Amadeus VP cautions travel search ‘is exploding’ while fundamentals remain

Amadeus VP cautions travel search ‘is exploding’ while fundamentals remain

The travel industry has a tendency to “generalise too much” about changes “at the perimeter” when “the fundamentals of travel don’t change”.

Svend Leirvaag, Amadeus’s vicepresident of industry affairs, told the ITM Conference: “We still travel physically. The changes are in how we search, how we consume, the things around how we move. The fundamentals don’t change.

“Buyers want a choice and reassurance they get value for money. Suppliers want to sell without competition. The transparency required by thebuyer side is in conflict with the supplier side. If you’re a buyer, you want an RFP [request for a proposal]. The incumbent [supplier] never wants an RFP.”

Leirvaag added: “Travel search is exploding. The look-to-book ratio is 1,000 to one. A few years ago it was 10 to one. [But] direct sales are becoming re-intermediated – 70% of traffic comes through intermediaries.

“What you thought were direct sales are, in fact, indirect sales and the cost of sale in this channel is growing. With some OTAs, airlines pay $88 per booking.”

He said: “At the heart of the value chain, I don’t see massive change, I see evolution. At the perimeter there is massive change.” However, he added: “Different parts of the value chain have to collaborate in ways we’ve not seen before.”

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