Competitor or Supplier? Expedia Forges New Ties With Agents

When they first came on the scene, Expedia and other major online travel agencies were considered a direct and formidable threat to the survival of traditional travel agents.

Since then the business relationship between OTAs and travel agents has evolved, casting it in shades of gray rather than stark black and white.

Expedia, which is currently marking the first anniversary of the U.S. launch of its Travel Agent Affiliate Program (TAAP), is a case in point. The giant OTA believes it has transformed its relationship with travel agents worldwide from that of competitor to supplier, enlisting them as an effective sales channel for its vast array of product in return for commission payments.

Diego Pedrani

In the U.S. 1,840 agents have enrolled in TAAP during its first year of operation here, and there is no indication that interest in the program is slowing. Diego Pedrani, Expedia’s global director of travel agent distribution, told Travel Market Report the OTA signs up 100 to 200 new agent affiliates in the U.S. every week.

Overseas numbers are even stronger. Expedia first launched TAAP in Italy nine years ago. It has since expanded the program throughout Europe and into Asia, Australia, New Zealand and Canada to include a total of 15,200 agent affiliates in those regions to date, Pedrani said.

How it works
Agents pay a one-time $50 fee to join TAAP. After registering, they are given an exclusive tracking code that gives them access through a dedicated portal to Expedia’s global inventory, including product from more than 130,000 hotels and 300 airlines. The products and prices on the site mirror those shown to consumers.

Agents use the portal and their tracking code to check the availability of hotel rooms, flights, packages, and destination-based activities; make and confirm reservations for their clients in real time; track their bookings; and accrue commissions.

Expedia pays TAAP agents 10% commission on hotel bookings, up to 5% on packages, 6% on car rentals, and 10% on activities.

E-packages and last-minute inventory availability are the site’s most attractive options for travel agents, said Pedrani.

Travel Market Report conducted an email interview with Pedrani, who is based in Italy, about the TAAP program and the OTA’s evolving relationship with traditional travel agents.

Why did Expedia introduce a program to partner with travel agents?
Pedrani: Expedia recognizes the value agents provide as an important segment of travel distribution. We introduced TAAP because we think it is good business to develop new and maintain existing relationships with agencies. They provide a unique service that Expedia sometimes cannot offer. Agents are also a business segment that provides additional revenue [to Expedia].

And why would agents want to partner with a potential competitor?
Pedrani: Expedia is a supplier, not a competitor. As a supplier to agents we have a mutually beneficial relationship; we offer agents product and the chance to earn incremental revenue. This partnership developed naturally over time and has proven to be successful for all, including the travelers themselves.

TAAP was launched in Italy in 2002. Why introduce it first in Europe and specifically in Italy, and wait another eight years to bring it to the U.S.?
Pedrani: Italian agents expressed the most demand for TAAP. The program proved to very successful there so Expedia decided to expand it globally. The U.S. is a more complex challenge with greater competition. The TAAP program needed to evolve and progress to a level that would suit the needs of the U.S. travel agent. With the implementation of Expedia Access, the new agent portal, as well as a dedicated agent call-in support center, TAAP provides its affiliates the technology and assistance needed to thrive in the U.S. marketplace.

Are there any differences between how TAAP works with international agents and with U.S. agents?
Pedrani: In the U.S., TAAP pays agents a flat fee on e-packages, which is the most successful line of business. We plan a more aggressive marketing approach for e-packages going forward. U.S. agents have the experience to understand the intrinsic value of a product that taps into offers coming from both airlines and hotels.

But the basic working properties of TAAP share many similar qualities worldwide. The global component of the program has brought an advantage of shared best practices to each TAAP point of sale.

What challenges does the TAAP program face in the U.S. market?
Pedrani: Our biggest challenge is overcoming the perception that Expedia is only a consumer site. Like all other travel suppliers we have programs suited to various market segments.

Are there other challenges specific to the U.S. market?
Pedrani: At launch, the features we offered agents in TAAP were not considered top level. This was the main reason we decided to significantly invest in building a dedicated travel agent platform designed to offer top-level technology to agents. For example, when TAAP was introduced [in the U.S.] last year, it had some tools for agents, like the reporting tool that allows them to see their bookings and commissions. However, these tools were not as advanced as we wanted, particularly for a tech-savvy company like Expedia.

How did you address those problems?
Pedrani: The new platform, Expedia Access, includes simplified log-in procedures and reporting, enhanced activity reports that allow agents to regularly monitor bookings and commissions, and news, promotions and incentive status.

It also features personalization and re-branding capabilities. By adding individual travel agency logos and messages, the functionality will support the download of invoices and itineraries into Microsoft Word or Outlook for easy dispatch to clients. Expedia Access also helps agencies enrich their own websites. The platform offers technical specifications that allow an agent to place an Expedia Search Widget on their own site, while still earning commissions on bookings made through the agent’s site.

Are you planning any additional enhancements for U.S. agents in the TAAP program?
Pedrani: We are working every day on new tools, promotions, and advanced technology; new enhancements will roll out on a regular basis. We are also working with Expedia call centers to provide a more dedicated service to our agents. This is an extra safety net for agents, as they now have Expedia providing a solution if the supplier cannot commit to the offering.

Will there be anything new in terms of commissions?
Pedrani: We are planning to increase the commission on e-packages for a period of time, or pay extra absolute dollars on top of commissions. The availability and pricing on this product are unique to Expedia. We are also planning to introduce competitive promotions based on the e-packages.

In Expedia’s view, has TAAP been successful in the U.S.?
Pedrani: The program has just had its one-year anniversary and the number of agencies registered has grown exponentially. We have a wide variety of U.S. agents in every state, including large agencies and host agencies. TAAP has been very successful with home-based and independent travel agents.

On the other hand, the productivity per agency is slightly below other markets. We believe the U.S. market requires time for agents to discover the advantages of joining and using TAAP.