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Pivotal times for travel firms
Raini Hamdi, reporting from ITB Asia 2013, Singapore, October 24, 2013

TRAVEL companies are at a pivot point, with two industry luminaries warning the dangers for those who stay the course or are just “tweaking”.


PhocusWright’s founder, Philip Wolf, said the need to pivot is on the rise across the industry’s value chain, affecting everyone – daring upstarts, media darlings, local players, global powerhouses, OTAs, TMCs, Asia or the Americas. 


“TripAdvisor and Yelp rule the day, not Frommers and Zagat. Priceline and Expedia rule travel, not American Express or Thomas Cook. Google, Yahoo, Ebay, Facebook and Twitter rule the Internet, not Microsoft.


“So I ask: Who will be the new travel players to rule the day?”


His list of pivot examples includes Priceline, which transitioned from a US, air, opaque-centric business, to an international, hotel, retail-centric business; and TripAdvisor, from a B2B white label search engine, to a B2C banner ad model and, again, to a CPC (cost per click) model with reviews. American Express is pivoting, spinning off its corporate travel business. Meta-search comprises many pivots in the works, said Wolf, who was keynoting ITB Asia’s opening on Wednesday.


“Companies should evaluate whether their current skills and assets can adequately deliver what their new customers want. Do you still provide the products and services that matter the most?”


Quoting Eric Ries, author of The Lean Startup, Wolf said the litmus test for when firms should pivot is when their experiments – say, repricing – have stopped being productive. 


Citing befallen Kodak, Dell and BlackBerry as examples, he warned: “The pain of embarking on a critical course correction may pale in comparison to the cost of not pivoting.” 


In a related call,  Ho Kwon Ping, executive chairman, Banyan Tree Holdings, keynoting National Association of Travel Agents Singapore (NATAS) Travel Conference Wednesday, addressed the issue why so many travel agencies are struggling to survive despite millions of new travellers enlarging the market. 


Describing the Internet as the single most disruptive change for the travel agency business, Ho said the only way travel agencies in small markets can survive is “to specialise and globalise or regionalise at the same time”.


“In what seems to be a contradiction but is completely rational, it (travel agency) must narrow its product focus and widen its market focus. It must become a specialised, niche player with value-add, in a very large market,” Ho said.


“If you focus, for example, on cultural tours, or the even more niche markets of, say, wine tours, or adventure tours, you have to reach out to more than the Singapore market. The problem of course, is that competitors exist in other national markets and they may have more local market knowledge and linguistic capabilities. 


“The Singapore travel service provider in a regional market must leverage through better services and products, stronger branding, higher use of technology, to create a more seamless, efficient and memorable travel experience for consumers in the entire Asian market.”


Ram Samtani, secretary-general of NATAS and general manager of Ramesh Travel Service, agreed that the market is borderless today and the agency market should be global. But the challenge for agency owners is fear. “They are afraid of the risk, afraid it is at the expense of something else, etc. But to a certain extent, that has changed, as they realise there is no choice really. It’s not just travel agency businesses. A lot of people in the industry understand that things cannot be done the same way.” 


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