Disruption in the Travel Industry

CMO.com has a slideshow which then links to a number of deeper articles on disruption in the travel industry. While I’m not sure I agree with every statement about disruption, I can agree that the travel industry has been disrupted more than almost any other sector.  First off though, we need to focus on what disruption means. In this case, disruption is a move to digital channels for sales, customer experience, and support.  Those who move with the trend, generally do well and even improve profit and market share.   Those who don’t, get disrupted.

It should surprise no one that worldwide, the travel industry “raked in $98 billion in online sales” just during the summer months.  We all book online these days.  Implicit in the CMO presentation and articles is that the travel and hospitality industry has reached a saturation.  Whether it’s 90% or 98%, I couldn’t say.  But that saturation has created a new baseline and with that baseline, consumer expectations continue to rise.  As consumers, we choose the best overall customer experience.

What’s interesting in the presentation is the focus on the marketing side of disruption rather than the complete customer experience.  I think that leads to some elements important to consumer rather than business travel.  Consumer oriented companies like cruise lines will focus on creating the best sales experience.  Hence the potential importance of:

• VR to help you experience your vacation before you buy it
• Video or “live video” to also help experience the vacation
• Artificial Intelligence to help make the purchase of a potentially complicated vacation easy

Business Travel Relies on the Full Customer Experience

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But that’s only relevant for consumers.  Business travel and hospitality must focus on the entire lifecycle.  Think of what Delta and Hilton have done.  Probably 70% of their investment has focused on making the travel part of your experience easier through the use of digital tools.  I rely on my Delta app when I travel. I check in, get my ticket, determine terminal and gate, and find sky clubs.  I get notified when my bags are loaded onto the plane.  I check my status, miles, and progress towards the next status.  Delta has made the experience easier for a committed traveler.

That’s where I think this article misses the point just a bit.  Disruption is occurring and your ability to digitally transform the entire customer experience will determine how well you do in the market place.

Price Matters

Let me leave you with one compelling item.   The CMO article noted that the battle against price aggregators like Priceline, Expedia, and Airbnb continues. Airbnb had nearly 88 million visits in Q4 2016.  That’s more than any other accommodation site and it will continue to impact legacy companies.

But we’ve known this for a long time. Any transformation has to take into account what customers want and for a large percentage of travelers, price matters. Delta’s better experience is worth somewhere between $30-$50 to me.  A traveler who flies once a year to catch that cruise probably assigns a $0 value to that experience.

That’s why disruptors like Airbnb and Priceline continue to do well.

Bottom Line

It doesn’t matter what industry you are in, if you are going to roll with the ever changing digital flow, you need to:

1. Understand your customers. What makes them tick. What they are willing to pay.  What experience they want.
2. Focus on the entire customer lifecycle.  Create an experience that’s more than just marketing glitz.  That may get them in the door but it won’t garner repeat business.  Don’t kid yourself, that involves a lot of front and back end work. Just ask Delta how easy it was to notify me my bags were loaded on the plane.  It took a lot more than a mobile app to make that work.
3. Commit to the long haul.  Just like car manufacturers have a relentless focus on cost efficiencies and probably have more Six Sigma professionals than any other industry, you should understand that the digital world won’t go away. It will continue to become more important to your business.  You have to create a continuous investment model rather than a once every five years approach.