Innovation Report: Shift to software solutions could be the final piece in the jigsaw

This year’s Travolution Innovation Report may mark 2016 as being a sea change year in the travel industry. With this year also marking the 10th anniversary of Travolution, it would be remiss not to look at the trajectory of innovation over the decade during which these annual reports have been produced.

Pictured: Simon Ferguson at the Travolution Awards

By Simon Ferguson, vice-president and managing director, northern Europe, Travelport

This year’s Travolution Innovation Report may mark 2016 as being a sea change year in the travel industry.

With this year also marking the 10th anniversary of Travolution, it would be remiss not to look at the trajectory of innovation over the decade during which these annual reports have been produced.

Many of the earlier Travolution reports indicated that our industry was focused on automation rather than innovation. Our legacy-intensive systems, combined with the fact that travel is essentially a service sector with product sector margins, meant travel firms simply automated multi-vendor people-intensive processes, often based on decades-old proprietary platforms.

The key findings of this year’s report look decidedly different. The big growth in software-related spend, combined, critically, with an increase in spend on IT staff, indicate something fundamental.

The software spend indicates a growth in support for mobile and this in turn indicates an emphasis on the whole-travel lifecycle as opposed to just the booking and pre-trip phases.

Expedia has noted that two thirds of the total cost of a trip (including excursions and meals etc) occur in destination. Travel brands have been notoriously bad at tapping into this, and the predominance of mobile has unlocked this potential, as well as opening huge opportunities in CRM, customer service, and revolutionising the potential for personalisation and ancillary sales.

Look at WeChat, the Chinese mobile-messaging service. It indicates the power of a truly integrated mobile experience, with flight booking, reviews, hotel room service – even in-room air conditioning – all controlled from one app.

WeChat has some 500 million subscribers, 70 million of them outside China. Travelport’s acquisition of Dublin-based Mobile Travel Technologies last year was made with this revolution in mind. Mobile is now much more than just app development, or mobile-enabling a website.

The growth in software spend also indicates a move away from the proprietary past towards flexible open-platforms. At Travelport, we have created a Travel Commerce platform, based on open-APIs, capable of integrating low-cost airlines, unbundled airline ancillary products, new forms of accommodation and ground transport service, which can be flexibly accessed depending on a travel brand’s business model.

The 10% growth in IT staff spend is similarly significant, as it indicates that growth in spend on software and IT services is not coming at the expense of staff.

With all the talk of driverless cars, and avatars replacing travel sales consultants, it is easy to envisage a future where software replaces people. Although the figures do not tell us if this is an actual numerical increase, at Travelport we certainly see investment in innovation accompanied by investment in high-quality IT staff.

The CIA famously conducts an aptitude task for applicants, involving having to complete a jigsaw of a complex IT or process diagram in a minute. However, lateral-thinking applicants turn the jigsaw pieces over, where the picture is that of a person’s face which can be slotted together with ease.

There is a metaphor here: it is the people that make the technology come together.

As Travolution enters its second decade, this relationship between people and technology is likely to become more symbiotic, more sophisticated and more provoking than ever before.