Today's travelers have easy and complete access to all the information they need: TripAdvisor tells them best places to go to, their friends post photographs and reviews on Facebook, and an OTA tells them the best combination of flights, hotels and rental cars they should consider. All brought together into one seamless experience on their smart phone. Travel companies by contrast, have far less information than this when understanding their customers and deciding on their go to market strategy.
Every cloud though, has a silver lining. The same digital disruption that has given the traveler leverage, is also giving something significant back to the Travel businesses: Data. Every search, review, booking, complaint, swipe, "like," buy, comment produces a unique virtual identity – something we will refer to as a "code itinerary™," which can be harnessed to understand a traveler's persona and intent. This is powerful information in the hands of Travel companies who know they can only win by rewriting the rules of engagement with digitally savvy travelers. Not surprisingly, digital transformation has become a top priority in this industry, and according to World Economic Forum 2017, done right, has the potential to unlock $1 trillion of value for the industry by 2025. To get there, Travel companies need to focus on the following strategies.
Today's travelers are very clear about what they need and if a travel company cannot personalize travel for them, they will do it for themselves, or worse yet, go to someone who will. Digital organizations will get ahead in this challenge and will ensure customer delight and loyalty.
These days however, the cliché is that Plans change as soon as you launch them. In order to ensure your plans continue to be relevant, organizations need a mechanism by which they can Sense market dynamics. The digital data foundation is continuously listening through APIs for new information to arrive: competitor rate data, sentiment data, events that might be affecting demand at a certain destination, weather data that might suggest flights could be cancelled at an airport, etc. and as soon as the data comes in, subject to business rules at play, machine learning algorithms determine if an alert is warranted.
If an alert is indeed warranted, the organization must Respond. The response could be codified in the application through business rules, or the system could take an action on its own, or the alert can be routed to an analyst who takes the appropriate action quickly, and in the process teaches the system how to respond the next time. Recommender systems have been popularized by the likes of Amazon and Netflix, which rely on user input and past actions to reinforce their own learning and over time become smarter and smarter in their responses. This ability to respond quickly to a situation is critical, when you consider the hundreds of thousands of interactions travelers have with travel companies, and when a quick decision is what closes the traveler as opposed to losing their business.
This virtuous cycle of Plan – Sense – Respond, done continuously, is a key enabler of the digital transformation of a travel company. Erstwhile Revenue Management applications are rudimentary solutions for this requirement, and a paradigm shift towards Digital Revenue Management is critical for Travel companies to exploit every opportunity to win against competition.
Digitization as a technological innovation for Travel companies however, is just an enabler. True digitization that unlocks the "Trillion dollars in value" requires much more. It needs for a Travel company to bring about organizational changes to meet the needs of the digital world. As a first step it is important to raise the digital IQ in Travel companies. It means breaking down silos so that Marketing and Revenue Management are working hand in hand to meet the needs of the traveler. It means both Marketing and Operations working together to address the negative tweet from your guest. In other words, a complete alignment with the traveler who sees a Travel company as single brand, embracing an innovative mindset and creating a culture that is able to stay ahead of the digital traveler.
This is easier said than done. Culture and mindset changes are hard. While no employee will argue about aligning with a digital strategy, a legitimate question to address would be about legacy applications and processes that cannot be abandoned overnight. Travel companies will have to create roadmaps appropriate to their business. Perhaps start with getting all your data together in one place and then adopt the next-generation analytics. Or upgrade your revenue management solution with a dynamic one without affecting the upstream and downstream processes. Identify quick wins that will engender faith in employees. But most importantly, get employee buy in, provide training where necessary and hire the right talent to thrive in this exciting digital future.
Travel companies need a sense of urgency as they contemplate their digital journey and they will do well to pay heed to what Clayton M. Christensen says in his book The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. In it he argues that disruptive innovation usually starts at first in a small niche of an industry which established firms would typically ignore. But this disruption gradually matures, solutions that work in the niche area improve enough to start working with the mainstream, and suddenly established firms are disrupted or displaced. Airbnb is a case in point. Started as a home rental portal, they now are disrupting Expedia and Booking Holidays by offering themselves as a distribution channel for independent and boutique hotels on their site with a compelling commercial offer. How much longer do you think before the major hotels also start distributing their inventory on Airbnb?
For Travel companies the disruption is not just from new entrants or nimble competition, but also from the connected traveler who might take his business elsewhere. The hour is upon Travel organizations to start on this digital journey now – before the disruption wave becomes a tsunami. Early movers, with a clear understanding of Code Itineraries, stand to win a piece of the Trillion dollar prize!
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Anand serves as EVP and Chief Product Officer at RateGain. Dr. Medepalli has almost 25 years of experience as a trusted advisor with leading companies in pricing and product strategies, commercial account strategies and asset planning decisions in such diverse industries as airlines, freight, hospitality, rail, retail, banking, insurance and manufacturing. With a solid background in pricing and revenue management, big data and data science, Dr. Medepalli has spent much of his career advising companies and defining innovative solutions to drive their growth. At RateGain, Dr. Medepalli is responsible for setting product & technology strategy for the Travel industry and disrupt the marketplace with leading solutions leveraging big data, machine learning and artificial intelligence. He is part of the executive leadership team. Dr. Medepalli holds a Ph.D. in Mathematics from Iowa State University and is a machine-learning enthusiast. He currently resides in London with his wife and three children. And in his spare time, he likes reading, running and traveling.
Sr. Manager- Travel Marketing