While it is “impossible” to tell how long it will take for
things like artificial intelligence (AI), virtual reality and augmented reality
to affect travel distributors, those technologies will inevitably change the
landscape, according to a report released Tuesday.
The report, “Travel Distribution: The End of the World as We
Know It?,” was conducted by the London School of Economics and commissioned by
Amadeus IT Group.
“Now is an opportune time for the travel industry to reflect
on alternative pathways and examine new approaches that are more innovative and
collaborative,” the report states.
The report identified five major disruptive factors:
consumer expectations, mobile, big data and AI, regulation and travel risk.
Consumers will increasingly want “more choice, frictionless
purchasing, inspirational shopping and personalized services” in the retail
sector, the report states, which will bleed into the travel industry. The use
of mobile devices is increasing rapidly, as well.
As the technology behind AI becomes more mature, those who
hold that technology will have greater power as artificial assistants and
virtual reality change consumers’ behavior, according to the report.
Regulation was also pinpointed.
“A major disruptive factor over the next decade will be the
extent to which regulators intervene to limit the power of larger players such
as large airline carriers, mega meta-online travel agencies and travel
management companies,” the report states. “In particular, the rise of
gatekeepers such as Google and Facebook who thrive on the non-neutral
advertising model will be determined largely by the level of regulation or
deregulation in different regions.”
Finally, the report said travel risk — including incidents
like terrorist attacks and natural disasters — will also likely alter consumer
“The travel distribution industry is entering a period of
unprecedented change — with rapidly changing consumer expectations, advances in
data analysis technology and a blurring of the travel lines between the various
players,” said Graham Floater, director of the London School of Economics and
one of the report’s authors.
Based on the disruptive factors identified, the report
pinpointed four areas where the most change is likely: “complexity and
innovation in air travel distribution,” “the revolution of shared economy
models in the hotel and car-hire sectors,” “innovation and hybridization in
online travel retail,” and “the rise of gatekeepers such as Google and Facebook
in traffic acquisition.”
The report also identified several potential “pathways to
the future” for each area of distribution.
For airlines, the report suggests that carriers, especially
large airlines, could grow their direct sales, but will likely face limits
longer-term “as complexity leads to greater demand for content aggregators.”
Airlines could also partner with GDSs, IT companies and other aggregators to
The hotel and car rental sectors will need to continue to
adapt to the sharing economy, perhaps by increasing service expectations and
incorporating their business content into sharing-economy platforms, according
to the report. It also said continued consolidation among hotel chains is
Going forward, travel retailers will need to adapt to new
technologies that can enhance their clients’ travel experiences, according to
the report. Consolidation in this sector, as well as the creation of hybrid agencies
and metasearch companies, is also likely.
The report defines “gatekeepers” as “tech giants such as
Google, Facebook, Microsoft, Amazon and Apple.” It notes their advertising
models have already begun disruption in the travel sphere, and predicted their
development of “virtual assistants” will make the consumer experience better by
lessening search times and providing increasingly personalized purchases. Their
control over searches will also grow, according to the report, enabling them to
more precisely target consumers.
Additionally, “travel booking is likely to be integrated
increasingly into social media and messaging, with advertising and referrals
tailored to social network discussions and searching,” the report states. “The
rise of virtual reality will lead to more inspirational marketing and traffic
Considering the disruptors identified, the report also
identified some recommendations for the industry to focus on, like responding
to consumer expectations and the rise of gatekeepers, harnessing new
technologies, adapting to the shared economy and getting ready “for the rise of
giant mega-OTA hybrids.”
As distribution changes, “to avoid consumer confusion and
lost opportunities, industry collaborations need to go beyond bilateral partnerships
and contractual relationships,” according to the report. “Distribution business
models will need to evolve to encompass more shared innovation, a culture of
experimentation and cross-industry alliances to grasp the opportunities fully.”