I recently claimed in this webinar that the travel industry’s innovative golden years were in the 1990s, and that our industry hasn’t seen much innovation (with a capital I) since.
Why the lack of innovation, you ask? I listed three factors, and am adding a fourth here.
Barrier 1: The legacy “Rows and columns” GDS mentality. The GDSs are arguably the most influential – and constraining – link in the travel value chain. Their products and attitudes about travel technology have driven much, maybe most, of the way suppliers, TMCs and many corporate buyers think about the travel technology landscape, for better or worse.
Unfortunately, those products, and the way GDS folks relate to them, don’t fit the emerging needs of the market, mainly the travel suppliers and TMCs. An easy example: airline merchandise just doesn’t fit in the tables of existing GDS displays.
Barrier 2: TMCs don’t have an innovator’s orientation. Instead, they see themselves as integrators. Yes, integration is a real value, as is their focus on delivering seamless services. But what makes this a bottleneck to travel innovation is the depth to which TMCs see so many problems. Why? Because a deep understanding of pain points is a key factor in innovation. Nobody sees more pain points in travel than a mega-TMC.
If there was one part of the travel industry that I’d expect to deliver significant innovation throughout the years, it is this one. And yet the TMC industry’s innovation record is arguably appalling. It’s not for lack of opportunity, so it must be some combination of insufficient skill or will.
Barrier 3: Overly-cautious corporate buyers. Buyers are closing their doors to innovators because they don’t want to take the risk on a new technology or unproven approach. Sure, these folks need to evaluate risks and rewards, and I get that they may err on the safer side of a decision, but still.
Innovations die without markets. If every buyer waited until someone else took the first leap off the diving board, we’d always be looking at an empty pool.
Barrier 4: Poor innovation practices. It occurred to me after the webinar that this barrier is the fundamental explanation. There’s no lack of desire to innovate, and there sure is no lack of opportunity to solve problems. It has to be that innovators, and their managers, are not going about the job in the right way.
It goes back to skill and will. By skill, I don’t mean the ability of innovative teams to imagine new solutions. I’m talking about the processes they use to find worthy problems and then validate their prospective solutions.
By will, I mean the political will, and to a much lesser extent, the financial will to back the pursuit of innovation within large organizations. That’s you, GDSs and TMCs.
That’s also you, the corporate buyers. You’ve got to make time for more in-depth conversations with your suppliers about what you really need, and what you’ll pay for.
I recently heard a story about a credit card executive who asked a buyer if he’d like room night volumes from the credit card data. “Oh yes, that would be great!”, said the buyer. And how much would you be willing to pay for that enhancement, asked the card guy.
“Oh, nothing – you need to give us that data for free.”
If that story ended there, then shame on both the buyer and supplier. A problem was identified, a solution was floated, and the buyer immediately popped the trial balloon.
And we wonder why there is a lack of innovation in our industry.
This article originally appeared last week in The Beat.
See this post on the future of airline distribution.
See this post on GDS implications from the Google-ITA deal.
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Your article is rather provocative (as usual ?);
I think innovation continue to be present in the travel industry !
Even it’s not seems appearing so far.
Because I believe the convergence between mobility (smartphone, pc,…) and travel will be more and more improving and maturing. And, for sure, that will change a lot all the travel chain:
The traveler will have access to more content, thus will be in a position to take more decision at his level.
That’s is really challenging for travel manager (will the traveller become a travel manager himself ? to what extent ?), for the TMC and all travel providers (who we need to convinced ? traveller ? travel manager ?).
So we may face a serious shift of power between the different travel players in the coming years.
That could explain the potential reluctancy to change, you are mentioning, of all the different stakeholders.
Anyway, changing forces, especiallly those linked to technology will, for me, change drastically the rules of the game for all travel people, certainly sooner than expected.
Another possible explanation of the relatively “peaceful” period we are facing is certainly due to the slight recovery of travel:
2009 had been so difficult for everyone, that after the storm, there is time for just having a look at a more safety landscape !
Hi Scott, I would like to add a few thoughts to your comments.
Firstly I think the travel industry as a whole continues to be reasonably innovative but it is the leisure travel space that is sparking great ideas and implementing them. The corporate travel space is however to my mind fairly stagnant. No industry stands to benefit more from Mobile / Local / Social than travel. There are huge opportunities for corporates and suppliers to optimise the traveller experience / traveller data.
At the NBTA conference in Portugal the economist who spoke highlighted very clearly that recovery from recession is the best time to invest in innovation. The time is now.
As an industry we should pay as much attention those people who are trying new things as possible.
The GDS model is the backbone of corporate travel – changing from it is like upgrading out the electrical supply of a city – its going to be painful , there will be failures but the final result will be far better for everyone involved. Kudos to HRS in this space who are trying something completely different.
Several very good points, gentlemen. Last one first: Has the economic downturn delayed innovation in our industry, and should it? Yes, it almost certainly has. Presumably, the major GDSs and Carlson Wagonlit Travel all have significant debt structures that consume cash – cash that could otherwise be invested in innovation.
And yet Michael’s point about hard times being the best times to bring out innovation is fascinating. Perhaps it is the scarcity of cash that sharpens the innovative lenses of those who place these risky bets?
On to the power and influence of Mobile/Local/Social. No doubt these are paradigm shifts that will drive much of the travel industry’s evolution. Evan Konwiser, Co-Founder of FlightCaster, recently wrote this excellent piece on the shift to a traveler-centric world: http://blog.flightcaster.com/the-future-of-corporate-travel-how-to-change Here’s his view:
“…consumer travel technology is vastly outpacing managed travel. This is not a surprise, nor should it necessarily be worrisome. Companies like TripIt, Kayak, Google, Apple, and the garage developers should produce the best traveler-friendly tools and technologies. A Travel Management Company (TMC) or Corporate Booking Tool (CBT) can never build the most beautiful user interface — It’s not in their DNA, nor is it their mandate.”
I agree with your views that corporate travel is changing, largely due to the influence of consumer-oriented Local/Mobile/Social tools.
What I find fascinating and frustrating is that the major players in the corporate travel industry – those who know the problems so well – aren’t the leading lights of innovation. Perhaps they are content to absorb innovation, rather than produce it.
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Hey, that’s the way we’ve always done it.
Oh so true…the ultimate reason for lack of innovation!
The other two:
“We tried that last year and it didn’t work”
“Who do you think you are?”
The travel industry has always been at the forefront of innovation, but it was always dedicated to maximizing efficiencies in distribution of hotels, air and other services. The TCM’s and GDS have pretty much fine tuned this to perfection for their “clients” I believe one of the main reasons you see very little innovation in coporate travel today, is because of the nature of travel in of itself. Coporate travel managers are not looking for innovation they are looking for the cheapest alternative to travel, and why would any company invest only to reduce their already paltry margins. The most ROI on innovation will be from the leisure sector, since it will serve a wider and more fickle audience. The leisure traveler needs to be engaged and todays innovative tools are designed to do just that.
I can remember my first job as a travel agent when all reservations were made by phone. Then a computer terminal arrived in my office (it wasn’t even a GDS). Customers trusted me to find a good solution. I had one guy who would fone me up, give me a list of cities in the Middle East and the number of days he needed in each and I would work out the holidays, weekends etc and put together an itinerary that met his needs at a price that, while it might not have been the cheapest, kept the overall cost down by maximising the use of his time and minimising hotel nights/costs.
Once we’d agreed the routing the real fun started and we would have to visit various embassies to obtain visas; working out the order of which embassy to visit when was almost as much fun as the itinerary itself given opening hours and holidays and needing to show one country that he would be able to leave the next one on his itinerary.
But once he started travelling (and, if you’ve worked it out this was the early mid 70s) his progess was arguably easier than today. Take the “innovation” of online check in. He would arrive at the airport, join the queue, check his bag and then head to the plane. Now? He has to find a place to access the internet and logon, navigate to the airline, find his way to online checkin, complete the process and then, because he’s in a Starbucks when he gets to the airport he has to go to a machine, get his boarding pass, go to “fast bag drop” to check his bag and finally head for the plane. That isn’t innovation.
And, look at the booking process. How long do you typically spend on fiddling around with your self booking tool to get the flights you want? Wasn’t it quicker to phone your agent and leave him to work it out? Yes, agents charge less for processing online bookings but when you factor in the time of the traveller (who probably earns quite a bit more than the average travel agent) is it really more cost effective and is it really so innovative?
As for the leisure traveller (which is where I find myself these days) the mantra is “they want the cheapest fare”. Do they? Look at what those travellers do when they get to their destination. Do they stay in the cheapest motel/hotel, and take the cheapest cabin on a cruise? Some might but a lot don’t. What I want from a flight booking tool is options related to fares/schedules/services. If I pay fare 1 what kind of seat will I get, can I reserve that seat in advance, what will it cost me, what baggage allowance will I get, what will it cost me, meals/cost. It might be that fare 2, which is more expensive includes some of those features or offers a bigger seat (e.g. BA world Traveller Plus or UA Economy Plus). Today I have to know those things before I start the process because one of the base questions relates to the class I want to travel in but I don’t know. BA actually try and address this by offering various costed options during the booking process – more felxibility, upgrade to WTP (or if you’re booking WTP upgrade to Club World).
I’m sorry, but I see very little genuine innovation in the travel business that actually makes the end to end process better/quicker/easier.
This historical perspective is great – thank you for sharing it. It made me think about McDonald’s restaurants…how they capitalized on the idea of having the customer take on part of the labor costs. Costs that a full-service restaurant would normally have.
Business are always looking for an edge, and in travel, much of that edge seems to have come in the form of shifting more work to the traveler. In return for what?
Well, if the supplier, or distributor, really did get a significant reduction in cost, and if they face normal competitive pressure, then they will eventually have to pass those savings along to customers in the form of lower prices. Which leads to a cost-based industry – one that readily associates cost reduction with service reduction. Pretty consistent with what you describe, so perhaps the question is how does the travel industry break the pattern?
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