Why do some travel firms fail – and others succeed?
I have been prompted to write this blog item after reading an article on Travelmole about “Dozens of travel firms on the brink of collapse”. The article paints a stark contrast between travel firms who are seeing sales dramatically decline and those who are seeing significant sales increases. The proposition is that the former have “outdated business models” and have failed to adapt to “the way we use technology, delivery methods and trading hours”, whilst the latter are adapting and show “increased profitability and sales”.
The UK trade is reporting a strong start to 2013, so how can tour operators (the market we provide our technology to) ensure they are in good, not bad shape? During a conversation at the Travel Technology Show yesterday, I was reminded of a message I have been giving regularly for many years. All that appears to have changed more recently is the impact and swiftness with which getting this wrong take effect!
So, here are my three key points for your consideration:
1. It’s about your value add, not the technology
You might be surprised that the CEO of a travel technology company is saying this but it is a fact. There is a saying about putting lipstick on a pig and I would suggest that acquiring the best technology money can buy will not help you if the fundamentals of your business are wrong.
What is your differentiated “value add”? This can take many forms. It may be the products you sell (which cannot easily be sourced), the expertise you have in the destinations or product types (that can’t be easily replicated), a highly respected brand developed over many years, or indeed the ability to sell to a membership group that others cannot easily reach.You need to be clear on what differentiates you and where you add value and then that needs to be clearly communicated to your customers.
2. It’s about having the right business processes tailored to your specific business needs
If your business is selling lots of lower margin holidays, then you need to ensure that your costs for selling each one are as low as you can get them. You cannot afford to have expensive human beings having to ‘touch’ each booking in order to take it, manage it and fulfill it. You need to be able to take bookings online and confirm these with NO human intervention and to automate as much of your supplier reporting and customer fulfillment as possible.
However, if you are offering higher value (and margin) products where part of your value add is your product expertise and client advice, then you will want to have businesss processes that maximise your staff’s ability to deliver these (at the appropriate point in the sales cycle) to your potential customer. Full end to end automation is not only less critical but also possibly detrimental.
Don’t fall into the trap of simply continuing to do things the way you have always done them though! As the article says, you need to be ready to adapt as the world around us (consumer habits, technology etc.) rapidly changes.
One of the ‘wins’ in replacing a legacy system with a new system such as ours comes from the opportunity that the project provides to examine existing business processes and look how they need to be performed in the future. The worst thing you can do is simply look to model your existing business in a new system! We always enjoy sitting with our customers during both the sales and the implementation phase and helping work with them on how they can do things better going forwards using our system.
3. Now choose the right technology
Ok, here’s the technology point. Once you are clear on your value add and differentiation and have an understanding of how you need to work operationally, you then need to find the right technology to SUPPORT this. Technology is rarely the driver here – unless you are a major OTA! It is an enabler. Get it wrong and it will hinder or worse. Get it right and it will support your business model, help you to leverage your ‘value adds’ and help provide a vehicle for sustained business growth.
Having a clear understanding of your real requirements will significantly help you in the tricky process of selecting the right technology and technology partner. If you have a clear focus on WHAT you need and WHY you need it that helps you make trade-offs about things that are necessary verses nice to have.
And, speaking as a technology supplier, discussions with travel companies that know what they want and why and have clarity on this are much better than discussions over vague system requirements! We have many, many years of experience working with tour operators and travel wholesalers around the world but our job isn’t to tell you how to run your business – it is to enable you to do it by providing a flexible, scalable, reliable, proven system that can be configured to meet you current and future business needs. Oh, and to continue to support you on a daily basis as you use our system to run your business.
So, there you have it – simples (as a furry animal would say). But as the evidence goes from the large number of companies who are struggling, it is easier to say than to do – or perhaps it is that inherent human instinct to always keep on doing what we have always done in the hope that things will get better!
In closing I am reminded of the saying:
THERE ARE FOUR KINDS OF PEOPLE:
- THOSE WHO MAKE THINGS HAPPEN
- THOSE WHO WATCH THINGS HAPPEN
- THOSE TO WHOM THINGS HAPPEN
- THOSE WHO DON’T EVEN KNOW THINGS ARE HAPPENING
Which kind are you?
For further information on how RWA and our Sell-It Suite family is helping travel companies around the world please visit www.rwa-net.co.uk