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Consumer expectations, mobile devices, big data and artificial intelligence (AI), regulation and travel risk are five “potentially huge disruptions” that will impact significantly on travel industry business models in the next decade, claims research undertaken by the London School of Economics and Political Science (LSE) on behalf of the Amadeus IT Group.
While the travel industry is largely aware of these changes, the scale and speed at which they are occurring is underestimated. Thus, the industry continues to focus on bilateral and contractual partnerships in narrow areas of the value chain, to its detriment.
The report, titled Travel distribution: the end of the world as we know it?, cites the consumer ‘revolution’ currently prevalent in the retail market as spilling over into travel distribution. Consumer expectations, it states, now include easy purchasing, inspirational shopping and personalised services.
“Consumers are looking for the [buying] process to be frictionless and safe,” it states. “They turn to online retailers who recall their profile and payment preferences, have a short and efficient purchasing process, provide clear delivery options and pricing, have websites that don’t crash, and reassure the customer through payment confirmation.”
A further consequence of e-commerce is online price transparency gives the consumer the ability to compare prices, which has increased with the advent of metasearch companies, OTAs and online peer reviews such as TripAdvisor. Price comparison can impact negatively on brand loyalty, while in the airline industry it has increased support of low cost carriers, sparking a reaction from full-service carriers to commoditise their service around the cost of a seat.
Mobile devices have for some time been reshaping the market, driving demand for 24-hour services during travel and in-destination. “Micro-moment” searching and booking – taking the opportunity of a coffee break or a wait at a bus stop to web surf by smart phone or tablet, is on the increase. In addition, big data and AI are developing hand in hand. Computers are recognising consumer patterns and preferences, and virtual assistants or internet robots (bots) are being integrated into mobiles and messaging apps, interacting with online conversations and guiding choices.
Another major disruptive factor will be the extent to which regulators intervene to limit the power of large players such as airlines, mega meta-online travel agencies (OTAs) and travel management companies (TMCs). In Europe, for example, GDSs are controlled by an EU Code of Conduct and must provide display parity for airlines. “In particular, the rise of gatekeepers such as Google and Facebook that thrive on the non-neutral advertising model will be determined largely by the level of regulation or deregulation in different regions,” states the report.
It is also expected that consumer behaviour will increasingly be affected by travel risk, such as terrorism and natural disasters. The report proposes industry responses to reduce risk, and just as importantly the perception of risk, through improved information management.
Additional impacts on travel distribution will be caused by shared economy business models, product differentiation and industry consolidation.
According to Project Director Graham Floater of LSE: “[P]layers in the travel distribution industry will need to respond with broad collaborations for aggregating, processing and harnessing the big data involved. Otherwise the explosion of complexity and differentiation of services in the short-term risks translating into a mass of confusion for the consumer.”
Sourse: tourismupdate.co.za
, regulation and travel risk are five “potentially huge disruptions” that will impact significantly on travel industry business models in the next decade, claims research undertaken by the London School of… "Pin It")