The Future of Travel Distribution

The future of the travel distribution landscape is a hot topic these days, with many industry leaders and insiders pondering how the marketplace will evolve as new technologies continue to emerge and fracture the way business has been done for decades.

Which companies and providers will be left standing? Which will go the way of the dinosaur?

Among the giants that have long dominated the travel distribution landscape are companies such as Amadeus, Travelport, TravelSky and Sabre.

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By some accounts, technological advances could leave these big players behind if their legacy technology doesn’t meet the evolving needs of today’s traveler, the airlines and hotels.

Among the developments impacting the industry are the widespread use of the internet; the advent and proliferation of mobile; and new business strategies such as airlines selling ancillary services.

The arrival of a small army of meta search platforms has also caused seismic shifts, as has the arrival of gatekeepers like Facebook, Apple and Google, which have disrupted travel distribution with their advertising models.

These developments have already led to changes in the way travel providers distribute their content and the way sellers present that content to consumers, according to “Travel Distribution: The End of the World as We Know It,” an independent report commissioned by Amadeus and produced by the London School of Economics.

So where does that leave the industry and what does the future hold?

“With waves of innovation already starting to impact the industry, change is likely to be inevitable and far reaching,” states the Amadeus-commissioned report, adding “Now is an opportune time for the travel industry to reflect on alternative pathways and examine new approaches that are more innovative and collaborative.”

During a recent interview from his office in Europe Amadeus’ Gianni Pisanello, director of airline channel management, acknowledged that the industry has reached a turning point, but it’s an evolution the company saw coming.

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“Are we at the dawn of something new? I think we are.” Pisanello said. “But we anticipated this.”

Some of the other industry disruptors identified by the Amadeus report include:

—Consumer expectation: Consumers today expect more choice, frictionless purchasing, inspirational shopping and personalized services—all of which will spill over into the travel market.

—Big data and AI. Today’s processing power allows for real-time analysis of consumer preferences and responses to consumer requests. Virtual assistants are being integrated into mobile devices and messaging apps, directly interacting with online conversations between friends and business colleagues. The growing sophistication of assistants and virtual reality will change consumer behavior and shift greater power to those players who control the technology.

 “Do all of these changes mean that global distribution systems are just going to die?” continued Pisanello, addressing the question many have been pondering. “The conclusion of that study was no, they’re not going to disappear. There will still be value offered by large aggregators, but for sure everyone will have to evolve. And we have taken that to heart.”

Paul Tilstone, of Festive Road, a consultancy at the center of the travel management ecosystem, says the future of the middlemen in the travel distribution world lies in their own hands.

“If you believe you can have value, now is your chance to start differentiating yourself,” said Tilstone. “In the past, the distribution chain didn’t allow for components in the chain to differentiate.”

Similar to the Amadeus report, Tilstone says the internet is one of the primary drivers of the monumental shifts taking place, allowing for shades of distribution that didn’t previously exist. The internet, for instance, has allowed for new airline entrants to distribute their own product.

At the same time, the behavior of travelers has also evolved from a time when booking through a travel agent was standard practice, to the current penchant for booking nearly everything online.

Tilstone also talks a great deal about the arrival and importance of NDC or New Distribution Capability, which is transforming the way air products are retailed to corporations, leisure, and business travelers.

NDC allows for richer content, images, and personalization, Tilstone explained. It also allows airline take more control (if not all control) over what they offer to the customer, enabling them to personalize offers and sell all their products, including ancillaries, through travel agencies.

“The principle of NDC is that the traveler who uses a travel agent, or an online booking tool, will be able to get the same experience as if they were using an airline website, they will be able to see things like videos of seats and user generated content such as feedback from travelers on seats, and they will be able to choose their seat,” Tilstone said.

With all of these developments in mind—and this is merely scratching the surface—Tilsone predicted that the industry is entering a phase where there will certainly be winners and losers.  

Pisanello meanwhile sees a future that includes a continued proliferation of ways to access content.

And legacy companies such as Amadeus will have to be very smart about reusing existing elements of the distribution system that are efficient and work well, while also building on top of newly emerging technologies.

“I think we are going to see natural evolutions, not some big bang,” Pisanello said. “In general, the whole process of buying travel and consuming travel is going to become easier. We will be the first to admit there is a lot to be done. It’s also a fantastic opportunity.”

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