Tuesday, October 15, 2019

Tools & Tech


Rethink travel distribution
November 2016 1636

We have heard this over and over again, that the bots are coming, that artificial intelligence and big data will make sense of everything that we offer in travel services and make them better. Let’s go beyond the surface and look at research conducted by London School of Economics (LSE) at the behest of Amadeus. Titled 'Travel distribution: the end of the world as we know it?' the research explains how technology will shape travel services industry.

Holger Taubmann, SVP Distribution, Amadeus, says: 'We commissioned the London School of Economics to take a dispassionate, academic and independent look at travel distribution in order to prompt industry debate and discussion about the future of our industry. This report makes a major contribution towards understanding how consumer expectations, new technologies and shifting market dynamics will shape the future of travel.'

It is important to understand this because everyone looks at their part of the industry from their own point of view and doesn’t necessarily look at the needs of the customer. The retail business has been able to evolve to the needs of the customer with a more focused approach across all experiential touchpoints.

There could be some lessons for the travel industry here. Here are the top learnings and recommendations for travel industry collaboration identified in LSE report:

Managing expectations: Consumer expectations will rapidly spill over from retail into travel distribution. Players in the travel distribution industry will need to respond with broad collaborations for aggregating, processing and harnessing the big data involved. Otherwise, the explosion of complexity and differentiation of services in the short term could translate into potential confusion for the consumer.

Seamless connections: The role of gatekeepers, the giant IT companies with major consumer interfaces, in travel distribution will continue to grow, notably through the use of virtual assistants, payment technologies and integration into social media.

Hybrids are here to stay: The size and power of ‘mega-meta-OTA’ hybrids (online travel agents with metasearch capabilities and global brands) are likely to continue growing. Consequently, their influence will penetrate deeper into the distribution chain, with the ability to negotiate better content and conditions, whilst still receiving commissions.

Travel and tech together: The travel distribution industry is rapidly becoming a technology industry. Business models will need a more strategic approach that recognises the value creation of different technologies across the industry.

Flexibility matters: To avoid consumer confusion and lost opportunities, industry distribution need to go beyond bilateral partnerships and contractual relationships. Distribution business models will need to evolve to encompass more shared innovation, a culture of experimentation and cross-industry alliances.

Borderless thinking: Sharing economy platforms will continue to create new markets and erode the market share of suppliers and industry players who intermediate. The industry will need to adapt to this changing market and carefully monitor the impact of competition rulings in different regions as regulators play catch-up.




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