Are there too many players in the online travel industry value chain?
The lack of standards, a push towards virtual cards to simplify the payment process and the role of technology in reducing complexity are among the challenges facing the global travel industry.
Many would argue that the systems and methods online travel businesses use to sell travel services have become too convoluted. Technology companies can play a role within this space to reduce the levels of complexity that have complicated purchasing within the sector.
These were among the issues discussed during a recent World Travel Market session which involved people from all corners of industry including Alex Banbridge, chief executive of TourCMS, David Cabreza, Director, Hilton Worldwide and Suhail Uddin, Business Development – Travel, Ixaris Systems Ltd.
EFT: Are technology providers today really solving the problems that already exist within the travel industry?
SU: Well the panel conclusively agreed that there is a definite problem when it comes to the complex process of buying travel services to sell online. In order to solve this issue, technology companies play a valuable role in simplifying this process, making it as cost effective as possible to connect global suppliers with buyers.
However, to show just how convoluted the process has become, Alex, our moderator, posed this question: "How many of you sell your own product on your website to your customers?" Surprisingly only three hands went up which means that the vast majority of people were actually selling someone else’s product on their site.
Another concern raised is the lack of standards in the industry. The dearth of collective forms of standardisation, such as those that are now evident in the airline industry, must be brought into the travel industry more widely. With businesses in the travel sector failing to play to the same tune, companies are forced to put in duplicate efforts and are consequently finding it difficult to add value. One suggestion was that suppliers could support a standard interface.
David Cabreza from Hilton pointed out that consumers are demanding many different ways to carry out their bookings and so a degree of variety was unavoidable. By attempting to accommodate everything will only add more complexity to the business, and he noted that companies will need to make trade-offs. Complexity in the industry is one thing but having complexity in your own business is something that should be avoided.
EFT: Would you say there too much fragmentation within the travel industry and are there too many different types of payments methods on offer?
SU: We all seemed to agree that the wide range of payment methods on offer for end users is a good thing. Maintaining consumer choice is key. A market with too few large players would ultimately reduce this choice and damage competition. While it is important to have the right number of participants so you have a changing market, what the industry doesn’t want is stagnation because there are too few multinationals.
We then went on to explore how a wide range of different payment methods can add complexity to businesses as they try to accommodate everything. Suppliers in particular struggle when it comes to dealing with payments. For instance, David pointed out that a big problem on the part of hoteliers and other providers is getting the cash in through the door. There are probably 70 or 80 different types of payments available to Hilton Worldwide, and suppliers simply cannot be everything to everyone. He noted that suppliers would like to offer things like bank transfers or PayPal, but that in the end they had to pick and choose the ones with which they deal. When debating potential solutions to this problem the panel argued that there could be an opportunity for a company to deal with all the payment complexity for travel businesses, ensuring that they just got paid the way they want.
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