The Blue Swan Daily was live at the 2018 CAPA Melbourne Aviation and Corporate Travel Summit last week. Catch up on some of the most interesting themes to come out of the day.
Technology continues to evolve and change the travel and corporate travel industries
- Amadeus corporate IT solutions head Ingrid Picard, discussed how Amadeus recently helped Qantas to redesign its online booking tool “with increased personalisation in mind”. Ms Picard said personalisation “is about being able to give the right content to the right person” and said the technology behind online booking tools should be capable of providing content based on individual preferences, rather than inundating users with options that are not relevant to their needs. She forecast that five years from now the majority of booking in the travel industry will be done using mobile applications and eventually booking travel through applications utilising artificial intelligence, smart speakers and voice command devices will become the norm.
- FCM Travel Solutions strategic partnerships manager Julie McLean, stated technology providers and new booking tools have changed the way corporate travel booking is managed by making the process more intuitive. Ms McLean said employees do not require extensive training to use these new intuitive tools, making the entire workforce adoption process faster and easier.
- Uniglobe Travel International Asia Pacific MD David Hughes, stated new technology is changing procurement in the corporate travel sector but also has the potential to create disconnections between partners and stakeholders. Mr Hughes said stakeholders in the sector need to ensure they are creating new value, rather than simply transferring value between players, resulting in uneven partnerships where too much value is one side while the other is short changed.
Accommodation is key
Pan Pacific Hotels Group global sales office Oceania area director Keren Southgate, stated:
- “I think there’s a misconception that hotels are incredibly profitable” when in reality hotels generate returns of approximately 7%-8%. Ms Southgate reported hotel energy costs are “astronomical” and previously profitable services, including minibar food and beverages, are “no longer a revenue stream, they’re all costs”. She urged corporate travel buyers to remember that hotels are businesses that “need to maximise our revenue opportunities”, and noted “If we don’t make hotels profitable there won’t be investment in creating future demand”.
- Hotel occupancy growth in Melbourne has been “roughly in line” with passenger traffic growth at Melbourne Tullamarine Airport. Ms Southgate added that hotel room occupancy in Melbourne is approximately 84%-86% and is not forecast to change significantly in the next few years despite “some hotel supply coming in in 2020 and 2021” because the additional capacity “will be absorbed very quickly”. She reported that Melbourne’s accommodation sector has yet to see any major impact from Airbnb and said she expects Airbnb to become “just another platform/technology supplier”, noting that hotel operators are already using the platform.
Melbourne’s booming aviation market
- Avalon Airport Australia CEO Justin Giddings, stated the LCC sector is “generally strong” at Melbourne Avalon Airport, in part because “we get a lot of students looking for lower fares”. Mr Giddings said LCCs present an opportunity for corporates travelling to and from Geelong, particularly for SMEs. He added that Geelong has one of the fastest growing economies in Australia, noting “We’re seeing a great pick up in confidence in the region” and said Avalon Airport hopes to record the launch of operations by a premium airline in the future.
- Melbourne Tullamarine Airport SVP commercial – aviation Ryan Both, stated: There is “good business travel demand” and a “very strong propensity to travel” in Melbourne’s aviation market. Mr Both said there is a room for multiple airports to operate in Melbourne, describing the market as “a story of success, not a story of competition”, but affirmed that Tullamarine plans to retain its role as the city’s primary hub. He noted that unlike most primary airports in multiple airport cities, Tullamarine is not capacity constrained, adding “we have twice as much land as Heathrow” and can expand its capacity to 100 million passengers p/a.
- Air Canada Australia and New Zealand GM Vic Naughton, stated: Air Canada aims to provide passengers with an industry leading end to end premium travel experience. Mr Naughton said the airline has worked hard to make its premium product, including its Signature Class cabin “consistent across flying sectors” and “consistent across our widebody fleet”. He added that Air Canada plans to implement a dedicated Signature Service concierge team for premium passengers at Melbourne Tullamarine Airport.
- Helloworld Travel CEO and MD Andrew Burns, stated: Many stakeholders in the travel industry initially viewed new distribution capability (NDC) as a potential “problem” for global distribution system (GDS), adding “I think Lufthansa and British Airways went down a pretty aggressive path with NDC that shocked GDS”. Mr Burns said there has been a reasonable degree of compromise and collaboration between airlines and GDS regarding the implementation of NDC. He noted “it’s now more about that ancillary product” and less about airlines “trying to cut out GDS”.
Millennials are changing corporate travel
- Amadeus corporate IT solutions head Ingrid Picard, stated: Technology vendors like Amadeus can provide booking tools that will enable employees, particularly Millennials, to self book rather than relying on executive assistants or dedicated travel personnel to book for them. Ms Picard noted it is essential these tools are secure and that employees feel safe and confident when using them.
- BP Indirect Procurement Asia Pacific regional head Karina Harris, stated: Millennial employees have driven changes in corporate travel policies at BP, including adoption of ridesharing applications, including Uber. Ms Harris noted Millennial employees typically want to have a similar experience while travelling as they do in their day to day life and are willing to use technology enabled services, including Grab, to achieve this.
Pricing is still at the heart of the conversation in 2018
- Pan Pacific Hotels Group global sales office oceania area director Keren Southgate, stated due to corporate travel programme buying behaviour static pricing is no longer sustainable as a valid revenue model for hotel operators. Ms Southgate said: “I believe there is no way we won’t be going down the dynamic pricing path” in the future.
- HRS – Global Hotel Solutions director Jon West, stated virtual cards create a sensation of being observed in corporate travellers that encourages compliance and makes travellers more conscious of costs. Mr West noted virtual cards generate and collect data at multiple stages of the corporate travel experience and employees are aware that this data is likely to be viewed by employers. He added that virtual cards can generate “savings through transparency”.