New Research: Understanding the Hidden Costs of Direct-to-Consumer Retailing

This sponsored content was created in collaboration with a Skift partner.

The direct-to-consumer (DTC) movement, which eliminates third parties and connects businesses directly with consumers, has led to an overwhelming number of product choices — but it often fails to deliver better value. This trend has now reached the travel industry, where airlines are increasingly offering New Distribution Capability (NDC) fares directly to consumers. 

The travel sector’s embrace of DTC is largely fueled by the desire to enhance customer experiences and drive revenue through direct channels. Airlines and hotels, for instance, are keen on owning the end-to-end customer journey to better understand their clientele and refine their offerings. However, as a new report from Travelport highlights, this move has introduced significant complexity for consumers, who now face an overwhelming array of choices and inconsistent experiences across various platforms.

According to the report, travelers spend up to 4.2 hours shopping around before finally booking a trip. In addition, they visit up to 277 web pages before booking a trip, compared to just 38 websites in 2013. However, Travelport’s new research shows that 9 out of 10 people want to see all their options on a single screen or website.

“Despite travel providers favoring direct-to-consumer connections, the sheer volume of options is overwhelming to travelers, making them less confident in their booking choices,” said Jen Catto, chief marketing officer at Travelport. “Our research found that instead of feeling excited after booking a trip, most travelers are left feeling anxious, wondering if they got the best deal. For the travel industry, this signals a growing need and opportunity for travel agencies. Their expertise in comparison shopping aids travelers in confidently booking the best option, based on their personal preferences.”

Travelport’s comprehensive research underscores the importance of balancing DTC strategies with the needs of the modern traveler. The findings reveal that while DTC promises enhanced personalization, the reality for many consumers is a fragmented and confusing marketplace. This not only diminishes the perceived value of direct channels but also underscores the critical role of intermediaries in simplifying and enhancing the travel booking process.

“Travel providers are continually refining and expanding their offerings to fit their customers’ unique needs and preferences,” Catto added. “Prioritizing partnerships with agencies will ensure a truly personalized service to their travelers. That will make the shopping experience seamless for all.” 

In this report, you’ll also find:

• An exploration of how DTC models have permeated the travel industry, with a particular focus on the impact of New Distribution Capability (NDC) fares introduced by airlines
• Insights into traveler experiences and perceptions of NDC, revealing a gap between the promised benefits of personalization and the actual complexities faced by consumers
• An overview of innovative solutions offered by Travelport to streamline the comparison process and enhance the retailing capabilities of travel agencies, ensuring a smoother, more confident booking experience for travelers
• An examination of how travel agents are adapting to the changes brought by DTC and NDC, including the challenges they face in providing comprehensive, comparable options to their clients.
• Real-world examples of travel brands successfully integrating DTC and retail technologies to provide seamless, customer-centric experiences.

This content was created collaboratively by Travelport and Skift’s branded content studio, SkiftX.