Prepare today - win tomorrow!
Ever wished you had a crystal ball to see what the future holds? Today, we live in such a fast changing, turbulent world that predicting the future is almost impossible. However, a new report by Amadeus, “Online Travel 2020 – Evolve, Expand or Expire", gives an insight as to what the future may bring to the travel industry. Two clues – like it or not, digital is here to stay; and travellers are looking for a one-stop shop that meets all their travel needs.
The report revolves around the question: “What should travel players be doing today to prepare for the different scenarios unfolding before us?” Four key trends (or scenarios) emerged from the research:
The rise of Mega Online Travel Retailers
Until recently, Online Travel Agencies (OTAs) and metasearch companies lived separate, but complementary lives, working together but competing for the same customers. Now, they are converging – and to a powerful effect. This marks a shift in business strategy and opens up new commercial opportunities – for example, traffic monetisation and online advertising - for OTAs which are very dependent on search engine marketing (SEM) and need to optimise their costs.
OTAs are exploring the advertising market and even buying their own marketing channels. Take Expedia’s acquisition of metasearch company Trivago as just one example. The OTAs are creating huge entities called Online Travel Retailers (OTRs) where customers can search, book and pay in one place. As the average traveller searches nearly 50 times online, makes 38 site visits and does not always have a particular destination in mind when he/she starts looking this gives OTAs the opportunity to take advertising business from competitors.
Introducing Digital Tour Operators
Traditional tour operators and OTAs are becoming Digital Tour Operators, providing digital and human interaction, combined with convenience and speed.Although a Digital Tour Operator has not yet appeared on the high street, the chances of this happening in the future are high, according to the report. It imagines a scenario where Digital Tour Operators will have a cool concept brick and mortar store (think Apple Stores) where customers will be attended by engaging, trained agents – a ‘Travel Mate’ – using the latest technology.
After the customer leaves the store, they will continue to engage with their ‘Travel Mate’ via an App while travelling – for example, follow their blog and, if they have a problem with a flight, they can contact the agent, or, the agent can proactively contact them offering an alternative if a flight is delayed or cancelled.
This new type of ‘Travel Mate’ will also be able to cross-sell at the destination, suggesting where to go or what to see, putting customers in direct contact with potential service providers at the destination.
The challenge for tour operators will be how they can stand out on all fronts – be visible on the high street, inspire on their website, be active and engaging in social media and sharp on their ads. Hence, they are upgrading their technology and changing their way of working.
The rise of more sophisticated Mobile Travel Retailers
By 2020, there will be around 6.1 billion smartphone subscriptions worldwide, according to TechCrunch.com. This means mobile-first design will be essential. OTAs and airlines are already rethinking their mobile strategy. One good example is Indian online travel company Cleartrip which already gets 53% of its traffic through mobile; 70% of its mobile customers use mobile devices only for their transactions.
Imagine a mobile travel retailer with an addictive App, accompanying a traveller throughout his/her journey. The retailer would be able to connect with the traveller from the moment the booking is made until he/she returns home and would inspire and service the traveller for the next trip. App users would likely stick to the same apps and be more loyal. OTAs would need to find alternative ways to advertise on mobile channels. By pushing relevant notifications at the right time in the traveller’s journey they could cross-sell and up-sell.
Mobile Travel Retailers would be characterised by having new ways of search and engagement to inspire customers – like voice recognition, sensors, fingerprints as well as leveraging on virtual reality etc. Chatbots would enable full booking flow, service and payment.
The new Travel Marketplace
A marketplace is a platform where suppliers connect with and sell directly to consumers. Amazon Prime is a good example of this, offering one-day delivery, unlimited films and TV shows, secure unlimited photo storage, early access to ‘Lightning Deals’, and more, all for a small monthly or annual fee.
It’s not hard to imagine the Travel Marketplace moving beyond travel search and booking into ‘at-destination’ services (restaurant, tours and activities) and upselling other travel services (rental equipment, insurance, etc.). Travellers will have a one-stop e-commerce platform where they can buy anything they want: the ultimate package.
There is however, a downside for suppliers. They risk losing their relationship with the customer because the Travel Marketplace will control the profile and the payment method. Suppliers who want access to customer profiles so that they can advertise, will find that they are deprived of that information. Whoever owns the Travel Marketplace will own the traveller for the entire journey.
"Many people are resistant to change. But change is inevitable and the unforeseen can, and often does, occur; we’re working in a quickly changing industry where disruptive business models are blurring the lines between players, and new emerging technologies are taking root.”