The Sync with Greg Abbott: Future of the Travel Industry

Greg Abbott, Global Head of Travel, Transportation & Hospitality Practice at DataArt, shares his ideas on the state of the travel industry after the Covid-19 pandemic. Is travel gradually getting back? What should we expect from travel in the new normal?

In this episode, Alexei Miller, Managing Director at DataArt, and Greg Abbott, SVP, Global Head of Travel, Transportation & Hospitality Practice at DataArt, discuss whether travel and hospitality sectors are gradually getting back to where they were before the pandemic, how the industry survives in the war for talent, and how travel tech and automation tools distinguish the leading companies from the lagging.

Alexei Miller: We’re in conversation with Greg Abbott, Head of DataArt’s Travel practice and my frequent companion in speculating about where the industry is going, what travel demand looks like. I thought I’d ask him a few questions because the good news is travel is back. Whether it’s back to where it was before the pandemic or back to some kind of new normal? What does it mean for travel and travel tech in particular? This is what I’m hoping to explore today.

Greg, thanks for agreeing to speak. So, what does it look like? Is travel back? And to what levels?

Greg Abbot: Well, first of all, thanks for asking. It’s been a rough year for travel. I’ll always remember that day: March, the 14th, the day when the world stopped traveling. I also liked when you reached out and said «travel’s revival» — I think this is a very hopeful look. A lot of people call it «recovery,» I prefer to use «revival,» but I think that it is coming back for sure. «How quickly» is probably the key question.

The recovery is slow, there is a lot that happened. The industry was turned on its head, and I feel like now what a lot of our clients are experiencing is that the charts they depended on in the past really do not dictate what is happening at present, and how travel is coming back. So, it is a lot of uncharted territory.

A.M.: Can you give us a few examples of the rules of the past that do not necessarily apply to today?

G.A.: As you can imagine, data was an important component to decision making across the board, that is: how people are traveling, when people are traveling, how people are searching, what the price is, and what are they willing to pay for the future — all of that data has been flushed. If you can imagine revenue management has almost been reinvented, not to say that those in the revenue management technology sector haven’t quickly adopted it.

The way that they have had to adopt has been based on how people are searching and who is searching. Sectors are performing quite differently. Business travel is not performing as expected, it was one of those things where business travel was — within a percentage point — forecasting and predicting month by month demand. It is gone, so I think that the data that was relied upon is gone.

In fact, we have recently had a webinar on siloed data and this topic of how search patterns and the behavior of people searching for travel changed. It used to be three or four weeks out, when people were looking for tickets. Now people are looking between one and three days. People are changing, so they’re changing their travel plans more frequently. There is a lot more flexibility that is to be built in.

It used to be that you paid for flexibility. Now, it is kind of expected that you have a flexible ticket because who knows what restrictions might come out? And I also think there is still a long way to go before international travel comes back to where it was. I think, statistically, we are even still at 5% — that is a U.S.-focused number — of where we were previously. So, we have a long way to go.

A.M.: It makes sense that business travel as a sector is not where it was, maybe never will be. But sort of anecdotally it feels like there has got to be some pent-up demand for in-person meetings, maybe events, conferences, trade shows, and so on. Are you seeing that? Looking 6 to 12 months out, are people planning big gatherings again?

G.A.: Yeah, I think there is real, you are right. This sort of idea of pent-up demand is there. It is certainly hitting in leisure. In the summertime, the majority of U.S hotels are at 90% of where they were in 2019, which is a significantly good sign.

You also have this really booming short-term rental market. You yourself may have snuck away to get out of the quarantine bubble at a local short-term rental. We have really seen that industry pick up. It was already a hot industry, Airbnb kind of broke through and really made its mark. But the number of players in that particular sector has really been hot.

We see there are sectors that are really starting to perform well. We do know that events are starting to come back, we’re seeing our clients attend events, we’re attending events with our clients. So, things are coming back there. The way that they’re done, the form that they’re done — those types of things are still being worked out. I think we’re seeing a lot of technology tools and automation play a role in helping travel come back.

A.M.: We are reading the news and hearing reports like «Airlines can’t hire enough pilots» and «Service workers and restaurant sectors are slow to come back,» and so forth. And I imagine it affects big chunks of the hospitality industry, broadly speaking.

Do you and other travel leaders think it is temporary, or is this a sort of catalyst for more automation? Will the servers and the restaurants be replaced by automated food delivery? How is technology playing a role here?

G.A.: Well, it’s a great point that you’ve underlined: the bottleneck in staffing and finding resources to come back after being furloughed or laid off in changing industries. I think the hospitality industry has had the hardest hit. But what we’ve noticed is this trend is automating everything — from the check-in process to baggage delivery. I envision in the future there are going to be bots that do the luggage delivery and the job of the porter.

I think there’s going to be a lot more automation in that particular sector now. Whether you can automate pilots — I doubt we are anywhere near self-driving airplanes. But I think that you’re going to see automation throughout the hospitality sector to take some of those activities and find ways to proliferate. This has already have been done by a few of the leaders in the hotel sector.

I can think about automated check-ins for a decade. So, I think it has just become a lot more prevalent now. There is a real race for talent in the industry. A lot of the best players got offers in different sectors. There is kind of this brain drain in the sector.

There is really a need for technology leaders to step in and play a role and attract teams and partners to be able to get the job done because there is still a long way to go for digital transformation to take its full impact in the industry and to give us all traveling again.

A.M.: You speak with dozens and dozens of travel clients, some clients of ours or travel practitioners. If you look sector by sector, what are they talking about in terms of what they need to do and how they need to do it? What do they invest into? What were OTAs, broadly speaking, asking us to do before the pandemic, and how has that changed now versus airlines or hospitality?

G.A.: Well, it’s a big question because the industry is really broad — for 4 trillion prior to Covid. I’m not quite sure what it is right now, but it is a large industry. What do we see? Aviation is really adopting some of the sorts of old walled gardens, and old guards are dropping. Entrepreneurship thinking is starting to drive change through the organization. They are a lot more willing to listen to some of the partners, some of the products that perhaps before they felt were of lower priority. I think the ability for those companies to adopt some of those hypotheses into actual actionable technology that impacts travelers will distinguish the leaders from the laggards.

In hospitality, big chains seem to have the power at present. It’s really a geographic market by geographic markets, so the U.S chains have a real advantage over European independents who are struggling probably the worst.

In terms of ground transportation, the car rental industry is really going through quite a crazy time. You’ve probably tried to rent a car and had it be a hundred and fifty to five hundred dollars. I recall the person trying to rent in Hawaii at a thousand dollars a day. So this is really an effect of the broken supply chain, and we’re not sure when that is going to come back. But I think the car rental organizations that have cars to rent are benefiting from this sort of supply-demand and Keynesian economic crisis.

Ground transportation seems to be quite healthy in general. The mobility market seems to be moving quite well. Not sure what other industries I am missing, I’m sure I am missing a number of them. I miss business travel as we’ve already spoken about, which is still probably in the worst shape.

The cruise industry has been given the green light. Yes, they are starting again, and I think that there is a real welcome to getting them back in the water. There are a lot of really loyal customers that are lining up to go on. I think the booking numbers are quite high for future cruises. There is sort of a mandate to have only vaccinated passengers on cruises by some of the cruise lines, and that’s probably going to make for a faster return to voyaging.

A.M.: My last question to you is sort of on the tech side and, more specifically, the tech talent side. What we’ve seen across our company and across the industry is, while the pandemic was raging and travel was kind of down, IT went through a dramatic upswing.

It has manifested itself in a pretty bloody war for talent here in the States and across the world. Now travel is coming back with its own demand, new capital, new projects, new ideas, but, as they need to rejoin this war, the battlefield is already pretty littered with bodies. Any thoughts on how travel plans to attract good talent? What are the arguments? What are the lines of winning this battle?

G.A.: It is a great question, Alexey. I think really what you see is that some of the companies that aggressively held on to their employees, some of the leaders in the market that really fought to keep their people over a long period of uncertainty, are in a much better position than those that released tons of people.

There were companies that really didn’t have that choice. Like in the business travel sector. And I think what this is going to do is to force these companies to really use technology and automation to deal with some of the shortages in terms of staffing. It is also going to make them be very clear with their value proposition to employees in the market.

The third thing is that obviously, they’re looking for really great partners to help them along the way to be able to run sort of hybrid models to where there is no vendor lock-in. At the same time, they can start to slowly recuperate and bring on staff.

Thankfully, travel is a really fun place to work. It is a great aspirational place to meet wonderful people. It’s an easy industry to recruit within, but, at the same time, you’re right, there is a real supply shortage for great talent.

A.M.: Greg, thanks as always for your time and insight. I hope we can do it every few months because things seem to be changing so fast.

Originally posted here.