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”.

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 airline.com 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.”