Victoria Waddicar // December 11 2018

From World Travel Market looking into 2019

This November Digitalist ventured to World Travel Market for three days to meet businesses from all over the world about our new Digital Service Platform Ticknovate.

For those of you unaware of World Travel Market it is the world’s largest gathering of travel organisations from Destinations, Airlines, Hotels to Attractions and Activities globally. With visitor numbers reaching 51,000 it is the key show within the European Travel Trade Calendar.   But with scepticism facing the Trade Show industry, what is the use of a trade show? Results speak for themselves and the 2017 WTM show fuelled circa £3bn of signed contracts, showing the value of bringing key industry players together to do business.

We took Ticknovate to meet the industry, as a platform we launched just 2 months ago this was the perfect opportunity to test our platform with the market, gather feedback and importantly to see if we could persuade some of the industries top worldwide attractions to join us on our journey – to make ancillary ticket sales into a new era.

There’s room for improvement

We found that over 80% of the companies that we met with felt a significant level of frustration with their current ticketing solutions. Their frustration stemmed from:

  • Usability
  • Functionality
  • Inconsistent Service Levels
  • Lack of continual improvement
  • Version/Seat license pricing
  • Inability to keep up with the external changes in selling and distributing tickets

There was an overwhelming frustration that what they were using wasn’t right, yet as such a still traditional industry the air of calm that it was acceptable because all their competition faced the same issues…and it had always been done this way.

What we found interesting was the concept people accepted that this was ok because other people in the industry were struggling with the same solution and the same problems that come with it. There didn’t seem to be any fear that someone would take action, thus giving them a significant competitive advantage.

The conclusion was that our product eased the majority of the issues or concerns that the industry faced, offered significant advantages to the end customers in terms of potential revenue opportunities from existing (and potentially new) revenue streams but offered the companies a more efficient way of operating due to the considerations given to workflows and processes used when shaping the Service Design of the platform.

The market is currently in buying mode, they want to know what is out there so when the time comes they can make a concerted move.

The market is changing

Travel Technology is having to make a concerted effort to increase its R&D, whilst technology within Travel Tech has increased it still lags behind the rest of the market.  The consumer is now so used to seamless experiences offered by Amazon, Uber etc, it’s only natural their expectations of a smooth customer experience expand to other digital services such as purchasing tickets e.g. from an airline and checking in smoothly online, to gaining smooth access at the airport.

It’s clear external pressures including the advancement of the wider E-commerce environment are driving the Travel Tech revolution. Skift recently reported large Digital based companies like Amazon, Salesforce average between 10-14% of their total revenue in R&D.  The questions now to be answered are which existing providers will now reinvest rather than maintain their solutions and what new solutions will enter the market to disrupt the legacy solutions.

Why the new found focus on ancillaries?

The travel sector or revenue area of particular focus seems to be Ancillaries, in particular in destination attractions and experiences. Which has been heavily highlighted as a growth area by these companies is ancillary ticket sales (basically in destination attractions and experiences) with an estimated combined global market value of $130bn which is expected to grow to almost double this figure by 2020.

Therefore we seeing a shift from key market players like Expedia and Tripadvisor to expand their market offering with a more noticeable focus on in destination activities, which also highlights the emergence of ancillary specific competition such as Get Your Guide and Viator.  Each of these players will be looking to expand their foothold in the ancillary market, this doesn’t just rely upon them having the strategy to gain the largest market share but also getting as many new attractions listed on their sites to ensure they have the most diverse offering to capture the most revenue.

So what does this mean for attractions and ticket sellers?

This is the era of opportunity, where no doubt those choosing to put themselves out there on these platforms will no doubt gain the most from the initial growth.  That said the way they sell to these consumers creates a shifting sales dynamic, older, slower more laborious ways of facilitating agent bookings are no longer scalable, and with technology, they aren’t the most financially sound option to grow a business.

The technology market that serves travel and attractions is seeing a shift, as large OTA’s become a large focus for individual attractions to connect with via API there is a realisation that the majority of their legacy solutions cannot connect or their infrastructure and operations cannot service the connections required.

This is a big problem because the OTA’s for an attraction offer access to a global consumer market place, and without being part of this they will almost certainly be at a commercial disadvantage if their competitors are able to access these consumers.  

As the OTA transactions largely operate via API there is an increased requirement for the solutions connecting to each other to hold accurate data in terms of availability, pricing and consumer documentation such as a barcode for tickets they have purchased.  This is overlooking the fact the booking solutions are currently unable to provide content to the OTA with manual work being required to submit a product listing.

This aspect of selling itself will evolve, with OTAs expanding their API suite over the next few years and creating a pseudo automated process in the next two to three years (technology both sides pending). A recent article from Travolution quoted EasyJet boss Johan Lundgren saying:

“It’s also about operational efficiency, doing things smarter, less manual interventions on things that you can predict, looking at what’s going to happen in the future.”

Therefore the attractions businesses of today need to be investing in the right technology platforms to serve their business, not only to capture OTA revenue but also to serve their end consumers and business in a better way than they are currently.  Servicing all stakeholders in a more impactful way, less labour intensive way will only drive revenue and by capturing key data points along the way also offers operational efficiency leading to noticeable positive impact on their bottom lines.

This is similar to the shift online retail faced with the emergence of ASOS, Amazon, Boohoo etc, it shows that going beyond comfort zones and questioning ‘tradition ways of working’ has become the most rewarding for those willing to drive their business to new heights and innovate their customer and business offering.

Wider Observation

Meeting with other industry professionals who sit slightly out of this space and sit more prominently in Digital Innovation within Travel it’s clear the industry is waking up to the opportunities of better operations, increasing revenue and profitability using Digital Transformation as a catalyst.  

It’s not just the OTA or the online presence that will needs to change, this industry needs to leverage the right platforms to their advantage to create their own eco-systems which allow the organisations to thrive.  What is worth being mindful of is that not one solution will satisfy all of their requirements, if it does its highly likely there will be a significant degree of compromise, whereas leveraging the individual platforms that hold the most power for the business defies this paradigm.

It was noted by Accenture in ‘Platform Economy the new Bedrock of Digital’ that “platform-based business models and strategies they enable that are driving the most profound global macroeconomic change since the industrial revolution. In the digital economy, platform ecosystems are nothing less than the foundation for new value creation”.

Looking within their article they suggest some of the worlds most successful ‘Digital Based Companies (DBOs)’ their platforms have enjoyed their success due to two significant factors:

  • the technology platforms they’ve built to support their businesses
  • the business models these platforms enable.

I couldn’t agree more with their statement “These platform-based business models fundamentally change how they operate”.

Which leads me to 5 predictions for 2019:

  • The companies who invest in their platforms (specifically Booking PLatforms) within Q1 2019 will enjoy better trade, customer and internal relations…not to mentioned better piece of mind than those who do not.  
  • What will also be interesting to see is whether the smaller startups entering the market without large backers will be able to keep up to their promises of continual investment in their technology and services
  • The ancillaires providers who don’t invest within Q1 2019 will by the end of Q2 and Q3 be chasing platforms to find a hybrid approach until they can fully move over their business in an attempt to not get left behind
  • OTA will continue to expand their technology and consumer offerings, implementing more personalised offerings which will put further pressure down the food chain
  • Large Travel Technology players will begin to keep an eye out to aquire  innovations which fill this space in the platform ecosystems in an attempt to gain market share in a rapidly growing sector.

I look forward to reviewing my predictions midway through 2019.

Resources:

https://skift.com/2018/11/07/amadeus-revs-up-spending-for-product-development/

https://www.ft.com/content/02287b86-ad37-11e8-8253-48106866cd8a

https://www.accenture.com/gb-en/insight-digital-platform-economy

http://www.travolution.com/articles/109701/easyjet-right-to-scrap-e-tailing-project-says-johan-lundgren