What 3 words sum up the online travel market in 2016?
- Ancillary services – and the ancillary revenue that is associated with that.
What have been the most exciting developments in 2016?
I think mobile has been the biggest game changer in terms of travel, mainly due to technological advances. Phones are now both small enough and big enough, with a good interface, for people to take with them when they travel. Also, we have 4G, and 5G coming, Wi-Fi and reduced roaming rates – which all mean people are more comfortable using their phones when travelling. And it’s becoming their travel companion that they use as a source of information but also that they are more likely to use to buy travel experiences on the go.
Which global markets offer the biggest opportunities for online travel companies?
When you think about it, a lot of travel is still sold face-to-face in every region – so online offers massive opportunities everywhere. We’re seeing continued immense growth in online bookings – not just in developing markets– but as peoples’ confidence grows, they are moving away from face-to-face bookings. So, online presents a huge opportunity - even in the most saturated markets – as it replaces face-to-face.
Face-to-face do offer that personal touch though – how can online suppliers compete with that?
We’re seeing two trends here. OTAs are trying to compensate the personal touch with automated customer profiling and recommendations – they learn from your previous bookings, what you like/ dislike, what persons with a similar profile liked and disliked and can come up with a rather accurate recommendation. So AI plays an ever growing role in the way an OTA creates an itinerary based on the ever growing supply of holiday components.
However, travel still needs a human element – as humans have a much more complex mind – and can filter out the right thing for the right moment. The long term aim is to rely more and more on machine AI and less on humans – which would make the process more effective and efficient.
What were the biggest challenges for online travel providers in 2016?
It has to be the constant increase in card scheme fees. Card schemes are being squeezed on one side through regulations – but they need to make money – so are becoming more and more creative and inventive in terms of industry specific fees. The travel industry has suffered more than others because of this. Average transactions value is high, and we have lost transaction capping in the UK e.g., so all of a sudden, debit and credit transactions have become a lot more expensive.
A lot of the airline preferential rates have been phased out. As a payment partner, the challenge for Worldpay is, how can we help compensate our customers for these additional costs? The solution we offer is smarter routing and optimising authorisation: essentially, increasing conversion at optional costs.
Where are the biggest opportunities in developing markets? Where should OTAs be focusing their attention?
Asia – or APAC is the biggest growth market. Any country in that region, such as Thailand, Malaysia or South Korea, is experiencing huge growth. China offers opportunity, but it’s difficult as a foreign OTA to access this market – mainly as it’s dominated by local players, such as Ctrip. There is a boom in international Chinese tourism, as if you want to attract this market, then you need to offer the right preferred payment methods. E-Wallets, like TenPay or AliPay need to be implemented into your proposition.
What are your top 3 predictions for 2017?
1. Mobile will continue to be relevant. It’s currently massive in Asia – but miniscule in Europe and the US in comparison - not in terms of searching, but in terms of converting and transacting.
2. Ancillary services – there will be more and more – from ground transportation, attractions to restaurants.
3. AI – specifically how it will automate content – not creation – but putting available content into itineraries which are personalised and context relevant.
We’ve predicted huge growth for eCommerce in India. What advice would you give any OTA looking at that market?
Work with a payments provider who understands the market. At Worldpay we have an amazing team on the ground who can help you navigate the complexities.
What’s your ideal customer journey?
Initially, I decide where want to fly and when – say in 6 weeks time - and book my flights. Only relatively shortly before I fly I start looking into how to get to airport and what to do with my bags. That is the time when travel providers should be offering a limo service to the airport, or somebody to pick up my bags the day before. If the flight is an early morning flight want to be offered an airport hotel with parking and transfer to my terminal. Or just a special airport parking deal, if I live closed enough to the airport to drive. Then I want to be offered relevant ancillary services – which the provider should be able to work out from the type of booking (reason for travel), lets say Disneyland tickets if I fly to Paris with 2 kids.
If I am running late for my flight – which you can tell geolocalising someone’s phone – offer a security fast-track pass. Let me buy it by simply swiping my finger across phone. Or, offer me seat upgrades just before the flight – based on availability. Suggest a transfer to my hotel at the time I turn on my phone after I landed. The sky’s the limit really! If you’re travelling for longer then it could be someone to water flowers or refill your fridge before you get back home, etc.
If you operate in the online travel space and are looking to expand into new markets, or improve performance in existing ones, talk to us about how payments can help you on your journey. Click the 'Contact us' link below, complete the form and we’ll be in touch.