It’s tempting to look back on 2015 for clues of what lies ahead for the travel industry in 2016, and there is some value in that approach. Certainly technology will continue to impact how people purchase and experience travel; distribution channels will continue to evolve and the industry as a whole will continue to grow. But there’s a limit to what clues from the prior year can tell us and also a point at which trying to read tea leaves from the past amounts to a distraction more than anything else.
Given the contrast between todays travel world versus the one just five or ten years past, the most sensible approach might be to look back - not one year, but almost twenty five hundred years – to the words of Heraclitus, who said that “Change is the only constant in life”.
Yet for all the changes within the travel industry, there are operating traits found in successful travel companies and agencies which remain relatively constant over time. Companies, like people, rarely do everything right or wrong, and your company undoubtedly shares several of these good traits. For those that are missing, a decision to acquire them during 2016 is almost certainly a better use of time than speculating on the next change in the travel landscape.
Operating Traits of Successful Companies
If you could spend a few weeks as a fly on the wall of your most successful and formidable competitors, here’s what you’d be likely to find.
Data-driven decisions: This doesn’t mean algorithms have suddenly taken a seat in the conference room. Managers will continue to manage and decision-making will continue to a front and center part of their role. However, it does mean managers will be expected to make better decisions by utilizing increasingly effective data and analysis.
For all the news in the industry about Big Data and analytics, many in management have a skeptical, defensive, attitude about aggressively using data beyond customary reports. Some of that reaction is justified. Many of the Big Data success stories involve large corporations with travel technology budgets beyond the reach of most companies in the industry. There’s no question more affordable and robust solutions will be available in only two or three more years.
Successful companies recognize that: 1) a better technology investment is always farther down the road; 2) a future possibility can’t be considered a valid alternative to a good option available today. Effective management means acting – not merely speculating – by taking three types of steps:
- Capability: Without waiting for the magical day when travel technology is both inexpensive and transformational, objective, grounded, technology investments are made to bring as much data and analytic capabilities into the organization as financially possible.
- Culture: Regardless of what level of capabilities the travel company can afford, it has a plan for how it will be used in ongoing management decisions – and methodically executes that plan. The point is not only to make better decisions, but to also replace any “gut feel” mindsets with a “data-driven” culture.
- Accountability: In this context, the point of accountability is consistently improving the use of information, not punishing or rewarding decision-makers for outcomes. Well defined information should empower a person’s experience and judgement, so managers must learn how to use data more effectively by extracting lessons learned from decision outcomes.
Unpack: Top companies recognize and take proactive steps against organizational tendencies to compartmentalize information and decisions inside business units and groups. For example, sales and marketing can be blindsided – without malice - by procurement’s implementation of changes in prices and terms for various travel inventories. Successful enterprises guard against these unpleasant surprises by implementing reporting frameworks designed to keep all parties talking and communicating.
Look Ahead: This article began by talking about the inevitability of change. High performing travel businesses understand the difference between predicting the future and preparing for it. While management may not know what technology or market trend is coming down the road, it is expected to have contingency plans for likely scenarios.
Future concerns are speculative abstractions, whereas operational concerns are real and tangible. This means contingency planning must be tied to accountability or it will eventually fall by the wayside. One approach is to have each business unit prepare and present semi-annual trend reports, likely business challenges and their recommended actions
Be Proactive: In order to make effective, proactive, decisions and stay ahead of the competition, successful travel companies: 1) mine their own business data for operational insights; 2) stay current on industry trends; 3) enrich both types of information with management experience and judgement. For instance, if forecasts based on operational data predict tighter profit margins while global leisure travel is trending lower, management is well advised to prepare cost-cutting options.
Resist Denial: Recent years have witnessed many disruptive changes to traditional travel business models - many of which have caused organizational and financial pain. Yes, life would be easier if travel distribution costs would decline rather than increase – but they won’t. Your company’s business model would probably benefit from less online pricing transparency – but that won’t happen either. It takes discipline to avoid wasting time speculating about “woulda-coulda-shoulda’s”, and focus instead on the unpleasant problems. That’s exactly the type of discipline tough competitors have.
Embrace Automation: With few exceptions, every company that winds up outperforming the travel industry in 2016 will have laid the groundwork for that success by either implementing business process automation technology or enhancing what was in place.
Take, for instance, a travel agency with loosely integrated software applications. Innovative management will seek to find ways to replace that outmoded application architecture with a new Travel ERP system, such as TINA from dcs plus. On the other hand, if a travel agency has already implemented a Travel ERP system, it will evaluate the situation to see if any enhancements or additional modules could optimize cost savings by enlarging the agency’s business process automation footprint.
Either a new or enhanced Travel ERP system provides an important competitive edge by delivering compelling operational benefits. It cuts staffing levels and operating costs by completely automating business processes. This automation also improves scalability, elevates performance levels and raises quality standards. These benefits produce a highly favorable ROI because the price of an ERP system is within the reach of all but the smallest travel agency.
Encourage Innovation: It may be an over simplification to say the travel industry embodies two types of companies; ones that adjust to changing conditions and others who create those changing conditions, but it does hold truth. There isn’t an exceptional organization in any industry that isn’t known for fostering innovation. Which means it’s a real issue if your travel company doesn’t have an innovative culture.
As with creating a data-driven culture, an innovation investment must be financially practical. However, finances can’t be used as an excuse to delay or defer innovative initiatives, there must be some level of continuing, consistent, action for a culture to root and grow. Innovation can’t succeed if it’s a hit or miss endeavor. An enterprise has to apply a rigorous process that defines success and then effectively measures outcomes. Success begets success, so even modest innovation projects can grow into meaningful initiatives.
