Many people would say that price comparison websites like say Travelsupermarket.com; skyscanner or carrentals.co.uk do customers a huge service – by allowing them to choose the cheapest deals without having to do a stack of time consuming research. At its most basic level this is absolutely the case.
But, they focus people totally and utterly on price. Mercilessly.
By exhibiting a bunch of deals side by side with virtually no branding alongside they are a brand marketer’s nightmare. (All that cash spent carefully trying to differentiate your product from a competitor’s is just stripped away and levelled down to a price with little else.) And they quickly drive customers to think about nothing but the best price. Ever found yourself thinking 'hang on we're talking about £5 difference in price here!'
Some comparison sites do add back some extras into the mix – but the ultimate aim is to smooth all the products into virtual ubiquity so that people can make swift choices between them – driven by price and nothing else.
I wonder how great they are for customers too? This really commoditised marketplace is about cutting cost rather than innovation. Everyone is effectively selling the same stuff and spending much of their energy on the supply chain – cutting costs remorselessly to be able to compete more effectively on price.
But it’s not just about price is it?
A holiday, a flight, a hire car – all of these things are about way more than just a simple product and a price. (Particularly if things go wrong!) I think it’s time people started really thinking about customer service and what it could add back into the equation.
I look a lot at the financial services industry and laugh at the idiocy of it all at the moment. So crap, so commoditised, so tied down by regulation, so stiffled of innovation. Ironically, all the banks have to differentiate themselves with is customer service. So they try remorselessly to convince us that they are 'on our side'. And fail to deliver because they don't make real fundamental changes to the way they do business. If you're going to do customer service you have to do it from the top to the bottom of a business and be fanatical. Not enough to trot out some old tired cliches like the banks do.
But - travel is a 'real' people business and the touch points for delighting customers on say a package holiday are myriad. Customer service should be absolutely critical. What would it cost to add proper customer service back into the mix? A price differential of say £10 onto a booking of £100? I have no idea, but if you did it the smartest possible way and used technology to do it really efficiently… how much would it really cost? And - how much harder would it be for a competitor to copy you if you did?
The internet-fueled obsession with lowest cost and lack of balls to stand out from the crowd and say in the words of certain beer brand ‘we are reassuringly expensive’ is I think slowly screwing the industry.
And you know what, price comparison sites are so DULL. Holidays should be fun, inspiring and exciting - and that includes the purchase of them. Price matters... but there should be so much more to buying a holiday.
The only brand I can think of really selling on service right now is Virgin Holidays. Can you think of others?
Would you pay more for better service or does it have little or no influence on your booking habits these days?
17 thoughts on “Are Price Comparison Sites Killing The Travel Industry?”
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I completely agree about price comparison in travel but I don't think you need to look far to find many excellent small and medium-sized tour operators providing great customer service and outstanding experiences. Why single out Virgin Holidays?
Hi Mark
Well, I was thinking about the kinds of holidays that end up on price comparison sites - ie mass market package stuff rather than more niche, smaller businesses. I didn't spend any time really considering this to be honest - more just a suggestion to get the ball rolling. If I think mass market travel brand - with a marketing message around customer service... it's Virgin Hols that comes to mind.
Cheers!
Jeremy
Nice piece. Some thoughts and comments:
I'd be interested to know what you (and others) make of Hipmunk.com, since price plays second fiddle to other deciding factors such as time of day, length of stopover etc. It's a subtle tweak to the user experience but it means a consumer gives more consideration to their purchase: "I could pay $100 for that flight, or I could pay $10 more for another flight and not have to get up at 4am."
To be honest, it doesn't matter to me how a site sells flights or hotels; if it has the ability to filter the results, the first filter I hit is "price - lowest to highest". Price is never all I'm looking at and I don't always buy the cheapest, but it's always, always my starting point. It is for most consumers. Ryanair could sacrifice children mid-flight and punch OAPs in the kidneys before take-off and stay in business. There would be outrage - there is most weeks already - but people will keep flying with them. Flights are a means to an end - they're never the purpose of a trip, so how much does the average person really care about customer service? Ryanair don't make their money by being nice to people, and never will.
Finally, if somebody has no allegiance to a particular brand, or a brand isn't associated with any particular values, then I think price will always feature more prominently in the buying decision. Virgin Atlantic is a good example because they have a strong brand and are great at selling emotively. When sourcing transatlantic flights, I always start with Virgin Atlantic because I like them. When looking at US internal flights, however, I don't give a damn - they're all just names to me. Despite flying on a dozen internal US flights in the last couple of years, I can't really distinguish between them and I'm not exposed to their marketing enough, so I pick the one that fits. I think low prices are more likely to be deal breakers when the brands are weaker or the consumer is unfamiliar with them. Aside from Ryanair, but than they're pretty much the exception to every rule of marketing ever drawn up.
Hi Paul
Good points. Thanks
Re: Hipmunk - I like the sorting options you describe yes. But I just tried searching for flights on there and it was baaaad. It clearly doesn't include UK low costers does it?
But I REALLY like the hotel search. That is COOL.
I've commented below David's comment about brand in context of flights and car hire. Commoditised these sectors may be. But I'd like to believe that they needn't be.
Cheers!
J
To be honest I've never used it for UK flight comparison, just US domestic :)
I quite like Skyscanner (why no business class?) and use Expedia professionally but I know what you mean about dull. Although maybe functional is a better word. Saying that they do work, and truth be told, that's what a lot of folks want. And if they weren't *very functional* the airlines would be after them (they are) never mind Google/Troogle/Floogle....
But travel can still take a butchers at other industries. Look at Lings Cars - completely bonkers
http://www.lingscars.com/
yet as Ling says, her bigger competitors are TV and Sky. Her site has to be interesting to attract attention. The lady herself certainly has a personality, (see Twitter), and her site is an extension of it...
But then again I bought my motor at Car Giant. Functional, not so much fun, yet works. Plkus you can go and have a poke around.
http://www.cargiant.co.uk
Quite a lot of small/medium travcos are trying to stamp personality on their sites - with video, blogs, quality writers etc...but the key message is not to scare the pax too much. After all pax are dropping rather a lot of wonga on your site. If there's too much *fun* the site could be misconstrued.
Does make you think though. What would Sir Freddie Laker do if he were starting out today? Fun apps? Personalised quizes? free downloadable guides where you're going? Or everything stripped out to get the cheapest possible price?
Course he went bust...
The other thing to say is not everyone searches by price. A lot search by destination, activity or type of hols they're after.
But interesting question. Wonder if the OTAs will join in the debate or cower in their undeground bunkers watching, waiting, observing like shy geeks after a bad bout of acne?
What's it to be fun? Or function? Come on time to leave adolescence and speak out...
Hi Stu
Oh my god - that site is mental. A usability nightmare.
I guess by fun, I didn't mean crazy! I just meant that more generally trying to find a holiday online is a frustrating task. So I'm more into the idea of holiday cos spending more time making the booking and researching experience better - more engaging, more simple, more intuitive, more satisfying(?).
That's about showcasing product better, finding ways to help people find the right product for them quickly etc. I've banged on about this loads before... ;-)
So I think we need both fun and function.
Cheers
J
I'm a programmer and have toyed with such comparison sites before. Know what the problem is? Data. The one and only meaningful item of data we can compare against is price because none of the other data that's relevant to the services we're comparing exists in a usable form. Why? For the very reason you've posted this post, companies don't *want* you to be able to compare against other services. They want you to go to their website *and only their website*, they want a captive audience.
And the problem now is that those comparison sites have the resources to ensure dominance through SEO. They earn commission on referred sales, they plough that back into SEO as long as they get their SEO & marketing right the only thing they need to do is compare on price because price is enough. Price is the "minimum viable comparison".
What would I do in travel co's circumstances? I'd create an industry wide easily accessible API which listed all my products with all the features clearly delineated in a machine readable format. I guarantee with the ability to compare more than just price people would create much more sophisticated comparison sites, not only that with some financial incentive (higher commissions for sites that compare on quality rather than just price) you feed the competitors of the "price only" sites.
Hi Rob
Really interesting take on this. I agree that the dominance of price comparison sites is not good - the way they plough stacks into SEO (I think often engaging in distinctly opaque practices in the process). It means less savvy searchers/consumers end up using price comparison sites almost by default.
Listing other features... not sure. My worry would be that the ability to compare all kinds of other stuff will just make it even harder for people to decide.
And I agree, I don't think that travel cos would want to offer comparisons like this. I imagine most would rather not be included in price comparison sites but just put up with it.
My feeling is that the one thing that is really hard to copy is brilliant customer service. Because it's about the culture of a company as much as whistles and bells. If a mainstream holiday company could get itself known as simply better at looking after its customers than anyone else it would be a big competitive advantage.
But achieveing this would I admit be quite difficult.
Cheers
Jeremy
Price isn't the only data readily available; there's time and dates, too. Doesn't sound like much, but if you recognise the value of this data and interpret it in a way that has meaning to the consumer, you can build something new. Hipmunk tap into the same APIs as anyone, but have built a product that looks unlike anything else and doesn't put the emphasis on price.
I find it interesting that you use the word 'Holiday'. Would I book a holiday using a price comparison site? Never. But then again, I rarely book holidays in one package.
For a flight, it's about getting from A to B - price is by far and away the main factor. The same applies to car hire.
But other aspects are slightly different. There are more factors to picking a hotel. I use booking sites, yes, but I cross check elsewhere for quality, location, WiFi access etc.
Tours and activities are massively different too. Content is king rather than price.
For things where price is easily the main factor, you're going to search by price. Price comparison sites aren't killing the market - they're a logical first step. But when things are more complex, these sites are only ever going to be one tool of many.
Hi David
Thanks - pertinent points and I agree. My definitions in the post were a bit woolly.
But for car hire or flights there 'ought' to be a differentiator that's more than just price. If I worked in either industry I'd be gutted if all I did all day was try and drive cost out of my business model. How sad. How dull. I'd want to innovate - to be better than my competitors. And I'd see price comparison sites as evil - sucking the soul from my business. Making the price element of a decision so all-important that people forget that other stuff can matter too.
As Paul mentioned - he actively chooses Virgin to fly across the atlantic - brand and service does impact his decision. And I'll happily pay a bit more to fly easyJet rather than Ryanair. Wouldn't you?
And these days with a kid etc I'd probably pay more to hire with a big brand car hire co too.
The question... how much more?
Cheers
Jeremy
I'm the same - I'd sooner go with Virgin than BA, Easyjet than Ryanair, Virgin Australia than Jetstar etc. And I'd probably pay a wee bit extra for it. Not much, but a wee bit.
I'd still go to a price comparison site first, however, to check fares were roughly in the same ballpark. I don't see why this should cannibalise the business of the companies that put the effort into the product, though. That branding is done elsewhere - advertising, marketing, word of mouth, personal experience.
If, for example, I saw London to LA flights with roughly similar times for these prices:
American Airlines - £450
Virgin Atlantic - £475
Air New Zealand - £475
Delta - £445
... I'd still book with Virgin or Air NZ. I'd drop down to the others if the price was way higher though.
Completely agree with the sentiment of the article.
However Mark makes a good point there are a lot of small to medium sized agents and operators out there who can offer a level of service which we often do not associate with the larger companies. My personal take is holidaymakers are now looking for more than simply "a week in the sun" from their holidays and this provides opportunities to the smaller travel companies.
Smaller, specialist companies however face the problem of being found. Consumers often do not even know they exist.
This is something makemeaholiday.co.uk addresses and hopefully we can provide a platform for smaller agents to compete on service and attention to detail rather than simply cost.
There is difference between cheap and value for money!
I agree Greg. Mark's own 101 holidays is another example.
I'm not for a moment saying customer service doesn't exist. It does and these smaller companies often do a great job.
Ironically they often get bought by the big ones and all that learning goes out the window... they become just another cog in a massive machine churning out the same stuff.
Cheers
Jeremy
Interesting subject and close to the heart. There is a massive - humungous - difference between "cheap" and "best value". What I and I trust, any self-respecting agent aims to give the client is "best value" - indeed, I know many occasions when "the cheapest" has cost the clients an awful lot of money. Price comparison sites are useful - but only as a tool, a crib sheet. They can save a lot of time and are useful as a benchmark in some circumstances. That said, most should carry a warning that they are only to be used by travel professionals. Using them for anything other the most simple, the most basic of there-and-back journeys can be a terrible mistake. I know, I (and other agents) have spent much time untangling hopeless online bookings.
I find Rob's comments fascinating. That the techy's have nothing else (much) to work on, so I understand this must be a big issue. I don't think it is fair to say that operators do not want comparisons - it is, I would venture, more of a case of trying to find a true comparison. Two hotels may be side by side - indeed, two rooms may be side by side, but the view may be different!
Yes - and be careful of the word "fun" as Stuart says - may be misconstrued .... Club 18-30 springs to mind... or the old song, sung at Gatwick "Good by brain cells, I must leave you ...."
... probably why I have renamed on price comparison site "hopelesslyunrealistictravelsolutions.com"
Such a lot of food for thought here! Thank you Jeremy, Mark, David and the rest of the contributors. Just the start-of-year inspiration I needed to help me focus on stressing the extra service levels provided by our many smaller specialist tour operator clients as a point of differential that is often overlooked by the consumer.
When we look for value we don't always realise that key holiday "must haves" may be lost in the battle to save very modest amounts of money. Would that we could make consumers think about the value of their holiday time in terms of salary. (eg if you earn £25,000 pa, your four weeks of paid annual holiday are worth nearly £2,000 - so why risk spoiling your precious annual leave for the sake of a small saving?)