The big challenges facing travel industry
A new report from A.T. Kearney, ‘What if? Imagining the future of the travel industry’, has identified trends of personalisation and seamless travel as key drivers of success in the next five to seven years.
According to the report, the travel industry must be better prepared for economic and political disruption if it’s going to make the most of future economic growth.
Whilst the sharing economy, virtual reality and the internet are all improving the traveller experience, international geo-political, social and economic developments are disrupting and polarising the world as we know it, limiting the industry’s potential for future prosperity unless companies act now, the report says.
So what’s this mean in everyday language? (Yes, we struggled).
A.T. Kearney has highlighted two key trends that are changing the travel industry landscape, and agents and the industry at large need to take note:
- Personalised travel experiences versus mass market
Technology enables the collection and making sense of consumer data and the use of Artificial Intelligence to learn about traveller behaviour.
In addition, it may help to meet individual needs, instead of a more traditional one-size-fits-all approach.
- Seamless travel versus fragmentation
Truly seamless travel will require governmental co-operation and data sharing between businesses: from airports and airlines to destination services such as hotels, restaurants, and ground transportation.
Based on these two key trends, Amadeus and A.T. Kearney have identified four future-looking world scenarios that travel companies need to prepare for today, if they are to maximise future growth and success tomorrow.
They’re a bit abstract – Picasso and Warhol made it into the report somehow – but relevant nonetheless.
PICASSO
The Picasso scenario comes from looking at a world that’s separated and isolated, surrounded by security risks and concerns. As a result of this outlook, more travel destinations become deemed off-limits.
But most parts of the world are still experiencing economic growth. Companies are investing more in innovation to reach more customers through mobile channels, and this interaction enables businesses to provide more sophisticated personalised offers.
DALI
The Dali scenario assumes that relaxed and open social attitudes and economic success can help create a better environment for the sharing of data.
As a result, we get more relaxed privacy laws and lighter regulation, which allows for greater personalisation of travel.
Living in the Dali scenario, travel becomes faster, cheaper, and safer. People benefit from less security controls at borders and have real-time information about unexpected events such as flight delays.
BOSCH
In the Bosch scenario, business costs rise across the industry as companies struggle to comply with a huge collection of different legal, tax, labour and data protection laws.
We’re faced with a fragmented world that is built on distrust, as we’ve seen with recent terror attacks around the world. Facing Bosch’s political environment, travellers seek comfort in trusted brands and book directly with well-known travel providers.
WARHOL
The Warhol scenario is characterised by seamless and not personalised travel, that considers the implications of strong economic growth in Asia, giving rise to a large middle class with more disposable income for travel and leisure.
Travellers would rather go for low cost, mass-market travel instead of having personalised options even in a world free of barriers.
“Technology has never held more promise for the travel industry”, said Alex Luzarraga, Vice President Corporate Strategy of Amadeus IT Group.
“But the status quo is being turned on its head. There is widespread mistrust and populism. Things we used to take for granted, such as the right to travel across Europe without passports, for example, may be less likely in the future.
“It is important to evaluate and understand, in partnership with A.T. Kearney, those issues that will continue to confront and disrupt the industry in the coming five to seven years, so we can as an industry be better prepared to deal with those issues, and also stimulate economic growth and success as a result”.
“The report is based on the perspectives of a broad range of stakeholders from across the travel and technology worlds,” added Yelena Ageyeva-Furman, Principal, London, at A.T. Kearney.
“It illustrates a broad view of the future, which allows companies to uncover their organisational blind spots. Moreover, the study tests existing plans against industry outlooks, and helps us understand ‘no regret’ moves and imperatives in company strategy.
“This paper will provide an interesting perspective to the businesses that wish to prosper in the travel industry in the coming years.”
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