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Tesla, Uber & Co ... and what are travel agencies up to?

Helmut Pilz
Oct 17, 2016 4:47:18 PM

The advent of driverless cars and Tesla have caused the established automobile industry to have an existential crisis. Uber needed only a few months to turn a 115-year-old industry completely upside down. Today, changes across entire industries happen very quickly and radically.

Martin Bachmann is an “old hand” in the travel trade. He has owned several travel agencies, successfully sold them, and with these experiences established a successful travel tech company.

As the CEO of Umbrella AG, he constantly keeps his finger on the pulse of the times. He expects that we will soon see attempts to disrupt the business model of the traditional travel trade.

But Martin is very much committed to an industry that has been home for his entire professional life. In the following interview, he shares his thoughts about how the travel agency industry needs to equip itself for the wild journey into the future.

Martin, recently the owner of a medium-sized travel agency told you that travel tech companies like Umbrella are responsible for the survival of the industry. Do you agree?
Small- and medium-sized TMCs have the skills necessary to work closely with the customer. This is incredibly valuable. But they do not possess their own technology. Developing this is an exciting task for Umbrella. We offer the necessary tools for survival but a travel agency must also be willing to be helped. Unfortunately, some in the industry are harming themselves by being reluctant to leave their established paths and invest in the future.

Why is change so difficult for some travel agencies?
Humans are creatures of habit. It is certainly not an easy exercise to throw old routines and organisations out of the window. Some decision-makers are too afraid of the risks inherent in trying something new. And in resisting change they risk their company facing existential problems.

We are delighted, though, that there are also many travel agency owners willing to try implementing exciting new ideas. Of course, we are also happy to work with managers of companies looking to continue using traditional processes.

What can one learn from web-based TMCs like Egencia or eWings?
In my opinion, the thing that is missing from such offers is an attractive platform and service for complex requests. From an IT perspective, however, they certainly do a lot of things right and offer adequate coverage for simple bookings.

Do travel agencies really have to completely reinvent themselves?

Reinvention doesn’t mean “disruption thanks to Silicon Valley”. Although I expect to soon see several attempts to disrupt the traditional model. The industry can also be successful by going through an evolution and it doesn’t have to completely reinvent the wheel. But we still have to at least question everything and remove any out-of-date customs in the travel agency world without necessarily replacing everything.

The strengths of travel agencies rest on good contact with customers and personalised service. These trump cards have to be played. An efficiency-oriented, assembly line model without the personal “touch” is guaranteed to head in the wrong direction. Robots can do that better and cheaper.

What are examples of services that need to be re-examined?
“Open Booking”
, i.e. the integration of bookings from all possible channels, is an absolute “must have”. Of course travel agencies must also be able to handle direct bookings. Another topic is customer data. I can only provide great service if I know my customers well. With Umbrella Faces we offer a wonderful tool. And it is possible to make more use of it than TMCs currently do.

Even the traditional, rigid pricing model of TMCs is no longer up-to-date. However, often old, clumsy IT prevents travel agencies from thinking at all about alternatives. But why should a customer have to pay for the whole machine if they need to use only a portion of it?

One topic where we scratch our heads again and again is reports. Ninety per cent of all evaluations from a travel agency are completely devoid of value. They are produced directly for the recycling bin. They are non-critical and - like “Open Bookings” - they cover only a fraction of the bookings anyway. It is clear to every insider that at least 30% of bookings already happen outside the travel agency channel. The use of modern communication is also very versatile. A travel agency must now offer communication via web chats, Skype or WhatsApp. But hardly anyone does, because it requires the organisation to change.

All of these are topics for which we have solutions at hand or in the planning stages.

Martin, thank you for the interview. We are looking forward to the second part of this interview, where you talk about your ideas and vision for Umbrella.

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