Online travel agencies (OTAs) made it easy for consumers to book hotels, flights, cars, cruises and other travel services. Then the likes of Airbnb opened up a worldwide marketplace of accommodations. Since then, boundaries have continued to blur across aviation, hospitality and travel services, allowing anyone and everyone to be your next competitor.
Travel Tech startups are wiping out intermediaries and non-traditional players that want to deliver end-to-end experiences can easily play in the space. Even “traditional” players are finding ways to offer more comprehensive travel services. For instance, most airlines now sell rooms, cars and destination services. This is just the beginning of the disruption to come. Travel businesses need to start adapting now.
Never fly solo
The stakes for easy, convenient and affordable travel are high and most companies are not equipped to meet rising demands without help. Companies in the travel ecosystem must work together to create hyper-relevant offerings that elevate customers’ end-to-end travel experiences. Leaders recognize the shift—64 percent of travel executives surveyed identified their major source of industry disruption as changes in the way customers are serviced.
More than half of travel companies (57 percent) want to build ecosystems to disrupt their industries, but only 45 percent have the capability and experience to do so. Companies are interested in developing an overall ecosystem strategy, yet they often want to sit at the center, being the hub that controls it. Often, this leads to the launch of platforms that fail to differentiate themselves with consumers and don’t lead to the relevant and frictionless experiences they are seeking. Instead, successful companies will care less about jockeying for the position of ecosystem leader, and more about creating a unique and relevant value proposition that makes the company indispensable and also delivers value for all players.
Trust is the ticket
Accenture Strategy surveyed more than 1,200 C-level executives across industries and geographies to understand their ecosystem strategies, capabilities, leadership and investment—and identify ecosystem leaders or “masters”. The survey found that over three quarters (77 percent) of ecosystem masters share data with some restrictions within the ecosystem.
Yet travel industry data is highly sensitive and personal. Just think of all the data a hotel clerk has access to right on their desktop computer (e.g. social security numbers, passport IDs, credit card information). One breach could immediately compromise the trust of not only customers, but also ecosystem partners.
The Accenture Strategy Competitive Agility Index quantifies the impact of trust on a company’s bottom line, and it is significant. The Index uncovered that 54 percent of the 7,030 companies in our analysis, spanning 20 sectors, experienced a material drop in trust over the past several years. As a result, affected companies will experience, on average, a 6 percent decline in revenue growth and 10 percent decline in EBITDA growth. For a US$25B travel company, that translates into a loss of US$1.5B in future revenue.
While collaborating with the right partners is a first step, travel companies must also develop the right capabilities to support data sharing and generate value out of that data. Ecosystems masters build the needed capabilities and competencies by developing talent and prioritizing technology platform selection. Masters (75 percent) consistently develop talent within the ecosystem, which has enabled them to identify and deliver new value propositions— compared to just 36 percent of non-masters.
Ecosystem masters (64 percent) also recognize the importance of choosing the right technology platform to support the ecosystem, compared to 36 percent of non-masters. They strive to jointly develop mutually beneficial technology platforms that center on trust, commitment and confidence.
Rise up in the travel industry
Travel is taking off in a new direction. Get on board to the ecosystem opportunity quickly to expand revenue potential and surpass customer expectations like never before. Here’s the winning ticket:
- Know your customer — With increasing amounts of structured and unstructured data and advanced analytics to synthesize it all, companies can gain unprecedented insights into what customers value and are willing to pay for.
- Excel at your core — Many businesses are eager to play in “the new” (e.g. digital services, cloud, data security), but to be credible, they must first be brilliant at the core business. Perfect the basics before entering new territory—and find partners who are doing the same.
- Find your differentiator — The travel businesses that stand out will be the ones that have a specific value proposition targeted to customer segments, whether they are seeking exotic luxury travel, affordable family trips, sustainable eco-adventures or pet-friendly travel experiences.
- Embrace coopetition — Businesses formerly thought of as competitors can become new “frenemies” that you cooperate with to enhance your value proposition. These ecosystem partners can close gaps within your organization by bringing their strong suits, such as talent, technology and security capabilities.
- Build trust proactively — Enhance security using the latest digital tools, be transparent about how data is used and revisit ethical standards. Ecosystem players can set ethical and security standards that go beyond legislation by working together. Everyone will benefit if breaches are thwarted.