Mathew Prior, Managing Director of The First Resort spoke at last weeks Association of British Travel Agents e-commerce seminar and stressed the importance of using more than one channel for travel sales.
Mr Prior said, “What we are seeing are rules based on Darwinian principles and business basics - survival of the fittest. The demise of some start up businesses is to be expected when there has been such a proliferation of new players. In the Internet gold rush of 1999 it appeared that barriers to entry for travel sites was low. Now in 2001 the reality is increasingly clear - success is not just the result of some travel industry people getting technical, there`s a hell of a lot to get right.
Success is based on giving consumers a reason to change their purchasing behaviour. For most consumers price is extremely compelling. TheFirstResort is able to operate at a lower cost as we don`t have the drain of an overhead intensive UK wide chain of travel shops - enabling us to pass savings on to the customer.
We currently price beat other travel agents quotes by £20 per booking. In order to gain the required critical mass, it is necessary to maximise sales channels and distribution points in a cost effective way. Being limited to one channel only, does not allow a new company to get to scale quickly enough. Internet, phone, Teletext, partnerships are all essential channels - consumers buy in different ways, and it`s necessary to be available across the board in order to cater for all needs. If you`re just a travel website, it`s just not enough.
Travel is a volume game. It`s essential to get the right balance between sales volume and investment and overheads required to operate efficiently. As the holiday market is highly season, it`s essential to pick the right segment to be operating in. Picking the right product mix is key to success, to allow year round sales, and repeat purchase opportunities.
Cost effective marketing campaigns that raise profile and focus on selling holidays are essential for success - at the end of the day, we`re all retailing.
There are lots of innovative ways of developing cost effective marketing - such as the equity relationship with Channel 5 which has allowed us to advertise on television without a huge cash outlay.
One of the exciting developments in the past two years has been the innovative ways of partnering up with other businesses for mutual benefit. There are opportunities out there - it`s about having sound ideas that work well for both parties.
Only when you get to scale can you make high levels of investment in state of the art technology and infrastructure. All new businesses need to grow at the right pace. In summary, the volatility in the market in the last few months is not a reflection of the role of the Internet in the travel industry - merely a shaking out of players down to those whose business model has been planned for success.”
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