Demystifying Emerging Technologies for the Travel Industry
Rethinking the Role of Online Booking Tools in Corporate Travel
Way back in the early 2000s I was asked to address a session at Oracle Corporation shortly after they had acquired e-Travel. I was introduced as the “grandfather” of self-booking tools. This title reflected my early adoption of this tech at Sun Microsystems and the fact that I authored the first analysis of OBTs back in the late 1990s. That […]
Way back in the early 2000s I was asked to address a session at Oracle Corporation shortly after they had acquired e-Travel. I was introduced as the “grandfather” of self-booking tools. This title reflected my early adoption of this tech at Sun Microsystems and the fact that I authored the first analysis of OBTs back in the late 1990s. That title was a bit frightening as I was only in my mid 40s at that time. Now that I am in my mid 60’s I feel it is time to reflect on the role of OBTs and how they have evolved in the market. I have seen the technology move from a few early adopters to become a mainstream component of all travel management programs. The original pitch of OBTs was to automate the travel process allowing the traveler direct access to booking information so they would choose the right options that met their needs. The addition of policy filters was designed to direct the traveler to the preferred supplier to ensure their choices were policy compliment. Nearly 25 years later, I believe it is time to re-evaluate the role of OBTs and recognize how they now act as gatekeepers and even obstacles to innovation. Many corporate travel managers have heard a clear message from their airline suppliers, carriers are moving from a process of static percentage off discounts to an era of continuous pricing and dynamic bundles. This simply means you can no longer compare offers in the same way as in the era of static percent off discounts. The challenges faced by ATPCO’s Next Generation Store Front or the lawsuit between American Airlines and Sabre over the Delta value pricing display illustrates how comparing offers between carriers is challenging in a dynamic pricing era. Carriers such as Southwest are also put at a disadvantage in this apple to oranges search as their free baggage policy is not shown as an advantage and their lack of seat assignments is viewed as an inferior offering. The question that should be asked is how the OBT model fits with standard corporate procurement processes? I encourage corporate travel manager to look at how their companies deal with suppliers in other sectors. Do they expect their employees who are shopping for office suppliers or computers to use a tool that compares offers from multiple suppliers, including non-preferred vendors? I believe you be hard pressed to find an example of this outside of travel. Then why is travel still a shopping process versus simply an ordering of services from a preferred supplier? The answer is rooted in a belief that choice must be presented at the time of booking, or the traveler will go aside the preferred channel. I believe this is a false narrative that does not reflect the reality of the traveler mindset. If you are in a market where there is a dominant carrier the traveler most likely has loyalty to that airline, or the carrier has more direct flight options. In addition, standard published pricing is generally not dramatically different across carriers. With the emergence of airline retailing the true differentiation of airline product will be based on dynamic offers and bundles. I am not optimistic that OBTs will meet this challenge. Currently dynamic offers are not being brought to the point of sale and in fact, the indirect channel often lacks “NDC” inventory to make the OBT choices competitive with what can be found online. OBTs can act as an additional barrier to content as evidenced by the dominant OBT, SAP Concur, requiring another layer (Travelfusion) to gain access to NDC inventory at an additional markup on all volume on that carrier. This does not even address dynamic pricing and bundles as it is only trying to fill the content gap. Airlines continue to invest heavily in their direct channel .COM and more importantly their apps. Younger travelers are app focused and if it is easier to book travel via a supplier app, they will embrace this as we’ve seen from progressive companies who have adopted the “open booking” philosophy. In addition, restrictive travel policies inhibit employee acquisition and retention and thus are detrimental to the success of a corporation in a tight labor market. The next question is the obvious one. If I allow my travelers to book directly with suppliers, how do I continue to have consolidated information, and ensure I meet my company’s duty of care requirements? Fortunately, companies such as nuTravel, Atriis and Traxo can capture all bookings and feed them back to the corporation and their TMC. How about support of direct bookings? Progressive TMCs such as AmTrav and Spotnana recognize that the true definition of omnichannel is support of all bookings regardless of source. So, if the data consolidation, TMC support can be solved what about policy compliance and delivery of corporate dynamic pricing and bundles? Here’s where Web3 technology plays a role. Smart contracts can deliver benefits at the point of sale through the airline.com and supplier apps. The days where the traveler shopping paradigm using an OBT through a mandated channel are rapidly becoming obsolete. As the “grandfather of OBTs” it is time for another paradigm shift embracing a new direct supplier booking environment. What about the rest of the itinerary in the form of hotels, rent a car, ride share and other elements of the trip? More about that conundrum in my next blog post.
Philip’s passing yesterday was a shock for all who knew him, but for me it was extremely personal. My journey with Philip Wolf goes back nearly 30 years and I can state emphatically that Philip fundamentally had a positive impact on my life in countless ways and has had a lasting dramatic impact on the global travel industry. As […]
Philip’s passing yesterday was a shock for all who knew him, but for me it was extremely personal. My journey with Philip Wolf goes back nearly 30 years and I can state emphatically that Philip fundamentally had a positive impact on my life in countless ways and has had a lasting dramatic impact on the global travel industry. As someone who knew Philip beyond his famous stage presence, I knew first-hand of his ability to identify both business and tech trends that would become mainstream often acting as a catalyst to the drive entire travel industry forward by embracing emerging technology and driving innovation. With a nearly 30-year relationship, my list could be endless on Philip’s influence on my life and the future of travel technology. Here are just a few points I would like to highlight: After being asked to be a judge at the first Travel Innovation Summit, Philip asked me join him and Bob Offutt in planning, screening, and enhancing the startup competition. We were the core team for many years behind the scenes making everything seem seamless. Every year at the staff party after the Conference, Philip would find Bob and me and grill us stating that we “should blow-up the Innovation Summit and recreate it for the following year”. This was Philip, never satisfied with past accomplishments and always anxious to innovate. Working with startups became a key part of my consulting practice and I owe the roots of my expertise to the 12 years working on the Innovation Summit. In fact, in the travel space, other startup competitions, travel startup incubators and accelerators owe a debt of gratitude to Philip for starting the ball rolling with the Innovation Summit. Philip and I were in Paris back in 2005 (I believe) delivering project results to the CEO of a major TMC. I remember vividly Philip telling us all “you need to pay attention to Facebook”. Talk about vision, at that time Facebook was only available on college campuses! His support for his people was unparalleled. Though I have never been an employee of Phocuswright, Philip’s support of my efforts both on his behalf when doing Phocuswright projects or as an independent consultant showed unrelenting support for his colleagues. This was clear when a specific project went sour, with the client’s behavior contributing to many of the challenges. Once aware of the issue, Philip picked up the phone and told the CEO, “you can’t treat my people that way”. I felt similar support when my Mom passed away unexpectedly in 2006 just as the Phocuswright Conference wrapped up. Philip, Carol, and the entire staff went out of their way to get me home quickly to be with my family. And that’s the thing, I was part (and continue to be part) of the Phocuswright family. That sense of family was a result of Philip’s leadership. Many industry executives talk about innovation, few live it. Philip’s entire life was around disrupting the status quo and driving the industry to use technology to improve the travel experience and drive greater industry efficiency. His wisdom, vision and passion will be missed by all. My life was changed by Philip Wolf and I will never get over losing him at such a young age.
Philip’s passing yesterday was a shock for all who knew him, but for me, it was extremely personal. My journey with Philip Wolf goes back nearly 30 years and I can state emphatically that Philip fundamentally had a positive impact on my life in countless ways and has had a lasting dramatic impact on the global travel industry. As someone […]
Philip’s passing yesterday was a shock for all who knew him, but for me, it was extremely personal. My journey with Philip Wolf goes back nearly 30 years and I can state emphatically that Philip fundamentally had a positive impact on my life in countless ways and has had a lasting dramatic impact on the global travel industry. As someone who knew Philip beyond his famous stage presence, I knew first-hand of his ability to identify both business and tech trends that would become mainstream often acting as a catalyst to the drive entire travel industry forward by embracing emerging technology and driving innovation. With a nearly 30-year relationship, my list could be endless on Philip’s influence on my life and the future of travel technology. Here are just a few points I would like to highlight: After being asked to be a judge at the first Travel Innovation Summit, Philip asked me to join him and Bob Offutt in planning, screening, and enhancing the startup competition. We were the core team for many years behind the scenes making everything seem seamless. Every year at the staff party after the Conference, Philip would find Bob and me and grill us stating that we “should blow-up the Innovation Summit and recreate it for the following year”. This was Philip, never satisfied with past accomplishments and always anxious to innovate. Working with startups became a key part of my consulting practice and I owe the roots of my expertise to the 12 years working on the Innovation Summit. In fact, in the travel space, other startup competitions, travel startup incubators, and accelerators owe a debt of gratitude to Philip for starting the ball rolling with the Innovation Summit. Philip and I were in Paris back in 2005 (I believe) delivering project results to the CEO of a major TMC. I remember vividly Philip telling us all “you need to pay attention to Facebook”. Talk about vision, at that time Facebook was only available on college campuses! His support for his people was unparalleled. Though I have never been an employee of Phocuswright, Philip’s support of my efforts both on his behalf when doing Phocuswright projects or as an independent consultant showed unrelenting support for his colleagues. This was clear when a specific project went sour, with the client’s behavior contributing to many of the challenges. Once aware of the issue, Philip picked up the phone and told the CEO, “you can’t treat my people that way”. I felt similar support when my Mom passed away unexpectedly in 2006 just as the Phocuswright Conference wrapped up. Philip, Carol and the entire staff went out of their way to get me home quickly to be with my family. And that’s the thing, I was part (and continue to be part) of the Phocuswright family. That sense of family was a result of Philip’s leadership. Many industry executives talk about innovation, few live it. Philip’s entire life was around disrupting the status quo and driving the industry to use technology to improve the travel experience and drive greater industry efficiency. His wisdom, vision and passion will be missed by all. My life was changed by Philip Wolf and I will never get over losing him at such a young age.
Philip’s passing yesterday was a shock for all who knew him, but for me, it was extremely personal. My journey with Philip Wolf goes back nearly 30 years and I can state emphatically that Philip fundamentally had a positive impact on my life in countless ways and has had a lasting dramatic impact on the global travel industry. As […]
Philip’s passing yesterday was a shock for all who knew him, but for me, it was extremely personal. My journey with Philip Wolf goes back nearly 30 years and I can state emphatically that Philip fundamentally had a positive impact on my life in countless ways and has had a lasting dramatic impact on the global travel industry. As someone who knew Philip beyond his famous stage presence, I knew first-hand of his ability to identify both business and tech trends that would become mainstream often acting as a catalyst to the drive entire travel industry forward by embracing emerging technology and driving innovation. With a nearly 30-year relationship, my list could be endless on Philip’s influence on my life and the future of travel technology. Here are just a few points I would like to highlight: After being asked to be a judge at the first Travel Innovation Summit, Philip asked me to join him and Bob Offutt in planning, screening, and enhancing the startup competition. We were the core team for many years behind the scenes making everything seem seamless. Every year at the staff party after the Conference, Philip would find Bob and me and grill us stating that we “should blow-up the Innovation Summit and recreate it for the following year”. This was Philip, never satisfied with past accomplishments and always anxious to innovate. Working with startups became a key part of my consulting practice and I owe the roots of my expertise to the 12 years working on the Innovation Summit. In fact, in the travel space, other startup competitions, travel startup incubators, and accelerators owe a debt of gratitude to Philip for starting the ball rolling with the Innovation Summit. Philip and I were in Paris back in 2005 (I believe) delivering project results to the CEO of a major TMC. I remember vividly Philip telling us all “you need to pay attention to Facebook”. Talk about vision, at that time Facebook was only available on college campuses! His support for his people was unparalleled. Though I have never been an employee of Phocuswright, Philip’s support of my efforts both on his behalf when doing Phocuswright projects or as an independent consultant showed unrelenting support for his colleagues. This was clear when a specific project went sour, with the client’s behavior contributing to many of the challenges. Once aware of the issue, Philip picked up the phone and told the CEO, “you can’t treat my people that way”. I felt similar support when my Mom passed away unexpectedly in 2006 just as the Phocuswright Conference wrapped up. Philip, Carol, and the entire staff went out of their way to get me home quickly to be with my family. And that’s the thing, I was part (and continue to be part) of the Phocuswright family. That sense of family was a direct result of Philip’s leadership. Many industry executives talk about innovation, few live it. Philip’s entire life was around disrupting the status quo and driving the industry to use technology to improve the travel experience and drive greater industry efficiency. His wisdom, vision, and passion will be missed by all. My life was changed by Philip Wolf and I will never get over losing him at such a young age.
Maybe What is Needed for Leisure and Corporate Travel to return is Local Human Support
It was 1992 and I was traveling with an associate at Sun Microsystems to Montreal visiting a travel software company. My traveling companion was a classic road warrior who went into auto-arrival mode as soon as the plane landed. As he bolted out of the plane when the door opened, I struggled to keep up as his routine was clearly […]
It was 1992 and I was traveling with an associate at Sun Microsystems to Montreal visiting a travel software company. My traveling companion was a classic road warrior who went into auto-arrival mode as soon as the plane landed. As he bolted out of the plane when the door opened, I struggled to keep up as his routine was clearly set in stone. Of course, that was then, today as the travel industry struggles to map a revival path out of Covid-19, corporations and travel providers must ensure that travelers, such as my former colleague, are ready for all unexpected situations on their trip. There are just too many variables today. Will quarantine be necessary? What if upon arrival Covid-19 is detected? What if the stay is extended and the traveler needs other services after they arrive? The standard corporate travel solution in dealing with emergency medical situations involves dedicated services such as International SOS. This was an adequate solution pre-Covid-19, but with the global pandemic, these services will be limited to travelers who are ill. What if the traveler needs more mundane things such as a prescription refilled, a repair of broken glasses or simply help in navigating a non-English speaking country? We clearly need a different type of support network for travelers’ post Covid-19, for not only traveler piece of mind, but also the multitude of service needs caused by the pandemic. This can be viewed as an expanded definition of duty of care. This is what attracted me to become an advisor to Prontopia. At first view, I mistakenly thought Prontopia was simply another gig economy company offering local tour guides through an app. I had seen many of these types of services launched in the past 10 years with little success. In a way, the failure of local tour guide apps was surprising considering gig economy companies such as Uber, Lyft and Airbnb exploded during this same time period. But the idea of local tours never took off, so my first reaction meeting Shannon Kenny, Prontopia’s CEO, was one of extreme skepticism. That perception has significantly changed over time. I soon learned that Prontopia’s strategy was human support when needed, not local city tours. Prontopia started in Italy in May 2019 with their headquarters in Venice. There they developed strong relationships in the city and organized social impact activities such as cleaning plastics from the lagoon. When the floods hit later that year, Prontopia was well positioned to provide service to foreign travelers. Unlike other gig economy companies, Prontopia views their role in a more holistic way. Gig economy services will only work if the workers are properly trained and compensated. It also became clear during the initial launch, that local support services such as Prontopia must work closely with local government officials to succeed. The next country for expansion for Prontopia in October 2019 was Spain. Shortly after launch in Barcelona the city erupted into serious riots over the Catalan separatist movement causing disruption for travelers. Again Prontopia was there to help travelers impacted by the protests. When Covid-19 hit first Italy and then Spain, Prontopia expanded their services to support both travelers and local disadvantaged citizens. This required Prontopia to adhere to the highest public health safety standards to protect both their assistants and customers. Working with local authorities in both counties, Prontopia provided critical local support during the pandemic’s worst hours. Recently the team expanded to the U.S. offering Prontopia services in Santa Barbara and San Diego, California. Based on Prontopia’s “baptism by fire” experience in Europe the company was able to implement early, consistent high-level safety protocols in the US during a time when many people were not taking the pandemic very seriously. Prontopia now has a duel focus of supporting disadvantaged people during the pandemic while continuing to build a network of human support for the traveler. The travel industry has often suffered from a mentality that once the traveler is on their trip the only support needed is around the reservation. For corporate travel, it is the corporations’ responsibility to provide duty of care and the TMCs role is to support this through data which helps locate travelers during an emergency. TMCs are not equipped to provide local help. There is an excellent opportunity for Prontopia to partner with the leisure and corporate travel industry stakeholders to provide support as travelers return to the skies. Multiple surveys have indicated that travelers need information about Covid-19 restrictions and assurances regarding cleanliness and safety, which continues to be the key focus of our industry. Adding a service such as Prontopia provides additional reassurance that support is there if something goes wrong. As the travel industry emerges from the Covid-19 lock down, providing human support in destinations, especially where the traveler does not speak the local language, could be a key part of the recovery. I encourage the all stakeholders in the travel industry to take a closer look at Prontopia. Note: Prontopia will be presenting at the upcoming Phocuswright European and U.S. Conferences.
Can Anyone Really Capture the SME Travel Market?
It was 1996 and I had just launched my consulting practice the prior September. On the agenda that day were consecutive calls with two startups, The Trip.com (not associated with the current iteration of the former C-Trip OTA) and BizTravel.com. Their mission was clear; to bring digitized travel management to the small/medium enterprise (SME) segment. And of course, the rest […]
It was 1996 and I had just launched my consulting practice the prior September. On the agenda that day were consecutive calls with two startups, The Trip.com (not associated with the current iteration of the former C-Trip OTA) and BizTravel.com. Their mission was clear; to bring digitized travel management to the small/medium enterprise (SME) segment. And of course, the rest is history, these companies went on to become the dominant players in SME business travel space, right? Wrong, within the next few years both these companies would go out of business despite investment from industry heavyweights such as Rosenbluth International. Fast forward to the early 2000’s and I found myself in the boardroom of Netscape, the leading Internet browser at the time. The purpose of the meeting was to discuss how Netscape could partner with Sabre BTS (this was prior to the GetThere acquisition) to create a SME portal where travel services would be part of a number of small business offerings. Suffice to say neither the SME portal idea nor in this case the actual company known as Netscape survived. Over my 38 year career in the travel industry I have seen additional attempts at aggregating small business travel whether it was the Delta Airlines dedicated small business portal launched in the early 2000s only to be shut it down in 2002, or the more recently the acquisition of Hipmunk by SAP Concur again targeting the SME segment, which failed and was subsequently closed earlier this year. News today that yet another acquisition has taken place where Online Booking Tool (OBT) startup, WhereTo, has been purchased by Flight Centre again with the goal to attack the SME segment. Why does Flight Centre expect to succeed in the SME segment with WhereTo especially given the fact that WhereTo was designed for large enterprise customers? A great deal depends on how it is executed. Over the last four years the market has seen the emergence of well-funded new digital TMCs in the form of Trip Actions, TravelPerk, Travelbank, Lola and Uptake. There is clear evidence that these companies have gained some traction with smaller businesses. But where did this business come from and have these companies cracked the code to finally capture the SME opportunity? The reality is that many of the companies that have signed on with these digital TMCs already had a managed travel program in place often with a smaller traditional TMC or in some cases one of the mega-TMCs. Though it is true that sometimes an account is brought on board to bring travel management to a previously unmanaged program, it is more likely the new client was captured from another existing TMC. Any success in the SME segment should not be confused with market opportunity. There is a reason why prior attempts to consolidate SME business travel have never gained traction. By definition, many companies in this SME segment may chose not to implement formal travel policies. Some may believe that allowing the traveler to shop the best fare or rate represents the best way to control travel expenses. After all these companies generally do not have the volumes to negotiate significant supplier discounts. In addition, the large mega-OTAs such as Expedia and Booking.com have successfully captured some of this business in their direct OTA channel or their dedicated business portals, such as Egencia or Booking.com for Business. The bottom line is that capturing SME market opportunity can be like the cliche “herding cats”, where the business is highly fragmented and there is a basic inability to get everyone within the SME or across SMEs to behave in a uniform fashion. The is also why TMC negotiations on behalf of multiple smaller companies or corporate buyers who form a buying consortium often don’t succeed due to an inability to deliver market share to maintain discounts. The question is simple, is there a definable market for SME and if so how big is it and how easily is it captured? Even my colleagues at Phocuswright struggle with this segment as the unmanaged portion of the SME segment is lumped together with leisure travel rather than including the volume in their managed travel calculations. Though hard to measure most believe the SME market is substantial and thus a significant opportunity exists to capture this market. Despite all these prior challenges, Covid-19 may actually help finally reach the SME segment. All business travel going forward will be highly scrutinized regardless of the size of the company. With corporate liability for Covid-19 related travel illness still unclear, no company, regardless of size, can afford to send their employees on the road without some sort of controls in place. In fact, the very need to keep up on the constantly changing travel restrictions by country and within a country, requires more information for travel planning than pre-pandemic behavior. Will these lead to more penetration of the SME market? The answer lies with the SME traveler. Often at best, these companies have lightly managed travel policies. From traveler research I conducted on behalf of Phocuswright, unmanaged business travelers believe they are obtaining the best fares/rates for their companies. Of course, this was a pre-Covid-19 perspective. The 2019 Phocuswright Business Traveler Survey also documented a significant lack of support for health and safety communication on the lower end of the market. <img fetchpriority="high" decoding="async" width="1024" height="542" src="https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-1024x542.jpg" alt="" class="wp-image-3507" srcset="https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-1024x542.jpg 1024w, https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-300x159.jpg 300w, https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-768x406.jpg 768w, https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-1536x813.jpg 1536w, https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-2048x1084.jpg 2048w, https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-260x138.jpg 260w, https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-50x26.jpg 50w, https://www.traveltechnology.com/wp-content/uploads/2020/08/PCWI-duty-of-care-142x75.jpg 142w" sizes="(max-width: 1024px) 100vw, 1024px" /> If the promise of consolidating the SME part of the business travel market is ever going to materialize, the time may be now by providing this segment with proactive health and safety insight. It is important to note that this communication must be combined with a comprehensive selection of available fares and rates. Given the fragmentation that exists already, and which may increase with the further adoption of NDC, providing both proactive safety and security information combined with the best fares and rates may be the winning combination to achieve greater traction with the SME business travel segment.
Who Pays for the Needed Upgrade to Travel Distribution?
As we are in the midst of one of the most devastating events in the history of the travel industry, the Covid-19 pandemic, you might find it odd time for me to write a blog article about the need to upgrade technology infrastructure for travel distribution. No one has any money, not the airlines, the GDS, the OTAs or the […]
As we are in the midst of one of the most devastating events in the history of the travel industry, the Covid-19 pandemic, you might find it odd time for me to write a blog article about the need to upgrade technology infrastructure for travel distribution. No one has any money, not the airlines, the GDS, the OTAs or the TMCs. Even the newer NDC aggregators and next generation TMCs are challenged with a lack of revenue and struggling to find investment for future tech enhancements. How can anyone think of investing in new platforms while the industry suffers through one of the worst six months in the history of modern air-based travel? As I stated in some prior blogs, it is often during severe industry disruption that change occurs. Remember Expedia came into prominence after the 9/11 to grow to dominant online travel by the mid-2010s and Airbnb and Uber came out of the Great Recession in 2008 to emerge as of major disruptors in travel. Those who sit by the sidelines during the pandemic and in turn decide to wait until the market improves to make a tech investment, frankly, may simply not survive as the pandemic continues to devastate the industry through the end of 2020. Why does the infrastructure need to be changed anyway? When I conducted my extensive NDC research last year, this is a common refrain I heard especially from some very large TMCs and OTAs. Well, this is certainly a matter of perspective. The fact that airlines who for years suffered severe losses while the GDS, OTAs and TMCs generated profits certainly has caused friction since the airline divested ownership of the GDS. It is important to note that the very fees paid by the airlines and other suppliers to the GDS has been a significant source of the GDS, OTA and TMC profits. I doubt any airline distribution executive would state that the today’s travel distribution infrastructure fully meets their needs. A similar refrain could be voiced by hoteliers especially independent properties that have a historic love/hate relationship with OTAs. So how can part of the industry be so satisfied with the traditional infrastructure while other parts want dramatic change? A prime factor causing this change is the desire for suppliers to have greater intimacy with their customers and provide more personalized offers. Traditional intermediaries often limit the amount of information received by a supplier about the customer. In the case of the airlines who want to shift the control of the quote from GDS to the airline, this lack of customer insight acts as a barrier to more personalized offers. Another factor is the need to tie compensation to performance. In the current GDS driven compensation model, OTAs and TMCs traditionally are compensated by segments booked through their GDS provider. Simply meaning that a trip in the lowest fare cabin between SFO-LAX is treated the same as a Business Class segment SFO-LON. Clearly, we need a compensation formula that reflects the value of the transaction to the supplier. Of course, the one entity every stakeholder in the travel industry value chain must keep in mind is the customer. If we continue to see fragmentation of airline and hotel supply through different direct and indirect channels, the ultimate loser is the customer. With most corporations experiencing between 20% to as high as 40% leakage of their managed travel programs to not only supplier sites but OTAs as well, the search by the business traveler for the lowest fare combined with actual lower fares available through different channels, will accelerate this trend as business travel slowly returns. In the leisure market will we likely see massive sales this Fall designed to get travelers back into the skies, again available through some channels but not all. But I need to return to the major theme here, who is going pay for this change? Intermediaries need to recognize the fact that compensation in the form of GDS segment kickbacks is an inefficient incentive method and thus is not sustainable. Anticipating that this revenue will return when travel returns misses the disruptive change happening with travel distribution. I will make some predictions here. Those stakeholders who expect the GDS to fix all the issues associated with NDC and become a full partner with airlines in delivering personalized content to customers are naive. While I do believe each of the three GDS are committed to NDC, the pace of change has been extremely slow, especially now, as their own revenues have severely suffered due to Covid-19. Throughout my 42-year business carrier (38 years of which I have been in the travel industry) I have seen many industries go through dramatic change not surviving the disruption. The list is long from BlackBerry and Nokia (as a phone provider) to Blockbuster Video and more recently cable TV providers. In each case the existing players ignored the impending disruption at their own peril. No, I do not believe the GDS are going away, but their ability to act as the single source of all travel inventory has been fading for many years. It is also tough to move a battleship, and thus the years of market dominance of the GDS has embedded staff practices which are hard to break. We are still seeing press reports that the GDS are difficult to work with (as in this recent article The Beat article on Southwest and Sabre). Therefore anyone whether it is the largest booking/expense provider or one of the large TMCs, who puts all their faith in the GDS on solving the airline merchandising problem risks being swallowed up by the disruption if their GDS partners cannot execute on their NDC goals. The good news is that there is plenty of evidence that the mega-TMCs are in the process of investing in a significant tech redesign, but what of the 1,000s of second and third tier TMCs worldwide? The same is true for large OTAs versus smaller OTAs or large hotel chains versus small chains and independent properties. Everyone needs to invest now. Today’s equivalent of the Expedia post 9-11 example or the post Great Recession example of Airbnb will likely be the well-funded next generation TMCs such as Trip Actions, TravelPerk, TravelBank and Click Travel. Though most of the traction of these companies have been on the lower end of the market, as travel returns, the investment each has made in building a new TMC tech stack independent of the GDS, will pay off. Additional players who will likely emerge provided they can survive and gain traction during the pandemic, will be alternative NDC aggregation / distribution platforms or new open platforms based on new emerging technology such as blockchain. OK Norm, so this all fine and well, but I am struggling just to survive. I can’t pay my employees and all my revenues have dried up, what should I do? The sad truth is that there will be significant number of travel companies that will not survive the upheaval caused by the pandemic. Those who have not had a dedicated fund for tech spending are most vulnerable. Just as bringing back customer service is a priority for the industry as travel begins to rebound, a dedicated focus needs to be on tech stack redesign and investment. The message here is that those without a technology strategy around travel distribution that embraces new technologies and platforms will be more of risk as other sources of revenue such as GDS rebates disappear and clients are lost due to a lack of full inventory or competition from more nimble players. Often all it takes is a dedicated resource whose job is to evaluate and experiment with new tech alternatives. If this is staff you have laid off, prioritize their return. If you want to survive you must invest in the future!
Will Med-Tech Save the Travel Industry from Covid-19?
As the industry shows signs of a limited recovery, many hope science, and specifically, advancements in medical technology (Med-Tech), will play a key role in ensuring cleanliness and safety to help the travel industry recover. Most pundits will agree that without extensive testing and contact tracing, controlling the pandemic is a challenge. Of course, a vaccine is the best solution […]
As the industry shows signs of a limited recovery, many hope science, and specifically, advancements in medical technology (Med-Tech), will play a key role in ensuring cleanliness and safety to help the travel industry recover. Most pundits will agree that without extensive testing and contact tracing, controlling the pandemic is a challenge. Of course, a vaccine is the best solution for the pandemic, but realistically, a vaccine will not be ready for widespread use for many months. Therefore sterilization procedures and health monitoring efforts are essential now to help revive the travel industry. A few weeks ago, Shashank Nigam, CEO of SimpliFlying, asked me to participate as a mentor in their new Launchpad initiative. I applaud Shashank and his SimpliFlying team in taking a proactive stance on helping the airline industry recover, with the goal to provide solutions that can be implemented today. The team at SimpliFlying took a rapid response approach to this effort focused on four key areas critical for airline recovery: Sanitation/Cleanliness, Touchless Travel, Ancillary Revenue Opportunities and Contact Tracing. Every few weeks, a new batch of companies present to a group of airline and airport executives. The first batch focused on Sanitation/Cleanliness and presented their solutions last week. My interaction with the first batch of Launchpad startups presentations reinforced the fact that the industry needs to look at solutions for sterilization and cleaning that exist outside of the travel industry, often used in places like hospitals, shopping malls and office buildings. Most of the 1st batch of Launchpad startups use some sort of cleaning method (UV light, robot cleaning, sensors) to clean surfaces and monitor supplies. One startup stood out that could have a major impact on all sectors of the industry, and I wanted to highlight it here. The company is V-Shield. <img decoding="async" src="https://www.traveltechnology.com/wp-content/uploads/2020/06/VShield_reduced-1.jpg" alt="" class="wp-image-3488" width="119" height="212" srcset="https://www.traveltechnology.com/wp-content/uploads/2020/06/VShield_reduced-1.jpg 180w, https://www.traveltechnology.com/wp-content/uploads/2020/06/VShield_reduced-1-169x300.jpg 169w, https://www.traveltechnology.com/wp-content/uploads/2020/06/VShield_reduced-1-82x146.jpg 82w, https://www.traveltechnology.com/wp-content/uploads/2020/06/VShield_reduced-1-28x50.jpg 28w, https://www.traveltechnology.com/wp-content/uploads/2020/06/VShield_reduced-1-42x75.jpg 42w" sizes="(max-width: 119px) 100vw, 119px" /> Rather than approaching the problem from a surface cleaning perspective, V-Shield is a personal virus protection device. V-Shield uses slow release CI02 nanocrystals to create a concentrated sterilizing vapor that is effective up to 1m (0.5m radius) and provides 30 day continuous protection . V-Shield can be worn as a clip or installed in the seat back. The product is already approved for use by the FDA. But is V-Shield the magic bullet the industry has been waiting for that will trigger a return to the skies? When being questioned by the airline evaluation team, the CEO of V-Shield admitted that V-Shield alone may not be sufficient and that other cleaning methods as well as wearing a mask while traveling should also be followed So, it is not a magic bullet, but equipping every flight attendant, passenger, seat and boarding area with Vi-Shield could go a long way to calm nervous travelers and provide an additional level of protection. The demand for V-Shield as you might expect is high and it takes some time to produce the units. I encourage other sectors, particularly the corporate travel industry to evaluate the use of V-Shield for their business travelers. <img loading="lazy" decoding="async" src="https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion-1024x682.jpg" alt="" class="wp-image-3491" width="285" height="189" srcset="https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion-1024x682.jpg 1024w, https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion-300x200.jpg 300w, https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion-768x511.jpg 768w, https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion-1536x1022.jpg 1536w, https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion-219x146.jpg 219w, https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion-50x33.jpg 50w, https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion-113x75.jpg 113w, https://www.traveltechnology.com/wp-content/uploads/2020/06/Breathalyser-Ben-Gurion.jpg 2048w" sizes="auto, (max-width: 285px) 100vw, 285px" /> Prof. Gabby Sarusi is develpoing a One-minute Coronavirus Breath Test Another promising tech comes from Israel. A team at Ben-Gurion University has designed a one-minute breath test to tell whether someone has coronavirus. The test is currently being evaluated by the FDA. Once the firm receives FDA approval breath tests could be seen in public as soon as September. Another interesting Med-Tech solution announced recently is the use of the Oura ring where researcher claim the device has been successful in recognizing Covid-19 symptoms up to three days in advance with 90% accuracy. If its good enough for the NBA why not business travelers? This is also relates to my April post on the new relevance of wearables. The reality of the current pandemic is that the travel industry can not wait for a vaccine to be widely distributed. The pain and suffering in our industry is real and if we don’t implement solutions in the interim, the traveling public will continue to be reluctant to fly. Hopefully the combination of extensive sterilizing techniques in all public areas, the mandating of facemasks on board and the implementation of innovative solutions such as V-Shield and the one-minute breath test will help the industry recover faster while we all await a vaccine. I look forward to learning about additional SimpliFlying Launchpad solutions in the remaining three focus areas and I again want to commend Shashank and his SimpliFlying team in providing real value to the industry during these difficult times. Here is a link to all the companies reviewed in the batch; I appreciate being included in the process.
The Challenge of Being a Disruptor – Changing the Fundamentals of Travel Distribution and Settlement
It was a Sunday afternoon in 2013 and I did something I normally don’t do; I checked my Facebook feed (I’m not a big FB user). There I discovered a Meetup for Travel Startups scheduled for the upcoming week in San Francisco. It happened to coincide with an event where I was speaking earlier in the day, so I decided […]
It was a Sunday afternoon in 2013 and I did something I normally don’t do; I checked my Facebook feed (I’m not a big FB user). There I discovered a Meetup for Travel Startups scheduled for the upcoming week in San Francisco. It happened to coincide with an event where I was speaking earlier in the day, so I decided to attend. What I found was a group of young entrepreneurs (about 20 people) all trying to create the next killer travel site/app. I sat next to a software developer named Maksim Izmaylov and after the meeting Maks and I started the beginning of many conversations about the challenges software developers face in obtaining API access to innovate in the travel sector. We both agreed there must be a better way to allow the broader software developer community to drive innovation by building against industry APIs. Maks first effort was to form Travel Tech Con, an independent conference for early stage travel startups based in the San Francisco Bay Area. A few years later Maks and his business partners embraced blockchain technology and embarked upon building the first open, secure marketplace based on distributed ledger technology. I was enlisted as an early advisor to Winding Tree and I have been working with team for the last three years. It is hard to be a disruptor. Maks’s presentation at the 1st Phocuswright Battleground Americas in 2017, was not well received. Maks essentially described a vision where an open blockchain platform could be the foundation for travel distribution, eliminating the middlemen. Many of the Dragon’s questions focused on “how do you make money” rather than understanding the seismic change that blockchain technology could bring to the industry. As Maks was determined to first create a non-profit marketplace platform, the investor mindset just did not apply here. Unfortunately, Maks and his COO Pedro have experienced similar reactions over the subsequent years at various travel conferences as the industry continued to struggle with understanding the role of blockchain could play in travel distribution and settlement. Maks is truly a visionary and an unapologetic idealist. On numerous early executive council calls, advisors were often treated to passionate discussions where Maks did his best to educate us on the key differences between an open blockchain and closed distributed ledger technology (DLT). The bottom-line difference is control, where the role and power of the middleman is eliminated in the open public blockchain while the use of private DLTs are designed to maintain the current role of intermediaries. If you don’t understand the basics of blockchain, check my presentation at Phocuswright 2017. Support from airline and hotel distribution disruptors such as Lufthansa, Air France/KLM and Nordic Choice Hotels helped provide credence to Winding Tree’s efforts. On the edge of the coming “crypto winter” which begin in early 2018, Winding Tree was able to raise approximately $1.5 million to build the Winding Tree open distribution platform. Now after 2 years of development, Winding Tree is announcing new solutions around API access, air and hotel distribution and settlement at an upcoming PhocusWire Webinar on July 1st 2020. In my opinion there is no better time to re-invent travel distribution then during a downturn while the industry struggles with reduced demand. Now is the time to experiment. Now is the time for cheaper and faster distribution and settlement. Now is the time to open-up the travel distribution systems to the hundreds of thousands of software developers worldwide to drive innovation. Join us on July 1st for this important Webinar! <iframe src="http://www.facebook.com/plugins/like.php?href=https%3A%2F%2Fwww.traveltechnology.com%2F2020%2F06%2Fthe-challenge-of-being-a-disruptor-changing-the-fundamentals-of-travel-distribution-and-settlement%2F&layout=standard&show_faces=true&width=450&action=like&font=arial&colorscheme=light" scrolling="no" frameborder="0" allowTransparency="true" style="border:none; overflow:hidden; width:450px; height:80px">