Travel Distribution: Is the Future Bright for TMCs?
Posted by Mike Atherton on 14 November, 2016
Rising expectations, mobile and travel risks are just some of the disruptive factors set to shake up the travel distribution industry over the next 10 years, according to a recent report commissioned by Amadeus.
Increasing Consumer Demand and Expectations
Demand for business travel is rising as we head towards 2017. This increase, believed to be linked to the rise in corporate profitability, outweighs the loss of those businesses replacing corporate travel with virtual meeting alternatives. Trends observed include a continued rise of online booking and integrated travel services, which may lead to further mergers and acquisitions in the industry, as travel companies seek to expand their online offering.
As consumer expectations grow in the wider retail sector, they’re also predicted to expand into business travel. For example, the report found that travellers are expecting more from TMCs, such as a smoother booking process and responsive customer service during travel. Travel technology is a key area of concern, including real-time merchandising opportunities, Artificial Intelligence (AI) integration and mobile.
Mobile Becoming the Primary Booking Device
“It’s truly the moment of mobile. There are over 3 billion people connected and they are using the internet in ways we have never seen before. Over 50% of our queries come from mobile phones” – Sundar Pichai, CEO Google
For North America and Europe, the use of mobile in travel tends to be reserved for research and finding last minute deals. However, in emerging markets, such as China and India, where it is often consumers' only access to the internet, mobile is becoming the primary means of booking.
As the functionality of mobile technology increases, business travellers' expectations increase with it. In order to satisfy the needs of the tech-savvy traveller, TMCs need to integrate this functionality into their offerings, such as voice-activated commands and fingerprint authentication.
What’s more, as business travellers now expect 24-hour services during travel and at their destination, Amadeus predicts that the market for travel ancillary services will grow from the $2,000 billion market it was back in 2013. This presents huge multi-channel merchandising opportunities for TMCs who want to maximise post-booking revenue. As the popularity of wearable technology and geolocation technology increases, TMCs can personalise their services to offer automated merchandising opportunities to business travellers at the right time.
Big Data and AI
Beyond mobile technology are the issues of Big Data and AI. Experts surveyed in the report cited big data and AI as key disruptive factors for travel distribution over the next decade, with airlines scoring the importance of Big Data at 9.5 out of 10. The lure of Big Data for travel companies is the ability to analyse huge amounts of traveller data to tailor their offerings more precisely. Once again, this opens up opportunities for targeted merchandising, as well as targeted advertising and better customer service for the wider travel distribution industry.
The idea of AI for the travel industry is already making waves and was top of the 'trending
topics' at this year's GBTA (Global Business Travel Association) convention in Denver. Yet the mainstream use of AI in the corporate travel industry is largely unknown. Within a year, some experts see AI emerging as a tool for dealing with smaller tasks and supporting the work carried out by travel agents.
“Lower-priority tasks will be handled by self-service artificial intelligence, which will free up human travel agents to do more of the intense work required.”
– Miriam Moscovici, Director of Emerging Technologies, BCD.
Looking further into the future, the development of AI is set to enhance the traveller experience –perhaps in the form of automated ancillary merchandising or document delivery.
Complex Distribution Networks
Linear distribution networks, where travel agents liaise with airlines, are on the way out. Nowadays, the travel distribution industry is more complex than ever, comprised of global distribution systems (GDSs), IATA's NDC airline initiative, online travel agents (OTAs) and metasearch companies. Trip Advisor recently expanded into the OTA territory by offering bookings through its website. It’s now up to TMCs to organise this complex distribution network to offer simpler travel for organisations.
Rise in Travel Risks
The demand for managing travel risk is expected to rise, as the threat of terrorist attacks, oil prices and natural disasters influence corporate traveller’s perception of air travel.
The rising threat of terrorism over recent years has damaged the perceived safety of air travel in the minds of consumers. In the week following the Brussels attack, 74,700 fewer bookings were made, and thousands of reimbursements were requested. Similarly, following the Paris attacks, there was a significant drop of 308,000 bookings logged by Amadeus three months after the bombings.
Natural disasters pose the same threat. Amadeus logged 167,600 fewer bookings a month following Hurricane Sandy for flights departing from New York City. Despite the loss to the industry, bookings recovered quicker following the Brussels attacks, presumably due to the more destructive psychological perception of terrorism. But as scientists predict an increasing frequency of storms due to climate change, natural disasters could have a significant, and rising, impact on the travel industry in coming years.
As travel risks tend to come with little warning, TMCs need to become more proactive and responsive to sudden changes in business travel plans. In anticipation of these threats, risk assessments are expected to become a priority within the corporate travel industry. Fully automated, Big Data and AI technology could be fundamental in predicting and mitigating travel risks. With that in mind, travel risk apps are likely to become the most important communication platform, as they are in hand in times of crisis.
Overall, it seems that technology will be the saviour for the travel distribution industry in minimising and managing travel risks. Meanwhile, the future of travel distribution holds many potential opportunities that TMCs can capitalise on with the help of Big Data, AI and mobile apps. To understand more about how mobile apps can help you seize opportunities in the corporate travel sector, don't hesitate to download our 'Mobile Strategy Guide for TMCs'.