HRS cuts itself off from business travel agents – a revolution in distribution?

Electrifying information is circulating around the market of business travel agents. One of the leaders in offering German hotel content, HRS, has started a revolution.

Withdraw from working with agents(TMCs)

It is clear from the information circulating on the market that HRS terminated the contracts with the main TMC networks. These are agents that are strictly specialized in servicing corporate travel. This does not only apply to secondary or tertiary agents, as information about such activities by HRS comes from offices in the TO10 category (the largest in Poland).

However, such a radical change does not apply to the entire market either. Several major offices still have access to HRS content. Perhaps, behind such a decision is pressure from the corporations themselves, who clearly wish to be serviced by an agent.

Own innovative tools will convince contractors to cooperate directly?

It is difficult to guess the motivations of the German giant. Probably this step was influenced by several factors. We can assume that the German giant has great faith in its innovative tools, such as a purchasing / tender platform or a tool for group / event reservations.

Increased interest in tools offered directly to corporations will translate into demand for special rates. When using this type of rate, the role of the agent is exhausted. He does not receive a commission, and he cannot make additional margins on the product. In fact, it does not make money on it.

Perhaps HRS will focus on direct personalized service to the largest global customers and will offer others purchases through its own website. Although it cannot be ignored that in recent years the platform’s activity in the segment of small and medium-sized enterprises in Poland has significantly weakened. Vide blog / knowledge dissemination tool for this market segment left without update.

Is the real reason behind fear of financial loss/bankruptcy of TMCs?

Perhaps the decision to withdraw content from agents has other reasons as well. The difficult situation on the business travel market is an open secret. Many of the agents are cutting employment. Some of them may not survive. Perhaps the German giant wants to reduce the financial risk associated with a possible bankruptcy on the business travel market.

What about payments, how HRS will fill the agent hole?

There is one significant gap in the puzzle, so far agents have been useful to HRS as a payment taker. HRS itself did not have an effective tool to serve corporations in this respect on the terms under which agents did it.

For now, it is difficult to find out how the German giant will deal with this problem. Perhaps the solution is now ready, it would be strange if such a technological gap was left. It may be, however, that the Polish market, as not strategic, will be released. However, it is hard to believe.

Or maybe this move is to limit the mark-up policy and introduce transparency?

There is also one more interesting aspect of this behavior of the German giant. The transition to direct service and further popularization of private rates translates into the elimination of the above-mentioned “problems” in cooperation with agents.

Ie commission and mark-up – special rates cut off both possibilities. Introducing 100% transparency to the relationship with the contractor, while guaranteeing additional savings.

It should be remembered that the hotel booking area in Poland, next to group air travel, is the one exposed to the greatest risk of hyper-margin by agents. We have often had cases on the market adding 30-40 percent margins to the net price.

Perhaps HRS decided to curb these practices once and for all, becoming an ambassador for market transparency. Such an approach would also be helpful in introducing significant changes in the area of ​​public tenders. Where hotel reservations are often made on the basis of a “free American”.

Competitors like RateHawk and TBO holidays are waiting for such a gift

It is also very interesting that such activities of the German concern coincide with the market expansion of the competition. The rapidly expanding rateHawk has recently offered airline tickets to its agents/partners. It is also working on further technological innovations.

At any moment, the Indian TBO Holidays will also enter (CEE)the market more strongly. Here we will also be dealing with a philosophy based on B2B cooperation with Polish agents.

The above-mentioned aggregators of hotel content, such as RateHawk or Krakow’s Tripnet, still have access to the HRS offer. So a certain inconsistency appears here, perhaps only temporal and dictated.