The Evolving Story of Brands & Distributors in Travel

One of the key themes emerging over the past decade of travel startups has been the convergence of what it means to be an operator ‘brand’, and what it means to be a travel ‘distributor’. This convergence was articulated well by Ritesh Agarwal, founder of OYO Rooms, in this Skift interview from 2015 (excerpt here):

“Today the brands and distributors are fighting with each other, but in the next five or 10 years, companies are going to be created that are going to be Internet-first and also brands” 

A decade ago, when you booked a hotel on Expedia (classic distributor) and the stay went awry, as a consumer you probably wouldn’t have tried to call Expedia to make it right - you’d walk down to the front desk and plead your case.

The situation is totally different now. The rise of Airbnb & the hotelier of 1 has introduced an entirely different dynamic - the ‘branded distributor’. While it’s not how the legalese is structured (e.g. ‘hey, we’re just a ‘network’, we have no accountability in practice’), clearly the expectation is different. Consumers routinely call Airbnb when something goes wrong, and for the most part their issues are resolved by Airbnb acting as a principal if not possible with host directly.

But what does it mean to be a ‘brand’ when your 'operations’ devolves into a marketplace managed through guidelines and behavioral norms rather than traditional accountability systems?

Clearly as an Airbnb consumer, you are much more attuned to the fact that things can go wrong when you book an apartment rather than hotel stay - it’s now part of the generally accepted risk-reward tradeoff in the accommodation market. As long as these tradeoffs are well understood, extra choice has been great for the overall consumer.

Likewise, a similar trend is playing out in tours & activities. GetYourGuide, historically a tours & activities distributor, launched a new ‘Originals’ product line with the following promise:

World-class guided tours. We took exceptional guides and experiences and perfected them, based on feedback from our customers. More time to explore. Special access and entrances minimize time spent waiting in line. Zero stress. Exceptional guides.

Does this make GetYourGuide a brand or a distributor?

Is the tour development process and consumer promise from a distribution-first business like GetYourGuide really that different from a more traditional brand? More importantly, is the consumer experience, on average, that much different? (for a mass market consumer, I would argue no)

Can traditional brands afford to not build distributor-like distribution capabilities if they hope to scale? (I would also argue no)

Distribution matters, as the rise of Booking.com over the past decade demonstrates. Similarly with the quick traction of early days GetYourGuide.

But brands matter too. The cost of product development - with a smartphone in your pocket & possibility of an Internet shop front in minutes - is incredibly low. Costs this low means noise level are high - there’s never been more choice.

Which is precisely why brands - the ones that really stand for something that’s clearly expressed to the consumer - matter more than ever. Just don’t forget about your distribution.