Read the headline again… That’s right, the UK’s official body which represents the interests of travel organisations and consumers has a rather interesting idea.

But first, some background: two key distribution models are emerging in consumer-facing online travel.

Firstly, there is the distributed transaction model – supplier places product, price and availability information into some form of distribution system, consumer buys from an agent (online or off), the transaction details are transmitted to the supplier.

Secondly, media models are coming to the fore. Awareness of the product (including perhaps price/availability) is on a 3rd party website, but ultimately the consumer books with the supplier directly.

Media models are simply a form of advertising with rich data. It is a marketing process, not a sales process.

With flights, hotels and other commodity products distributed transactions work well.

Most leading OTAs sell flights/hotels and consumers are happy enough to book these products via OTAs.

One reason is that collectively we as an industry have worked out what product information the consumer needs in order to make a purchase decision on a 3rd party website.

For flights/hotels the hot news is the media model websites (including meta search, trip planning sites etc).

For escorted tours, activities and some ground arrangements the story is quite the opposite. Take the example of a customer looking to book a white water rafting holiday.

The consumer will want to communicate with the supplier prior to booking. It is the nature of the product. Hence for these products distributed transaction websites have never really taken off and, I argue, are unlikely to.

Instead of automation tour companies focus on efficiency. You know you are going to have human-to-human contact as part of the sales and booking process – how can that be made efficient?

For these kinds of products the media models are king as ultimately it ensures consumer-to-supplier communication takes place directly.

The hot news is where you see distributed transaction models being given a go.

Trouble ahead

In the UK at least, distributed transactions are a core part of what a travel agent does. In flight/hotel sales the travel agents are competing not only against strong online distributed transaction players but with media model sites that don’t need any complex technology nor any consumer protection mechanisms. Is that fair?

Seems the agents don’t believe so and they want to even up the playing field.

What we may have here is the start of a proxy war between the smaller agents who want to maintain the distributed transaction model and the media model people.

However the media model people haven’t really woken up to it yet (probably because the trade press tend to write from a travel agent perspective!).

The proxy war will be fought within the new Package Travel Directive (a European-wide proposal that is under consultation at the moment).

From an ABTA statement this week:

“The ABTA submission to the European consultation advocates that the scope of customer protection should be extended to include all linked leisure travel arrangements, including “click-through” arrangements bought on the internet.”

Now I am not quite sure what this means yet. Does it mean that if you are a travel website and you have an affiliate banner to sell a hotel – and an affiliate banner to sell a flight – you need to be offering consumer protection?

That would be troubling. It would also be troubling to all non-travel websites who have travel advertisers and, if finally incorporated into the new directive, break the media model at least in Europe.

ABTA asked their members the following question:

If a new Package Travel Directive were introduced, indicate which of the following travel-related products or arrangements you think should be within the scope (tick all that apply).

One of the answers was:

• Accommodation, transport andor other tourist services purchased on the internet from different sites which are clearly linked on their web pages.

105 out of the 141 responses (74%) ticked that this should be in scope.

I am somewhat surprised by this position taken by ABTA. Last year when the ABTA chairman was being elected there was a great discussion on the Musings blog about this very topic. John McEwan (now ABTA chairman) stated:

“My view is that ABTA is best placed to represent the industry as a whole and that should include non transactional companies such as Cheapflights, Google etc. The methods of purchasing travel have evolved and ABTA needs to evolve accordingly.”

The European Union is still accepting responses to the open consultation (until 7th February 2010). Consultation website.

If you believe that websites should be able to link to travel companies without taking responsibility for consumer protection then make your voice heard!

NB: I am taking part in a debate about these two models in tour distribution as part of Travel Technology Europe (London, February 9th 2010). Seminar A1. I will be debating these two models with Deepak Jha from Isango.

Hugely intriguing move at Thomas Cook, one of Europe’s biggest vertically integrated tour operators, with the discovery that customers who build their own package holiday online are in fact going on an Expedia trip.

Thomas Cook has yet to officially announce the change but Tnooz has learned that any customer who books a bundled deal (flight and hotel) is already being serviced by Expedia white label offshoot Worldwide Travel Exchange (WWTE).

The partnership is not simply a technological one – customers on a bundled deal are financially protected under an ATOL belonging to Travelscape (a little-known Expedia name often used to front its white labels), rather than the Cook’s ATOL bond.

Casual visitors to the Thomas Cook website will have no idea that Expedia is behind the dynamic packaging/build-your-own service and is also holding the protection bond. The company is never mentioned by name and Terms and Conditions only refer to WWTE.

Any only hint of a partnership will only be picked up by the slightly more trained eye with the presentation of search results almost identical between the two brands.

Thomas Cook

Expedia

The service also runs off the WWTE domain and servers.

Thomas Cook has chosen to take a low-key line over the partnership and will not comment on a number of aspects of the deal, saying in a statement: “Relationships with our suppliers are commercially sensitive and therefore we cannot confirm details.

“We work with a number of partners across our ecommerce business, eg bedbanks and technology companies. Thomas Cook’s relationship is with Expedia affiliates only and is one of these partnerships.”

Cook’s stresses that it is “very strong” in the dynamic packaging sector through its myriad of other brands such as FlexibleTrips, Hotels4u, NetFlights and MedHotels.

Nevertheless, Cook’s decision to partner with a major company from an area of the industry (OTAs) it says it wants to move into will raise a number of eyebrows, or at least trigger some rueful smiles.

Following the company’s November 30 2009 preliminary results, chief executive Manny Fontenla-Novoa was quoted as saying:

“You’ll also see Thomas Cook competing with Expedia, Priceline and lastminute.com in their space as well, and we’ll have a much bigger presence in that market.”

The reason for the partnership remains intriguing and largely unknown one at this stage given that Thomas Cook has an airline, the ability to charter seats elsewhere, existing bedbanks and has dynamically packaged product for some time.

One clue might rest in the collapse of Thomas Cook’s reservation system software provider BlueSky last year. When the BlueSky deal was announced in August 2006, creating a system to handle dynamic packaging across the Thomas Cook portfolio was one of the original components.

The financial failure of BlueSky and subsequent re-examination of Cook’s technology requirements may have changed the wider dynamic packaging strategy, triggering the need for a partnership with Expedia.

However, those close to the BlueSky saga say that the original vision for the Globe project changed in terms of the dynamic packaging software as individual brands within the group had different requirements.

Another reason could be simply to get access to Expedia’s accommodation and flight inventory, including 80,000 hotels and 450 airlines around the world – content that Cook’s air partnerships and existing bedbanks and owned stock are unable to match.

Dynamic packaging is a major play for Thomas Cook, especially if it is to reach its stated target of becoming a leading OTA in Europe – ironically alongside Expedia et al.

From the company’s financial statements in November 2009:

Independent travel passengers increased by 18% through investment in dynamic packaging capabilities, significant focus on our ecommerce operations and expansion of our product offering. With the strength of our retail brand, access to inventory and a true multi-channel capability, our strategy to develop an international online travel agent represents a compelling customer proposition.

Questions remain as to why a partnership with another white label flight+hotel provider, such as lastminute.com, didn’t materialise after both companies said they would be exploring other opportunities following the transfer of Med Hotels between the two in 2009.

Just as consumers – and the travel trade itself – thought regulation and insurance issues around bundled online holidays couldn’t get any more of a mess, European regulators today stepped into the furore to launch their own new set of guidelines.

In a statement released late this afternoon, officials in Brussels (headquarters of the European Union) said the existing Package Travel Directive would be extended to include dynamically packaged holidays created over the internet.

The original guidelines, created in 1990 and pre the explosion in online travel, did not include “liability for sub-standard services and protection for insolvency” for holidays.

The EU is now looking to include bundled holidays as part of the legislation – a decision it says was accelerated following the spate of recent travel company failures over the past 18 months (such as XL and Zoom).

In a statement, EU consumer commissioner Meglena Kuneva says:

“We need tough protection that gives all consumers booking a package holiday the peace of mind they deserve, and we need a level playing field so businesses compete on equal terms.

“I am particularly concerned about the issue of insolvency. Anyone who saw the TV pictures of thousands of holidaymakers stranded at airports after bankruptcies from Sky Europe to XL, Futura and Zoom, knows that now is the right time to ask tough questions about extending basic insolvency protection to consumers across the board.”

The move follows recent localised challenges to existing package holiday regulations, such as the TravelRepublic vs CAA saga in the UK.

The EU’s decision to take up the baton will be seen by some as a typically late entry into the debate.

Officials today said around 40% of all holidays booked in the EU are package holidays, with around 33% dynamically packaged and 25% classed as other arrangements.

Nevertheless, around 56% of all travel is booked independently and therefore not protected by EU directives in the case of a travel provider going under or airline insolvency.

The EU says it plans to introduce “concrete” proposals to review the Package Travel Directive by the Autumn of 2010. The official consultation process kicks off today and ends in early-February 2010.