Travel incumbents face intense competitive threats. More than $100 billion is set to migrate from established players to new entrants in aviation, travel and tourism in the next decade, according to the World Economic Forum.1 Travel companies are not just selling seats and rooms; they are selling experiences to demanding customers who want their adventures in real time.
Accenture surveyed senior executives from 128 travel companies—airlines, hospitality and travel services—to understand how they are keeping pace with unprecedented competition.
Travel leaders agree that customer expectations are changing faster than ever, 87 percent of travel C-suite leaders surveyed believe that business reinvention is required to succeed. However, only 63 percent of their direct reports agree that past approaches are irrelevant today. This disconnect between leadership and management is a wake-up call.
Ants marching, wolves circling
Industry growth is elusive and becoming harder to achieve. Naturally vulnerable to market cycles, travel is now at the mercy of endless disruptive forces, including:
- Rising fuel prices
- New customer demands
- Political and social unrest
Competition is intense, with new entrants—the ants and the wolves—disrupting the market.
Ants at the picnic
The ants are the mass of small, nimble players—like the low-cost carriers. What they lack in size, they make up for in tenacity.
Wolves at the door
The wolves are the big hitters like Uber, Airbnb, Google and Amazon. They are disrupting longstanding industry norms with category-redefining business models, tireless innovation and ground-breaking customer experiences.
Fight or flight
This convergence of ants and wolves is creating a defining moment in travel. It’s about fight or flight, sink or swim—live or die.
The travel C-Suite is under no illusion about what’s at stake.
Self-disruption requires blurring traditional industry lines and connecting to customers wherever they are on their travel journeys. It’s about anticipating and curating real-time travel options that serve customers’ wants, needs and whims—anytime, anywhere.
Sense and respond
To survive in today’s competitive market, travel companies must become living businesses. Instead of clinging to established ways of working, living businesses are built to embrace constant change. Their inherent ability to adapt is due to two fundamental characteristics—hyper-relevance and vitality.
Rooted in deep customer understanding, hyper-relevance is the ability to deliver hyper-personalized services that flex dynamically around travelers’ real-time needs. Being hyper-relevant is getting harder. Sixty-three percent of travel executives saying it is now more difficult to gain customer loyalty than three years ago.
Instead of price, product, promotion and place, living businesses focus on what matters more to customers today.
The new formula for vitality: Hyper-relevance
- Purpose: Customers feel the company shares and advances their values
- Prestige: Customers feel proud to use the company's products and services
- Personalization: Customers feel their experiences with the company are tailored to their needs and priorities
- Partnership: Customers feel the company relates to and works well with them
- Protection: Customers feel secure when doing business with the company
Vitality is the organizational "architecture" that allows living businesses to break through ongoing shifts in customer expectations.
Our survey reveals that vitality is nuanced across different travel sectors. Hospitality performs best overall. However, while hospitality players believe that they understand their customers, they face challenges with rapid, agile design and scaling experiences. Airlines also believe that they understand their customers but find it difficult to optimize costs and be nimble in experience design.
A living business balances five vital signs to stay relevant
- Target: Balance core and disruptive growth initiatives
- Design: Develop products and services as hyper-relevant platforms
- Build/Iterate: Prototype and scale new and innovative experiences
- Connect: Plug into a broader set of ecosystem partners
- Sustain: Infuse a mindset that keeps customers at the core
Bringing living business to life
Future travel leaders will be those companies that deliver the real-time experiences travelers crave by investing in the organizational, technological and cultural enablers to make it happen as a living business. To achieve this, travel companies need to work on three core imperatives:
- Growth—increasing awareness, engagement and relevant guest interactions to increase share of wallet
- Efficiency—reducing costs through digital operations
- Service—creating frictionless, relevant travel experiences.
C-suite executives recognize the urgent need to become living businesses. To execute this vision, the first step is to now create a similar sense of urgency for action among the management team.
1 World Economic Forum, “Digital Transformation Initiative: Aviation, Travel and Tourism Industry,” January 2017 at http://reports.weforum.org/digitaltransformation/ wp-content/blogs.dir/94/ mp/files/pages/files/wef-dti-aviation-traveland- tourism-white-paper.pdf