New technology levels playing field in travel
The last few years have seen significant changes in the travel industry. A few players have grown enough to disrupt long-term dynamics, and in the view of many, to decrease competition. New industry leaders such as booking.com were born out of a clear need, but rose thanks to great execution aided by superior technology. And now, the cutting-edge technology has trickled down to the hands of today’s underdogs. Will it change the game?
Middlemen have the upper hand
The share of online sales has been growing fast in the travel industry for a long time, and the sales of online travel agents (OTAs) have grown to close to $300 billion. Initially, this trend was great for small providers: they found themselves able to compete with established brands thanks to aggregator websites. Nice photos and good service were enough to yield positive ratings, which brought a steady stream of bookings. But as it happens, the honeymoon phase did not last long.
Major OTAs’ growing power and price focus led to ever stricter conditions for independent providers who relied on them. Two main players, Expedia (who also owns Trivago, Hotels.com and Hotwire) and Priceline (whose brands include Booking.com), control about one-third of all OTA bookings, and their position is likely to grow still stronger given that they account for about 50% of the industry’s marketing spend.
With no viable competition in sight, the leaders’ appetite has been growing despite attempts to keep it in check. Indeed, the major players’ contractual policies remain controversial although Booking.com settled an antitrust probe with several EU countries in 2015. Stories of other aggregators, such as TripAdvisor or in flight booking portals such as Kayak.com, are not that different.
Execution has always been key
Scale matters, and not only because once a company establishes reputation as a go-to place for online booking in a particular segment, challenging it becomes a tall task. More money allows incumbents to afford better teams to do better analytics and find ways to optimize customer experience. Exceptions, such as Kiwi.com (formerly Skypicker.com) that managed to write a prodigious algorithm, are few and far between.
Incumbent OTAs do not just have the largest offer; they also have better technology to tell them what, when, how and to whom to offer to improve the odds of making a sell. Small details, such as booking.com’s small pop-up window showing that someone has just booked a room in the hotel you are viewing, work wonders (to be specific, a client of Exponea’s did something similar on its website to increase its revenue per user by 9%).
Technological advantage is only temporary, though. Just like computers were accessible only to the largest corporations in the 60’s but are absolutely ubiquitous today, SaaS platforms are bringing about the same revolution in advanced analytics and engagement automation today.
Functionalities that were previously possible only with enterprise-grade solutions from IBM or Adobe for at least $100-200k a year, are now available for a fraction of that cost. The pop-up message about room availability can now be had within a few hours with platforms such as Exponea (we searched high and low but could not find any other platform capable of the same feat yet). Simpler banner-like personalized messages and quick surveys can be designed and deployed within 10 minutes, without the need to involve IT people.
We have set out to build an ecosystem seamlessly combining analytics with customer engagement that empowers all businesses to get greater business results faster. The new, cheap technology gives fresh power to new progressive entrants, such as Kiwi.com and Sygic, and breathing space to the travel businesses that actually deliver the service, such as hotels or airlines. After years of consolidation, the travel industry is once again on the cusp of disruption, and we are happy to spearhead it.