Maximising opportunities in tomorrow's travel distribution landscape
In the first article on the report “Travel Distribution – The end of the world as we know it” by London School of Economics, we explored the disruptive factors most likely to impact the travel industry in the years to come. These disruptive factors are led by the consumer expectations and the technology developments such as mobile, virtual and augmented reality – not to mention the use of big data to create a more personalised experience. The second article focused on the changes we are most likely to see as a consequence – further emergence of new service concepts, experiments with business models and a growing diversification in distribution.
But what is the impact on travel distribution landscape? How are we going to deal with the changes? Is the industry ready? How are we going to maximise opportunities?
There seem to be little debate across the industry about the importance of the consumer and the need for a deeper consumer understanding. The technologies that will shape the future of travel also seem very well known. However, the size and speed of this consumer revolution, as well as the potential power it places in the hands of innovative companies is underestimated by many players.
Collaboration is key
Taking on the future of travel merely by the means of contractual relationships and bilateral partnerships is probably not going be the most sustainable model. Instead, travel distribution players will have to form broad collaborations and cross-industry alliances in order to properly to succeed in the consumer driven market. Shared, strategic innovations and a culture of experimentation will be needed to grasp the opportunities fully. This collaboration needs to include both the shared market economies and the new tech giant gatekeepers as they continue to grow in size and power.
The importance of harnessing technology is beyond dispute. The travel distribution industry has more than anything become a technology industry – and will continue this development at a higher rate than ever in the coming years.
And whereas technology today is relatively cheap, allowing more or less anyone to be able to nibble at a corner of the bigger pie, computing power is not. And that processing capability is a crucial asset for leveraging big data in creating valuable customer experiences. However, smaller players will be able to take advantage of new market opportunities with low entry barriers, and there is a need for a business strategy approach that recognise the value creation of different technologies across the industry.
The bigger gets bigger
Consolidation and acquisitions has been a pronounced trend in the industry for a while, and there are no signs of this pattern changing in the coming years – quite the opposite.
There are also many takes on which models that will “win” the distribution battle, indirect or direct, classic retailing or metasearch, traffic acquisition or conversion. It is not unlikely that all of this will merge, and we will see the rise of giant global meta-OTA hybrids – leaving the choice of booking through the OTA itself or directly with the supplier as well as the level of packaging is left to the consumer. Through this consolidation, the giants are gaining influence throughout the distribution chain.
The path into the future of travel distribution is paved with both challenges and opportunities. The only certain thing is that the consumer is king. Whether that consumer revolution is perceived as a threat or an opportunity may well determine the winners and losers of the future.
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