Amadeus Rail Forum: The challenge posed by emerging markets, disruptors and lack of data scientists

by Martin Cowen in Vienna

Senior Amadeus executives are working out how markets such as Turkey and Mexico, disruptors such as Uber and a shortage of data scientists will impact its business over the short-to-medium term.

Holger Taubmann, senior VP distribution, told delegates at the Amadeus Rail Forum how businesses such as Uber, Hailo and car-sharing apps were “developing faster than we anticipated” and were already a long-term part of the travel ecosystem.

“They really are best in class for transport around the metropolitan areas,” he said.  One way in which these businesses are having an indirect disruptive influence is changing revenue models.

“No-one is making money on displaying travel related information such as door to door, however the money is made on the advertising, ” he warned.

“The money will be made by knowing where people are and by using that to sell specific location-based services via targeted advertising.”

Taubmann suggested that businesses still needed to be aware of search marketing expenses and see them as part of the cost of distribution.

“When airlines talk about the cost advantages of direct distribution, they neglect to mention that quite often they have paid for that customer to come direct.”

Amadeus is developing products which will help businesses manage their ad spend, with a focus on conversions and mobile.

Elsewhere, Taubmann noted that the importance of the BRICs economies was shifting. “China is closed to us from an IT and distribution perspective,” he warned, “and by 2017 [the Chinese state-owned airline IT business] Travelsky could be bigger than Amadeus, even though they will be a domestic GDS only.”

India, an intermediated travel technology market, he admitted, “has fallen to pieces because of low cost carriers. GDSs have lost a lot relevant content. Nevertheless it is one of the biggest Amadeus markets, but with a lot of challenges for Amadeus.”

However, Russia remains important, with Amadeus putting a lot of effort into getting Russian rail content into its TotalRail product.

He added that “it’s not just Russia, its Russia and Turkey. Turkish Airlines is our second biggest airline customers and by 2017 it will be as big as Delta and Southwest with around 120m passengers a year”.

Latin America is also a target for Amadeus. Brazil is still growing, albeit at a slower rate. “Mexico is important for us and growing fast,” he said.

“Due to NAFTA [North American Free Trade Agreement] the Mexican economy has developed really well with a lot of growth opportunities also for the travel market. Amadeus will be putting a lot more focus into Mexico”.

Elsewhere, Pascal Clement, Director of Amadeus’ recently-formed Travel Intelligence Unit, talked about the ways in which big data would change how the travel industry operates.

He started his presentation by saying that “the future is not about the data, it’s leveraging the data and travel companies need to put the right infrastructure in place.”

A vital part of that infrastructure is human capital. “Data scientists are key to the future,” he said. However, a lack of data scientists could be a problem.

He mentioned a McKinsey study which suggested that there is a shortage of up to 200,000 data scientists in the US alone.

“Schools and universities haven’t caught up yet,” he warned, “and catching up will take some time. It’s not easy to retrain internally.

“Amadeus has a deep knowledge about travel and some good developers, we have started to create a large team of data scientists but many more will be needed in the years to come.

“It’s easier to bring them in and teach them about travel than it is to teach our travel experts about analytics. But travel isn’t the only sector seeing this shortfall. We’re having to target senior people because they are so hard to find.”

He continued, “Our aim is to have travel intelligence teams (including data scientists and travel intelligence consultants) in at least 20 countries around the world. We already have teams in Frankfurt, Munich, Madrid, Nice, Boston, Miami, and soon will have in Singapore.”

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