As the first issue of Travolution this year, and my first column in the magazine, it seems a good time to introduce myself, as well as share with you what I believe are the trends we will see materialising over the coming 12 months in our industry.
Having been in the travel industry for 18 years, working for a travel company first and then for a GDS before starting Dolphin Dynamics, I have witnessed the revolution of how travel is sold – from the days of retail shops and business done entirely over the phone, to the first CRS, then GDS, and more recently the advent of Internet and multi-channel distribution.
There is still a long way to go for the travel sector to fully exploit the changes that are continuing to take place in our economy as a result of technological innovations. Technology is changing the way we do business rather than creating radically different business models. Indeed, most of today’s business models are not necessarily new.
Talking of the technology sector, I think we will see a return to some of the basics in technology this year. After years of investing in the ‘cosmetic’ aspect of websites along with adding content, building brands and capturing customers at any cost, companies are now looking at their entire operation to try to put in place platforms that will provide services end-to-end profitably.
If the signs of a slowing economy for 2008 do materialise, many companies will be faced with having to improve their processing in order to increase profit margins, rather than going for growth, which won’t be there for the taking. Expect more projects to kick off that will aim to deliver efficiency to the operation of travel companies.
In the supplier sector, the current trend will continue with airlines, ironically, going back to business much as it was 15 years ago. Back then every carrier had its own tour operator, until almost all of them got out of that business in the mid-90s, when the mantra was to focus on the ‘core business’.
Now, again shown the way by some of the more innovative low-cost carriers, they are back in that space. This time as ‘virtual tour operators’, selling direct instead of via the trade. Modern technology enables airlines to push add-on products via their websites and to capture more of the dynamic packaging market by selling accommodation, transfers and car rental. Maybe in 2008 we are going to see other suppliers do the same thing – could Avis or Hertz start selling accommodation and flights on their websites?
And what about the good old travel consultant? Agents are back to focusing on customer service and knowledge; key areas of differentiation that have historically attracted time-pressed customers.
For most agents, selling online is a service they offer their customers, much like when they started to take bookings on the phone with a credit card – serving people who did not have the time to go to their shops. However, most agents have accepted that they have lost the opportunity to sell those simple products that have now become commodities, and must focus on those products where they can add value; areas where customer service is required and appreciated due to the complexity of the product.
This just shows that people’s needs and requirements do not change dramatically over time. Technology eventually changes, and with increased functionality it allows old business models to be revisited and implemented in a different, more efficient way.
With these considerations in mind, it is possible to predict the likely trends for these sectors of the market: travel companies needing to protect their revenues require a consolidated platform to facilitate providing such service at a lower cost; knowledge of travel products is now enhanced by knowledge of where to get the necessary information and the ability to use the GDS is substituted by the ability to use the Internet, among other sources, to find the right information for the customer.
Roberto da Re is president of Dolphin Dynamics