Artificial Intelligence, virtual reality and the use of portable technology could change travel distribution as we know it over the next 10 years, according to a new independent study released today by the London School of Economics (LSE).
At the same time, industry and consumer pressures will generate more complexity in both content and technology. As consumers begin to expect more personalized content throughout their travel journey, the technology managing the differentiation of airline fares and services will become more complex. Those players who do not innovate fast enough to adapt to these changes will miss out on growth opportunities, says the LSE.
These are just some of the potential “future pathways” identified in Travel distribution: the end of the world as we know it, an LSE study commissioned by Amadeus. The report provides a credible and objective benchmark for the industry. It recommends six areas for industry-wide collaboration:
- Consumer expectations will rapidly spill over from retail into travel distribution. Players in the travel distribution industry will need to respond with broad collaborations for aggregating, processing and harnessing the big data involved. Otherwise, the explosion of complexity and differentiation of services in the short term could translate into potential confusion for the consumer.
- The role of gatekeepers, the giant IT companies with major consumer interfaces, in travel distribution will continue to grow, notably through the use of virtual assistants, payment technologies and integration into social media.
- The size and power of ‘mega-meta-OTA’ hybrids (online travel agents with metasearch capabilities and global brands) are likely to continue growing. Consequently, their influence will penetrate deeper into the distribution chain, with the ability to negotiate better content and conditions, while still receiving commissions.
- The travel distribution industry is rapidly becoming a technology industry. Business models will need a more strategic approach that recognizes the value creation of different technologies across the industry.
- To avoid consumer confusion and lost opportunities, industry distribution needs to go beyond bilateral partnerships and contractual relationships. Distribution business models will need to evolve to encompass more shared innovation, a culture of experimentation and cross-industry alliances.
- Sharing economy platforms will continue to create new markets and erode the market share of suppliers and industry players who intermediate. The industry will need to adapt to this changing market and carefully monitor the impact of competition rulings in different regions as regulators play catch-up.
Dr. Graham Floater, Director, Seneca | EGC Director, London School of Economics, and one of the report’s authors, commented, “The travel distribution industry is entering a period of unprecedented change – with rapidly changing consumer expectations, advances in data analysis technology and a blurring of the traditional lines between the various players. Our report identifies the disruptive factors that are likely to shape the industry, and eight future pathways for how the industry could develop over the next decade.”