OTAs must rethink merchandising and retail flows for future growth: Amadeus

As the online travel market continues to rapidly evolve and grow, OTAs in Asia-Pacific looking to remain competitive must embrace merchandising and reinvent retail flow, as well as form strategic partnerships across the industry, said Amadeus in its latest report on the future of OTAs.

Asia-Pacific travel markets, while diverse in their opportunities and challenges, are no longer isolated ecosystems. Consolidation is on the rise, while big agencies have become mega brands and are acquiring smaller travel agencies to expand their product offerings and customer base. At the same time, local brands are defeating “the giants” through innovative solutions that focus on niche products or services that deliver unique travel experiences.

OTAs in Asia-Pacific must embrace merchandising and reinvent retail flow to ensure future growth: Amadeus

The competition is well and truly on to attract a traveller that is less loyal than ever before. Travellers today are demanding the same level of choice, personalised service and consistency across channels and devices, so they can compare and choose the option they desire. This will lead to a paradigm shift when it comes to flight retailing, where OTAs will need to rethink their search and booking flows for consumers to find the right product.

Amidst this shake up, Amadeus has released three recommendations for online travel companies to ensure future growth.

1. Ride the merchandising trend

“Merchandising is at the core of fundamental change taking place in the global airline distribution landscape. The unbundling of airlines’ ancillary products and services such as baggage fees, pre-assigned seats and airport transfers have been major moves for airlines to compete with attractive cheap fares. Today, the ability to cross-sell and up-sell optional services is now critical to secure revenue,” said Sebastien Gibergues, vice president, online travel, Asia Pacific, Amadeus.

“Online travel companies should explore new methods of merchandising to differentiate with and improve the user shopping experience. This could include providing customised offers for customers at various price points through frequent flyer numbers, or assembling bundles for customers, such as bundling airfares with seat selections and extra baggage,” he added.

eDreams ODIGEO has worked with Amadeus on its merchandising strategy. eDreams was one of the first players in Europe to implement the sale of extra baggage and seat selection as part of its wider product offering. The move paid off – eDreams was able to offer more personalised products and services, boosting its conversion levels and achieving its revenue diversification targets.

2. Reinvent retail flow to satisfy travellers’ demands

“Travel offer unbundling will continue to fragment content, which is good news for online travel companies who will play an important role in helping consumers purchase the right product. However, the challenge will be how to best aggregate and normalise travel content from multiple sources, so it can be searched and compared by travel sellers and travellers,” said Gibergues.

“As a result, online travel companies will need to reinvent their retail flow to satisfy the customers’ demand for “search and compare”.

“This represents the combination of all functionalities, enabling online travel companies to differentiate and deliver a truly exclusive user experience. This means not only displaying the cheapest possible fares but also offering choice – fare families, baggage, seat selection and others – all in one simple, easy-to-use booking flow,” he added.

Leading this transformation is Goibibo, part of the Go-MMT group in India. The team is already experimenting with the creation of their own offers to help travellers better understand and compare the prices of fare families across airlines.

Creating OTA branded bundles could allow consumers to identify what they need, such as economy class with extra luggage or premium economy class with no exchange fee, across multiple airlines. This also allows Goibibo to complement with missing services that would allow like-for-like comparison with other suppliers. This is a major paradigm shift in terms of user experience and needs to be handled with care. Their development team runs many AB testing scenarios to introduce these new features with optimal business upside across all channels.

3. Build mutually beneficial partnerships across the industry

“As content chaos continues across the industry, the challenge for online travel companies is how to aggregate and normalise travel content from multiple sources,” said Gibergues.

“Travel suppliers are seeking more control over how their products are displayed and sold across channels, which will bring both challenges and opportunities for online travel companies. Therefore, it is critical for online travel companies to build strategic partnerships in the industry, be it with technology providers, airlines or corporate travel companies.”

Online travel company Travix is working with Amadeus to enable NDC content to sit alongside traditional EDIFACT technology so that it can be found through one search and displayed in an aggregated way to allow for easy comparison. FCM Travel Solutions and Flight Centre are also testing new graphical user interfaces to access NDC content in the Amadeus Selling Platform so as to transform how they service bookings.

“Partnerships will enable online travel companies to have the widest and most accurate content choice to offer their customers, to deliver frictionless, end-to-end travel experiences,” said Gibergues.

He added: “The online travel market will be an exciting one to watch in the coming years. Innovation will continue to spark growth and change across the sector. To remain competitive and ensure future growth, online travel companies in Asia-Pacific will need to rethink their merchandising and retail flows, as well as look for opportunities to collaborate with others across the travel industry.”

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