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The Marketplace: Internet Levels Playing Field Among Rival Tour Operators
September 27, 2006

The Internet has shaken up the travel industry more than most and will help more Canadians than ever before take a sunshine vacation at bargain prices this winter.

It’s now possible to spend a week in the Caribbean sun – with direct flight from Ottawa, a nice hotel on the beach, and all meals – for less than $1,500 per person, all taxes and fees included.

Partly we have to thank Hugh Boyle, the Scottish-born, Ottawa-based entrepreneur, who started his own travel company – Go Travel Direct – and his own airline – Zoom – to offer reasonably-priced vacations as a break from our bitterly-cold winters.

But Mr. Boyle readily acknowledges that the Internet is the key to a revolution that has taken place in the way consumers choose and book their vacations. “We have all become our own travel agents, ” he says.

The Internet makes it possible for most people to hunt for the best bargains and go comparison-shopping in a way that few could do before without the assistance of a diligent and expert travel agent.

Consumers have been further helped by a recent rise in the value of the Canadian dollar against the U.S. dollar, the currency in which most vacations are initially priced in the Caribbean, Mexico and, of course, the United States.

Mr. Boyle is controversial in the Canadian travel industry for offering cut-price vacations and for selling directly to the public, rather than through travel agents.

He has complained for several years that some of his largest competitors put pressure on hotels in the Caribbean and Mexico, urging these hotels not to do business with Go Travel Direct. Now, the federal government’s Competition Bureau is investigating whether this violates the law against price-fixing and stifling competition.

Maureen McGrath, a spokeswoman for the Competition Bureau in Ottawa, saidl: “The bureau is investigating alleged anti-competitive practices by certain companies in the tour operators industry in Canada. Search warrants were obtained from the Superior Court of Quebec pursuant to the provisions of the Competition Act. There is no conclusion of wrongdoing at this time, and no charges have been laid. All evidence will be analysed and we will refer the case to the Attorney General if appropriate.”

It can take years for the Competition Bureau to build a case, when it finds evidence of wrongdoing. But, says Mr. Boyle, “From now on, I think my competitors will think twice before doing what they have been doing.” Already, he says, some hotels are doing business with him that previously refused to deal with Go Travel Direct.

Mr. Boyle also notes that other package-tour operators, besides Go Travel Direct, are now selling directly to the public via the Internet. Previously, he says, these tour operators sold only through travel agents.

“Canada’s leading tour operators, such as Signature Vacations and Nolitours, whose websites were once only research tools, are now encouraging their own customers to bypass travel agents,” Go Travel Direct said in a recent news release.

Mr. Boyle claims Go Travel Direct can undercut competitors by as much as 25 per cent in prices of its vacation packages. But it’s difficult to test such a claim, since tour packages offered by competing companies are rarely identical. For one thing, Go Travel Direct must find hotels that will deal with the company.

For another thing, operators of package tours may offer discounts to some customers, or some travel agents. And travel agents can, of course, elect to lower their markup on any package they sell.

Inder Handa, owner of Handa Travel, which has several retail stores in Ottawa, says he offers discounts to customers who book package tours over the Internet on the Handa Travel website.

As an example, Signature Vacations recently offered on its website a one-week all-inclusive package to the Mexican resort of Cancun in January 2007 for $1,532, all taxes and fees included. The Handa website price for the same Signature Vacations package at the same hotel was $1,435 – a savings of $97.

Go Travel Direct did not offer the same hotel, but had a similar package to another hotel in Cancun that week for $1,269, all taxes and fees included. That was $166 lower than Handa’s price, but I don’t know which was the better deal, since I have not stayed in either hotel.

One thing is crystal clear: The more time consumers spend in research on the Internet, the better chance they have of finding a real bargain vacation this winter.

By Michael Prentice

Source: Ottawa Business Journal

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