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Maximizing
revenue across
the traveler’s
journey
Introducing the concept of
Complete Retailing
Flight No.
A white paper by
Henry Harteveldt
Atmosphere Research
2
Introduction from Atmosphere Research
Ireland enables the era
of Complete Retailing
As we write this updated introduction, affected many technology-related activities,
including spending for ancillary product
the world is still reeling from the development, retailing/merchandising, and
societal, financial and emotional digital direct and third-party distribution
impact of the Covid-19 pandemic. channels. But no business can be a “turtle,”
retreating within its shell, quivering, waiting
The virus has wreaked havoc across
for the bad times to pass before they extend
all industries, but few have felt its their head out and start to move forward. If
impact as forcefully and intensely anything, a business landscape like the one the
as the global travel industry. industry is currently in demands bold, creative,
and arguably even counterintuitive strategy
and action – albeit strategy and action that is
Covid-19 is the first peacetime event to also financially responsible.
bring nearly all of the world’s travel industry
to a total standstill. As we write this, some Beginning in late June 2020, and continuing
parts of the world are starting to reopen, into mid-July, Atmosphere Research Group,
while others remain fully or partially closed. an independent and objective travel industry
International travel restrictions remain in market research firm, conducted its own global
place between dozens of countries – and, survey of airlines and hotel brands and groups
in the US, even between various states about their Covid-19 recovery strategies in
or cities. topics such as budgets and spending, ancillary
products, digital commerce and distribution,
With most travel demand having evaporated marketing, and other commercial topics related
and a recovery timeline still uncertain, to travel retailing. Forty-one digital commerce,
airlines, hotels, and other travel businesses distribution, marketing, innovation, and
have understandably slashed their operating technology professionals in the airline industry
and capital expenditure to reduce expenses and 35 professionals in similar roles at hotel
and preserve cash. The budget carnage brands or groups completed the survey.
3
From it, Atmosphere learned: — The focus will shift, slightly, from cost
reduction to revenue growth. Survey
participants were asked whether they
focused on cost reduction or revenue
— Industry financial recovery is expected growth for March 2020 through June 2020
to take about three years. Both and where they expect their focus to be
sectors currently anticipate it will take for the remainder of the year (July 2020
approximately three years to reach the through December 2020). Almost all – 88%
same topline revenue they saw before of airlines and 91% of hotels – cited cost
the pandemic. Hotels anticipate a slightly reduction for March through June. Just 10%
shorter timeline than airlines (2.8 years for of airline respondents and three percent
hotels, 3.1 for airlines). The expectation is of hotel respondents said they had placed
that leisure travel will recover faster than their commercial tech emphasis on revenue
business/corporate travel, with meetings/ growth (the balance opted not to answer
conference demand (the MICE segment for this question). For July through December,
hotels) expected to take the longest time to some change is afoot. The emphasis on
return to pre-Covid-19 levels. budget reduction leads among both airlines
and hotels (39% and 43%, respectively),
— Commercial technology budgets have but there is a splash of good news: 34%
been slashed. Budget, of course, is always of airlines and 29% of hotels say they will
the big topic, whether times are good or focus their commercial technology budgets
bad. The news here isn’t pretty – but it on revenue growth. And, this reality check:
may not be as bad as some expect. The a critical mass of both airlines (22%) and
airline respondents said their commercial hotels (26%) are currently uncertain what
technology budgets, covering software and they will do.
functionality such as digital commerce,
personalization, ancillary product — Priorities favor more immediate solutions.
development and retailing, marketing, When asked to rate the importance of
and loyalty applications were cut 44% various components to their Covid-19
from their pre-Covid-19 budgets (NB: the commercial recovery efforts, solutions that
survey focused on budget for software, offer the promise of faster returns come
applications, etc., but not about headcount out on top. Revenue management and
and compensation). For hotels, it’s a customer and commercial data won the
nominally sharper cut – 47%. Asked where, “gold” and “silver” medals, scoring 9.3/10
at this point in time, they expect their and 9.0/10 for airlines, and tied at 9.1 apiece
commercial tech budgets to be in 2021, among hotels. Ancillary revenue was the
34% of airline respondents and 37% of hotel third highest scoring focus for airlines
respondents admitted they were uncertain. (8.1/10) while personalization scored third
If there’s good news, it’s this: Just 10% of for hotels – 8.5 (ancillaries scored fourth
airlines and 14% of hotels expect cuts from among hotels, at 7.3). Personalization
their revised post-Covid 2020 budgets to was the fourth most important option for
2021. There’s also this glimmer of hope: airlines and scored dramatically lower –
Nearly one in four airlines and 17% of hotel just 6.8. Why? Because, in Atmosphere’s
respondents believe their commercial tech opinion, airlines were further ahead than
budgets will increase next year from their hotels with personalization efforts pre-
current reduced levels. Fingers crossed. Covid-19. Mobile scored fifth for both
groups (5.9/10 for airlines, 7.1/10 for hotels).
4
Why do hotels place more importance Your product and its value must be
than airlines on mobile? In a post-Covid-19 unambiguously clear and intuitive – this is
world, hotels recognize that a great deal of about helping your customers improve their
the hotel guest experience can exist within appeal and relevancy to their travelers, while
their mobile apps. Plus, airlines had already helping them generate critically-needed
created comprehensive mobile experiences revenue or provide newly-essential information.
(booking, flight check-in, contactless bag Don’t be afraid to show how your product may
check, mobile boarding passes) – meaning generate a small profit now but could easily
there’s not that much left to do. As one generate many times more within a few years.
airline said in a follow-up call, “We’re Make sure your software is easy to implement
holding off on mobile perfection for now. and operate, and that it integrates with key
Good enough will have to be good enough systems (for example, airline PSS or DCS, hotel
until our business improves.” PMS, customer databases, etc.). Prepare to
take on as much of the tech set-up, testing,
implementation, and maintenance as possible;
your prospect’s or client’s IT department has
a sea of empty desks now. Be open to new
What does this mean? commercial terms to show that your firm
understands the severe business environment
your prospect or client is operating in,
If you’re an airline or hotel, 1) you’re not plus your commitment to a long-term
alone in the confusion and professional partnership based on shared success.
angst you may be feeling, 2) you can’t just
cut, cut, cut and hope to make it through Against this, the technology innovation that
this mess, and 3) it’s OK to tackle more is occurring in Ireland has perhaps never
pragmatic things for now. Earlier, we been more valuable to the global travel
counseled that airlines and hotels shouldn’t industry. And while Enterprise Ireland, the
be corporate turtles. To that, we’d also like to trade and venture capital arm of the Irish
discourage airlines and hotels from embracing government, commissioned Atmosphere
lemming-like behavior as well. Opportunities Research Group to prepare this Thought
exist to conduct affordable testing of various Leadership Paper before the pandemic
software solutions. The intensity of the current had emerged, its findings remain relevant.
revenue crunch compels airlines and hotels to Atmosphere Research interviewed 10 of
explore new ancillary product ideas. And the Enterprise Ireland’s portfolio companies,
“Complete Retailing” strategy, explained in full forming its own opinions about each firm.
detail later in this report, is arguably even more The report also includes data from
important than it was before the pandemic Atmosphere’s proprietary studies of travelers
began. Why? Pre-Covid-19, it was relatively in five countries selected by Enterprise Ireland
easy to coax financially confident travelers into – the USA, UK, Germany, Spain, and China –
spending money. Now, the traveler has a tight to provide context for why Complete
vice around that wallet. You’ll need to work Retailing is essential to airlines’ and hotels’
extra hard to get even a few bucks more. commercial success.
If you’re a software provider, you’re in one Finally, please note that the concepts and
of the toughest selling environments that’s opinions expressed in this report are solely
existed since software sales began. those of Atmosphere Research Group.
5 Contents 6 Introduction Why is Ireland a hotbed of Travel Tech? 9 Section 1 Poor digital experiences weaken the joy of travel 13 Section 2 The story arc framework remains underutilized 15 Section 3 Tapping into travelers’ second wallets is the key to travel retailing profitability 18 Section 4 Travel enters the era of Complete Retailing 22 Section 5 Cloud and machine learning are at the core of Complete Retailing 25 Section 6 Content is king 41 Section 7 If content is king, data is the power behind the throne
Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 6
Introduction
Why is Ireland a hotbed
of Travel Tech?
North America, the Irish government made
Ireland is one of technology’s most
aviation a central focus of its pre-World War
active and creative start-up hubs. II industrial development policies. Aviation
contributed to the country’s participation in
Ireland is one of technology’s most active exploration, science and engineering, and
and creative start-up hubs. The country is commerce. An Irish pilot, James Fitzmaurice,
home to more than 70 innovative travel tech was the first to cross the Atlantic from east to
firms, including start-ups, early stage, and west. In 1929, Irish pilot Sophie Peirce-Evans
established businesses. These companies sell (also known as Lady Mary Heath), was the first
to companies worldwide, including the USA, person to fly solo the 9,000+ miles from Cape
China, and countries across Europe. Town, South Africa to London. The world’s
first female aviation engineer, Lilian Bland, was
How did Ireland earn its place as a leading from Ireland. The world’s first airport duty-free
nexus of travel technology? store was located at Shannon Airport. Ireland
is home to the world’s first commercial aircraft
Let’s look at the map. Literally. Ireland is an leasing firm and Europe’s largest single airline
island nation located on Europe’s periphery. brand, Ryanair. Ireland has also produced
Travel and transportation have played unique several well-known airline CEOs, among
roles in the country’s trade and commerce. them Alan Joyce (Qantas), Michael O’Leary
Irish shipbuilding dates back to the Viking era (Ryanair), and Willie Walsh (International
and was a major industry during the 18th, 19th, Airlines Group, parent of British Airways,
and early 20th centuries. Given its geographic Aer Lingus and others).
proximity between continental Europe and
Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 7
To learn more about how Ireland became propel existing businesses forward and spark
a vibrant technology hub, Atmosphere the creativity that fosters an entrepreneurial
spoke with Dr. Padraic Regan, Ph.D, an culture. As the Irish economy boomed, Irish
aviation consultant and formerly Ussher expats returned from abroad with their
Assistant Professor in International Strategic own experiences and ideas and started their
Management at Trinity College Dublin. own businesses.
Dr. Regan explained that, as the 20th century
progressed, the country lost much of its Dr. Regan shared that Ireland also developed
manufacturing industry. Exploring options, ‘inside out clusters’ centered around aviation
the country’s leaders realized that technology and travel. “Aviation has long been a respected
was a sector growing enormously and acted to industry in Ireland to work in.” The Professor
position the country to benefit from it. also pointed out that aviation in Ireland is
valued as much for its role, creating a large
Dr. Regan explained that Ireland has a strong number of skilled engineering and technical
focus on education. The country’s primary and jobs in its ability to link the country to other
secondary schools’ programs of studies focus parts of the world. Having created industries
on STEAM (Science, Technology, Engineering, like aircraft leasing and duty-free shopping,
Arts, and Math). Ireland is home to numerous and having developed expertise in air traffic
world-renowned mainstream and technology- control and airport management, Ireland
focused universities and colleges, including exported these concepts to other countries.
Trinity College Dublin, University College
Dublin, University College Cork, NUI Galway, Another key to Ireland’s success was its ability
Dublin City University, and University of to successfully attract a growing constellation
Limerick. As the country pursued its focus on of technology firms, including top-tier brands
a technology-based future, these and other like Google, Facebook, Microsoft, Airbnb and
Irish institutions of higher learning ‘blossomed’ others. “These firms did more than just create
with diverse curricula in disciplines such as jobs,” said Dr. Regan, “they attracted the
technology, digital, business, entrepreneurism, disruptors, spurred the development of locally-
design, and literature, producing graduates based venture capital firms, and contributed
well equipped with the knowledge, to the country’s burgeoning entrepreneurial
inquisitiveness, and savviness required to business environment.” It helped, added
Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 8
Dr. Regan, that the Irish government had a development agency tasked with helping Irish
foreign direct investment tax rate of just 12.5%, companies grow. Enterprise Ireland provides
and that Ireland is an English-speaking country. financial support and advice to its portfolio
The European Commission classifies Ireland as companies, which include more than 70 travel
a ‘Strong Innovator’ in its European Innovation tech firms. Given its strong STEAM-based
Scoreboard (EIS) 2019, thanks in part to its education, a longstanding role in travel and
extremely high level of university graduates, aviation, and a passion for entrepreneurism,
strong venture capital funding landscape, and Ireland continues to play a significant role in
high employment. travel technology and the industry’s future
success and prosperity.
Aside from their roles as conduits for travel
and tourism, travel and aviation in Ireland are Digital travel, especially digital travel retailing,
major employers. They are complex industries demands creative, market-focused B2C and
with numerous business challenges and B2B travel technology solutions. As you will
highly technology-reliant – perfect fodder for see, there are numerous gaps which must be
entrepreneurs with ideas they believe can help addressed for the industry to meet (and ideally
solve some of these. exceed) travelers’ ever-increasing expectations
and enable airlines, hotels, and other travel
Helping incubate and scale many of Ireland’s sellers to achieve greater digital commerce
most compelling travel tech start-ups is success.
Enterprise Ireland, the country’s economic
1
ource: https://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards_en
S
An interactive tool of the European Innovation Scoreboard can be found at https://interactivetool.eu/EIS/EIS_2.html#a
9 Section 1 Poor digital experiences weaken the joy of travel
Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 10
Travel can be fun. Travel can be It’s not like digital commerce is a niche activity.
Every day, more than 5.2 million people around
a source of joy, learning, sharing, the world make at least one digital purchase.
personal and professional growth, Travel is one of the pioneering e-commerce
success, and even love. categories. People have been booking travel
for 25 years, and travel remains one of the
And yet sometimes the process of planning largest digital commerce sectors. In the US,
and booking a trip just sucks. UK, Germany, Spain, and China, between
82% and 92% of online travelers are Bookers,
This isn’t a random statement. Atmosphere’s people who research and buy some portion of
research among travelers in five countries their travel online. But plenty of these Bookers
– the US, UK, Germany, Spain, and China – curse airlines, hotels, and other travel sellers as
shows numerous pain points vex travelers. they plan and book their trips.
Figure 1: Travelers say planning trips takes too much time
% - Airline passengers
% - Hotel guests
US UK Germany Spain China US UK Germany Spain China
Sources: Atmosphere Research Group's US Travel Online Studies, Q1 2019 and Q1 2018; UK, Germany, and Spain Travel Online Studies, Q2 2019 and Q2 2018; and China Travel Online Studies, Q3 2019 and Q3 2018Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 11
Why? Because:
— Travelers say it takes more time to plan and Figure 2: Travelers have to shop too many
book trips online now than in the past. places to get the information to plan a trip
Even though travel has been sold online since
1994, 50% or more of the airline passengers
in the US, UK, Germany, Spain, and China say
they spend more time than they want using
digital channels to plan and book flights (see
Figure 1). Worse, more people feel this way in
US
2019 than in the past. Hotels fare only slightly
better; on average, 45% of the hotel guests UK
believe they spend too much time planning Germany
and booking a hotel stay. Compounding this Spain
are travelers’ perceptions that they need to China
shop across too many websites to find the
travel services they want and need for their
trip (see Figure 2).
— Inadequate actionable, contextual product
information makes them feel confused.
Why do travelers find flight and hotel
booking to be so frustrating? In part,
because they lack contextually useful
content to make well-informed purchase
decisions. As with the shopping process for
almost any goods or service, shopping for Sources: Atmosphere Research Group’s US Travel Online Studies, Q1 2019 and
Q1 2018; UK, Germany, and Spain Travel Online Studies, Q2 2019 and Q2 2018;
travel involves finding the base and optional and China Travel Online Studies, Q3 2019 and Q3 2018.Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 12
“Travelers believe
other industries do
a much better job
of personalizing offers
than airlines and hotels.”
products that meet a traveler’s emotional Figure 3: Travel brands guilty of sending
and rational needs. Yet just 23% of airlines irrelevant offers to travelers
and just 17% of hotels say they adequately
invest in innovation for their ancillary
product strategies.4
— Airlines and hotels don’t adequately
personalize their offers.
Unfortunately, travelers believe other
industries do a much better job of
US
personalizing offers than airlines and hotels.
Even though 70% or more of travelers in the UK
US, UK, Germany, Spain, and China want Germany
to receive personalized offers from travel Spain
sellers, not even one in five say they receive China
offers that reflect their interests, travel
behaviors, or stage in their lives (see Figure
3). That’s a massive gap. Meanwhile, digitally
native businesses such as Amazon, Netflix,
and Spotify regularly push personalized
communications, recommendations, and
offers. Tsk, tsk, travel.
2
Source: https://www.statista.com/statistics/251666/number-of-digital-buyers-worldwide/
3
tmosphere defines an online traveler as a person who takes at least one business or leisure/personal trip (excluding commuting to/from work) to a destination
A
located more than 50 miles away from her or his primary home. The percent of online travelers who are Bookers are: US, 92%; UK, 88%; Germany 87%; Spain, 85%;
China, 82%.
4
Sources: Atmosphere Research Group’s Airline Commercial Outlook Online Study, Q4 2018 and Lodging Commercial Outlook Study, Q 4 201813 Section 2 The story arc framework remains underutilized
Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 14
Every trip, from the first spark of an into groups, such as demographic groups or
personas, a travel seller can identify common
idea about taking a trip to returning moments in which to sell various products to
safely back home, consists of countless a cohort of travelers. What will make the story
micro-moments where a traveler is arc a successful tool for a travel seller is when
that seller fully leverages its customer data,
open to making a purchase.
software, customer insights, and commerce
tools to dynamically create and publish
Some of these purchase opportunities will be tempting offers to the traveler at the opportune
large and considered – Where to go? How do moment, and through the channel most likely
we get there? Where do we stay? – to simple to snag that traveler’s attention.
– Where should we eat? What should we do
today? Where do local residents shop?
Atmosphere likes to use a framework we call
the ‘story arc’ to organize these moments
(see Figure 4). Though we pioneered the
use of the story arc within travel commerce,
we borrowed it from the literature and
entertainment industries, which use the story
arc to provide structure to novels, movies, TV
series, and video games. A traveler’s story arc
embraces the entire trip, from ideation through
planning and booking to all the steps within
the journey itself.
The ‘story arc’ framework is just that, a
framework, a structure that each travel seller
can use to tailor the products and offers it
wants to show to each traveler. Just as no two
people are alike, no two story arcs are alike,
either. Yet, just as people can be clustered
Figure 4: A ‘story arc’ spans every traveler’s trip
Traveler’s Journey
Channels, content, offers, etc.
©2019 Atmosphere Research Group, LLC. All rights reserved15 Section 3 Tapping into travelers’ second wallets is the key to travel retailing profitability
Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 16
From our consumer research, we Figure 5: Most leisure travelers create
budgets for an entire trip
know more than four in five travelers
in the US, UK, Germany, Spain and
China establish budgets that cover
their leisure trips’ transportation, US
lodging, ground transportation, and UK
Germany
meals (see Figure 5).
Spain
China
This partially explains travelers’ intense
focus to find the best possible price for their
flights, hotel rooms, and other travel services.
Fortunately, travelers give themselves an
‘out’ to spend more. They view travel as an
indulgence they have earned (see Figure 6).
We also know leisure travelers tap into other Sources: Atmosphere Research Group’s US Travel Online Studies, Q1 2019 and
Q1 2018; UK, Germany, and Spain Travel Online Studies, Q2 2019 and Q2 2018;
budgets for activities such as shopping, and China Travel Online Studies, Q3 2019 and Q3 2018.
entertainment and other ‘splurges’ (see Figure
7). This is where airlines and hotels can tap Airlines and hotels can’t sit back and expect
into what Atmosphere calls the ‘second wallet’, travelers to open their second wallets without
travelers’ supplemental budgets for affordable working for it, though. This is why it’s critically
extravagances. It’s this second wallet that often important for airlines and hotels to invest in rich
funds travelers’ ancillary product purchases visual content, such as high-definition video,
such as fast-track security, seat or room high-resolution photography, or crisp diagrams
upgrades, or a spa treatment. and graphics to sell effectively. Airlines and
hotels also need highly detailed written
content, ideally dynamically prepared so theMaximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 17
seller can match the product’s description to to be able to say “yes, we have that” as often
the traveler’s interests. But at the core, the as possible, both to please the traveler and
airline or hotel must offer a broad, relevant generate more sales – and profits. Amazon sells
mix of products, especially those that can fill both mass-market major brands and numerous
out travel’s ‘long tail’. A smart retailer knows niche products it believes are relevant to its
what its customers may want or need and customers. Airlines and hotels that want to
strives to sell as many of those products as it be successful retailers must be prepared to
can. It’s no different for an airline or a hotel. do the same.
Like well-run retailers, airlines and hotels need
Figure 6: Travel is an opportunity Figure 7: Travelers ‘second wallets’ fund
for self-indulgence ancillary purchases
US
US
UK
UK
Germany
Germany
Spain
Spain
China
China
% - Online leisure travelers % - Online leisure travelers
Sources: Atmosphere Research Group's US Travel Online Studies, Q1 2019 and Q1 2018; UK, Germany, and Spain Travel Online Sources: Atmosphere Research Group's US Travel Online Studies, Q1 2019 and Q1 2018; UK, Germany, and Spain Travel Online
Studies, Q2 2019 and Q2 2018; and China Travel Online Studies, Q3 2019 and Q3 2018 Studies, Q2 2019 and Q2 2018; and China Travel Online Studies, Q3 2019 and Q3 201818 Section 4 Travel enters the era of Complete Retailing
Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 19
Except for ‘all-inclusive resorts’, most allow travelers to find the products they want
and the value they demand, in a shopping and
hotels use the ‘a la carte’ business booking process that reinforces the seller’s
model, where a guest books a room, desired attributes. And good news, we’re
with additional hotel services charged making progress.
when used.
Travel sellers now enjoy access to more
extensive (though still not perfect) customer,
commercial, and operational data. The
In contrast, most airlines had traditionally industry is benefitting from advancements
used the ‘all-inclusive model’ with services in transformational technologies such as the
like checked bags, meals, and assigned seats cloud, mobility-based solutions, and machine
included in the fare. This began to change learning, all of which have also become more
after 9/11, with airlines more widely moving to affordable. Some travel firms have begun to
unbundle its products (especially domestic or build teams of data scientists, complementing
regional economy class) following the oil spike their digital commerce and product groups.
and start of the economic crisis in 2008. The intersection of these developments enables
the travel industry to enter what Atmosphere
But just because airlines and hotels have been calls ‘the era of Complete Retailing’.
selling ancillary products for a decade or more
doesn’t mean they do it well. As with many
aspects of business, airlines and hotels have We define Complete Retailing as:
followed an evolutionary path towards their
new roles as retailers as market dynamics, The ability for a travel seller to dynamically
technology, and consumer behavior allow. create, price, publish, and sell relevant,
personalized, appealing offers, whether as a
The industry is now at the point where travel proactive ‘push’ or a response to a traveler’s
sellers should be equipped to elevate their request, and manage the order’s creation,
customer and user experiences with the most purchase, payment, and fulfillment across any
useful back- and front-end technologies that channel and platform.Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 20
STOW STOW
1
2
3
4
5
Complete Retailing is the fourth and most — Basic merchandising (2012-2016).
recent, though certainly not final, stage of The first attempts to ‘merchandise’ airline
travel’s retailing evolution that began in the and hotel ancillary products emerged
early 2000s. The four periods that comprise during this time, and they were weak.
travel’s retail evolution are: Though airlines and hotels began to present
a few optional products during the initial
— Simple selling (start through 2012). booking path within their own websites,
Think of this as travel retailing’s Hadean era. the offers were fairly uniform and rarely
Airlines started to cluster their fares into ‘fare targeted, and were often not available from
families’ based on factors such as advance- other direct or indirect channels. Once the
purchase requirements and refundability as initial reservation was made, the traveler
well as cabin classes; in 2007-2008, the first rarely saw another offer for an ancillary
branded fares (product or attribute-based product until they checked in for their
fares) emerged. If an airline or hotel was able flight or arrived at their hotel. The seeds
to sell its ancillary products online, it did for improved airline merchandising were
so in a random, higgledy-piggledy manner. planted in 2012, when IATA, the airline
There was minimal offer targeting, let alone industry’s global trade group, launched
tailored or dynamic pricing. Travelers’ loyalty New Distribution Capability (NDC), a set
‘elite tier’ statuses were generally overlooked, of industry-developed XML-based data
resulting in their seeing sales messages for transmission standards intended to help
products or amenities that they were entitled airlines sell their base fares and optional
to receive on a complimentary basis. Copy products more effectively through third-
and visual content were both basic. Aside party distribution channels such as GDSs
from greeting a registered user by name after (Global Distribution Systems).
logging in, there was no personalization.Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 21
“Offer personalization is
at the core of the user
experience – relevancy is
everything.”
— Beginning Retailing (2016-2019). — Complete Retailing (2019-).
During this three-year period, airlines The era of Complete Retailing is built
and hotels began to implement their on a foundation of timely, targeted, and
initial attempts to ‘retail’ their optional thoughtfully presented offer creation and
products, including some of the first real-time order management. The seller
efforts using offline and third-party makes a complete catalog of its own and
channels. The products received more third-party ancillary products available
engaging, compelling copy and, for some, for sale on a channel-agnostic basis, with
photography or video content. Airlines offers crafted using machine learning-
and hotels improved their abilities to based inputs. Similarly, machine learning-
target offers. Their customer databases based algorithms inform the dynamically
and content management systems were calculated prices, which are made available
enriched as well, allowing them to promote on a more continuous curve rather than
‘elite tier’ benefits to eligible members the traditional, less flexible revenue
within the search, shop, and booking management ‘stair step’ approach. Travel
phases. This is also when airlines and sellers embrace the ‘story arc’ of potential
hotels augmented their mobile app-based selling opportunities that spans each
optional product merchandising. Airlines’ traveler’s journey. Offer personalization is at
first uses of NDC standards in production the core of the user experience – relevancy
mode launched in 2017. is everything. Brands use an omnichannel
distribution and sales strategy to ensure
their products are available at the right time
via the traveler’s channel(s) of choice.Ireland enables the era of complete retailing: Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 22
Section 5
Cloud and machine
learning are at the
core of Complete
RetailingMaximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 23
The new generations of flexible, nimble, has numerous challenges, they are similar in
some ways to those found elsewhere: “The
and responsive technologies allow challenges the travel industry faces are the
Complete Retailing to exist. And, within same as other industries, such as retailing,
these new technologies, the cloud and manufacturing, and financial services.”
machine learning play the greatest roles. Dr. McDonnell sees the cloud, data, artificial
intelligence (AI) – which includes machine
As part of our research for this report, learning – the Internet of Things (IoT), and
Atmosphere spoke with Dr. Edward McDonnell, blockchain as technologies offering potential to
Centre Director, National Centre for Applied the travel industry. Chief among the challenges
Data Analytics and Machine Intelligence, at faced by the travel sector, Dr. McDonnell
the Centre for Applied Data Analytics Research believes, is actionable customer data. “Traveler
(CeADAR). data is one of the first steps of enlightenment.
The challenges of having limited customer
Dr. McDonnell noted that “Ireland has long insights is not unique to travel.” But other
been a strong innovator in the European industries, namely fintech, in his opinion, use
innovation ecosystem,” a point borne out their data more effectively and thus serve as
by the European Innovation Scoreboard. He an example for travel firms. According to Dr.
also observed that though the travel industry McDonnell, “it’s not enough to have the data,Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 24
travel firms must be able to extract insights report credited the cloud or machine learning,
and act on them as close to real-time as is and often both, for their firms’ abilities to
possible.” To do this will require travel firms to exist and operate as market-, client- and
have “bottom-up use of data science and AI” traveler-focused businesses. The executives
as part of their decision-making processes. routinely cited the cloud’s flexibility, scalability,
Contributing to the mix are blockchain-based and cost-effectiveness compared to even
smart contracts, which could help travel firms the newest generation of servers. Several of
pass information and funds more securely and the firms Atmosphere interviewed for this
irrefutably, whether internally or with a report, including Boxever and CarTrawler,
third-party organization, improving aspects cited the cloud in playing a role in their
such as operational effectiveness and the growth and success.
customer experience.
The firms we interviewed also regularly cited
Dr. McDonnell believes travel firms are making machine learning as the most important
progress, adding he sees a “never-ending quest component of artificial intelligence they were
for gathering more and better data, and for using. The algorithm, once it has learned the
exploiting the data travel firms already have.” patterns in the data, often from seeing multiple
Yet the situation is ripe with opportunities to repeated patterns, applies the learnings in a
improve. How? One suggestion he offers is fraction of a second to subsequent decisions.
marrying what may appear to be disparate data Its ability to process massive volumes of data at
sources, but which if combined could help a blazing speeds makes effective personalization
travel company vastly improve its product and possible, because results can be returned with
provide a better end-to-end travel experience. essentially no noticeable latency. But we
As a suggestion, Dr. McDonnell mentioned must recognize one brutal truth: As is often
a piece of work they undertook with a major the case when using data, a travel seller’s
airline which combined data from the aircraft ability to execute depends on its own data’s
plus weather patterns to minimize the aircraft’s relevancy and quality. No matter how good
fuel consumption and flight path while a machine learning-based algorithm may be,
satisfying international rules on air travel. it can’t compensate for inadequate or poor-
Almost every executive we interviewed for this quality data.25 Section 6 Content is king
Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 26
If airlines and hotels want more people In Complete Retailing, it’s the product catalog
content that is king.
to buy more things from them – from
their direct channels, too – then they In retail terms, airlines and hotels are specialty
need to transform themselves into what shops, while travel agencies are department
consumers would call ‘travel companies’. stores. Referencing the massive online retailer,
some airlines and hotels say they want to
become ‘Amazons of travel’. Guess what?
What do we mean by that? In 2019, the typical Travel agencies are already there. If airlines and
airline or hotel website or mobile app sells hotels want to become more comprehensive
primarily its own products: its core fares or retailers – retailers of travel, not just their own
rates and its own ancillary products (and services – they need more content.
possibly not all of those). If the airline or hotel
sells third-party products, they probably And while this isn’t necessarily difficult,
offer a small selection, such as insurance, it will require airlines and hotels to slay a
airport transfers and ground transportation few corporate dragons, among them being
and, for airlines, lodging. Contrast this with prisoners to big numbers. When an airline or
travel agencies, which in addition to a wide hotel generates hundreds of millions (or more)
selection of airlines and lodging options, also of euros in ancillary revenues, its product
sell other forms of transportation, (e.g., rail, managers understandably look for the ‘next
ferry), cruises, destination activities such as big thing’ to meet their ever-increasing revenue
sightseeing tours and festival tickets, passport goals.
and visa expediting services, and more.
In the era of Complete Retailing, airlines and “In retail terms,
hotels must remember that authentic ‘retailing’
is based on more than ‘selling stuff’. To succeed airlines and hotels are
at Complete Retailing, airlines and hotels must
offer robust content based on product catalogs
specialty shops, while
comprised of a thorough, relevant assortment travel agencies are
of proprietary and third-party products –
especially ‘long tail’ products. department stores.”Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 27
50
40 60
30
70
20
90
10
100
0
Atmosphere understands this. It’s much Enterprise Ireland has numerous portfolio
easier to hit an increased revenue goal with companies that can help airlines and hotels
a commission of €100 than one of €10. We’d become travel companies. For this report,
counter with this suggestion: Look at the Enterprise Ireland selected 10 firms from
bigger picture. Adding ‘long tail’ services that its vast portfolio, based on each company’s
may admittedly be considered niche products abilities to complement and strengthen an
now, with smaller pay-outs, may actually be airline’s or hotel’s customer experience, its
quite the smart move. Why? Adding these business strength, and its unique nature
services can help improve the utility and within the travel technology landscape. These
appeal, and thus the customer experience, of six, presented in alphabetical order, all offer
the brand’s digital channels and, by extension, content that can enhance an airline’s or hotel’s
the brand itself. digital customer experience and brand USP.
Some may argue it may take the same amount
of IT effort to add the smaller ancillary
product provider as the larger one. This may
be a point of negotiation. Explore having the Camping is much more than hiking, cooking
vendor do more of the IT work or consider a out, and sleeping under the stars. Camping
compensation arrangement that allows the IT is part of the $260+ billion adventure travel
costs to be recouped within a given timeframe. market, which the United Nations World
Tourism Organization estimates is growing
This much is true: Adding the right mix of third- by 30% or more annually. In 2020, Campsited
party ancillary products can help transform the estimates camping will produce more than one
airline or hotel into the more customer-centric billion ‘camp nights’ worldwide.
retailer it needs to be, the more comprehensive
travel brand it wants to be, and helps it get Campsited has made camping a digitally
closer to becoming the ‘Amazon of travel’ its accessible part of travel’s ‘long tail’. The firm
CEO says it’s going to be. estimates the value of campsite bookingsMaximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 28
(excluding airfare, gear, meals, and activities)
in Europe in 2019 will be €11.5 billion and
is estimated to reach €13.5 billion by 2023.
Camping’s growing appeal reflects how we
live increasingly hyper-connected lives from
which we’d like to disconnect, even if for brief
periods of time. We’ll admit there’s a bit of
irony in Campsited, an online company, making
it possible for consumers to use technology to
book escapes from their digital lives.
Campsited’s backstory began when its founder,
Finán O’Donoghue, wanted to take his family
camping in Europe. An IT and digitally centric
business professional and experienced camper,
he knew the campsites existed but found it
maddeningly difficult to find them online. Even
when he did, a significant proportion weren’t O’Donoghue launched Campsited in late
bookable online directly, and there was no 2015. He focused on signing up campsites in
easy-to-use central platform to find, compare order to have product to offer travelers when
and book every campsite globally. the company eventually began to market to
them. Today, Campsited has more than 2,000
You can see the light bulb going off above properties on its platform, and can offer real-
O’Donoghue’s head right about now, can’t you? time availability, pricing, and booking at more
than 1,300 locations. Campsited’s inventory
Campsited became O’Donoghue’s passion currently represents about 10 million available
before it became his business. While working nights and is growing weekly. With an average
full-time in another job, O’Donoghue spent stay of seven nights, the platform has enough
nearly every night and weekend for six months supply to accommodate 1.4 million bookings.
researching campsites, gathering government Campsited has seen impressive growth.
statistics on camping and campsites, assessing O’Donoghue anticipates that Campsited’s 2019
campsite operators in 30 countries, and revenue will be 400% greater than 2018’s.
conducting country-level, local-language
Google searches using 20 different search Campsited currently has small campsites,
phrases. Eventually, O’Donoghue emerged glamping sites, right up to five-star camping
with a catalog of 600 websites, plus mobile resorts in France on its platform. In France,
apps. He scored each based on UX, ease of campsites are known as ‘hotel de plein air’,
use, number of campsites and number of which translates into open-air hotels. That’s a
bookable campsites (which were very few). fitting description, because some of the largest
Through more than 40 conversations and campsites are resorts that define European
in-depth interviews with almost every type camping. These campsites offer every
of camper – individuals, families, younger imaginable type of camping accommodation,
couples, older couples, groups of friends, and from pitches, to safari tents to air-conditioned
more – O’Donoghue learned that guidebooks mobile homes. They also offer a huge array
and Google Maps were the tools campers used of amenities, such as bars, restaurants,
to find campsites. And, because many of the supermarkets, and spas, plus an extensive
campsites didn’t have transactional websites, assortment of activities, including archery,
people emailed the campsites with their fishing, and nature walks. Some even offer
queries and for reservations. accommodations in air-conditioned cabins.Maximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 29
“Campsited estimates the
value of campsite bookings
(excluding airfare, gear,
meals, and activities) in
Europe in 2019 will be €11.5
billion and is estimated to
reach €14.3 billion by 2023.”
While a week’s stay at a modest campsite and camper vans. Travelers from other
may cost a few hundred euros, according countries often opt for rental accommodations,
to O’Donoghue a booking at some of these including those air-conditioned cabins.
campsites can reach several thousand euros.
Campsited uses two models to work with
The primary Campsited customer segment, partners such as airlines and travel agencies.
producing more than 75% of its reservations, The company has a full white-label solution
are families. Younger travelers, either and a suite of APIs that can be integrated
couples or small groups, are also important, into the partner’s website (O’Donoghue says
as are retirees, who have the time to integrating the white-label solution is the
travel and are flexible about when and faster option). Campsited has invested a “huge
where they go camping. In our interview, amount” in its UX and conversion optimization,
O’Donoghue emphasized how camping is which partners benefit from through steadily
often an intergenerational experience, where improving conversion rates.
grandparents travel with their kids and
grandkids. This helps build deep passion for the One benefit Campsited offers airlines and
camping way of life among future generations travel agencies is that most parties booking on
of travelers. It’s common, says O’Donoghue, to the site consist of two or more people, which
see people who first went camping with their can contribute to the partner’s traffic, volume,
parents or grandparents return to the same and revenues. Campsited, says O’Donoghue,
campsites as adults with their children. shares its commissions with its partners using a
negotiated revenue share model. The company
The company plans to expand its network of plans to introduce car rentals and transfers.
campsites, including the US market. The US It is exploring adding camper van and carvan
market is as large as all of Europe; each region rentals and adding destination services and
produces about 500 million ‘camp nights’ a activities at and around the campsites on its
year. That’s one billion camp nights just from platform, O’Donoghue said. Many of these
these two regions – the global market size is, of ancillaries will be included in its partner
course, even larger. revenue share program as well.
From its experience, Campsited has learned
that all campers are not alike. UK campers, says
O’Donoghue, are “stone mad” for their caravansMaximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 30
CarTrawler’s Chief Commercial Officer, Aileen McCormack
Executive Director, told Atmosphere,
CarTrawler’s data “knows no one rents a car
at London Heathrow Airport, but 40% do at
Ground transportation provider CarTrawler is Miami International.” As a result, CarTrawler
a B2B supermarket of global mobility services. will serve up taxi and private transfer options
CarTrawler provides unrivalled breadth and at Heathrow, while at Miami they’ll suggest a
depth of mobility suppliers across the globe, car hire along with other options, such as on-
including car rental, private airport transfer, demand ride hailing. “The selection a traveler
and on-demand ride hailing services at sees,” says Healy, “isn’t random.”
more than 50,000 locations in 174 countries.
Working with more than 100 airlines and CarTrawler is a business deeply rooted in,
2,000 travel retailers, CarTrawler expands the and passionate about, personalization and
airlines’ and travel partners’ offering to their merchandising. The company often finds itself
customers, while deepening those relationships teaching its clients how to be more effective
and creating substantial ancillary revenue in their personalization and merchandising
opportunities – a central component of efforts. CarTrawler’s secret, says Healy, is the
Complete Retailing in travel. amount of data it has collected – “trillions
of data points,” according to Healy – and
CarTrawler is exclusively B2B – the company its ability to utilize that data effectively on
doesn’t compete with its airline and travel behalf of its clients: “90% of the problem
partners for customers. CarTrawler is also in personalization is needing the data to
a master at using its data to tailor offers to make the decisions.” CarTrawler’s Healy is
increase the potential of a traveler making a a personalization evangelist. He elegantly
purchase. CarTrawler has massive scale and articulates the benefits personalization can
an equally extensive diversity of data from offer travel sellers and the risks travel firms
its worldwide sales, which it aggregates and face if they ignore personalization or fail at it.
learns from. As Bobby Healy, CarTrawler’s Says Healy, “This is a time where businessesMaximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 31
“CarTrawler’s secret
is the amount of data
it has collected –
trillions of data points,”
according to Healy.
are made if they do personalization well, and CarTrawler’s new SDK takes advantage of geo-
where they won’t succeed if they don’t.” Healy location data, of course, plus the company’s
acknowledges the challenges regulations such customer data insights and other pertinent data
as GDPR and external events like hacks pose elements to suggest the most appealing and
to earning travelers’ trust and participation: relevant options to the traveler. But CarTrawler
“People are fearful about sharing data thanks didn’t merely “shrink” the screen size of its
to hacks, breaches, and bad actors, so they are traditional web displays to fit mobile device
less likely to do it. Some feel it’s safer not to forms – the company completely rethought
share data.” Fortunately, Atmosphere’s research its mobile UX and processes to account for
shows 75% or more of travelers in the US, UK, mobility being a distinct platform whose user
Germany, Spain, and China are comfortable is a traveler with a very different mindset than
sharing personal data with travel sellers if when on a laptop or desktop computer.
doing so will help them save money or result in
more pleasant journeys – provided their data is From its UX testing, CarTrawler knows that
protected and their privacy respected. presenting travelers with too many options
can dilute conversion rates and reduce
CarTrawler recently introduced a very slick performance. “You can’t overwhelm the
mobility SDK that sits inside partner apps customer with 50 choices when they’re on
which allows airlines and travel retailers to their smartphones. Mobile needs to be more
offer the broadest range of travel solutions precise,” says Aileen McCormack, CarTrawler’s
in-app so that they can “own the last mile” Chief Commercial Officer. Mobile is a more
for their customers. This is the culmination of immediate platform and is more focused as
significant investment by CarTrawler in the a shopping and booking channel. Travelers
mobility sector and ensures that airlines and are often pressed for time and have too many
travel retailers can maximize revenues from the potential distractions swirling about them as
mobility-as-a-service (MaaS)5 market, which is they’re shopping. CarTrawler doesn’t want to
estimated to reach a value of $1.75 trillion by risk losing them. Decision-making on mobile
2028. The result: In just two taps, the traveler is “atomic,” says Healy, compared to a more
can find and reserve all available mobility contemplative and comparative process for
products at the destination. travelers using a laptop or desktop computer.
5
Source: Global Mobility as a Service Market – Analysis and Forecast (2018-2028), BIS Research, October 2018
https://bisresearch.com/industry-report/mobility-service-market.htmlMaximizing revenue across the traveler’s journey: Introduction | Section 1 | Section 2 | Section 3 | Section 4 | Section 5 | Section 6 | Section 7 | Conclusion 32
CityHook’s CEO, Kevin O’Shaughnessy
Airlines, in particular, offer a unique customer results for its clients, claims Healy, adding
value proposition through their loyalty “There is no end to our optimization efforts.”
programs. CarTrawler offers the first ever
mobility SDK which affords travelers the ability
to both earn and burn their airline loyalty
points as they ride. As McCormack put it,
“Airlines need to offer travel solutions that CityHook is a specialist airport transportation
can exist alongside car rental – the ride-hailing provider, focusing on bus, airport shuttles,
market alone is estimated to reach a value taxis, rail, and car-sharing. The company works
of $285 billion by 2030 and the overall MaaS in 60 countries worldwide – a global network
market will grow by 25% over the next five the company created solely on angel funding.
years. However, just 12% of the world’s 473
airlines currently offer mobility services to Arriving at an airport, whether familiar or new,
their customers.” can create stress for a traveler. CityHook’s
CEO, Kevin O’Shaughnessy, believes the
Does CarTrawler work? In its first year of company has an opportunity to help arriving
working with SWISS and Vueling, CarTrawler travelers feel more in control. “The first 10
says each airline saw its car rental conversion meters of each arrival are the most anxious,”
increase by 151% and 298%, respectively. says O’Shaughnessy, who believes CityHook
What’s more, in the first three years working can help business and leisure travelers “book
with one of its large European partners, like a local” while reducing “arrival anxiety.”
CarTrawler grew car bookings made on the
airline’s site by travelers flying with competing A reason CityHook launched was because
airlines by 40% between Year 1 and Year 2, and it realized there were no existing sources of
by 49% between Year 2 and Year 3. CarTrawler authoritative, neutral information and content
actively builds brand loyalty for its partners. for ground transfers. And while adding ground
This growth isn’t a one-time event, either. Says transportation seemed straightforward – just
Healy, “We continually grow the revenue per establish the connections to a transit system’s,
PNR we produce for airlines.” Constant mining bus line’s, or railroad’s reservation platform or
and fine-tuning its data are among the reasons a taxi group’s or car service’s booking system,
why CarTrawler steadily produces strong right? – CityHook discovered numerousYou can also read
