A month ago, we hosted over 100 senior representatives from some of our online travel agencies (OTAs) customers in the EMEA region, as well as key partners we work with, and Amadeus leaders. Having had time to reflect upon the event, here are some of my takeaways.
A kaleidoscope of new of possibilities for digital travel players
OTAs are emerging from the pandemic into what we are calling “a kaleidoscope of new possibilities” with an impressive wish list reflecting their specific needs and opportunities for the short and medium terms.
The list includes: more content to sell (air and non-air); better search tech and capabilities for travelers to find the content; improved conversion rates; options for automation and digitalization; payment services; wider adoption and actioning of data and analytics; and of course, an ongoing commitment of human and financial resources around innovation.
With all of this, cost efficiencies are a priority. Digitization is the first step towards robust cost controls; automation can deliver material gains in efficiencies, while contributing to a better traveler experience. Travelers now expect their OTA to offer self-service and digital support during their journey, and at Amadeus, we are already offering automation and digital travel assistant solutions to help our customers in this area.
Another takeaway from the C-suite attendees was a desire to expand their business beyond the scope of how OTAs traditionally operate. Amadeus has been proactively developing the tools to help them do this, we are investing and innovating beyond our own established usual areas of interest and adding new disciplines to our areas of expertise.
The power of content – inventory and information
We know that content is one of the most criticalareas for our OTA customers. We are committed to ensuring our available inventory becomes as comprehensive as the commercial and technology landscape allows. We are taking our desire to become the “universal content aggregator” very seriously indeed.
For air content, we are focused on bringing in more “classic” content – fares using EDIFACT – and at the same time – growing the availability of NDC-sourced content. We are committed to building on our role as an early advocate and driver of NDC, leveraging our interest in NDC from both an aggregator and IT provider perspective.
We already have 11 airlines live in the Amadeus Travel Platform (Finnair, Iberia, Air France, American Airlines, Avianca & TACA, KLM, Qantas, Qatar Airways, United Airlines and Singapore Airlines) and have many more to be integrated in the coming months. When it comes to retailing, personalization, and product differentiation, we believe NDC is the name of the game.
When talking about giving OTAs access to a wider range of air and non-air content we also need to talk about better search and conversions, about partnerships, about open systems and the cloud, and, most importantly, the traveler.
Of course, giving access to a broad range of content is key for OTAs to propose tailored offers. But the journey does not stop at the booking stage. At Amadeus we want to be able to provide the full servicing capability, the help OTAs unsell ancillaries or manage events like disruption.
Search remains at the heart
OTAshave historically spent big bucks on traditional search, research suggests that OTAs spent more than $10 billion in advertising (based on 2019 annual reports from Expedia, Booking, Trip.com, eDreams Odigeo) in 2019 whileconversion rates is still less than 5%.
In this accelerated world, something must give.The search spend will not go away and is even increasing, with more travel options, more fragmented content to search from and a high search level right at the inspiration stage. Today there is a greater emphasis on converting more queries into an initial booking, and then layering in upselling and cross-selling to increase "revenue per booking."This KPI is driving improvements across the board. Personalization is pivotal – if you want to be able to offer the right travel option from the start of the search and be able to provide refinement and personalization option at the time of booking.Then to upsell then you need to know who I am, my previous interactions, the purpose of my trip, my propensity to spend.
But before you can upsell, you must convert.Knowing where a traveler is in the funnel – dormant (still at the inspiration or early planning stage) or active (ready to book), looking for inspiration, looking for a deal – is as important for conversion as knowing who they are.
Search remains at the heart. There are many flavors of search beyond the usual origin/ destination/ date/ price fields. In response, many of the digital travel players have sophisticated their in-house-developed search tech, adapted to suit the specifics of their competitive positioning or target audience. We are not expecting them to decommission their own capabilities. Instead, we can leverage our full search capability and expertise to offer customized search – including access to fully tailored search technology which allows OTAs to search, book and fulfil Amadeus-sourced content using the same techniques and flows, with the same fast response times, that they are used to with their own content.
Offering faster, better, deeper search and conversion capability on all content OTAs are sourcing is at the heart of our strategy.Adapting our search capabilities to the use cases and needs of the OTAs reflects Amadeus’ bigger picture approach to partnerships and collaboration. Ourstrategic partnership with Microsoft includes work on how our travel search expertise can synchronize with Microsoft's experience of wider e-commerce search trends to help OTAs improve conversion rates and customer acquisition costs.
The right offer at the right time on the right channel
The e-commercelandscape is shifting, there are plenty of opportunities beyond the legacy web search for OTAs to capture traveler’s interest and inspire them. There is an opportunity for OTAs to become part of the everyday digital experience across all channels, devices, and touchpoints.For example, on social media or super apps, all to improve the customer experience and move from price driven to value driven purchases.
We have seen a trend towards "native" advertising solutions for specific channels.. If anything, the big OTAs kickstarted this when they started to launch their own “media solution” businesses, giving destinations and brands the chance to advertise directly on their site.Fast-forward a few years and there are today advertising solutions for travel companies on Twitter, Facebook and more recently for TikTok and Netflix and many more.
Today it is possible for OTAs to advertise on what I like to call "dormant channels."The current set-up is for an ad to click through to a generic holding page, returning the traveler to search browser.I believe that in time there will be a way for companies to advertise with higher conversion and better customer experience, by offering more relevant and targeted offers when people are at the inspiration phase, trying to make up their mind, with this, decisions can transition from price-driven to a deeper customized experience.With all of this, travelers will have a smoother shopping experience and potentially complete the purchase within the walled garden of whatever site they saw the advert on.
A more embedded approach to dormant channels is well within the grasp of technology, and it is not science fiction, it is happening now. Within our Microsoft partnership, Amadeus is working on a way for travel companies to offer personalized relevant travel offers on social media, leveraging the latest technology in artificial intelligence, machine learning and augmented reality.
Looking ahead, we believe that targeting travelers when they are outside the travel ecosystem is one of the ways in which the industry can deliver on the promise of new possibilities.
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