Why Bargain Travel Sites May No Longer Be Bargains
Doug Garr writes at Backchannel.
Last August, Andrea Giacobbe logged on to Skyscanner, a European metasearch engine like Expedia and Travelocity that scans multiple travel websites and surfaces the cheapest fare. Giacobbe, a 52-year-old management consultant, was looking to book a flight from New York City to Genoa, Italy—a trip he’s made numerous times for family visits. He’d always relied on Skyscanner for a discount.
This time, the cheapest fare wasn’t that cheap: It was for an Alitalia flight that made two stops, through Milan and Rome, for $2,050. Surprised at the high quote, he decided to call Alitalia. Immediately, the airline offered a $1,550 flight with only one stop in Rome. It was cheaper. It would get there faster. They even offered him a discounted car rental.
“It blew my mind,” recalled Giacobbe. He hadn’t called Alitalia directly in years. He was accustomed to almost always relying on Skyscanner for the best deal.
Giacobbe’s experience is becoming more typical. Over the past several years, the conventional wisdom has been that cruising the net would yield the best prices in the travel, hotel, and car rental spaces. There’s been a tidal shift in the travel industry, to a point where most of us use aggregators to book our trips. Who bothers talking to a human being—a travel agent? You’re just going to be stuck in a long option queue.
Most of us rely on metasearch engines, like Priceline, Expedia, or Travelocity, which typically use dozens (sometimes as many as 200) of online travel agents, called OTAs, and aggregators to find the best deals. (A metasearch engine and an aggregator are interchangeable terms — they both scour other sites and compile data under one roof. An OTA is an actual travel agency that actually does the booking and is the lone site responsible for everything you buy through them.) We rely on these sites because we assume they have the secret sauce — the most powerful search engines, tweaked by superstar programmers armed with the most sophisticated algorithms—to guide us to the cheapest options. With a single search, you can feel assured that you are paying a rock bottom price.
Over time, however, the convention has flipped. As competition among the sites heated up, the hard-to-believe cheap fares required some filtering. A too-good-to-be-true fare ($99 to Europe from California) usually came with a catch (the $400, indirect, ticket home). And as the business models that on which these aggregators rely are getting tighter, the deals are getting worse. How can you be certain you’re getting the lowest quote? The short answer is, you can’t.
While reporting this piece I spoke to several software engineers, executives of hotel chains, as well as academics and researchers who have spent a considerable amount of time and effort digging into the issue. Their conclusion is that the industry is in flux, and that really good bargains—for hotels, flights, and car rentals—are often largely illusory. “Hotels are not giving the aggregators as many good deals as they did in the past,” a former software engineer who used to work for Priceline told me. (He didn’t want his name used because he still is seeking work in the industry.) “You might as well call Sheraton’s front desk.”
And good luck finding the delinquent parties: The number of players behind each transaction has ratcheted up. For every potential deal, there are likely to be multiple aggregators in the food chain, with each site taking a cut and ultimately driving up the final cost. My ex-Priceline source told me that aggregators explain away price fluctuations by citing the ebb and flow of supply and demand, which varies greatly in seasonal resort areas. But really, it’s a breakdown in the system. Just as airlines and hotels began trimming travel agent commissions more than 20 years ago, now history is repeating itself. “The airlines don’t want to pay the aggregators anymore,” he told me.
Which means the people who are paying them are us.
As early as the 1990s, before the ubiquity of the internet, you called your travel agent and he or she took care of everything — your flights, the hotel, the rental car. America Airlines, the Hyatt, Hertz and the like paid the travel agents to offer their services. But slowly, the landscape changed. The airlines and hotel chains stopped paying. Travel agents stopped offering their services for “free.” The consumer shouldered their fees, and travel agents became irrelevant players to all but the boutique wealthy travelers who didn’t need to worry about cost.
Technology aided in this inevitable disruption, and ultimately helped create some of the pricing chaos we see today. As the internet became the first stop for travel shopping, we started searching for bargains via keystroke commands. We stopped talking to hotel clerks, rental car agents, and airline reservation agents, and we boasted to our friends about our low-cost vacations to Lake Como.
All of this was made possible by the web aggregators.
Web aggregators work like this: . . .