ID:103925501
2 weeks ago
 

Latest tech-driven era in travel needs a new type of rock star leader

I have been in online travel (and offline, before that) long enough to experience a number of distinct eras.

The first travel startup that I founded, in 2000, was billed as the first brochure-less tour operator in the UK.

Seriously – at that time, not having brochures as a tour operator was genuinely newsworthy.

Automation era

Then the era of automation really took off.

To become a leading online travel agency you had to master a single process – such as flight search or flight booking.

In the period between 2000 to 2010, most of the leading OTAs as we know them found their feet and became the 10,000-plus employee monsters that they are today.

But what skills were required by the founders to achieve that?

Primarily, they were tech-related – you had to source data where no data sources existed (well, at least not those designed for millisecond response online use).

You also had to make a process efficient. And then you had to scale it (generally, a commercial problem).

You had to be first, or at least very early.

This took talent. It was a commercial talent once the initial tech solution was created.

The discovery and artificial intelligence era

We are moving into a new era, now that automation is largely done.

You can buy the tech that used to give a business a competitive advantage off the shelf – similar to how I can now use WordPress to manage content on a website, when I used to have to pay $1 million for a Broadvision licence 15 years ago. It’s a commodity.

You want flight, hotel, car rental or tour and activity data. It’s available.

This is where the OTAs have an Achilles Heel.

The main opportunity to differentiate now is not really tech-driven at all, but product innovation and customer experience. Think Airbnb. Think Uber.

Full control of the experience from shopping to delivery enabling them to innovate or remove friction at every level. That’s why they are winning.

The tech and commercial skills that got the OTAs to where they are is not the talent required to thrive in this new era.

Creating differentiation in this era requires you to be able to devise features, interactions, tone of voice (especially important in voice UIs), and know how data insights can be applied.

This is all much more emotional than technical. A different part of the brain. A different type of person. Individuals can flourish rather than teams.

Restructure the companies

The OTAs should copy the music industry. There it is all about finding talent, young and old, and making the talent the story. You only hear about the musicians/singers, not the commercial people (Simon Cowell excepted).

The OTAs need to find it, promote it, enable and empower it and then reward it.

Online travel, it’s the commercial people we hear about at conferences. Wrong narrative, sorry!

How would the new structure work?

Put the talent in charge of user experience. Of the product. Of the direction. Make the commercial organisation support the talent rather than the other way around as it is today.

This is what startups do (out of necessity or situation) and big OTAs don’t.

Name a famous musician you admire. Right, now tell me who their music label is… I bet you can’t.

Yet it doesn’t matter. What matters is the TALENT, not the commercial team.

Sure, you would not hear about talent without the commercial team, but the talent is what is at the front and what you, as a fan, care about.

You buy that musician’s next album (if you buy albums at all), not the label’s next output.

One challenge OTAs have is that this new talent won’t take a mid-level job at a business. They may find themselves there due to an acquisition and stick for a few months, but they don’t hold them.

The only place talent is comfortable is in startups, where they can show off their talent, even if they are on a secondary stage.

They want to be the guitarist facing 500 ecstatic fans, doing a ten-minute solo, rather than an off-stage roadie in a larger show.

The future

The OTAs have become very commercial and unattractive for true talent to work at.

In the previous commercial era, OTAs could afford to lose the talent they had acquired as part of their acquisition programmes as long as they kept the customers/partnerships/tech/brand from that acquisition.

But in this new talent-led era, this isn’t the optimal outcome.

Likely to mean that when customer experience expertise becomes the differentiator, as it will in the new non-tech differentiating era, OTAs may no longer be king of the hill.

Buy the popcorn!

NB: U2 concert image via BigStock.

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Alex Bainbridge

About the Writer :: Alex Bainbridge

Alex is a contributing Node to Tnooz and writes about travel technology, travel startups, in destination guides and the tours & activities sector.

His most recent business TourCMS (sold October 2015) was the original leader in tours & activities distribution, connecting up hundreds of local tour suppliers with leading online travel agents. The industry architecture he put in place during that period is now the regular approach adopted globally by the entire local tour industry.

He is now CEO of a new in destination project coming soon.

Alex has a computing degree, is passionate about usability, speaks French and still writes and reviews code. Follow him on twitter @alexbainbridge

 

Comments

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  1. Peter Topping

    Personally iI am some what weary of Guru’s and Brand or Technology evangelists as their frame of reference is often pretty narrow, market specific or self serving, the world has enough issues with prophets as it is.
    We have commodified our own industry and flights, hotels, activities, insurance, transfers and car hire are driven by the simple “best price for that item” usually serviced from a range of mega pick and pack travel stores who use their enormous revenue leverage to hold price and inventory access combined with their Google and Face book PPC hammer to access the customer. Brands doing well are differentiating themselves via marketing like “booking.what ever” and trivargo are the stand outs, its the modern version of the early 2000s Expedia (I think) Gnome. With equal access to the travel ingredients it is the dish or the venue that is the easy opportunity while re-imagining the business process, like Uber, AirB&B is the gold. The tech its neither here or there right now.

     
  2. Chris Ford

    The U2 reference is quite timely as I experienced a total fail on the part of the commercial component to the U2 concert in Vancouver BC, May12. Ticketmaster’s new automated ticket validation system was a disaster with 20,000+ fans unable to get into the stadium to see the opening act, some in line for 3+ hours, and forcing U2 to delay their start to ensure everyone got inside. Needless to say many unhappy customers. Fortunately the “rock stars” saved the day with an outstanding performance and all was forgotten.

     
  3. Evan Davies

    Great article and something I have been thinking of lately also, the big OTA are essentially huge supermarkets… but its worse than that. Like a supermarket that shows all the products in exactly the same way. It’s not going to be easy to compete or disrupt them unless voice and chatbots take off soon.

     
    • Alex Bainbridge

      Hi Evan
      Thanks for the comment 🙂 This article isn’t really about how to disrupt OTAs. Plenty of ways to do that if you are so inclined. Voice & chatbots – nope, OTAs will win that – this is tech that requires money – listened to one OTA last week tell a conference that they had put 150 people on building an AI based chatbot. I don’t think this is how startups are going to take them on! Best a startup could do is build something now and sell it to an OTA who doesnt have 150 people spare !

       
  4. Duke

    A truly disruptive startup would not take investment from an OTA. That is just silly. They won’t allow you to progress to the point of disrupting them. They might absorb a few tools into their own system. But what fun in that.

     
    • Alex Bainbridge

      Hi Duke
      This article is not about startups or startup strategy – its more to do with what OTAs should be doing to build the right structures going forward from their perspective, where the skill will be about emotional engagement with fans (much like in music) rather than being commercial or technical. i.e. a whole new skill type to what got them to their existing leading situation….

       
  5. Alastair McKenzie

    Interesting thought. Good analogy.

     
  6. peter syme

    It is very hard for big established companies to get ahead of the curve and that is not just in travel it is industry wide. Once they were the upstarts and the disrupters and they climbed the mountain and got to the top. However, that journey creates a lot of baggage and you only move at a speed that the big organisation can keep up with.

    Meanwhile, young startups who do not have the same baggage can build next generation experiences. They have no interest in climbing the same mountain. They are focused on creating new customer experiences that the big organisation does not really want to because it breaks their current model. At the same time, the customers themselves are moving faster and faster as digital life has become ingrained in their life.

    Businesses are like human brains, they are happy when things are linear and they plan for linear change. They real change is exponential and that has a habit of surprising big business. If the big OTA’s want to stay on top of the mountain they need to stop planning for linear change as the real talent you talk about is all about exponential change and getting ahead of the curve.

     
    • Alex Bainbridge

      Hi Peter
      Established companies get ahead of the curve by disrupting themselves. e.g. in dating (which I heard about because they also own Expedia) – Match.com created Tinder…. to disrupt themselves
      However agree with you about baggage etc….. and linear progression……. however the predictability of this actually makes it easy to compete against for a startup!

       
  7. Matt Zito

    Great article Alex. In defense of the OTAs we are witnessing for the first time in history the opening up of their corporate structure by developing API platforms, launching new incubators, accelerators and investment arms. As TNOOZ noted there are now over 12 corporates in online travel supporting travel startups.
    https://www.tnooz.com/article/travel-startups-accelerators-investment/
    I like your analogy of the music industry, talent and their recording records. At Travel Startups Incubator (TSI) we’ve recently launched the Deal Flow Platform, a match-making network, connecting new travel technology with corporates and investors. We are growing it organically and have 35 members. Bala Chandran the CEO of Flightsayer, is the talent, the Deal Flow Platform, the agent. We’ve successfully been able to acquire pilots, integrations and investment opportunities through the commercial guys. Has then been difficult? Yes, but we have been succeeding. I think the fact that the big corporate travel companies are playing with the startups may actually be the first step towards a restructuring in the way you see it, where the talent (startups) run the front end. It’s also possible that as the larger travel companies open up and start enabling new technologies to be integrated for distribution through their API platforms that these startups and true talent could start moving into the front lines. I truly believe this is the best time in online travel to be a talented travel tech startup. There is more capital for new ideas and the corporates are opening up. Bring on the new travel ideas!

     
    • Alex Bainbridge

      HI Matt
      APIs etc you describe is the tail end of the automation era and the last bit of efficiency being found out of that model…… If I was an OTA I would do that too, of course, but doesn’t solve the medium term problem that talent and structure for creating emotional experiences is not the talent and structure for creating automated experiences…….

       
  8. Judy Melanson

    Love the analogy – a guitarist playing for 500 fans…. or the roadie. But across industries I’m interested in the concentration of power/technology/access with the very large organization/gatekeepers and wonder how technology and/or creative thinking will drive innovation. We’ll be watching!
    Thanks Alex.

     
    • Alex Bainbridge

      Hi Judy
      While not the focus on this post….. I prefer to compete with one or two large players than 10…. as 1-2 leave a lot more spaces around the edges than 10 well resourced entities all trying to differentiate from themselves. Hence concentration of power is not a bad thing for startups! (which again is not what this article is about!)

       
  9. Richard

    Great article Alex but there is still the huge obstacle around the cost of user acquisition that drives innovative B2C ‘rock stars’ to become B2B ‘roadies’ peddling their ‘differentiation’ features, interactions and tone of voice to the existing big players. The current ‘kings of the hill’ may be a handful of OTA’s but their ‘stage’ is well protected by their expensive ‘promoter’ Google who also have a few tunes of their own up their sleeve.

     
    • Alex Bainbridge

      Hi Richard, thanks for commenting
      Problem starts with all the startups who are hotel / flight search “cover bands” – replaying old songs (old UIs) that actually do work very well, because of the original talent and inventiveness from years before that they have copied. To be successful now, you have to either write your own music, or invest a whole new musical genre! Thats the talent….

       
 
 

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