Tourism service providers are increasingly focusing on incremental improvements to how consumers book and experience their product. With the changing landscape of e-commerce and the ubiquity of technological solutions, which gather, store, and analyse data, more travel businesses are monitoring their performance across channels. Very often, they are in a position to adjust their marketing mix elements, including the nature of the product or service, the distribution, promotional strategies and their price, in order to customise their offerings.
The price is the only element in marketing that actually produces revenue. The pricing of tourism products, such as airline tickets or hotel accommodation, is usually based on a variety of situations and circumstances. For this reason, tourism businesses use elaborate pricing and revenue management systems to understand, anticipate and react to market demand. They often do so by analysing, forecasting and optimising their fixed, perishable inventory and time-variable supply through dynamic prices.
In the airline industry, these systems align the right products to each customer segment. They maximise revenue from a combination of high-yield and price-sensitive passengers. Revenue management systems are intended to reduce seat spoilage and to increase load factors, thereby filling excess capacity.
Moreover, advanced systems also manage overbookings, and could minimise denied boarding, as they become more dynamic and customer-centric. Most probably, in the future there will be even more improvements in terms of technologically-enhanced customer services.
Ongoing developments in travel distribution channels are adding value to the customer experience
Currently travellers are using digital media and mobile technologies, including smart phones and tablets, to purchase tourism products. These innovations have inevitably changed the structure of the tourism industry in terms of control and value for money to consumers themselves. In addition, the travel businesses will shortly embrace flexible distributive processes that enable consumer interaction with speech and voice recognition software.
Tomorrow’s distribution channels must be designed to accommodate different users. Travel businesses will be serving customers from geographically-diverse regions. There will be more travellers hailing from emerging markets and developing economies. Hence, travel distribution systems will have to cater for senior citizens, as there are ageing populations in many countries.
The service providers and their intermediaries will have to provide engaging, intuitive shopping experiences that tap into the travellers’ discretionary purchases.
The tourism businesses could leverage themselves with artificial intelligence to facilitate dynamic pricing and the personalisation of services. The distributive systems could possibly interface with virtual reality software to help businesses merchandise products through captivating customer experiences.
It is very likely that many service providers may be using direct channels to reach out to their targeted customers. There could be fewer market intermediaries and retailers.
Many airlines are already recognising the need to invest in internal selling mechanisms. The flag carriers may not have to pre-file volumes of defined fares through third parties. They would not rely on inventory buckets to manage their selling capacities. Therefore, the full-service as well as no-frills airlines ought to improve their customer-centric systems by providing flexible and dynamic sales environments.
Present systems could soon be replaced with modular retailing platforms. Full retailing platforms (FRPs) will allow airlines to take back the control they necessitate to become better retailers in their distribution chain (IATA, 2016).
In the foreseeable future, we will be witnessing new travel technologies and capabilities. Several companies around the globe are increasingly creating innovative solutions in mobile technologies. They are finding ways that will intentionally overturn decades of outdated travel distribution practices. It’s only a matter of time until they hit the mainstream. The distribution community can either choose to innovate and disrupt, or to allow others to be leading innovators.
Multiple venture capital firms and technology companies like Google could develop or acquire price comparison sites, or travel search engines. In fact, its travel product, Google Flights, is increasing in popularity among travellers. Moreover, blockchain’s bitcoin technology or some other crypto-currency could transform the marketplace and may even reduce costs for travel companies.
Online users are already using purchase protection facilities, which use SSL certificates, to ensure that their transactions are safe and secure.
In sum, it may appear that ongoing developments in travel distribution channels are adding value to the customer experience, as they empower individual consumers as well as intermediaries to make well-informed purchases.
Mark Anthony Camilleri is the author of Springer’s Travel Marketing, Tourism Economics and the Airline Product.
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