Dear travel businesses, get your differentiation spot-on first, then think about the technology

NB: This is a guest article by Mark Bradbury, joint-CEO at RWA.

The prophets of doom have spoken: "Dozens of travel firms on the brink of collapse."

Such predictions paint a stark contrast between travel firms who are seeing sales dramatically decline and those who are seeing significant sales increases.

The proposition is that the former have "outdated business models" and have failed to adapt to "the way we use technology, delivery methods and trading hours", whilst the latter are adapting and show "increased profitability and sales".

Here in the UK, travel firms are reporting a strong start to 2013, so how can tour operators (the market to which provide technology, for example) ensure they are in good, rather bad shape?

During a conversation at the Travel Technology Europe event this week, I was reminded of a message I have been giving regularly for many years, it's just all that appears to have changed recently is the impact and swiftness with which getting this wrong takes effect!

So, here are my three key points:

1. It’s about your value-add, not the technology

You might be surprised that the CEO of a travel technology company is saying this, but it is a fact. There is a saying about putting lipstick on a pig and I would suggest that acquiring the best technology money can buy will not help you if the fundamentals of your business are wrong.

You need to regularly ask yourself: "Why should people buy holidays from us?" If your answer is simply "because we are the cheapest", then I would be concerned.

Furthermore:

Can you continue to compete on price alone?
What prevents the likes of Expedia or other online travel agencies offering what you are offering at the same or a cheaper price?
What is your differentiated "value add"?

This can take many forms. It may be the products you sell (which cannot easily be sourced), the expertise you have in the destinations or product types (that can’t be easily replicated), a highly respected brand developed over many years, or indeed the ability to sell to a membership group that others cannot easily reach.

You need to be clear on what differentiates you and where you add value and then that needs to be clearly communicated to your customers.

2. Have the right business processes tailored to your specific business needs

If your business is selling lots of lower margin holidays, then you need to ensure that your costs for selling each one are as low as you can get them.

You cannot afford to have expensive human beings having to "touch" each booking in order to take it, manage it and fulfil it.

You need to be able to take bookings online and confirm these with NO human intervention and to automate as much of your supplier reporting and customer fulfilment as possible.

However, if you are offering higher value (and margin) products where part of your value add is your product expertise and client advice, then you will want to have business processes that maximise your staff’s ability to deliver these (at the appropriate point in the sales cycle) to your potential customer.

Full end-to-end automation is not only less critical but also possibly detrimental!

Don’t fall into the trap of simply continuing to do things the way you have always done them though! As the article says, you need to be ready to adapt as the world around us (consumer habits, technology etc.) rapidly changes.

One of the wins in replacing a legacy system with any new system comes from the opportunity that the project provides to examine existing business processes and look how they need to be performed in the future.

The worst thing you can do is simply look to model your existing business in a new system!

3. NOW choose the right technology

Ok, here’s the technology point. Once you are clear on your value add and differentiation and have an understanding of how you need to work operationally, you then need to find the right technology to SUPPORT this.

Technology is rarely the driver here – unless you are a major OTA! It is an enabler.

Get it wrong and it will hinder, or even worse. Get it right and it will support your business model, help you to leverage your ‘value adds’ and help provide a vehicle for sustained business growth.

Having a clear understanding of your real requirements will significantly help you in the tricky process of selecting the right technology and technology partner. If you have a clear focus on WHAT you need and WHY you need it that helps you make trade-offs about things that are necessary vs nice to have.

And, speaking as a technology supplier, discussions with travel companies that know what they want and why and have clarity on this are much better than discussions over vague system requirements.

We have many years of experience working with tour operators and travel wholesalers around the world, but our job isn’t to tell you how to run your business – it is to enable you to do it.

So, there you have it – simples (as a furry animal would say).

But as the evidence shows from the large number of companies who are struggling, it is easier to say than to do – or perhaps it is that inherent human instinct to always keep on doing what we have always done in the hope that things will get better!

In closing I am reminded of the saying: "There are four kinds of people."