Online travel agencies (OTAs) have always focused on meeting traveller needs through air travel. However the consolidation of the European rail network and rail's better environmental credentials, coupled with its convenience and cost, means rail is now challenging air travel's dominance.
NB: This is a viewpoint by Madhavan Kasthuri, online technology director for Sabre Travel Network.
This offers an opportunity for travel companies who might otherwise see their profitability decline due to a growing shortfall in air travel.
Rail offers travellers a compelling alternative to air travel; it is viable for most business journeys, cost-effective, and often preferred for journeys up to four hours and distances of up to 800km.
So how can OTAs take advantage of the rise of rail? As highlighted in a recent study by Phocuswright, 20% of consumers indicated that OTAs are a typical booking method for air, but only 8% for rail.
Phocuswright goes on to say that by 2020, an estimated 44% of rail bookings will be online, if operators make the most of distribution channels such as OTAs.
As Christoph Klenner, Secretary General of the European Technology & Travel Services Association points out, the European Commission is already increasing pressure on rail operators with a mandate to make their data available – in essence, to embrace online and indirect bookings.
In turn these operators are looking at how indirect booking can grow their business and steal market share from the airlines. The future will see more content and rail availability via GDSs, and successful agencies will be those who jump in early.
In fact, some of the newer OTAs are already geared-up to offer rail travel – they’ve decided that first-mover advantage is the best growth strategy as rail travel increases. Competition also comes from travellers themselves, who book directly if rail travel isn’t offered through their chosen agency.
The result? Agencies are not only missing out on potential revenue but also failing to provide the added value of a complete door to door service that many customers now expect.
Ian Cairns, UK sales director for thetrainline.com said:
“Around 70% of rail bookings are currently made at the station. Offering pre-booking could be a huge growth opportunity for online channels.”
Rail travel is growing in popularity for a number of reasons. For a start, it's more comfortable than air with greater legroom and space to work. The process is usually smoother with no lengthy check-in and boarding queues, less baggage headaches and fewer delays.
For longer haul journeys, rail can also be offered as part of the package, so agencies can truly offer a door-to-door service, further boosting its appeal to travellers.
Offering rail as part of their portfolio adds value to an agency’s service, and enables them to better meet customers’ growing expectations for a smoother travel experience. In a crowded and fierce marketplace this can be a key differentiator from the competition.
The size of the opportunity cannot be underestimated. Europe's rail market currently stands at Euro 31 billion, twice the size of low-cost air carriers. So, on the one hand, technology providers are creating the solutions to integrate rail seamlessly into the booking process. On the other hand, consumer technologies such as tablets and smartphones are enabling travellers to book and pay with ease.
Phocuswright also highlights that mobile will account for around 8% of total gross rail bookings this year. As mobile web penetration continues to increase, customers will increasingly expect seamless end to end booking capabilities for both long and short haul rail journeys. OTAs need to ensure they act quickly when adopting rail into their offerings to maintain their competitiveness in the market.
The combination of all these trends makes rail a real opportunity - one amplifies the other. As a result, OTAs should be embracing rail as an attractive revenue stream that can differentiate their service – the timing is right for their business and their travellers.
NB: This is a viewpoint by Madhavan Kasthuri, Online Technology Director, Sabre Travel Network. It appears here as part of Tnooz's sponsored content initiative.
NB2:Click here to access Sabre's "It's time rail booking got smarter" report.