Online Travel Distribution: It's Ripe for a Big FixBy Diane Merlino A Bit about the Study"Travel 2020: The Distribution Dilemma" draws from extensive research into the issues and consumer dynamics shaping travel over the next decade. Primary research includes a 2010 survey by IBM research partner Frost Sullivan covering a mix of 1,020 business and 1,030 leisure travelers from both developed and emerging economies. "It was the conclusions that we reached in that survey specifically the conclusions around how much time and frustration was involved in the travel search process that led us to execute the survey in 2011 (conducted by Oxford Economics). In that survey, we tried to understand what was going on, what people were actually spending their time searching for, and where their moments of frustration were in the process." Secondary research included general online search efforts and interpretive input from IBM subject matter experts. IBM also leveraged key findings about the travel sector from its Airline 2020 study and Hotel 2020 study, which were completed in 2010 and 2011, respectively. "And then, as is always the case in our studies, we get client reaction to the findings," Petersen said. "So we're making sure we've understood the results and the interpretation we've put on the data is consistent with what the market is seeing." Travel Weekly PLUS readers can download the full report at Travel 2020: The Distribution Dilemma. Online travel distribution is glaringly out of sync with customers, providers and distributors, and that poses a dilemma. The causes and contours of the situation as well as some revolutionary remedies are covered in a report based on an exhaustively researched IBM study titled "Travel 2020: The Distribution Dilemma". The solutions proposed in "Travel 2020" are ambitious and far reaching but not impossible, says Peterson. All are based on a simple, time honored schoolyard axiom to play well with others. Peterson says that includes fierce competitors learning how to cooperate to share information about customers. The most challenging of the impediments to change is in the minds of travel industry executives. "It's the will of the leadership to recognize the gap between customer expectations and what is offered by the online community for travel distribution, and proactively take action to change the trajectory," Peterson says. This is the first article in a series by Travel Weekly PLUS based on a dialogue between Peterson and Editor in Chief Diane Merlino. Following is the first excerpt of that conversation. Merlino: Give us a bird's eye view of the distribution dilemma identified by the IBM research. Peterson: In many respects, travel distribution is not working for customers, it's not working for the travel distribution community, and it's often not working for the providers of travel. Customer dissatisfaction is quite apparent in the process, evidenced by the frustration and time that is represented in travel search. When an individual goes to search for travel online, they spend a lot of time searching, and they're often not satisfied with what they've found. And, in our view, online travel distribution is fueling product commoditization. Oftentimes the search process focuses the consumer exclusively on price, and that is obviously to the detriment of travel providers like airlines and hotels. Finally, distribution intermediaries are not generating sufficient return in many cases, and that is why we see so much frothiness in that space. Q: That's a fairly grim picture, Steve. A: I think it's fair to say the travel distribution process is not unlike the consumer facing processes online in other industries, which is to say that consumers do spend a lot of time searching for other things in the retail space, and other spaces as well. I think it's also fair to say that retailers and the like are continually improving that experience, and that's true for travel as well. Butthe travel search process can still take a lot of time. While it can be satisfying for some customers, by and large it's not a completely delightful experience for many customers. That's the evidence and general sentiment we collected in 2010 around how consumers feel about travel search. Q: You mentioned other industries. How is the travel industry doing compared with other industries? Is customer dissatisfaction with the search process as prevalent? A: Some retailers are at the leading edge of improving the search process, others are not. And the same is true within the travel space. But as industry goes, travel is not often at the leading edge of consumer interactions online. The evidence I would cite is e tailers that have very robust understandings of preferences and transaction histories and create an almost predictive experience. When you're online searching for a video or a book or a sweater, it often feels that the retail community knows what you're looking for before you've even decided. In the travel space, while there may be examples of that in small part, I've not found many of them. It's not as widespread in travel that predictive capability as we see in the retail space. Q: So the basic finding in IBM's very extensive research is that online travel distribution, for the most part, is out of sync with customers. Is that a fair assessment? A: I don't want to overstate the case, but I do think it's fair to say there are many aspects of the search process that are out of sync with many customer segments. There are some customer segments that really appreciate the process the way it's set up. If you are a bargain hunter and you focus exclusively on price, then much of what has been built for travel distribution is absolutely what you're looking for. To the extent that there is a gap between what customers want or expect and what the travel community provides, that gap is in evidence in the customer segments that value things other than just price. Q: What portion of online travel customers consists of these bargain hunters who are happy with the online distribution process as it is now? A: That's a great question, and not one that our data would allow us to answer accurately. That's why in our recommendations we encourage each individual company, be it a travel provider or a travel distributor, to conduct a full segmentation of their customer base. There will be a unique answer to that question based on the specific customers targeted. Some OTAs primarily target the low cost bargain buyer. Those companies have done a little bit better in the recession period than have the companies that focus a little bit more on the higher end consumer. So I wouldn't want to hazard a guess as to where those numbers shake out for the overall travel market. But I would encourage travel companies of every stripe to conduct a thorough segmentation so that they can understand how their model fits their customers. Q: The IBM report contains some pretty dramatic statements and statistics. One that particularly stood out for me was this: In the eyes of many consumers, travel has become a burden, as evidenced by the fact that four of the top eight words most associated with travel were negative, including "frustrating," "unreliable," "infuriating" and "broken." That seems pretty extreme to me, and quite telling. 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FREE E BOOKS: Harlequin books has a free offer for you. Download up to 16 free e books. FREE STUFF: If you're a Facebook member, a lot of restaurants are currently offering freebies, if you "like" them on Facebook. Search for your favorite and see if they have an offer. And while you're on Facebook, stop by the CBS 6 page and "like" us too. FREE QDOBA: Children eat free at Qdoba on Sundays with the purchase of an adult entre. FREE ADMISSION:Enjoy free admission all year long to The Virginia Historical Society, with access to the museum galleries and research library. The museum is at 428 North Boulevard in Richmond. FREE JEWELRY: The Silver Jewelry Club offers an assortment of free, pure sterling silver jewelry every day. From pendants to rings to earrings, all you pay is the shipping and handling. 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