Yes its been an interesting week. The reporting season has brought further evidence of how badly off travel is in the recession. While the US ponders a fall of 2.8 in retail sales Y/Y - Travel is down WAY further at least 7 points worldwide and as much as 12 points in the US market.
So here is my weekly reflection and just me being speculative.
After looking harder at the depressing news from Travelport, I started to reflect as to what could be done by the players. we seem to have a mutually symbiotic set of problems that are besetting the Travel Intermediaries (OTAs and Traditional) as well as the GDS.
Fixing these problems is going to require a set of radical solutions. I am not going to outline a State of the Union address on the situation but I will float an idea.
One of my regular contributors is Professor Alex who hails from Germany. He opines that the splitting of Orbitz and the GDS businesses of Travelport/Blackstone nee Cendant was a mistake. Further he states that with the importance of the hotel businesses (GTA, Synxis etc) of these companies that perhaps there is time for a rethink of the full service model of the GDS. Clearly the core GDS model is in decline so at what point does it actually start to fall apart and what can be done to compensate for the loss of this formerly lucrative and secure cash flow. I think he could be onto something. Perhaps there is a market for the re-alignment of the major OTA players and the GDSs. Perhaps there is a case for Expedia to use its cash pile to align with one of the other players. Of course it would have a ripple out effect on the current GDS based revenue that is more profitable for the GDS (and indeed the airlines) IE Business travel from such players as the Big 4 corporates.
As noted above this is pure speculation - but it is an interesting theory. There would be 4 lines of business for each of the big 3 players:
Corporate Intermediary Services
Leisure branded Intermediary Services
White Label Distribution and Core GDS Services
IT Services
Hmmm Food For thought?
I would be interested in people's views.
Cheers
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