Travolution officially launched its 2020 Innovation Report at Travel Technology Europe analysing tech spend in travel in the UK and innovation. Lee Hayhurst reports from a session at TTE in which experts from Traveltek, Publicis Sapient and Kantox discussed some of the findings in the report.
Demand for travel technology remains buoyant and although the coronavirus outbreak is having an impact long-term desire to invest on technology remains high.
Speaking at a Travolution session to launch the 2020 Innovation Report at Travel Technology Europe, Cressida Sergeant, chief marketing officer for Traveltek, said the sector had had a good start to the year:
“We saw a healthy year last year in terms of demand for technology,” she said. “We saw new prospects coming in, but we were also encouraged by the number of customers we have who wanted to spend more money with us.
“One of the big challenges in the technology industry is they want to spend money but it’s getting that tech technology to market as quickly as they want to spend. But from the demand side there’s certainly no slowdown in the business and people wanting to invest in technology.
“This year, definitely, there was a more buoyant start to the year than last year. I think the uncertainty around Brexit definitely had an impact and we did see people having conversations with us about waiting to see what happens over the next few months.
“In terms of bookings on our platform we had a bumper January and year on year saw some pretty significant increases for many of four clients and then the coronavirus hit and I can see that in the data for the last 10 days.
“But in terms of tech spend I can see that the outlook is fairly buoyant, and I think people are saying we know we need to invest. I think it’s going to be a good year.
Sergeant said that, with technology investment requiring long-term strategies, the impact of coronavirus may actually be positive for the tech sector.
“Most companies will have an investment strategy, although no one could have predicted what is happening with coronavirus. Often the conversations we have are 12 to 18 months out and for most companies that roadmap and planning means tech decisions are not made in five minutes.
“Most people have those longer-term views in terms of their spend. Some of the challenges that we see, like with the need for better reporting with coronavirus, are just highlight why technology is so important.”
Understanding the value of tech investment
Simon Cox, senior director strategy, travel and hospitality at Publicis Sapient agreed that propensity to invest in technology by firms remains high but there is increased demand to understand the return on that investment.
“For our clients there is still an absolute desire to invest in technology,” he said. “The one trend we are seeing is more and more clients are saying they’re prepared to invest but they absolutely want to understand the value that investment is going to generate.
“They are saying don’t try to sell me more technology unless you can show the value that that technology is going to being about, which is great for us because that’s what we try to do.
“A lot of businesses have got software but they haven’t often got the capability to realise the value within that software.
“The obvious answer to that has been to outsource the capability to unlock that value, but what I think we’re starting to see is businesses bring that capability into their businesses. The digital natives don’t outsource that type of stuff.
“Part of the reason we put people into businesses is we want to help them build that capability particularly given how expensive it is getting into that innovation space.
“You can’t rely on having that technical ability elsewhere because inevitably what happens is you never really worry about putting it into the DNA of the businesses and that’s critical. Maybe travel is a bit behind in that respect compared to the likes of financial services.”
Antonio Rami, co-founder and chief operating officer of Kantox, which provides travel firms with automation software to manage their foreign exchange needs, said:
“I actually agree with taking it inhouse. We see how many travel businesses were trying to stay away from currencies, pushing the problem away to the clients or the suppliers.
“Actually, what we are saying to companies is by internalising this problem and by taking responsibility for it they can develop a competitive advantage.
“In the end we do not expect people to be changing their booking engine to be able to work with us. Our job as a technology company is to be technologically agnostic, so make those integrations easy so they can be done by someone who is not an IT person.
“We just are proving that the data is sitting inside the company, it’s easy to extract and use and how using this basic data means their FX can be automated and the reporting is a lot more transparent and powerful for the business.
“The more Knowledgeable the company the better. Travel has been a great technology-driven sector but spend has been focussed on booking engines, on channel managers on distribution but the margins of the industry have been quite low and the focus of the industry on financial management has actually been quite small.”
Sergeant agreed that working with clients that have a high degree of technical nous in-house is something that Traveltek likes.
“We like partners who have that technological capability on their side. A big project we are working on at the minute is migrating everything to the cloud and we are having to have conversations about that with every single client.
“For a client to understand that from their side and have the technological capability means it’s much easier for us to work with them.
“When they do have that technological understanding, it’s much easier when it comes to speaking to them about how much it’s going to cost.
“The words ‘tech’ and ‘easy’ never really go together, things are never as straightforward as people think they are going to be, so having an understanding that there needs to be a testing process, it’s not just a case of moving something over, that’s brilliant.
“We encourage companies to do a certain part of it on their own. We can’t do all things for all people so we have to focus on the things that we do best and encourage work with third parties. We enjoy working with third party companies and the clients gets a better experience.”
Innovation in travel
Cox said from his perspective a lot of companies are just bad at innovation. “I’m not sure companies are really set up to do innovation,” he said.
“For example, I spend a lot of time working with our airport clients and the majority of their revenue comes from getting people to land and take off they spend most of their time and effort making sure that’s the best experience it can be.
“A third of their revenue comes from retail car parking and they are pretty world class. But the innovation part for me comes from they still have a lot of people who come to an airport and they don’t spend anything and that to me is where the innovation really starts.
“That’s not something you can roll up in an innovation department, get some people in, put a lab in place and now we’re doing innovation.
“It takes really concerted effort from the top to fundamentally change and re-engineer the business. Most businesses have a DNA that got them to where they are today and often that’s not going to be the thing that gets them where they need to be in the future. You see pockets of innovation and lots and lots of ambition.
“I wouldn’t say necessarily every time you’ve got an innovation department that’s a bad thing, but there are certain characteristics that can support that like if the firm has a real value proposition and they’ve got real funding to unlock it and, more importantly, they’ve got proper autonomy.
“Organisations are just not set up for this sort of thing. Often, we don’t have autonomy in an organisation. Most organisations, I feel, are just set up to try to try to make things incrementally better and optimise. Innovation takes much more than that, it often requires breaking stuff up and often organisations don’t like that.”
Rami said: “From the start we have been a company that has been innovative. We have never taken the product view, we have always been looking at the other side, at the businesses we are trying to serve and where are the pain points and what it is that was broken in the process.
“What we realised was that the problem for travel businesses was they don’t understand the competitive edge FX can give and even if we had built the best trading platform online you had still to be managed by a human.
“And that’s inefficient, not because a human is not smart, they are very smart, it’s just a machine can automate the process, can allow you to trade in 140 currency pairs at the same time instead of three.
“We went from going head to head with the banks and telling people your banks are ripping you off to now we are invested in by banks and the banks are coming to us and saying here are my thousands biggest clients please go to them and show them how you have software that can automate the process.”
For Traveltek, the innovation around its core agency desktop software us about allowing greater automation, and reducing the friction for its users to they can do their jobs better and more efficiently.
What problems is technology trying to solve?
But Sergeant said more needs to be done generally in travel to think about what technology is there to do in terms of solving the problems of the end user.
“The innovation should really happen on the front end in how they deal with clients whether that’s in the service or technology there offering. I think there’s always going to be a blend. For us our job is to make sure the agent desktop tool, the booking flow to mid and back office, that all works.
“Not enough is done from a technology standpoint in terms of thinking about the problems we are trying to solve for the customer. This year we have seen bricks and mortar do well. Is that down to customer service? There has to be a reason people are still walking into shops,” she said.
With the Innovation Report revealing that growth in travel agencies coming almost entirely from the small players employing just one to nine people, Sergeant said she welcomed the prospect of working with them through the larger groups they will often belong to.
“We’ve been actively working with a lot of consortia on getting a start-up package because clearly they [start-up agents] don’t have the budgets to spend ten to fifteen grand on their tech.
“We have seen some real success stories because they have got some real support from those consortia in the beginning around how they do bonding and finance. We saw LoveHolidays come through that channel.
“That’s always the difficult thing working out their needs when they come in and which ones are going to be the ones that are going to make it.
“It’s critical that these companies come to us with the innovative ideas because it’s great when you get people come to you and explain what they want to do from an innovation point of view and I do think that has been lacking in travel. Technology is often a barrier.”
Cox said: “I still think travel is complex and we make it far too hard for passengers. When you know what you want to do digital is good, if you know exactly where you want to go and wen you want to be there.
“When it falls down is when something goes wrong and that’s when you run into all those back end systems. But I still don’t think digital is performing as well as it could when it comes to that discovery phase.
“As a consumer it’s up to me to orchestrate all these different suppliers and different relationships. No one is really doing that job of orchestration. That goes back to how do you do that because if your business model is not set up to orchestrate where is the incentive to do that. Which is why we are seeing more platform businesses that can play into that orchestration space.
“My belief is that artificial intelligence will be a gamechanger. You want this stuff to be here now and the problem is people like me get up and talk about it and then two or three years down the line it’s not here yet and then six seven eight years down the line you suddenly wake up and go it’s here and everyone has got it and we haven’t been able to accelerate our development.
“The driver, and this maybe slightly cliched, is the likes of Amazon because the amount they are investing into it is going to open up new frontiers and that’s going to have a natural trickle down.”