Amadeus has pinpointed four areas where it sees the most change in the travel industry and travel distribution in the next decade.
A report put together, for Amadeus, by the London School of Economics and Political Science, talks in detail about the four areas chosen after studying current "disruptive factors" including consumer behaviour, mobile, big data and artificial intelligence, regulation and travel risk.
The four areas identified in the "Travel distribution - The end of the world as we know it?" study are:
- Complexity and innovation in air travel distribution
- A revolution of sharing economy services in hotel and car hire
- Innovation and hybridisation in travel retail
- The rise of the gatekeepers in traffic acquisition - i.e. Google, Facebook etc
They're not rocket science with much of the above already happening across digital travel distribution.
No travel technology conference is complete without the threat of Google conversation.
And, the hotel industry is already reacting to the home stay trend with some larger players even investing in the area.
The report goes on to look at the different 'pathways' each area identified might take.
With airline distribution, for example, pathway one is all about the limits airlines will face in pursuing their direct sell strategies. A much more positive outlook however is pathway two, where airlines, IT companies, global distribution specialists and other aggregators partner to move things on.
Then, with travel retail, pathway one talks about meeting customer expectations and improving the experience while pathway two highlights the rise of "giant meta OTA companies".
Again, not rocket science but underpinning all of this, and with frequent mentions throughout the study, is the need for collaboration with "more shared innovation" listed as one of six areas to focus on to meet the challenges.
When it comes to collaboration it feels like the industry has been here before but says Holger Taubmann, Amadeus senior vice president for global distribution, while there are many forward thinking companies out there, "no one can win this without collaboration."
"It's about an open mindset between what is happening now and what has to happen in the future. Our mindset at Amadeus about where we put resources is changing. It has been about connectivity, business processes and efficiency, now it's around consumer preferences."
There also has to be an appetite for change, which again the industry has been accused of being slow to accept. Taubmann says it's about airlines understand their business model.
"If you have a business model which is flawed you are not going to make it change by putting technology on top. Putting bags and seats online doesn't make you a better airline."
Quoted in the report is Ryanair marketing chief Kenny Jacobs who sums it up:
“Everyone looks at their part of the industry from their own point of view and doesn’t necessarily look at the consumer. The retail business is much more consumer orientated and has been for 25 years. The travel industry could learn a lot from retail in terms of opening up and what’s the best solution for consumers.”
The study also portrays a sense that many in the industry are under-estimating the affect of changing consumer behaviour and other "disruptive factors."
Dr. Graham Floater, EGC director at LSE and one of the authors of the report, says interviews with various industry executives show that many aren't getting the "speed and scale of the consumer revolution" that's going to impact travel.
For the purpose of the study, LSE also quizzed travel retailers and airlines on the importance of different technologies in disrupting travel distribution (see charts below).
The retailers highlighted mobile apps, mobile messaging and bots and websites as the top two followed by websites and social networks.
The airlines, meanwhile, put mobile messaging and bots at the top in terms of importance followed by mobile apps, social networks and then, big data.
And, while global distribution systems came somewhere in the middle for travel retailers, they were demoted to the bottom by the airlines surveyed after blogs, email and virtual reality. Perhaps this highlights the ongoing conversation between airlines and the distribution giants around fees, value and the need for new ways for carriers to retail their products and services.
Travel retailers view:
Airlines view:
You can download the report, here.