The travel industry is going through exciting and unprecedented levels of change and innovation, the likes of which we haven’t seen since the introduction of the package holiday. Competition among hotels and airlines is fierce and margins are squeezed tighter than your favourite pair of jeans after Christmas. This brings with it serious questions on current practices, the rise of new technology and an endless supply of exciting new start-ups. For a PR agency this is a dream.
Out With The Old?
Take GDS for example. In recent years we’ve seen airlines fight back against a system that’s been in existence since the 1960s. GDS (Global Distribution Systems) is a large computer network that passes inventory and rates for hotels to travel agents and travel sites. It is also used by other travel segments such as rental cars and airlines. The data is collected by big businesses like Amadeus, Galileo and Sabre. Every GDS charges per transaction. Booking fees are usually between 2 and 4 percent of a ticket, and around 20 percent for a hotel booking. So, for a percentage of a booking’s price, an airline receives access to a global network of travel sellers from travel agents to OTAs. Airlines also pay additional fees for system access and consulting. When you consider that more than a billion flights are being booked each year, these are serious sums of money. It’s no surprise that airlines are charging their own fees to recover this money and looking for alternative ways to do business. They’ve found them, with new aggregator platforms from companies like TPConnects giving airlines and hotels a genuine alternative. It’s no surprise that British Airways and Lufthansa were quick to sign up to the service.
In with The New
Of course we can’t talk about new technologies without mentioning AI. Where do you even start with this? Well, one area where AI is making a huge impact on travel is in data analytics. AI can analyse huge amounts of data improving any process from persoanlising travel to improving the procurement process. AI is enabling a range of apps, bots, and software that make the entire travel process easier. For business travel, this will mean more effective and satisfied travelers and a better travel investment for companies. With AI the opportunities are endless and it’s very exciting.
My attention however is drawn to the new technology players in the market. Hopper – the booking application that offers predictive pricing analytics, has launched Hopper Hotels, allowing users to book accommodation. It uses an algorithm that determines users hotel preferences. Mezi a chatbot-led virtual travel assistant now has 100,000 users downloading the app to book flights and make hotel and restaurant reservations. The explosion of global travel in the Chinese market has led to a raft of new services which will start to filter into the European market Almost every week there are huge new funding rounds with mid blowing numbers when it comes to mobile booking and online behaviour. Every sector from air to ground transportation, tours and activities and accommodation is making the news.
These are very exciting times in travel. No longer will we read that the travel industry needs to innovate to stay alive it is now setting the benchmark for other industries that will soon need to catch up.