | Podcast Host | Adventure Specialist | Community Building

6y

Silviu as much as I would like this to happen in the hotel industry and then in the tours and attractions industry I can see huge challenges. You cannot compare to what whatsapp did to telecoms. Communication is a basic need of humans, we need to do it every day. Staying in hotels is not and so engagement at a personal level is much lower. Your model also faces the same major challenge that I see with blockchain and this is not a technology challenge it is one of funding. In order to disrupt and get consumers to move from one booking channel to another at scale you have to spend big. The marketing spend of trivago, booking, expedia etc is huge. If a new system is designed to reduce the high fees that they charge, which is a good thing, how does that new system get scale without spending massive on marketing when it is charging much lower % our in blockchains case next to nothing?

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