Plug is Pulled on Direct Save Holidays

[J.O.]

http://www.travelind...plug?&Itemid=14

NO DIRECT

Why did Robbie pull the plug?

Jen Savedra

Robbie Goldberg has announced that plans to open Direct Save Holidays, his proposed straight-to-consumer Canadian tour operation will not proceed. Goldberg cited various reasons including industry consolidation, market-share driven pricing policies from the major operators, protracted negotiations with a number of the European controlled hotel chains, a lack of response from the Cuban tourism authorities, and the recent decline in value of the Canadian dollar. In pulling the plug now, Goldberg also is adhering to a self-imposed tactical deadline he set when the project began.

"We wish to thank the many hotels, the Mexican authorities and our air carrier partners that embraced and supported our marketing concept," said Goldberg.

"We regret having to make this decision, but financial prudence and the ever diminishing time frame drove this result."

Robbie Goldberg typically keeps his eye on the bottom line and has never been one to throw good money after bad. So, clearly he doesn't see this as becoming a viable proposition in the very near future, so he's shutting it down right now.

However, the question remains: Why?

Why is this not a viable proposition?

First, let's put aside any prejudices about selling direct. We are not discussing the principles or ethics of bypassing travel retailers – only the viability of the business model.

And the business model is viable. For numerous reasons, good and bad, the 30-something demographic he planned to target is perfect for the online direct concept.

If Goldberg's previous record is anything to go by, his product would be competitively priced, the lift was in place with Enerjet's Boeing 737-700s, and the destinations perhaps a little obvious - the Canadian holidaymakers' triumvirate - Cuba, the Dominican Republic and Mexico.

So what went wrong?

Well, possibly – probably - all the issues Goldberg alluded to, but two in particular stand out:

1. protracted negotiations with a number of the European controlled hotel chains

2. a lack of response from the Cuban tourism authorities

Add those up and you get one word - rooms.

Those "protracted negotiations" with European controlled hotel chains...interesting.

We're not suggesting for a minute that anybody dropped a word in anybody's ear, frankly there is really no need for anything quite that crude or potentially illegal. However, let's be realistic, when you're dealing with the global behemoths that comprise today's Canadian wholesale industry, it's not really in your best interests to piss them off.

And, why would Cuban authorities not be responsive to Goldberg?

Do they have enough Canadian business? All those rooms filled? Are they so busy preparing for, and confident of, the soon-to-be-burgeoning US holiday hoards that they don't worry about the Canadian market. And, oh yes, what about all those rooms Robbie Goldberg has filled for them over the years?

In any event, the major tour operators will not be sorry. They are bleating about market overcapacity, and can certainly live without Goldberg's operation that would have bypassed the retail middleman and directed its ad dollars at the consumer.

But overcapacity can only be, and is, created by the tour operators themselves as they jostle for share and supremacy.

And then of course there is that "direct" issue...

Come on guys, is there a major Canadian operator out there without its own healthy distribution system? And how is that, at least to some degree, not "going direct?"

Last Friday's story about Transat's planned Mexico operation, by Brent Jang in the Globe and Mail, said in its penultimate paragraph:

"This past winter's travel industry overcapacity and associated price discounting hurt Transat. Mr. Doerksen said WestJet, Air Canada, Sunwing Travel Group and Thomas Cook Canada Ltd.'s Sunquest will be battling it out for customers next winter, with the potential for a new entrant, Direct Save Holidays, under the leadership of travel industry veteran Robbie Goldberg."

Well...one down...

Meanwhile, Goldberg says he will continue his association with the travel business in general through his consulting company.

I wouldn't count him out yet.

[melcrothers]

When this was first announced, I stated on here that I was totally baffled by Robbie's plans and that I didn't think it would happen.

Glad he came to his senses.

He's better off doubling down on a pair of aces!