Travelers hope to be respected as the individuals they are. But too often, their booking experiences are homogeneous and impersonal — and so are their flights and hotel stays.
One explanation is that travel is an interdependent industry that is only partly connected. Each travel provider only has limited visibility into any traveler's profile, and thus limited ability to personalize the offers and experience.
How much of the friction is due to technological issues? How much to regulation? How much to commercial narrow-mindedness?
These were the questions discussed at last week's Travelport Customer Conference in Miami. A panel of experts touched on everything from surcharges for indirect channel bookings in flights and hotels to the issues posed by APIs from industry giants like Google.
Participants included Oral Muir, vp, global distribution & cross-channel strategy at Marriott International; Suzanne Neufang, vp, Americas and managing director in North America for HRS; Julie Kyse, vp, transport partner services, Americas and EMEA, for Expedia; Matt Cameron, COO of Christopherson Business Travel; and Chris Engle, vp, Americas, airline commerce at Travelport.
Jason Nash, GVP global marketing & product incubation at Travelport, moderated the talk, which has been excerpted here for brevity.
Nash: How do we start to deliver a joined up, seamless customer experience in the travel industry?... We hear that about a third of all bookings are going through the OTA model. How is that changing your business?
Kyse: If you asked me that question five years ago, I would have said it's actually a very tough kind of antagonistic relationship between airlines and OTAs.
Yet as we've evolved our technology, as we've made more and more investments in air towards de-commoditization, more and more of the airlines are looking at us as strategic partners who can help them enhance their direct experience and boost their audience.
Muir: I guess for us at Marriott, it's “coopetition”. The tack that Marriott has taken over the years has been that we are okay with the customer choosing the channel that they want to use to book.
But we want to make sure the consumer also understands that there are different costs and different benefits based on their choice. Have choice certainly, but understand the full picture….
Over time we've said, we are fine with OTAs being fat and happy as long as you bring us business that we need, and don't expect us to pay for business that we don't want, or become a toll booth standing in front of the customer.
If all you’re doing is giving the customer a ride to our front door and asking us to pay for the ride, that’s not as interesting to us anymore….
The analogy I keep using is that, at some point, if you get invited to a lot of parties and you're always asked to bring the food and drinks, and every time you bring the food and drinks, you're the only one bringing the food and drinks and paying, at some point you stop wanting to go to those parties….
The marketplace has gotten the message…. We’ve really seen how companies that deliver a great experience to the consumer via a risk-taking, and capital-intensive investment in innovation and technology, have done really well….
A lot of companies that didn't quite do that in the OTA space and other spaces are not around anymore. Darwinian rules actually work.
Neufang: In Germany, HRS has a consumer OTA, and our OTA activity keeps informing the other B2B pieces of our business…. The visibility and the transparency that OTAs bring in the pricing has helped, in a way, to open up the transparency of pricing and the pieces in the corporate marketpalce.
Engle: Among Travelport’s airline clients in the Americas, the vast majority are really focused on the idea that their dot com platforms serve very specific purposes and audiences.
They tend to look for OTA partners that provide real strategic value in extending their reach, extending their brand, and facilitating their ability to sell products that bring incremental revenue….
Cameron: We're a little TMC. We've grown from about 20 percent to 30 percent online over the last four years....We generally provide a blended solution....
Nash: At the end of the day, travel agents are the glue that are often connecting up what is, in some ways, quite a fragmented set of services, linked together with people…. What are the challenges you see in making a frictionless experience a reality for the customer?
Cameron: We call them awkward analog gaps in this digital world, and there are still a lot of them. … API connectivity among all these different platforms is needed.... We, as a small player, try to close some of those analog gaps by building a robust API to talk to other systems.
We're also building smarter itinerary documents, with the idea of having some digital trip actions —more things that can be launched right from that document with just a click or touch.
Nash: Julie, in the OTA world, is it all seamless and joined up because you're digital?
Kyse: No. I would say that the big processes certainly are, yes.... But there are still opportunities there.
We used to be a little bit precious about not sharing our customers' data with our airline partners, but we've evolved on that. Because we realize that if we don't share the data and our customers get disrupted by operational considerations, for example, then they're going to be stuck.
We're working more cooperatively with the airlines on that. It's not as much of a two-way of a street as I'd like it to be. I'd love for the airlines to help close the loop with us when things do go wrong so that we can help them with the customer recovery as well….
Nash: Suzanne, how about with you…?
Neufang: The most friction happens in the B2B space when there are so many middlemen that data gets lost.
For example, take when a sourced negotiated rate at a Marriott is not available. There's almost no data trail to see what was available that was sourced and agreed to at the time that the shopping happened.
Did the hotel not have availability, which is a bona fide reason, or was it just blacked out?
There is so much confusion for a corporate buyer. It will be a few years ahead of us to uncover all of those ways to make this industry on the corporate side really frictionless, from an end-to-end experience.
Someday a corporate customer will be able to know that they got what they paid for, what they negotiated, and that it matched the expectation of the actual user there….
It's not just what the traveler thinks at the end. It's also what the buyer thinks, too.
Engle: What you remind me of is this broader question, who owns the customer, right? We talk a lot about who owns the customer, but you could also ask, who is the traveler on a particular day ….
Muir: There's also the consumer behavior in-trip, or when they're on-trip.
Classic example: The customer shows up at the front desk and says, "You know, I booked this great rate on Expedia or someplace else, or HRS, but you know, that was five days ago. Can you check to see if availability has changed and my corporate negotiated rate is now available?"
The front desk says, as in hospitality you usually do, "Sure." Let's figure out how to make this customer happy. It turns out the rate is available. The front desk does what a front desk does which is, again, try to make the customer happy.
Now what happens? The travel agency that might have booked that rate — and it was commissionable initially — all of a sudden the customer has asked to cancel that transaction and book into a corporate negotiated rate.
That travel agency has now a problem with the commission, it's changed....
There are a lot of folks in this audience that might be unhappy with some of those decisions, and so the goal of the hotelier to make the customer happy has implications for the rest of the value chain.
We need a conversation about data. When we look at that in our system, we actually know exactly what's happened.
The question is, how do we share that intelligence with the rest of the world and say, "Guys, this traveler has actually made a decision that's different now." In terms of, you should look differently at your forecasted expectation for revenue....
Kyse: I would say that the vast majority of airlines that I work with have a common goal with us of reducing the friction….
Not all of them. Some of them are looking at throwing up roadblocks along the way of how they can commercialize or monetize certain elements of the process, and that's really detrimental to the customer and will ultimately create more friction.
Cameron: These days procurement owns travel. So when we're selling our services we're selling to hardcore procurement groups that are getting more sophisticated, and so a lot of the discussion goes on about what we can do to support the travelers.
But we've taken a perspective that we still want to support that, we call it the 2 percent, those that buy our services, and give them tools that help them manage it....
Nash: We're starting to see the beginnings of some of the mismatch in continuity when we have these different hand-offs happening and different people touching the customer at different times in that, not only in the buying cycle, but also in the lifecycle of the journey, which is, in effect,from the moment they leave their front door to the moment they get back.
Is this a battle that we, the incumbent travel providers, can win? Or is this something that the big tech companies are just going to kind of railroad over us and just take this space for themselves?
If we think about the likes of the Siris and the Google Nows that are supposedly going to be artificially intelligently aware in the coming years, is this a battle that we can win, or is this a battle that we've already lost?
Muir: First of all, we always joke about Concur being the eight-hundred pound gorilla. Google is freaking King Kong, in comparison. You don't stand in front of him and think you're going to bend him to your will somehow.
Google is great at democratizing information, and it is willing to share some of that information with others, so I think we need to see what they build and look for opportunities.
We have several integrations that use Google APIs. They'll build more, and we'll use more.
Neufang: Part of your question, Jason, has to do with the platforms that some of the tech companies are creating… A good platform brings things together in a way that puts data in a place where people can understand and get insights. It’s the insights that we're often missing, when we're looking too far down or too deep in our own verticals.
In the last three years, I've only been on a single flight where the flight attendant welcoming everybody said how many, for example, how many Diamond Medallion members were on the flight. It was so startling. They said there are 10 on the flight. We'd like to thank you for your business.
I thought, "That has never happened before. Why don't they do that routinely?” It's one of those things where you are recognizing someone. It was done very privately, and high-value customers would sit there and say, "Wow. They recognized me."
It's sometimes that type of recognition that goes a long way to satisfying high-value customers. I think you're missing those opportunities when you’re focused instead on control of the customer.
Nash: What are the things that you're doing with your data to try and better manage that customer relationship?
Muir: The first thing is we all have lots of data… The question really that faces us now is how do you surface that intelligence and that data in a way that it can be used. How do systems talk with each other? How is the data made actionable to front-line staff?
Then how do you then leverage that data with our partners ,whether it's Expedia, HRS, Google, or others, to then make sure that there is relevance across those touch points?
Probably the biggest challenge we all face, and we have to figure out how to cooperate to address this, is that the consumers expectations are being set by Uber and by other channel and platform-driven consumer-facing businesses.
It doesn't matter what legacy problems we've had for the last 30 years.
At some point, we have to say, "We have to move forward and solve the next generation of issues and challenges the way the consumer sees them today based on who is setting their expectation."
We need a point-of-sale conversation. It would transformational for the hotel business globally to start charging the customer at the point of sale. We don't do that consistently.
It would change how we interact and can respond to some of the challenges we face if indeed we did that.
If you look at Uber, what they've done is they've addressed that issue for the ground transport industry and other spaces by putting it all on a platform so that the customer has one point of sale….
What matters to the customer is us solving discrete challenges by surfacing information and leveraging the genius in our company and the genius in our partners.
Kyse: That's absolutely right. It's really about customer-driven data….We have a hundred and fifty versions of the site up at any given point and time. We test-and-learn relentessly. That's really been the secret to our success in conversions.
Neufang: When a business traveler is booking their hotel, you learn a lot about them. That's the data about their shopping patterns or that they've gone to Paris four times in the last quarter and that all of those trips have been three days long and that they've always stayed in the same hotel.
It makes a lot of sense to serve up that property first in search to the customer on their next search query, and we can do that.
We've decided to do that through an API that we give to partners who want to use it, who want to take that intelligence and save time because most of a business traveler's job is not to be shopping for travel. We shouldn’t give travelers or their executive assistants 20,000 choices. They want the right five.
Nash: Right, so it comes down to being able to highly personalize the offer and, if you like, use that transactional history to help inform future buying choice. Obviously the new platforms that we're talking about here are keeping all of that transactional history and using that to inform the decision-making.
In a world with data protection issues, if such a platform were to exist for us in the travel ecosystem, do we see any particular challenges around those issues in terms of making that work, or how would we potentially get that addressed?
Cameron: We're using Domo. It's the new business cloud, and what they've done in essence is put a wrapper around any data source, and then they have the front end that enables you to manage that and drive actionable intelligence out of that that you can deliver on demand in real-time.
We're exploring how to use that to deliver more value as a TMC. Again, it's sort of the top-down approach. We're not doing this at the traveler level, but it's an important initiative around actionable intelligence.
Muir: There will be innovations that are probably analogous to what Apple has done with payment where you can actually now engage without ever seeing a credit card number and so on.
There will be ways of making the data protected so we can make decisions and actually drive something against someone's profile without ever really having the true intent or the true history of the person and what they've done in the past exposed.
Neufang: It's a lot like the new public librarian, right? The librarian wants to know what books you checked out, but has this duty not to disclose that to everybody.
Muir: That's right.
Nash: There’s a huge opportunity in the travel space to improve and make payment move from being what is often quite a painful part of the process today, right?….
Muir: We wish we could wave a magic wand and make an investment in one year through some project that we've created internally to solve all of the issues around payments, but we can't.
Then there's a different solve in North America versus the solve in China. Certainly Alipay is doing an amazing job at solving virtual payment in China that which makes it a lot easier.
As you go across the globe it's a patchwork of solutions. We're in 60 countries and reasonably soon we'll be in close to a 100. It's a pretty massive management challenge to handle all of the payment options involved.
Nash: A question from the audience: "Lufthansa sets a surcharge of $16 for indirect sales. Might that be extended into the hotel space.” What do we think about this surcharging?
Muir: I think the same thing I said earlier applies, which is that everyone in the ecosystem has to sing for their supper, and deliver value.
If you deliver value then I think it's going to be fine. Our argument continues to be that cost affects the consumer, cost affects the traveler and the corporations, and we have to ensure that.
The notion that somehow hotel companies and other suppliers will take money out of their pockets and pay more to distributors, that's crazy because we're all for profit companies.
I think there are a lot of efficiencies to be found, and luckily in the hospitality space we've maintained a really good balance of direct versus indirect transactions.
In our business the vast majority of our transactions have always been direct, and a lot of the things we do are about making sure that we maintain that balance. As long as we maintain that balance there's never any reason to do things that are absolutely insane in terms of disruption in the ecosystem.
However we do expect that we all work together to find efficiencies to make sure that that cost issue doesn't become a problem.
If it becomes a problem then certainly we'll have to do more, I guess, medieval things — like what has happened in the airline space — to address those costs issues.
Hopefully that doesn't become the case and folks don't become pigs at the trough and decide they want more value than they're actually delivering.
The view is as long as we're transparent then hopefully folks won't be able to charge rents higher than the value they're delivering and there won't be this question of do you pass it onto the customer or do you find another way to make that up.
Kyse: The thing is if you are in an open marketplace and you do something to artificially make yourselves more expensive, you are going to lose more often than not. You're going to lose share to your competitors.
Your loyalists will continue to purchase from you, and they'll probably go to your direct site, but the people who are brand agnostic which certainly is a large group, they will see in the marketplace that you are more expensive and that there could be better options for them.
At the end of the day I don't think it's any surprise to hear me say, coming from an OTA perspective, that I think that Lufthansa's move, that's a losing move in an open marketplace.
Engle: I take great inspiration, leading Travelport’s air commerce team for the Americas specifically, I take great inspiration just from looking at the arc of what is happening in the US and in Canada specifically….
What you've seen is the airlines have come back in a very powerful way in understanding that there are both cost sides to the equation and revenue sides to the equation, and that a really sophisticated company, and you've seen this in all of the big airlines and smaller airlines for that matter, that they understand that value is worth paying for.
The key for us as a platform is to bring incremental value as we enable airlines to reach out to the travelers that often matter the most to them. I remain really confident about the overall trend.
Neufang: A surcharge for hotels in the indirect channel would be like saying that Michael Kors saying it is only going to show up in their own stores on the street corners, but they're very much ingrained in department stores and that's where, I don't know what the percentage of shopping is.
I know nothing about retail economics, but there's a piece that also says to find business travelers you've got to use Christopherson Travel or you have to use Egencia or you have to use another travel management agency, and there's pieces to that that mean that they, to be compliant, give up that $16 in order to have the security and safety that is provided by that other ecosystem.
Muir: I think "have to" might be too strong.
Nash: Let's talk about what Nirvana might look like in this, let's call it, travel operating system that joins the world up. What kind of joined up experiences would you as a traveler now like to see a platform like this, if it existed? What would you like to see this do for you in terms of making this frictionless experience happen for you?
Take your company hat off for a moment. As a traveler, what are the things that you might have encountered where you thought, "Actually, if something like this did happen it could be a lot easier”?
Engle: I personally would love the travel companies that support me in my travels to know, somehow be able to anticipate when I'm super cheap weekend Chris and when I am highly demanding and a little crabby fancy Chris.
Kyse: For me it comes down to disruption management. I travel a lot, and usually it's fine. It goes very smoothly. It's fairly frictionless, but when it goes badly, it goes very, very badly. There are different pieces.
A lot of the US airlines do a great job of re-accommodating, using their apps, but it's not necessarily connected. If I'm using my Expedia app to track all my itineraries I would love for it to be in one place.
I would love to be able to have my boarding passes all together, so that that way if something does go wrong it can be a lot of smoother to recover.
Muir: Probably also along the spectrum of disruption, being able to anticipate more, and partner with other companies that are critical to that experience, so our air partners — when things go terrible wrong, "Gosh, don't use travel rules to try to preserve revenue instead of taking care of the traveler."
Because we get the guests in IROPs, they show up at the front desk and they're distressed. We have to first get them to calm down and then engage, because they arrive from the airport just ready to go to nuclear war.
It would really help us if our airline and other partners could make sure we can engage when the disruption happens, and to share information. Let's all cooperate to take care of the traveler.
Cameron: Too many hotels make me stop and wait in a line of people and fill out forms. I'm amazed at how many places I still have to sign three or four or five times….That is silly in 2016.
Muir: You should stay at Marriott.
Nash: My belief and this is my personal belief, not necessarily the company line, is that with the likes of the Ubers and the Airbnbs coming along, there is a need for the industry to be able to start to work on a joined up, frictionless, customer first approach to the way we work on things, and if that means that we're able to digitalize some of those fax-based, paper-based, constant re-entering of data elements, that there is some inherent value in that,.
Because it's taking away that extraordinarily manual time consuming element that actually doesn't really add value, doesn't really differentiate you as a company or an offering, and ultimately could, if you like, improve that and potentially help us to be more competitive against these thousand pound gorillas that are coming into the industry and potentially ...
Engle: There are a number of initiatives in the airline industry where airlines are attempting to take some of that friction out…. Not necessarily profile oriented. I'm just thinking more about the providing the enhanced ability to know your customer.
Muir: I'd say there are a lot of failed attempts in the industry to build the one machine, and we shouldn't be trying to do that anywhere anymore.
The best notion would be to build standards, clear standards we could all agree on, and whatever we build will leverage those standards and the ability to be in an environment where we can share information and tag it very easily across our different enterprises.
That would be a manageable effort, because you can chunk that down, and you can over time have all the systems be able to play nicely with each other.
Cameron: Great encryption, great permission-ing, and the ability to handle a couple of different personalities would all be important.
Neufang: Maybe to end on a high note, but I think the US travel industry does work a lot better than the US medical/healthcare industry, right? The profile piece and the information that you share, what a mess here. Maybe it's better in the UK. But in the US, the travel industry does seem more functional than the healthcare industry.
Analysis from Locomote: Fight or flight – the transformation of corporate travel management
Earlier: Concur talks about its next steps in travel expense dominance
NB: Disclosure – the author’s attendance at the event was supported by Travelport.