For this year end blog post, I would like to share with you my recollections from a recent presentation to an audience of travel leaders by our Senior Vice President Distribution, Holger Taubmann. I found it thought provoking and hope you will too.
Setting the scene globally
- The world’s focus is shifting towards emerging economies.
- We have learned to live with constant security and surveillance measures.
- Having talked about it for years, the world is beginning to experience the implications of an aging population.
The powerhouse that is China is losing momentum. After 30 years of double digit growth, it is now growing by around 7 per cent. In fact, growth is stalling in a number of markets but we shouldn’t panic. Some of the world’s greatest inventions emerged from challenging times. The economic slowdown is sharper in 2015 than expected. Global growth this year is 5.8 per cent (excluding Japan) versus 6.2 per cent last year and an average of 8 per cent over the last 10 years. Closer to home there is the threat of rising household debt fuelled by low interest rates.
These changes affect all of us in some way or another.
Technology is racing ahead
We’re also seeing rapid developments in technology, emerging at a much faster pace: always connected devices (and not just phones or tablets), Cloud services, new forms of payments and virtual reality.
In travel we see technology driving greater opportunities for relevance and personalisation. Seamless travel is now a possibility albeit a nascent one. And local content, always available to those in the know, has become much more accessible through peer to peer content such as Airbnb.
At Amadeus, we always have an eye on the future. When you look at the future through the lens of travel usage trends, we see clear themes and opportunities as well as the inevitable challenges of course.
- Collaborative Economy – e.g. Airbnb, BlaBlaCar is here to stay. More power to individuals. It offers the economy and opportunity of access over the cost and responsibilities of ownership.
- Internet of Things – connecting everything. This is really just beginning to impact our lives. Gartner says there will be 26 billion connected devices by 2020. Cisco says 50 billion and Intel says 200 billion. They all agree on one thing: it’s going to be BIG!
- Universe of 1: personalised & unique – this fulfils the human need to be recognised, to connect, as well as the desire to feel in control. We will see this developing based on the application of data driven insights using historical but also predictive data.
- Hello HAL – artificial intelligence will quickly learn and remember how to respond to your likes and dislikes with a better memory than even close family members!
3D decision making
The surfeit of ‘pound stores’ in our towns might suggest that price is the most important criterion for decision-making. It is important, but it’s just one factor. As technology has become more sophisticated, the end traveller expects to consider factors beyond the price equation. Besides, when we say price in travel, we often mean air fare or room rate, which is just a component of the overall price. Not all supplier products are the same, which is why smart retailers are adding more cognitive information to the shopping process, with sorting and filtering closely linked to the travel experience. Examples are the sort by ‘agony’ of Hipmunk and RouteHappy’s sort by ‘happiest’.
From 0 to 60 in a heartbeat
The changes that we are experiencing and that are gaining momentum will impact the lives of individuals – ourselves and our customers. Therefore it must influence what we do and how we do it. It will create opportunities both on the technology side, but also on the business model side.
No one can afford to sit back and be a bystander to change. Even hugely successful brands such as Amazon are challenged by issues such as soaring logistics costs, which is why they are now investing in bricks and mortar (i.e. a book shop in Seattle). On the flipside, companies like Uber don’t even have to think about logistics. Maybe more of a concern to them is self-driving cars. In 2020 you’ll be sharing the roads with 10 million of them globally.
We’re working behind the scenes in ways that most people don’t even realise. As a B2B technology provider our focus is moving from back-end systems to shopping and user experience. We’re on a quest to grow and attract new content because travel professionals tell us how important it is to have everything they need in a single place.
While others are talking about product differentiation in the airline sector, we’ve developed advanced merchandising tools to help airlines showcase their products and benefit from higher yield. We’re also providing travel sellers with the ability to retail products to ensure they continue to deliver value and meet the needs of today’s demanding consumers. And through business intelligence and related applications we help travel companies quickly find and recommend the most relevant offers to deliver a highly personalised service.
For Amadeus, the future is about connecting the dots for a seamless travel experience. Our commitment to building a strong foundation for connected travel is also behind our acquisition strategy. Recent acquisitions include: Airport solutions (UFIS) already benefiting Gatwick airport; Hospitality solutions (Newmarket and ITESSO) and airline solutions (Navitaire) as well as a controlling stake in corporate travel and expense solution i:FAO. Where we don’t have all the answers, Amadeus is experimenting by means of our venture capital fund. More about that in 2016.
The next generation retailing experience
While others talk about a vision for redefining travel commerce, Amadeus is doing it. As the second largest e-commerce platform in the world, travel sellers using Amadeus are already embracing the retailing revolution that has got everyone in travel talking. Soon, our unique position at the crossroads of travel and technology will enable us to connect the dots like never before. As Mahatma Gandhi once said, “The future depends on what you do today.” That’s why I’m especially looking forward to showcasing our brand new cloud based shopping and travel management platform as well as exciting new Corporate IT solutions in early 2016.
I’ve talked a lot about change in this piece. But something that will never waiver is my personal (and my team’s) commitment to fuelling customer success. I’m proud of our unique blend of advanced technology and industry know-how. Why? Because of what you tell me. It’s enabling you to overcome the challenges and succeed like never before. At the end of the day that’s the reason I love doing what I do.
Wishing you and your loved ones the very best for the Season. Merry Christmas and a Prosperous New Year.