11 months ago
 

State of the travel tech nation – in the year 2040

We live in a fascinating – if uncertain – period for travel tech, as intermediaries, suppliers and, indeed, consumers evolve at an unstoppable rate.

Such progress is inevitable, for example, as consumer behaviour is influenced by mobility, connectivity and a barrage of choices.

As the number of people travelling is expected to double in the next 25 years, the role and function of travel tech will be influenced whether those that use it like or not.

So, alongside the volume of travellers in the marketplace, what other elements are likely to change?

NB: This is an analysis by Jim Fatah, chairman of JFA Systems.

1. Customers will split in two

Two distinct groups of holidaymakers have begun to emerge: those who value low-cost holidays above all else and those who require bespoke, tailor-made experiences.

Over the next 25 years, this gap will continue to grow. As tour operators diversify their offerings to meet the different needs of their respective markets, a clear winner may come out on top.

Established tour operators such as TUI and Thomas Cook in Europe, for example, will fulfil the needs of the low-cost market, while smaller, more agile operators and OTAs can offer flexible and dynamic packages.

However, the dynamic packagers have their own problems…

2. There will be a decline in dynamic packaging

For decades travel agents have offered dynamic packaging as a way of providing flexibility, ease of use and value for money.

However, OTAs and dynamic packaging tour operators will need to add considerable value to what they offer if they are going to survive.

While suppliers make it easier to book direct, hotel chains will increasingly move away from using generic hotel booking sites.

As customers start to take matters into their own hands by booking directly through a supplier’s website and creating their own bespoke packages, they will no longer require the services of an OTA.

The OTA must re-evaluate their offering to provide a cost-effective service or add value if they are to survive for the next 25 years.

3. The demise of the GDS

Once the long-standing providers of multi-functionality systems for travel agents, the role of the Global Distribution System (GDS) is changing.

An increasing number of airlines and other suppliers are now offering direct access to their stock via an API and, as reservation technology suppliers take advantage of this, there is less demand for the GDS offerings from tour operators.

4. The Survivors

Ski companies will survive as most major tour operators offering transfers to resorts still only cover about 20% of the European ski market.

Independents still have room to grow by marketing niche, tailor-made ski holidays.

While low-cost airlines continue to prosper, it makes little sense for them to cover long-haul as the marketplace is too large and volumes too small to truly compete.

Long-haul operators will also continue to survive as the “DIY trip” trend is unlikely to affect them as much.

Holidaymakers looking for all-inclusive vacations will be attracted to package deals rather than tailor-made experiences, therefore cruise operators, coach companies, adventure holidays and theme parks will also come out on top.

5. Understanding customers

Over the next 25 years, as demand for more comprehensive data continues to increase, the software industry will produce off-the-shelf technology to suit the needs of individual suppliers and provide more efficient solutions for data analysis and reporting.

While the adoption of advanced analytics tools is not yet mainstream, key trends show the industry focus is turning away from complex data processing systems.

Instead, companies are managing and analysing data in a user-friendly and simplistic way.

As suppliers gain a deeper understanding of their own data, tailor-made analysis and reporting will continue to replace traditional methods and satisfy customer needs.

NB: This is an analysis by Jim Fatah, chairman of JFA Systems.

NB2: Beach sunset image via Pixabay.

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Viewpoints

About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are the views and opinions of the author and do not reflect or represent the views of his employer, tnooz, its writers, or partners.

 

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  1. Bruce Rosard

    I agree with a lot of the comments – this article doesn’t touch on what travel tech will look like in 2040, but how could it? Forty years back, 1976, there was no mobile, social or web, which started to get real only 20 years ago. So trying to look 40 years forward is ludicrous. The slight changes mentioned related to GDS and Ski and dynamic packaging are such minor affairs. We know that autonomous cars will be a standard in 10 years or less. It is very likely that we’ll have flying cars in 40 years or less. Imagine what drones will look like in 10 years, let alone 40. VR and AR will completely alter the landscape of how travel is marketed, whether its on a GDS, OTA or direct channel. With wifi or broadband or whatever the connectivity of the day will be, the bandwidth will be so much faster than we have today, we can’t even imagine what the implications are. And the list can go on and on and on, sorry Tnooz, I agree, I’m not sure how this article, with this title got through.

     
  2. Jim Fatah

    Hi, please let me reply to both @Naresh and @RadekKorbecki. I agree with Radek that currently OTAs would have little incentive to switch away from GDSs – however, they represent only part of the GDS traffic. What I see happening is first the medium to large tour operators will move away from GDSs as the airlines open up better and better access reducing GDS revenue. Technology suppliers are already building better links to travel and accommodation suppliers, and in the future they will be able to provide OTAs with a one-stop shop where all business functions come under one roof. As more and more airlines move away from the GDSs this will become the favoured route. OPAs will need to become leaner and more responsive to persuade customers to book with them instead of doing their own thing. The all-in-one shop will help them do that by giving them the right personalisation and data analytic tools – so they will move – and the GDSs will lose out.

     
    • Naresh

      @Jim : Is the technology suppliers are building one more GDS? Concept virtually remains the same?? Having Individual connectors for each supplier is going to be very expensive even for big travel agencies…GDS meanwhile has taken different avatars already as OTAs, Online models etc…So still not convinced that the concept will lose and direct connects will be the future…

       
      • Jim Fatah

        @Naresh Actually it will be very easy. Your tech supplier has all the contracts and all the OTAs, all a tour operator needs to do would be to give the suppliers credit card info. The advantage here is that the OTA or tour operator has to have a system anyway – the GDA is an additional layer and removing additional layers makes the OTA more streamlined and cost competitive

         
  3. Peter Sume

    No mention about social? Do you think Facebook is going to do nothing in the travel space with all the travel data it is gathering on us?

     
    • Jim Fatah

      There is no doubt Facebook and social media will develop rapidly over the next 25 years. The effect they could have on travel is immense. With social media evolving on a monthly, and even weekly basis, it is difficult to say what the future of social will look in the next year, let alone the next 25! As my expertise lies within travel bookings systems, I wanted to focus on the areas informed by my background and industry experience. However, I am excited to see the development of social over the next years.

       
  4. Radek Korbecki

    GDS demise is a step backward for travel tech. As much as I dislike an oligopoly of this giants there is a need to integrate multiply schedules and pricing sources. There’s no way smaller OTAs can directly integrate with all of the airline’s revenue systems and it’s not feasible to do so. And what kind of incentives would OTAs have to switch? GDSes have a wide range of moves available and while airlines are running on a very low margin it can still be a bald move to do what Lufthansa has done.

     
  5. Naresh

    Hi, I think some points seems to be possible, but is it a reality that GDS companies must wither away? They are the foundation members of the industry and while technology is changing they are changing the front end. They are in OTA space as well as in other forms in the industry. They are investing in research and technology. I doubt this overall prediction.

     
  6. Torsten

    2 points:
    – If you advertise in the header to talk about travel tech in 2040 you should also cover it and not just a niche subset with vague opinionated statements
    – ski companies as survivors in 2040? You must be kidding! With the rate of global warming Europe can count itself lucky if there is still any snow let alone ski tourism in 2040

     
    • Kevin May

      Kevin May

      @torsten – thanks for the comment… We are sorry about the headline…

      I hope your company ( 😉 ) is doing everything it can to help the environment? For example, would you encourage travellers to stop flying and do more conference-calling? Seems a logical first step to many of those who may be concerned about the fate of the ski sector, if climate change is a factor in the snow window shortening.

       
      • Chuck

        Kevin, I can´t believe the editors let this article get posted. You must have been paid a lot.

         
        • Kevin May

          Kevin May

          @chuck – hey, thanks for the comment… As you know, any sponsored content is clearly marked as such.

           
      • Torsten

        @Kevin, I’m commenting as private individual but as you ask, yes, our company (BCD Travel) is taking sustainability seriously: e.g., we have introduced a trip planning tool in partnership with routeRank that shows video conferencing in the same way as other modes of transport to get from A to B (and is now integrated with Concur) to give the right nudge at the meeting planning stage before a trip is being booked; we advise companies how to integrate their virtual collaboration assets into travel programs (and last year partnered with Cisco on this); we sponsored the project to revamp GBTA’s sustainability assessment tool that helps companies to understand their baseline and give concrete ideas on how to meke their travel program more environmentally sustainable; and we have been the first TMC to report our CSR program progress through UN’s global compact

         
        • Kevin May

          Kevin May

          @torsten – ah, right… THAT Torsten… 🙂 …. Good stuff re BCD… Do you find that clients are doing their bit to help or is it one of those subjects that gets lip-service because of their own CSR programmes?

           
    • Jaume Calm Serra

      A common misconception about global warming is that all the planer will get warmer. Europe, most likely, will get colder winters: http://www.dailymail.co.uk/sciencetech/article-3143381/Europe-set-COLDER-Melting-sea-ice-weaken-Gulf-Stream-cause-temperatures-plummet.html

       
  7. AJS

    I for one hope that by 2040 we’ll all just be teleporting to our holiday destination!

     
 
 

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