At Amadeus, we believe that partnerships are the best way to build a sustainable global travel supply chain. The more we work together, the more efficiently we can meet our objectives together.
Last year, OTAs continued to grow on a global scale with impressive success. The European travel market was predicted to hit €282 billion in 2017, and the growth in online travel specifically has surged ahead of the broader sector. Of course, such success has resulted in a competitive environment for established players and newly formed startups alike. From maximizing what can be offered to customers via mobile, to catering for festival-goers or another niche part of the traveler market, online travel agencies of all shapes and sizes are determined to win market share around the world. All these efforts are paying off, and represent an unprecedented commitment to delivering the best for customers.
In this context, full partnership, through travel distribution players, between airlines and OTAs is key to providing a premium user experience and is beneficial for all parties. Solutions outside of the GDS, typically direct connections or scraping, have not proven to be ready to serve OTA’s growing customer base and have many implications for airlines and customers alike (e.g. research shows that bookings associated with scraped content fail over 20% of the time, which could impact the brand of both the OTA and the airline).
These solutions do not cost-efficiently scale to deliver the performance that online travel players need to properly sale the supplier products. In addition, the complexity of dealing with different airline connectivity API lowers the adoption of more complex ancillary flows, which represents a lost revenue opportunity for airlines and OTAs.
In contrast with this scenario, some airlines are partnering with online-advertising giants to bring more travelers to their websites. This can be seen as a means of increasing direct sales, but these customers are acquired at a very high cost, given airlines’ weaker position in online marketing versus OTAs. This evolving relationship will surely be an important one to watch.
A strong partnership between OTAs, travel distribution players and airlines is the best alternative to maximize the margin of the online travel supply chain. The near and medium future will show that airlines will benefit from closer partnership with proven technology that is fast evolving to adapt to new demands.
“Having solid partnerships is key to become a world-leading player in this industry and deliver the best quality to our customers. We always keep an entrepreneurial mindset in our partnerships, acting agile and fast-paced in testing new market concepts. When collaborating, we can innovate quicker at lower costs.” – Travix, CEO, John Mangelaars
Partnership can positively impact everyone’s bottom line. It’s the secret ingredient that can generate real business strength, and we truly believe in successful relationships as a pathway for growth. We believe that global distribution systems remain the most efficient platform for both retailers and suppliers as well as a powerful innovation engine, for our industry to optimize investment and running costs.
The cards are now on the table and there are several paths ahead of us. We’re working harder than ever with our OTA and airline partners to bring value to both consumers and suppliers. As we enter 2018, we’re optimistic that these partnerships will continue to be beneficial for all.
Originally published on the Amadeus corporate blog.