Global Trends Influencing Online Travel Retail
Updated: Jul 30, 2020
These are slides from a talk I gave at the 3rd Annual Travel Tech Middle East Congress from 8-9 October 2019 at The Oberoi Hotel , Dubai, UAE.
Let's start off with the way we feel about the internet. For most of us, the internet is simply an essential like food, water and shelter. There's a running joke that people would care more about trees if they doubled up as wifi routers.
We're spending more and more time on the internet. Digitization in not coming, it's here in every industry. We all need to be prepared, which means getting the basics sorted out - having an optimized PWA platform, getting those ML algorithms in place, getting AI to help with recommendations & remarketing, etc.
And we've all seen what can happen if we're not prepared...
The demise of Thomas Cook led to massive job losses beyond the company itself - it's said 500 Spanish hotels shut down after it's closure. There were of course other reasons to blame - a Europe-wide heatwave reduced holiday demand sharply, uncertainty around Brexit leading to a drop in sterling’s buying power. But lack of a proper IT & digital strategy was a key factor leading to it's fall.
Whatever I've talked about so far's pretty basic knowledge. Then the question is:
Well, social commerce, for one.
Penetration of social media in GCC countries is among the highest in the world.
Every channel is distinct and complexity crops up as new channels come in such as TikTok, Twitch etc. The audience profile varies widely across platforms as well.
Social media strategy, therefore, also needs to be distinct by platform.
Due to the complexity, it takes a significant amount of time and effort to draw engagement on social media. With increasing costs, it has become more and more expensive to just ask for an engagement and no transaction, especially for relatively mature brands.
Some companies have done this quite admirably. A great example is the Look & Book feature by easyJet. It allows users to search the brand’s app using Instagram photos. Users can upload a screenshot of a destination, and the app will then use image-recognition technology to determine where it is, along with options for Easyjet flights
But social commerce is not just about social networks. Messaging apps crossed networks in popularity way back in 2015. The reasons for these are hardly surprising: given our ever decreasing attention span, 87% of customers now expect a response to brand enquiries within 24 hours and 20% within an hour. In terms of responses, a chat message is less urgent requires less attention than a phone call. Customers can respond immediately or leave it till later.
Expedia & Booking.com have already started to experiment with FB chatbots. Etihad Airways has launched a new service to get responses on WhatsApp for premium guests. The service is being handled manually, which is sub-optimal, but it’s a start. There are still many challenges with chatbots – they're not robust and can sometimes increase frustration. Evolution of NLP technology can drive chatbot adoption in the future.
Unfortunately, there's a dark side to social media as well. Frequent use of social media has been linked to increased depression. Technology has a negative impact on self-esteem due to constant comparisons.
Users are therefore shifting from always on to more conscious, intentional use. Instagram lets you monitor the time you spend on it, for instance. With a drop in the avg. time spent on the internet, content quality becomes more important.
So it'd be reasonable to expect that engagement and transactions through social commerce will plateau at some point. So what would be the next frontier?
A likely candidate is the internet of things.
Internet of Things (IoT)
An IoT device collects a lot of data through different devices , analyzes it and directs actions across the network ecosystem. IoT is basically about connecting any device with an on and off switch to the Internet. IoT devices are almost always special purpose devices and not just computers. This includes everything from cellphones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of.
The %age of connected device is expected to double over the next 5 years.
And the growth in IoT penetration has been fueled by increasing availability of internet bandwidth.
Basic uses have started in travel. The Kayak Alexa skill can provide information such as where users can go for $300, hotels in Barcelona and a flight’s expected arrival time. Bookings still happen via mobile or desktop. But it will need a lot of getting used to - currently most travelers use it for weather information at their destinations (60%) and traffic updates (54%).
Now that we've got smarter devices, faster internet and better algorithms, what could go wrong? Well security for one - with billions of devices being connected together, what can people do to make sure that their information stays secure?
From a manufacturers' POV, they need to figure out a way to store, track, analyze and make sense of the vast amounts of data that will be generated.
But the biggest fear is of course the possibility of us inadvertently ending up with a Skynet. We got quite a scare when Facebook AIs started talking to each other in terms humans couldn't understand. All things considered, we're still pretty far from Skynet, but IoT applications will definitely increase in the next few years.
Now let's say you've reached out to customers through social media and IoT and even nudged them to transact. But you find that they still don't. What could be the missing element?
It could be the case that they don't trust you. And who can blame them?
We know that data is the most valuable commodity in the world right now. Tech companies' valuations have left other sectors far behind.
But corporations’ attitude towards data security has been rather lax, to say the least.
Marriott’s Starwood properties had its central reservation database hacked, including five million unencrypted passport numbers and eight million credit card records. The breach dated back to 2014 but was not discovered until November 2018. The breach affected about 30 million residents of the European Union. British Airways data breach & $230 million fine: 500,000 customers had their credit cards skimmed over a three-week period between August and September 2018.
Incidents like these don't inspire a lot of confidence.
But we might have a savior in...Blockchain!
Now what is a blockchain? In layman (my) terms, it is a shared database managed across a network. The data is encrypted and resistant to tampering. Everyone connected to the blockchain has a copy of it. The data is encrypted but the entries are visible.
Every block has a unique digital signature assigned based on the data in the block. The signature is included in the data for the next block. Any change in data for the first block changes the signature and “de-links” from the next block, which has the original signature.
In theory, a blockchain can be altered but for a large blockchain like bitcoin, the cost of computing power required would be greater than the gains from hacking the chain.
There are few problems with blockchain though. For the layman, it's really complicated to understand and hence harder to trust.
And potential data breach is not the only reason customers view you with suspicion every time you ask for their email address. The damage done by episodes such as Cambridge Analytica is still fresh is memory.
Moral from these stories: Be careful about what you see / hear / tell on the internet.
But that's not great for business. Companies need potential customers to trust them if they're going to make any money. How can they generate that? One method is to use User Generated Content (UGC).
Consumers are turning to their friends and family for destination recommendations - 84% of millennials think UGC affects their purchase decisions. It's evident from FB & Intstagram stories that consumers are even fine with lo-fi content on stories, trading traditional video production for quick content created and consumed entirely on mobile. In fact many feel they have a responsibility to share their experiences around products.
And why are these behaviour trends among millenials important? Because they have most of the money.
A great example of a successful UGC campaign in the region is the #fakeit campaign carried out by Cleartrip. It's enagagement rates were 10x compared to other campaigns and it resulted in a 100% increase in searches. It also fetched us an award for best social media strategy.
But one still needs to be careful with UGC. In the past, brands that haven’t monitored user submissions closely have faced PR nightmares sparked by internet trolls. To tackle fake reviews, TripAdvisor has developed its own fraud detection technology in addition to putting in place “hundreds of content specialists working 24/7 all over the world” operating in every language the site supports.
Now let's sat you've reached out to customers, made transactions easy, established trust and acquired a lot of data.
Then we come back to the quintessential question:
The answer's quite obvious now:
Personalization means tailoring offerings according to need. In an airline context, a move towards personalization was announced by IATA in 2012. It was an XML based technology, which was new at the time, so they named it New Distribution Capability (NDC).
Airlines are offering a wide variety of products and services on their websites to appeal to the business traveler – early boarding, preferred seating, a day pass for an airline lounge and so on. But TMCs using GDSs may not be aware of the full range of airline products on offer, and airlines cannot customize the offer based on who is making the request.
NDC enables unbundling of services based on who’s making the request – a flexibility not currently offered by GDSes. It is a set of technology standards, which will give airlines the ability to distribute all their content directly to third parties.
After initial resistance, GDSes have come around and started supporting NDC. This's great because it's impractical for agents to do 500 NDC integrations for 500 airlines.
But NDC isn't a done deal yet. There are still problems like:
o Different airlines have come up with their own flavor of NDCs
o Operational risks – Compatibility, comparability of fares, guidelines not clear for all functions
o Technological risks – Can airlines support the tech burden, especially smaller airlines & agents
o Commercial – Brings in more middlemen b/w airline & GDS, how do financials work, who bears the cost of transformation
It is clear that there will be updates to the current version of NDC. GDSes are multi-billion dollar tech companies, so they're not going away any time soon. And it's likely that GDSes will turn out to the best enablers for NDC.
And these are the four major trends disrupting flight bookings globally today.