Skift

Travel Companies Face a Trust Deficit Unless They Reset Use of Customer Data

  • Skift Take
    An established order can only endure if it can take in outsiders. Rome fell to the barbarians, while the British upper class has assimilated celebrities and immigrants. Travel sellers like Google and TUI must absorb new technologies like blockchain or else they will die.

    The travel industry is littered with brands that have broken the status quo. Former online travel start-ups, Expedia and Booking.com, top the brand league table; low-cost carriers lead the charge in air travel; and we’ve witnessed the meteoric rise of rental platforms like Airbnb causing major disruption.

    Dual Actor

    Google is a brand that likes to challenge the rules; it acts as service provider and friend of the online travel agencies (OTAs) on one hand, but also competitor and foe on the other.

    Any changes to search display and results through changes in Google’s algorithms are cited as potentially having a detrimental effect on OTAs and metasearch performance.

    It’s this dichotomy that travel brands are struggling to contend with, meaning Google is under constant scrutiny to ensure it provides a level playing field for everyone. Google continues to push the boundaries of its Hotel Finder metasearch service with the “Book on Google” option, taking Google into a grey area of whether it is a booking agent or not.

    A major question being posed by the travel industry, especially by OTAs and GDSs, is whether Google will follow Skyscanner’s example and switch on New Distribution Capability (NDC), enabling Google to sell flights directly to consumers.

    Carving out a Direct Opportunity

    Skyscanner is the first metasearch to sign up for Tier 3 NDC, meaning it can sell airline inventory through its platform and offer airlines a branded storefront on its site. Its “facilitated bookings” are performed on its web platform, without the need to move to the brand site for the booking. Skyscanner is currently working with low-cost carriers, Scoot and Finnair, in generating this new form of direct booking with conversion reported to be up 20%.

    If Google were to switch on flight selling capability this would further shake up travel distribution, paving the way for more disintermediation.

    It may also need to switch on NDC just because others like Skyscanner, Ctrip, and Fliggy (Alibaba) are bypassing traditional search engines, enabling consumers to book directly in-app.

    Expanding the Pond

    The travel path to purchase will increasingly be the focus of disruption as travel and tech brands aim to upend each other.

    Ultimately, the simplest path to purchase will win out. Simplicity driven by integrating search, booking, loyalty, and payments points to a single platform that will satisfy every stage of the booking journey, whether that is through Apple, Google, Facebook, Amazon or WeChat. It’s from outside the industry where the competitive threats lie.

    The potential for brands to facilitate peer-to-peer (P2P) transactions could be accelerated by further adoption of the blockchain, which will enable pure P2P transactions thanks to its universal distributed ledger, removing the need for a third-party financial intermediary.

    We may see Google or Amazon providing this type of payment function, with the latter taking a second swipe at travel.

    Blockchain and crypto-currencies will also empower social media sites, such as Facebook, where marketplace listings already take place, to book goods/services directly with consumers or through social commerce.

    This is a revenue stream that has yet to take off. Although the tech titans will need to sort their houses out first before they launch into new revenue streams.

    Trust Deficit

    Trust between individuals, brands, governments, and institutions is broken post-Trump and Brexit. In the past year, there has also been a notable shift in consumer attitudes to technology players like Facebook, Google, and Twitter, with the tech backlash.
    Brands recognize the power of the crowd, where trust is forged through reviews, sharing peer to peer and building online communities.

    Without the social element, it is hard to deliver on key consumer values, such as authenticity and a sense of belonging.

    Brand integrity and openness are critical for brands to succeed, while data is the oil that powers technology and enables brands to personalize and customize products/services. However, data is also a highly valuable commodity, and brands need to strike a fine balance between personalization and consumer privacy concerns.

    Faced with the recent revelations surrounding the Cambridge Analytica and Facebook scandal, it is not surprising that 25 percent of global consumers freely share personal information online in 2017, while 67 percent say that targeted ads based on previous web history are an invasion of privacy, according to Euromonitor International’s Global Consumer Trends Survey.

    Source: Euromonitor International Global Consumer Trends Survey

    Direct Influence

    To foster trust, brands are deferring to the power of the crowd, exemplified by Monzo, a mobile-first bank in the UK that is entirely app-based and harnessing the power of its client base for decision making.

    Monzo works closely with its customers as it releases products while still in beta form, allowing the community to test and provide feedback before a full roll-out is launched.

    Through its blog, the start-up asked its community to decide on the pricing of ATM fees abroad. Engaging directly with consumers and allowing them to be part of the decision, builds trust, deepens brand loyalty and drives transparency.

    Source: Euromonitor International Global Consumer Trends Survey

    Supply Chain Transparency

    In the retail industry, there are moves to provide greater transparency in the supply chain. Carrefour in China is using smart packaging in its stores to help give customers access to a vast array of information on products with a tap of their smartphone through its Visual Trust initiative to allay fears about food safety standards.

    Blockchain is also being used to record the life of a chicken of all things, where relevant information related to the bird can be verified in the blockchain, such as age, whether free-range and additional criteria.

    Blockchain applications in the travel industry to boost transparency offer potential, extending beyond the supply chain to also ensuring workers’ rights to drive openness and transparency but equally in terms of lodging contractual agreements, as seen with tour operator TUI.

    It seems very timely that in May 2018, the EU will implement the General Data Protection Regulation that aims to give back control to consumers.

    Travel and tech brands will have to rethink how they collect and use consumer data in light of the Cambridge Analytica/Facebook big data scandal to appease consumers of cyber-crime risks, data breaches, and misuse.

    Being a rule-breaker is one way to succeed, but being consumer-centric and putting trust at the heart of the consumer-brand experience will lead to greater returns over the long term.

    Euromonitor International is a leading provider of global strategic intelligence on consumer markets, with offices in London, Chicago, Singapore, Shanghai, Vilnius, Santiago, Dubai, Cape Town, Sao Paulo, Tokyo, Sydney and Bangalore and a network of 800 in-country analysts worldwide. Euromonitor International’s analysis of the global travel industry covers a wide range of categories, including tourist flows and expenditure, lodging, transportation, car rental, cruise, tourist activities, travel intermediaries, online and mobile travel.

    Photo Credit: Skyscanner CEO Gareth Williams has led his online metasearch company to be a leader in next-generation technologies. His company is one of many that are experimenting heavily with new approaches to merchandising and distribution. VisMedia / Ctrip

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