Technology

Guest post: Travel tech developers are in an arms race

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Guest post: Travel tech developers are in an arms race

Atcore’s Dave Cruickshank wrote for the 2017 Travolution Innovation Report and says the arms race winners will be those that can provide the platforms that best fulfil operators’ sales and operational needs.

Today’s travel industry is witnessing a technology arms race, with firms innovating to optimise sales on the one hand and striving to improve operational efficiencies on the other.

The technology developers which can provide solutions, both elegantly and efficiently, are going to be the people winning the war.

It is great to see that, as this report highlights, the UK travel sector continues to be in good shape, with average revenue growth significantly outpacing GDP growth.

Travel agency, tour operator and other reservation services revenues grew 8.4% a year (from 2011-16) as against GDP growth of 2.1%.

This growth is reflected in the industry’s proactive approach to leveraging the benefits of technology, with travel IT spend increasing an average of 7.4% per annum over the last five years.

We often speak to senior travel execs who view technology as either a blocker or an enabler of their business strategies. We tell them that there is only so far a business can carry itself with workarounds on legacy platforms.

A strong, modern, fit-for-purpose technology platform is critical to achieving the sales and growth that today’s travel providers need.

Typically, travel companies have relatively high revenues and low profit margins compared to other industries, so the benefits of innovation can be huge and are often crucial in the race to stay ahead of the competition.

In the age of the ‘unreasonable consumer’, technology is the critical enabler for a consumer who expects speed, accuracy and total control when booking travel.

Consumers have a wide range of travel companies to choose from when making their booking. This, combined with a short attention span, puts increasing pressure on the performance of every touchpoint.

Consumer challenge

Our own research has revealed that less than 50% of the booking sites used most recently by holidaymakers satisfied any of their key importance factors like best price, ease of use, best selection and speed.

The challenge to provide the right booking experience at the right time with the right information delivered simply, quickly and accurately is viewed as daunting by many, perhaps too daunting to contemplate.

At Atcore we embrace this challenge to help our partners differentiate themselves and make the best commercial gains.

The main areas we are seeing businesses invest in to create a clear competitive advantage are in areas of yield management; search performance (quicker, cheaper, more accurate); third-party supplier connectivity (increasing product range); ancillaries; and leveraging data (CRM, pricing, product creation).

Operationally, efficiencies are also an important area to focus on when creating a competitive advantage.

Gone are the days when businesses had to tolerate loading the same data multiple times across hosts of disparate systems, changing prices in anything less than real time or disappointing customers with price inaccuracies or lack of availability. That was like trying to win the 24 hour Le Mans race with a 30-year-old car!

Today, agility is king. Being able to react quickly to market conditions, and serve the consumer in whichever way they choose to interact with you, has never been more important.

If you are struggling to adapt to mobile or support e-commerce, you’re probably, almost certainly, being held back by poor technology.

Mobile is undoubtedly an invaluable channel set only to grow in importance, but it is only one of many channels. We design our platforms with flexible API structures to support any channel and any business model.

Looking forward, we forecast upward pressure on hardware costs, which traditionally has an uneven spend profile, driven by investment and/or replacement cycles.

We are seeing several hardware vendors, cloud-hosting and SaaS vendors who are increasing prices, citing Brexit and the weakening of the pound US dollar exchange rate as the reason.

Data regulation

Significant new investment will be required across the board over the next 12-18 months if the industry is to meet the requirements of the new EU General Data Protection Regulation (GDPR).

Protecting customers’ personally identifiable information (PII) is vital, but it is easy to underestimate the measures needed to comply, and travel businesses need to be vigilant on this issue.

Longer term, we are going to see a massive shift in how consumers access information, whether it be news, entertainment, search or more.

We believe that the screen will be as anachronistic in 30 years’ time as the horse and carriage is today. How people will search for their travel choices is going to significantly change.

Semantic search – whether voice or typed – is only going to grow in sophistication. Information may be projected directly onto our retinas; voice recognition may become critical.

It is a cliché that the only constant is change, but this has never been so true.

What is of paramount importance is that companies embrace innovation and technological development.

At Atcore, our in-house research and development team (which we call ‘skunkworks’) is continually creating new iterations of our technology and innovating new solutions to ensure we meet the demands of a rapidly changing online world.

As a pure-play travel technology company, if we could give one piece of advice to the industry, it would not be about technology: it would be to keep the focus firmly on the customer.

If you fall into the trap of finding a home for a new technology for technology’s sake, or of structuring your business around legacy processes, you will be setting up difficulties for the future.

If, however, you are constantly challenging yourself to learn and understand your customer’s evolving needs, you will make technology investments in the right places.

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