Anthony Hynes, Managing Director and CEO, eNett International
Competition in the travel industry is high, and margins are low. And with the cost of travel continuously being driven down by low cost carriers, discounting and disruptive competitors such as Airbnb, online travel agents (OTAs) need to be adaptable and agile to stay at the top of their game.
What’s interesting is that price isn’t always king in consumer purchasing decisions. In fact, customer experience is the true differentiator. And the winners are those that can create, personalise and guide a traveller’s journey – providing a high-quality customer experience throughout.
The array of holiday add-ons now available, such as holiday excursions and car rental, means that OTAs can effectively stay close to the customer throughout the whole journey and reap the financial rewards as a result. Suddenly, the OTA interaction isn’t simply a one-time transaction, it’s an ongoing relationship throughout the traveller’s journey. And that’s where data becomes critical. Building an ongoing relationship and capitalising on the known preferences of the traveller can drive differentiation and build customer loyalty.
Reaching this level of personalisation and agility requires a shift in traditional business and marketing models. It means investing heavily in your technology stack, and having flexible back-end systems and processes, to adapt quickly to fast-changing customer demands.
OTAs need to continue to establish capabilities in managing data for value to drive customer experience. Artificial intelligence (AI) and machine learning will help derive value from data more efficiently, supporting personalisation at every stage of the customer journey. For example, a young Australian couple on their first international trip together will likely have different needs and preferences to a German family that may be visiting the same destination around the same time.
Customer experience being driven by payment choice
Offering people flexibility in how they pay for travel is just as important for underpinning customer experience.
Thanks to the fintech revolution, today’s consumers have more choice than ever in how they pay – and they increasingly expect this across all of their transactions.The launch of companies, such as Amazon, Alibaba Group and eBay, in the 1990’s powered the online shopping movement, while the rise of smartphones meant they can pay anytime, anywhere. Now, smart devices, including virtual assistants such as Alexa, are providing an even more seamless experiences for consumers around the world.
Nowhere is payment innovation powering ahead faster than in Asia. In India, for example, there are already around 60 non-banking providers offering digital payment services, including Paytm, MobiKwik and Amazon Pay, which have grown in popularity since the country’s announcement of demonetisation in 2016. WhatsApp will broaden the choice for consumers even more by launching a new payment service in the country later this year. While in China, Alipay, WeChat Pay and JDPay are just some of the payment services vying for dominance.
With India and China’s outbound tourism increasing and travellers going further afield, both markets present huge revenue opportunities for travel companies. But, how many travel businesses outside of these markets accept such payment types?
While these are specific regional examples, it highlights the bigger problem facing the travel industry: The undeniable truth is that payment options are increasing faster than it can keep up with them. Should businesses be concerned? When it comes to unlocking global revenue, yes, they should be.
Travel firms should be making it a priority to expand their payment options in the front-end. The broader the choice of payments on offer to consumers, the better the customer experience and the more likely they are to convert. Especially when it’s their tried and trusted payment method. However, to do this in their own business can be challenging,let alone then having to ask suppliers to invest in new payment types too. But the answer is not convincing suppliers to change the way they accept payments, rather travel companies should change the way they pay them to mitigate any worries over acceptance.
For example, a universally accepted payment, such as Virtual cards or Virtual Account Numbers (VANs), can integrate easily with existing booking and property management. Suppliers are paid with a 16-digit unique Mastercard number, regardless of the consumer payment type received by the OTA. Not only is this fast and easy, but it also benefits travel suppliers by reducing the risk of fraudulent card transactions. A win-win for all.
Payments will soon become a key differentiator amongst travel companies. Especially since online behemoths such as Airbnb and Booking.com continually raise the stakes with new payment services.We’re starting to see more of the traditional players follow suit too; investing in technology infrastructure and talent, as well as streamlining back-end processes. This will allow them to better compete in an increasingly challenging and competitive environment.So, make sure you don’t get left behind!