This is not a story about Orbitz.
This is not a story about how the Chicago-based company is going to change the way we buy travel. If it were, then there would be a carefully scripted quote from chairman Jeffrey Katz, or at the very least, a sound bite from one of the dot-com’s proactive publicists. But there isn’t.
Instead, this is about how the online travel industry is reacting to Orbitz. Overreacting, some might say.
It’s about how the interactive travel business dramatizes news events — and about how your business can take advantage of misguided industry sentiment.
Let me begin with a confession: I’m part of the problem. For the last five years, I’ve written columns that tended to sensationalize routine events. I could blame the online travel industry’s fledgling status – its need for legitimacy – on my actions. But ultimately, I wrote “sky is falling” stories because I wanted to create news where there was none.
For example, in my very first column about online travel, I proclaimed, “the runaway popularity of virtual reality is undeniably real.” Problem was, the runaway popularity was actually virtual.
In years past, I’ve overblown Wal-Mart’s entrance into the travel sector, as well as Buy.com’s foray into our industry, which I mislabeled a “big story.”
I’ve chronicled the reactions of agents to commission caps starting with Delta Air Lines’ and leading us to the present-day commission reductions by Northwest Airlines. I’ve made them seem like cataclysmic events rivaled only by the Second Coming.
But I’m not alone. Without mentioning any names, I think any reasonable observer can see that even the industry’s best (or at least best-known) experts have a tendency to make over-the-top proclamations about insignificant events. ByeByeNow.com was so hyped that few bothered to notice its lack of a viable business model.
Now, some of my colleagues are seeing a conspiracy in the Northwest commission cuts, believing it couldn’t possibly be because the carrier is trying to reduce distribution costs. Oh no, Northwest must be plotting to boost Orbitz into orbit by vaporizing agent bonuses.
What does this mean to you?
- The herd often goes in the wrong direction. Don’t mindlessly follow. This is important to keep in mind when you’re making strategic decisions. The pundits are frequently incorrect – no two ways about it. Take their advice at your own peril. Remember the craze for travel bid sites of a few months ago? Now, with Priceline.com and Bid4Vacations.com in trouble, the dot-coms that held back and recognized the fad for what it was are counting their lucky stars.
- The learning curve may be steep, but it’s still there. Don’t forget to do your homework. Online travel attracts the kinds of talking heads that believe you can become an expert on the business overnight. It’s these wannabe pundits that make flawed prediction. People who don’t look at the fundamentals and instead go with the “feel” end up holding lots of Priceline.com stock. They find themselves as either the proud owners of worthless portfolios or as principals in companies on the verge of being de-listed.
- “Short-strategizing” has its rewards. Don’t be afraid to go against the grain. In this business, it’s the naysayers – the ones who effectively “short sell” the conventional wisdom – who often come out on top. For example, if ITA Software had paid attention to the critics, it probably would have left the likes of ITN (later, GetThere) to power every booking site. If Hotwire’s investors had listened to the self-proclaimed “experts” they wouldn’t have seen the opportunities they did to bring a Web site that peddles “white label” fares online.
All of which brings us back to Orbitz. Listen to the reports and ask yourself: “Haven’t you heard this before?” Yes, you have. It’s the sound of a very large herd stampeding in the wrong direction. Orbitz is going to change the way we buy travel about as much as a new coat of paint on one of Delta’s planes can improve customer satisfaction. If the online travel industry has taught us anything, it’s that insiders don’t just overreact to the least significant news but also that they underreact to developments that truly matter.
But more on that in a future column.