Emerce interviewed me after hosting a roundtable session with leaders from all areas of the travel value chain. Re-published with permission.
(Lees dit interview in het Nederlands →)
A lack of cooperation in the travel chain is resulting in travelers receiving a ‘schizophrenic’ total product, says Maarten Kappert, digital strategist for Travel & Hospitality at Mirabeau. On Emerce eDay 2018, Maarten chaired a private session with twenty leaders from the travel sector. These are his findings.
So, why the urgent appeal for collaboration?
“Although Travel & Hospitality is one of the fastest digitizing sectors, it remains miles behind sectors like retail and FMCG. Examples include one-hour delivery services, or the free return of ordered clothes, no questions asked. They are constantly raising the bar and, therefore, the expectations of travelers.
The sector is well aware of this development. In fact, there is a clear idea of what the ideal customer journey should look like: everything going smoothly, with a sense of control and autonomy. People get offered the right help at the right time, and when things go wrong, they’re immediately helped regardless of which party they approach and without any difficult questions being asked.
We know that this is not reality. Travel organizations still operate as good as solo and do not exchange data or align their products and services. As a result, travelers end up with a schizophrenic total product and have to find their own way between as many as seven different companies during their journey.”
But if the sector is aware of this, what’s holding them back?
“Reality is that our sector is struggling with a legacy of low margins and stiff competition. As a result, innovation is always under scrutiny – it must be successful or, better yet, be immediately profitable. This creates little space or time for innovation.
Worse still, while we’re fighting like dogs over a bone, the greatest threat is coming from the outside. With their virtual assistants, Google and, to a lesser extent, Amazon are claiming their own spots between us and the traveler. While we are taking a fragmented approach, Google Assistant offers integrated solutions that give travelers a single place to go with all their questions. Google Assistant has so much data related to travelers and their preferences, it can easily offer them good suggestions and support all stages of the customer journey. This means it gains travelers trust and they allow Google to make even more decisions on their behalf. Why would travelers have direct contact with an airline or hotel anymore, when they’re all set and perhaps even better off with Google Assistant. Google is taking over the customer relation role and we’re being left behind as the operational party.”
That’s not an attractive future perspective.
“Indeed, the role of these parties in the life of travelers will significantly change, forcing us to make choices. I see three potential directions. The first is to sync ourselves to the ecosystems of Google and return to the core of the physical travel product, like being a hotel, airline, etcetera. Where airlines now sometimes offer hotels as well to increase their share-of-wallet, this is a downhill path in this scenario as Google is the party that offers all the sub-products.
The second option is developing our own, shared data source to which we all submit data. In principle, everyone has the same data, and everyone’s booking and service app contains the same relevant information, so it doesn’t matter which party the traveler consults.
The third direction is to develop one joint interface as a sector that bundles our fragmented data into one singular source of information. In other words: our own assistant, working alongside Google. It will have to provide a value that Google cannot. And this value is self-evident; whereas Google can only observe from the sidelines, we can influence our product ourselves. We can make an aircraft wait and send an employee to the traveler to provide support. Google is, in essence, very superficial and therein lie many opportunities for us to strengthen the customer relationship.”
Which scenario would you choose?
“In a way, the first option is unavoidable. Brand loyalty in the industry has been falling for years and with the, as yet unparalleled, ease of use that Google offers, it will decline further in the foreseeable future, especially among millennials. Companies will have to reconsider their role and provide a genuinely unique product. Those who fail to provide a total solution themselves – i.e., at least a flight, transfer and accommodation – and thus become a fully-fledged alternative in the selection process via intermediary Google, will have to set themselves apart by either offering the lowest price or unique options, such as the location of a hotel.
I think that scenario three is bound to happen. The demand and potential of a joint interface are just too great to ignore. But I also think it is unrealistic to expect this will be jointly developed in the short term or even by one of the current industry leaders: it forces them to deviate too far from their current capabilities and we are hampered by our small margins.”
So the second scenario remains?
“That’s right. It forces us to draw a clear conclusion: we can no longer consider ourselves to be individual entities. We are all sub-products of the total; the customer’s journey. As soon as you start seeing yourself as a sub-product, you will change your perspective on the traveler from ‘my customer’ to ‘our customer’.”
In this regard, instead of fighting each other for the customer relationship we should work together to give travelers the best experience possible. To compete with an ecosystem we have to become an ecosystem: a network of collaborating companies. Travelers will consciously select such an ecosystem because they know it provides them with good support and information, with the operating party taking the lead. Each party has the same information and there are no secrets in the ecosystem. Everyone knows who the customer is, where they are and what their needs are. Within the ecosystem there is no hand-over. We all support customers together.
It is this fact, the extra trust an ecosystem provides, that will give travelers a new reason for choosing the group of companies within the ecosystem. Travelers feel that they are in good hands, whatever happens.”
How do you see that happening in practice?
“The basis is one customer for various parties. And, as a consequence, the free exchange of data and information at the request of the traveler. I put it this way explicitly. At the request of the traveler is stronger than with their permission.
The next layer is aligning each other’s products and making agreements as to who takes the lead at which step in the journey rather than fighting each other.
It also means synchronizing and creating an overlap in the provision of services. If something goes wrong with one party, travelers are supported in the next step. Employees of the different parties must therefore be able to communicate with each other directly.”
It sounds like quite a challenge.
“Yes, it is. Years of battling each other has resulted in a lack of mutual trust in the sector. This is one of the greatest problems we face and it’s up to us to find an elegant way to resolve the issue. It will require small steps and occasional leaps of faith, but the benefits will be reaped by all those who participate. And those benefits are not just strategic and not just for the traveler.”
What other benefits would be involved?
“In the short term, closer cooperation would enable benefits in a number of fields. For example, the product – by which I mean the total product – will become more reliable. Now a booking site may still send a message to hotel guests in the morning with an offer for a breakfast menu, while they can also purchase it directly in the hotel. This type of schizophrenic behavior gives travelers little faith at times when they need support: will the parties involved work together or against each other? Although it may seem that it would involve a backwards step commercially, where one door closes another one opens. If we know a traveler flies low-cost but stays in high-end hotels, we can provide useful information on their travel budget and allow participating companies to make their product suggestions more relevant.”
You’re saying that cooperation creates space for innovation?
“Exactly, and in more ways than one. For example, if we continue to invest in silos, as we are doing now, we will lack impact. Biometric identification is already available today, but if we aim for fast adoption – the only way the investment is worthwhile – it makes little sense to only implement it in one segment of the journey. Travelers sense the future with one party, and are thrown back in time with the other. This leads to disappointment. It would be better to innovate throughout the chain so that quality is increased across the entire width and length of the total product. Doing everything individually is also extremely cost-inefficient. We now work hard to obtain data which is already available to others. By sharing data, knowledge and effort, we won’t have to do everything ourselves.”
And what’s the plan now?
“The greatest danger now is that we all see it coming, that we understand it and want to do something about it, but then return to the order of the day and do nothing. And I understand that bringing together different organizations isn’t within everyone’s range of duties, which is why Mirabeau offered to take the lead on eDay.
We asked those present to participate in a pilot project in which a multi-company project group will make a first, small yet harmonized innovation in various parts of the chain at the same time. Seven parties have already joined, which is a great result! In the coming weeks we will be considering which customer needs we wish to address first. And we’ll be doing this together, so all suggestions are welcome.”