The development of digital media technologies, particularly the internet and social media are offering a wide range of possibilities to the travel industry. These latest technological advances have enabled many travel businesses, including airlines and hotels to manage their distribution channels in a more efficient and economical way.
With the changing landscape of travel e-commerce and the ubiquity of IT solutions which gather, store, and analyse data in a variety of ways; airlines have improved their ability to monitor their performance across channels. Very often, they are in a position to quickly adjust offers. Their prices are usually based on a variety of situations and circumstances, as they optimise communications and transactions.
By using big data and analytics on their customer behaviours, many travel businesses are taking advantage of channel-based distribution. Hence, the distribution networks have come a long way from the ticket counter. Evidently, travel and tourism businesses are leveraging themselves with data-driven marketing, as they seek new customers and prospects. For example, they may increase their profitability from high-yield customers as they are using elaborated pricing and revenue management systems. The travel distribution is evolving from its current passive, rigid, and technology-centric state to a more flexible, dynamic, and passenger-centric environment which we call ‘Active Distribution’.
Any changes in the tourism distributive systems may be stimulated by external macro factors such as politics and trade, global and national economies, technological innovations and access to them, et cetera. The airline industry could also be effected by increased competition from low-cost carriers, merger and acquisitions, and fuel costs, among other issues. However, the commercial future of the tourism industry may also be influenced by other factors, including travel distribution.
Tourism businesses can possibly become even more effective in how they sell their products and services, particularly if they deliver positive customer experiences. Tourists perceive value in customer-centric businesses. Most probably, in future, there will be significant improvements in terms of technologically enhanced customer services.
Tomorrow’s businesses will be serving passengers from geographically-diverse regions. There will be more travellers from emerging markets and developing economies. The travel distribution systems will have to cater for senior citizens, as there are aging populations in many countries.
The distributive channels must be designed to accommodate a divergent nature of users. Tourism service providers and their intermediaries have to provide engaging, intuitive shopping experiences that tap into the traveller’s discretionary purchases.
The businesses will need to embrace new technologies and flexible distribution processes, as outmoded distribution components will be replaced. It is envisaged that the distributive systems will be increasingly relying on mobile devices as these technologies enable consumer interaction with speech and voice recognition software.
The tourism businesses will leverage themselves with artificial intelligence which could facilitate dynamic pricing as well as personalisation of services.
The distributive systems could interface with virtual reality software to help businesses merchandise their products in captivating customer experiences.
The third-party retailers will continue to form part of the distribution mix. However, many service providers will be using their direct channels to reach their targeted customers.
There will probably be fewer market intermediaries and online travel agencies will see significant declines.
It is very likely, that airlines will not have to pre-file volumes of defined fares through third-parties as they may not rely on inventory buckets to manage their selling capacity. The airlines must recognise the need to invest in new internal selling systems. Today’s passenger service systems lack the flexibility that airlines require. They are not adequate enough to serve the airlines’ flexible and dynamic sales environments. These systems could be replaced with modular retailing platforms. Full Retailing Platforms (FRPs) will allows airlines to take back the control they require to be better retailers through any distribution channel (IATA, 2016).
However, Google, the multinational technology company, could be playing a much larger role in travel distribution. The technology giant could participate in, and possibly disrupt the tourism industry if it becomes an online travel agency. whether through acquisition or by launching a product of its own. In fact, its travel product, Google Flights is increasing in popularity among travellers.
Moreover, there have been recent developments in online payment facilities. Undoubtedly, there will further improvements in this area, as well. Payment providers like M-Pesa, Alipay, and PayPal will probably become more important.
In the foreseeable future, the travel marketplace will surely introduce new technologies and capabilities as multiple venture capital firms are increasingly investing in disruptive innovation.
There may be new businesses which could penetrate the market, including private air service operators who could provide “on-demand” airline services; alternatively, technology companies could develop or acquire their meta-search engines or online travel agencies.
Undoubtedly, the travel and tourism businesses need to find ways that intentionally overturn decades of outdated, distribution practices. The distribution community can choose to innovate and disrupt, or allow others to be leading innovators.