Future-proofing your business for 2018
February 7, 2018
The effects of the political and economic uncertainty that we witnessed in 2017 – such as the fluctuating Pound – are sure to continue to feature throughout the coming year. There’s no rest for travel companies. They must be discerning when it comes to managing their businesses effectively to ensure they remain in the black. Beyond these ‘unknown’ pressures, what else should firms be considering in 2018? Here are my top four considerations for 2018:
1. Expanding payment choice for global consumers
Consumer appetite for global travel is more now than ever before. This brings huge opportunities for expanding business in new markets, but the challenge is different regions have different payment preferences. And even within a country there are a myriad of options. China, for example, is showing healthy increase in outbound tourism with travellers going further afield. The market presents a huge revenue opportunity for travel companies. But consumers prefer to pay via Alipay, WeChat Pay and JDPay. Accepting payments via these channels is a huge step in tapping the market. But how many travel suppliers outside of China accept these forms of payment?
There is an easy solution – look to the back-end. Having a universally accepted payment method such as Virtual Account Numbers (VANs) in the back-end, means you can pay travel suppliers regardless of what payment method consumers choose at the front-end. The more payment types you accept at the front-end, the more a consumer is likely to book via your site. Simple.
2. Data scientists are the ultimate sales tool
Thomas Cook is the latest in a string of high-profile travel agents to announce it is closing stores and undertaking a review of operations. Like many traditional agents the company has realised that, to survive and compete with disruptive OTAs, it must beef up its online presence and have a truly omni-channel strategy. For many years, the travel industry has been driven largely by price, with many agencies shaving a point off pricing to gain ground.
However, advances in artificial intelligence (AI) and data analytics have enabled newer online players to deliver more timely, relevant and personalised services to boost customer experience and get a larger slice of the pie. For example, Booking.com and Sky Scanner have both hired large numbers of data scientists with a view to being able to offer insurance, theatre tickets or a restaurant booking based on customers’ personal interests. OTAs will continue in this vein and we’ll also see more of the traditional players follow suit, investing in technology infrastructure and talent to better compete in a challenging industry.
3. Coping with card surcharging changes
Since 13th January 2018, extra fees of up to 20% which companies levy on card payments for items such as flight tickets, were banned. Under the old rules, businesses were not allowed to profit from surcharging but the actual costs they incur could be passed on. Now the new EU Directive preventing this has kicked in, there could be an impact on the bottom line for travel companies. Travel operators have three potential responses: absorb the additional costs; pass them on to consumers by upping the price of their holidays; or reduce their own costs to off-set this.
We hope most will choose the latter and take positive steps to manage their own costs associated with making travel supplier payments. There are huge gains to be made by abandoning traditional payment methods. Our own analysis shows agencies are spending up to 3% more on each international transactions compared to alternatives like VANs.
4. Tackling rising fraud
With billions of transactions a year, it’s not surprising that fraud is a top pain point for travel companies. The problem is so engrained in the industry that travel agencies now set aside 1-2% of their revenue into managing fraud. In an industry where margins are already tight, it’s still a substantial cost. But with today’s advanced payment solutions, minimising the risk and cost of fraud is as simple as changing the way you pay.
The travel industry is forecast to continue its growth in 2018. Addressing these four issues will mean your business will be in the best position to take advantage.
For more comment and insight take a look at our other blogs.
