Speaking at the Travel Distribution Summit in Beijing last week, Fogel, whose company sold almost 80 million room nights for the four quarters that ended in June and has a market capitalization of US$15 billion, said that the wholesaler model (he named GTA as an example) made less sense in today’s rate-transparent world.

“The wholesaler buys rooms from a hotel at a low price and resells them to an OTA who doesn’t have a relationship with the hotel and takes 25% or 35% and sometimes a lot more out of the total cost of the room.”

He questioned why hotel managers were willing to give up so much of their revenue and claimed that inventory from the wholesale chain ended up on vertical search sites. “Many years ago the wholesale system made sense because there was no internet but now with vertical search, hotels who do this will find their wholesale rate on a meta search engine and this will decrease the hotel’s ADR.

“Over time, hotels will gradually move more inventory away from wholesalers,” he predicted.

As evidence of the decline of the wholesaler model, he said Travelport bought GTA in 2005 for $1.1 billion and last year had to take a write-down of $800 million.

His second prediction was that the rise of travel apps would swing the pendulum back in favour of intermediaries. His reasoning – consumers will not download every supplier app, intermediaries have the advantage in technology and can take a fun approach to apps and apps are habit-forming.

The intermediaries that will benefit are OTAs and metasearch. He also suggested that broad search engines might create their own travel apps and even mobile phone players could be tempted into entering the space as they wondered why should all the money go to the OTAs and search engines?

His third prediction was the emergence of “artificially intelligent” travel agents due to the proliferation of content on the web – we will be able to use the information to personalize like never before.

“Today, information is free and the more you can customize, the better.”

Finally, he said, mobile will be key to all things travel because it is both immediate and informative.

Featured image credit (hotel key flat icon with long shadow): Ockra/iStock