Executive view: Simon Ferguson

Ferguson is the president and managing director of Travelport Americas.

Simon Ferguson
Simon Ferguson

Everyone is, I think, a little bit nervous about some of the economic things that are happening in the world. There is some uncertainty around the continued trade war as well as around Brexit. U.S. economists have been predicting a recession in the U.S. for over a year now; there aren't any signs of it yet, but everyone's a bit guarded about how long the good times will last.

But we're seeing travel still growing globally and still growing ahead of gross domestic product in virtually all areas. There's huge growth in Asia-Pacific. It is poised to take over from Europe as the biggest traveling region. Very vibrant. Everyone talks about China as the big one, but Vietnam, Indonesia  phenomenal, growing economies. And 60% of all millennials in the world are in Asia-Pacific. So you've got not only young, dynamic economies, but a young demographic and newly enfranchised middle classes.

We do a survey every year of which countries are the most digitally advanced in terms of travel, and India's been No. 1 for the past couple of years. Even though there is still great poverty in that country, there's been a huge growth in mobile usage, and that's the commonality in some of the growing areas of the world, both Latin America and Asia-Pacific. Countries in those regions have typically skipped the desktop, whereas in the U.S. and in Europe we've kind of grown up on the desktop and then moved to mobile. They've gone straight to mobile.

So you see dynamic app and mobile usage, things like WeChat in China, for example. And in India, massive growth in infrastructure. They've opened over 30 airports in the last few years. India is now the No. 2 GDS market globally, behind the U.S. India has overtaken Germany, and it's probably not hard to predict that some of the Asia-Pacific countries could overtake the U.S. in the next few years in both the overall travel market and GDS usage.

Having said that, the U.S. travel sector has been remarkably resilient this year. We're seeing the overall market in the U.S. for GDS growing about 3% in both business and leisure travel.

In leisure, you had the impact of the Dominican Republic and Cuba, but all evidence suggests U.S. travelers are confident. They just swapped those destinations for alternatives. Business travel continues to be very, very strong. It's driving very good revenue growth for U.S. airlines, and airline ancillaries sales are very strong.

The removal of the 737 Max clearly impacted the market; taking capacity out pushes pricing up. It'll be interesting to see what happens when the Max comes back into service next year. But overall, the U.S. is really strong in leisure and business travel.

We surveyed global travelers in 20 countries and got 23,000 respondents to tell us about what trends they're seeing. One of the fascinating things, particularly in the U.S., is that over 50% of millennials cite travel agents and travel advisors as their key booking channel. This has grown phenomenally, and we see it in our own platform bookings.

And this is happening as we're also seeing the amount of bookings made by mobile or other digital channels also increasing. As travelers go to more far-flung destinations, the travel product is becoming more complex, and that helps agents. So we see, even among the younger generation, a great desire to interface with trusted advisors despite having grown up in the digital world.

From a GDS perspective, there has been a little bit of softness in Europe and in Asia-Pacific resulting from Jet Airways going out of business earlier this year in India. That was certainly an impact in the market. Some of the big airlines in Europe are withdrawing some content from the GDS platform, and that has an effect on the overall number of transactions that are going through the GDS market. We remain very committed to the New Distribution Capability (NDC) and offer NDC as a way of convincing those airlines that the GDS distribution platform remains absolutely the way they can retail their products going forward.

The best illustration of that is Southwest. It's a strange parallel, but much as you've got younger generations turning to travel agents, you've got Southwest, one of the doyens of low-cost carrier origins, embracing the GDS, announcing a deal with ourselves and one of our competitors, really coming to the GDS properly. They recognize that the business travel agent channel is highly valuable to them, and the way to get to high-paying corporate business travelers is through the GDS channel.

It's how those travelers like to book. They want to be serviced by travel management companies so that if their travel plans change and if they have complex itineraries, which they invariably do, they can be properly serviced. So I think Southwest gives us an indication that there's clearly still a place for traditional distribution methodology.

We see a future, a mixed future, going forward, much in the same way as we don't think it's sensible to talk about travel online versus booking travel offline. Travel brands have to be everywhere today.

NDC is important. We know it's important to the airlines, and it's important to travel agents and travel providers to be able to provide NDC content. We're piloting NDC with a number of large airlines, and we're very excited about the prospect of bringing those airlines into production, in the U.S., in Europe and in Asia-Pacific. We're also continuing to grow our hotel and hospitality content. That's a very important area for us. We're bringing more aggregated content for bed banks and aggregating the providers into the GDS.

And we're enriching the whole area of data. We are increasingly becoming a data business in the sense that we generate around 6 billion searches through our platform every month, and we're increasingly applying artificial intelligence, machine learning, into that data and enabling travel brands to do some pretty smart things with it.

Hopper, for example, has really built their business using Travelport's data, predicting when's the best time for consumers to buy a flight. That's an example of our data, at massive scale, being used not just to find the best price but actually to start to predict and analyze travel patterns, and we'll be announcing some more initiatives like that, which really help enrich the provision of data.

There's been a lot of talk about privacy. Will travelers even part with their data in a world where data security is an issue? In our global traveler survey, we see an increasing number of travelers saying they absolutely will give up their data to travel providers, as long as they get good service and good experience in return. Even baby boomers  48% of boomers  will give up their data.

So I think there's a massive opportunity for travel providers to be able to use data to analyze, predict and really curate travel experiences using the best of digital and the best of offline channels.

At Travelport, we're very committed to making those data and those data services available to travel brands.

We've already built mobile apps with some of the world's biggest airlines, but there's more that can be done. We wouldn't rule out a collaboration with any travel brand that wanted to work with us from a data perspective in an innovative way.

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