Mark Meehan, managing director, Asia Pacific, Middle East and Africa (APACMEA), Travelport, examines how brands can cash in on the booming experience economy.
Customer events always provide food for thought, especially those of the scale of Travelport LIVE Asia Pacific (APAC), which took place in end November in the beautiful city of Shanghai.
Held a few months later than usual, already approaching the year-end, the event was a good review of 2019 and left me with plenty to ponder. Its theme “Experience is Everything” is self-evidently broad, but here are the four key points I will be asking my teams across the region to think about carefully as we near the end of the year.
Drive the experience economy, before it drives you
While the experience economy is not new, its impact on the US$9 trillion global travel and tourism sector has never been greater. The experience economy is being driven by two converging trends, escalating demand for memorable and personalised experiences, and rapid advances in technology. Today, global expenditure on experiences is already greater than on goods and services, and demand transcends generations. Technology holds the key to unlocking the significant potential here for the travel industry. And every day, new advances are presenting new opportunities to deliver new value.
Examples of how the experience economy is shaping the travel and tourism industry today are everywhere. Singapore Tourism Board has created a simulation that allows travellers in transit at Changi Airport to take a seat on a traditional trishaw, put on a VR headset and go on a virtual tour of Singapore – complete with 4D elements like smell and mist – all without leaving the airport. EatWith allows travellers to dine with locals in their homes in countries including Cambodia and China. And Airbnb Experiences lets tourists book everything from attending a tea ceremony with monks in Taipei to playing football with locals in Hanoi. The experience economy is very much here to stay. The opportunities for those who drive it are endless, but so too are the challenges for companies that fail to respond and evolve.
Asia-Pacific leads demand for change
Demand in this region is now among the highest in the world for memorable and engaging digital experiences and technology that makes travel easier to manage. According to research by Travelport, three quarters (75%) of travellers in Asia-Pacific today say they now actively consider whether an airline offers a good digital experience when making a booking, a figure that has risen by more than 13% in just two years.
There is also significant demand from travellers in Asia-Pacific for virtual and augmented reality experiences. Four fifths (61%), for example, believe these technologies would help them better plan their trips. That’s twice as many as in Europe and North America. When researching a trip, 89% of travellers in the region also now say they have reviewed videos and photos posted on social media, not by friends, but by travel brands. This is the highest percentage recorded in any region worldwide.
Furthermore, more than two thirds (70%) have used voice search to help manage their travel, twice as many as in Europe. Fortune favours the bold, and with demand for and use of technologies like this so high in Asia-Pacific, the time for companies to be bold is very much today.
NDC picks up pace in Asia-Pacific
It may feel like IATA’s New Distribution Capability (NDC) is taking a long time to arrive but progress is starting to gather momentum. We expect 2020 to be a year where more of the technical plumbing is completed, when more airlines outline their ambitions and make content available, and when more NDC technical solutions from companies like Travelport enter the marketplace. We also expect it to be a year when agents start playing a more active role in shaping NDC decisions, as more start to determine how new NDC sales capabilities can be used to benefit their customers.
Interestingly, one thing that multiple guests on our NDC panel at Travelport LIVE APAC called out is that one of the biggest misconceptions surrounding NDC is that it means bypassing the GDS. To the contrary, they argued travel commerce platforms will play a critical role in ensuring value is unlocked for all parties. It won’t surprise you to hear, I agree.
But it’s not all about NDC
NDC might dominate the headlines but there is a lot more going on in the content retailing world, especially when it comes to aviation. Air content, for example, is getting more dynamic – dynamically sourced, dynamically bundled and dynamically priced. Merchandising is moving from an art to a science, thanks to big data. Automation is allowing products to be personalised more than they ever have been before. Even subscription-based models are being investigated and tested.
Airlines are also now considering how every seat on the aircraft has a different value and can be part of different bundles. When you add in offers for corporates, loyalty and personalisation there are potentially hundreds of products on every flight. This has the potential to be overwhelming for customers but airlines know this too. Delta Airlines has already initiated a concept called Next-Generation Storefront to cut through the complexity in competing products and sell on value, not price. As a travel commerce platform, we need to respond to all of this to ensure we continue to support all parties, no matter which model they decide is best for them.
In conclusion, the pace of change today is both frightening and exciting. Standing still is not an option, especially for companies like Travelport that sit at the heart of the travel ecosystem and need to support all partners, no matter how big or small, how innovative or conservative. Times of great change require great agility, and I for one am glad to be on the edge of a new year with ambitious new owners and an ambitious new CEO, who all recognise this.