NB: This is a viewpoint from Andrew Ryan, co-founder of 3BaysOver.
I have a confession to make. I used to be a Wall Street banker. Fortunately, I saw the light before it was too late, and I let it guide me to the world of travel. However, I did learn a few things before I made the leap.
Bankers have certainly not enjoyed a stellar reputation of late, with much of the criticism fully deserved, but certain elements of that industry can serve as an important lesson to us in travel.
In particular, my time in finance showed me first-hand how a whole industry can truly benefit when it embraces technology and innovation. This is of particular relevance to travel today, where the new and the innovative is all-too-often resisted and feared. Such resistance is not only futile, but enormously detrimental both to those who work in travel, and to the customers or partners they serve.
A distant past… which travel is still living in today
30 years ago, technology played only a very small part in the lives of finance professionals. Its most prominent role was to progressively convert exchanges from physical trading floors to online marketplaces. The day-to-day life of the typical banker or trader was all about faxes, telephone calls and paper printouts of bond and equity prices. Travel as an industry wasn’t much different, with the airlines and some agencies connected to an emerging online marketplace via the GDS’s, but otherwise life for its members was very much an offline affair.
What’s notable in finance is that since then, technology has been viewed not as a challenge but as an opportunity: if it can make pricing more transparent, save people money, reduce the time it takes to trade, help industry members to connect more easily and make information more accurate and more accessible for everyone, then why not embrace it with open arms? And that’s exactly what finance did.
To be sure, it hasn’t been a painless process: some jobs have been lost along the way, companies that couldn’t adapt or whose business models became redundant disappeared, and nowadays everyone and their cousin can claim to be a trader. But the ratio of output to input (ie. the efficiency) of any process in finance is almost infinitely greater today than it was 20-30 years ago.
Travel, by and large, has always viewed technology as an evil imperial power, set on conquering hitherto virgin markets and plundering their resources to enrich only itself. Few are those in travel who see technology as the unifying and empowering tool it really is – much more liberator, than conquistador.
Yet the truth is, and despite the common refrain, to date technology has barely impacted travel, let alone disrupted the whole industry. It has made small parts of it a little more efficient – mainly searching for and booking flights and hotel rooms, which are the easiest parts to commoditize and hence to be purchased online by the consumer – but as anyone within travel knows well, airlines and hotels are just the tip of a huge and very complex iceberg.
2 further differentiators
1) In finance, most of the innovation has focused on the back-end, ie. making the processes within the industry faster, cheaper, better. The conventional wisdom is that a more efficient industry will always benefit the consumer with better products at lower prices. You won’t find many social networks dedicated to letting bank customers post pictures of their favourite branch or share updates about their interest rate.
In travel, it’s generally been the opposite: investor funds and entrepreneurial energy have focused mainly on the traveler and creating funky tools for her, while those who dedicate their lives – not just their holidays – to travel, struggle to remain relevant with their outdated systems in their disconnected markets.
2) Unlike finance, the travel industry is not so much one industry as multiple interconnected ones. Few if any of these have centralized and truly effective trade representation or regulatory groups, and where these do exist they are often strongly incentivized to maintain the status quo.
This means that meaningful change will almost certainly not come from the top down, in contrast to finance where powerful regulatory agencies have been the ones pushing for continuous innovation.
In travel, innovation will likely come through grassroots experimentation and entrepreneurial innovation, which will see the early adopters thrive before the masses have no choice but to follow. This means that any and all of us can start to contribute today to shaping a technology-loving travel future.
Where is all this going?
Perhaps the most significant question to ask today, at least in terms of the age-old value chain that anchors much of the industry, is this: in a world of hyper-connectivity and consumer impatience, does the traditional “supplier-DMC-tour operator-retail agent-customer” chain still make most sense most of the time? Of course it doesn’t.
Is that a bad thing?
It’s maybe a little sad, the same way it was when the jet airplane condemned elegant transatlantic liners to a future of sunny island-hopping. But on balance, such evolution invariably favours a greater number of people.
At the end of the day, we should remember that as travel professionals, we are here – directly or indirectly – for one reason only: to serve the traveler. Not to defend our job title, not to promote our own agenda, and not to waste valuable time and energy on defensive strategies that could otherwise be invested in creativity, productivity and profitability.
2 quick points to keep in mind:
1) Innovation does not mean replacing humans with computers. Far more often than not, it means using technology to help humans do their jobs better. And this is where travel professionals can really benefit today.
2) Innovation will likely lead to the creation of completely new jobs in travel. In 2010, Mary Schapiro, then chairwoman of the US Securities and Exchange Commission (the US financial markets regulator), said that “advances in technology have opened the door for entirely new types of market professionalsâ€ť. Who knows what new types of jobs might emerge in travel?
The future of travel: My predictionsÂ
To put my money where my mouth is, here are my Top 5 Predictions for trends facilitated by technology and innovation that we’ll be seeing in travel over the next decade or so:
1) New roles created: The biggest new role we’ll see created will be the ‘client-facing DMC’ (let’s call them Destination Travel Consultants). This change will reflect a progressive blurring of the lines between agents, tour operators and DMCs, which to some extent has started with the first two, but has yet to really impact on the inbound side.
While itâ€™s clear there will always be a demand for experienced travel advisors on both the outbound and inbound sides, it’s also clear that agents/operators with expert knowledge and a local presence will have an edge in the future.
2) Consolidation: The above trend will be facilitated by significant consolidation in the market, across geographies and sectors, which will see vetted and accredited professionals joining forces (sometimes under the same brand, sometimes as integrated networks of independent brands) to benefit from economies of scale, to allow customers to return to the same group of professionals for each trip (if not to the exact same professional), and to mitigate some of the risks (eg. legal and logistical) of going ‘too local’.
3) A centralized global B2B marketplace will emerge. This will likely be the biggest change in the industry in the next decade. Similar to a stock exchange in finance, this dynamic marketplace will allow for the highly efficient real-time pricing and trading of all travel products, not just flights and hotels.
Tourism boards – whose role will grow in importance in the coming years – will be critical in setting up and regulating this new marketplace. Maths PhDs and computer scientists currently making big bucks on Wall Street will hop over to travel to help design and build it. Consumer-facing sites will also plug into this marketplace, but it will primarily be for the trade.
4) Evolution of user reviews: Qualitative user reviews (a la TripAdvisor today) will be completely outdated within 2-3 years. Consumer reviews will soon happen almost exclusively via ultra-smart mobile apps that a) verify that a consumer is legitimate, b) collect and interpret real-time feedback about an experience or service, c) translate that into an accurate score weighted for specific user characteristics, d) feed that into a centralized global rating system of all products and service providers. This ranking and rating system will be an integral element of the new marketplace.
5) In-person events: Smaller and more focused trade events will grow in popularity, while the big yearly trade events will see business decline further. The current trade show model (rent a booth, sit there, wait) will be progressively replaced by a more interactive and engaging experience, facilitating the actual doing of deals rather than catching up over a cocktail. At the same time, printed brochures will all but disappear within 5 years.
Like most of you no doubt, I’m proud to work in travel. I admire the fact that unlike bankers, my peers in travel are driven more by passion than profit. However, this has perhaps blinded us to the fact that an industry that wants to stay healthy must continuously improve and innovate. Finance has always done that well, and it may serve us to take just that page out of the banker’s playbook.
NB:Â This is a viewpoint from Andrew Ryan, co-founder ofÂ 3BaysOver.
NB2: Wall StÂ Image courtesy Shutterstock.