HRS cuts off business travel agents – a revolution in distribution ?
From information circulating in the market, it is clear that HRS has terminated contracts with major TMC networks. This is for agents strictly specialized in corporate travel for corporations. This does not apply only to second- or third-tier agents because information about such an action of HRS reaches us from offices of the TO10 category( the largest in Poland).
However, such a radical change does not affect the entire market either. Several of the largest offices still have access to HRS content. Perhaps behind such a decision is pressure from the corporates themselves who clearly wish to be served through an agent.
Its own innovative tools will convince contractors to cooperate directly?
It is difficult to guess the motivations of the German giant. Probably several factors have influenced such a move. We can assume that the German giant has great faith in its innovative tools such as a shopping platform / tender or group/event booking tool.
Increased interest in tools offered directly to corporations will translate into demand for special rates. When using this type of rates, the role of the agent is exhausted. He does not receive a commission, nor can he mark up the product additionally. De facto does not make money on it.
Perhaps HRS will focus on direct personalized service to its largest global customers and offer others to buy through its own site. Although one can not help noticing that in recent years the activity of the platform in the segment of small and medium-sized companies in Poland has strongly weakened. Vide a blog/ knowledge dissemination tool for this market segment left unupdated.
Is the real reason for this fear of financial losses/bankruptcy of TMCs ?
Perhaps the decision to withdraw content from agents has other considerations as well. The fact of the difficult situation in the business travel market is an open secret. Many of the agents are cutting employment. Some of them may not survive. Perhaps the German giant wants to reduce the financial risk associated with possible bankruptcy in the business travel market.
What about payments, how HRS will plug the hole left by agents?
There is one major gap in the whole puzzle, until now agents have been useful to HRS as a payment taker. HRS itself did not have an effective tool to serve corporations in this aspect on the terms on which the agents did.
For now, it is difficult to know how the German giant will deal with this problem. Perhaps the solution is already in place, it would be strange to leave such a technological gap. It may be, however, that the Polish market, being non-strategic, will be forgiven. However, it is hard to believe.
Or maybe this move is to reduce mark-up policy and introduce transparency ?
There is also another arch-interesting aspect of such conduct of the German giant. The move to direct service and further popularization of private rates translates into the elimination of the above-mentioned “problems” in cooperation with agents.
I.e. commission and mark-up – special rates cut both opportunities. Introducing 100% transparency into relations with the contractor, while guaranteeing additional savings.
It should be remembered that the area of hotel bookings, along with airline group travel, is the one exposed to the greatest risk of hyper-marginalization by agents. Not infrequently we have had instances in the market of adding 30-40 percent margins to the net price.
Perhaps HRS has decided to curb these practices once and for all , becoming an ambassador of market transparency. Such an approach would also be helpful in introducing significant changes in the area of public tenders where hotel bookings are made precisely often on the basis of “free Americanism”.
Competitors like RateHawk and TBO holidays are waiting for such a gift
It is also very interesting that such actions of the German company coincide with the market expansion of the competition. The dynamically pushing RateHawk also recently offered airline tickets to its agents/partners. He is also working on further technological innovations.
TBO Holidays from India is about to enter the market – here, too, we will have to deal with the philosophy based on B2B cooperation with Polish agents.
The above-mentioned aggregators of hotel content like RateHawk and Krakow’s Tripnet still have access to HRS’ offerings. Thus, a certain inconsistency appears here, perhaps only temporary and dictated by inertia in the introduction of revolutionary changes by the German company.
Either way, the competitive context seems very challenging for such a decision by HRS.