Secondary Markets for Travel: A Mixed Bag

Summary

The world is full of primary and secondary markets. Take the New York Stock Exchange. In the securities market, the primary market is the initial or subsequent public offering, in which companies float stock to be purchased by professional buyers or by the general public. The secondary market is the stock exchange where buyers and sellers complete transactions without the involvement of the company floating the stock. Many public-offering purchases are for long-term investments, where the buyer holds the stock while it increases in value. Other purchases are more short term; the buyer is a speculator who watches the stock and sells when market conditions are favorable.

In travel, there are a variety of products that lend themselves to a secondary-market approach, each with a unique set of characteristics. The challenge in travel is that inventory is perishable. When a sporting event, flight or hotel-room stay is over, no value is retained, which differs substantial from the stock exchange.

While it may seem that the concept of secondary travel markets is new and innovative, with several new startups in the hotel and air space, in reality, the practice – by a different name such as a “wholesale distributor” – has been around for years. This analysis takes a fresh look at today’s secondary markets, highlighting opportunities as well as dead ends.