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The Travel Ecosystem: An Industry on the Go
Whether you’re booking a flight, shopping for hotel rooms, or combing aggregator sites for a pop-up deal on a family vacation or adventure trip, chances are good that your query or transaction was processed by Amadeus, a provider of information technology that keeps the global travel industry moving.
The behind-the-scenes player supports the entire ecosystem, including airlines, hotels, railways, car rental companies, travel agencies, and aggregators. The massive Amadeus network empowers nearly every stop on a traveler’s journey—from doing an initial search to booking flights, rooms, and rental cars, all the way through pricing and ticketing, managing reservations, and check-in and departure. In 2016, Amadeus processed more than 595 million travel agency bookings and boarded over 1.3 billion passengers. The sheer volume of transactions, coupled with shrinking margins and consumers’ increasing appetite for personalized experiences, has raised the stakes for the travel industry and set Amadeus off on its own digital transformation odyssey in the quest to out-innovate its competition.
“The travel industry has been around for a long time, and the key systems supporting travelers have been around for many decades,” says Olaf Schnapauff, chief technology officer for Amadeus Data Processing. “Amadeus provides technology that completes the travel experience door to door. We’re strong in this market because we’ve always pushed the boundaries and provided customers with better and more modern ways to achieve their goals.”
Rather than stay the course, Amadeus, like many in the travel industry, is turning to modern digital technologies such as cloud, big data, analytics, artificial intelligence (AI), connected devices, conversational commerce, and open standards. While digitization has long been a catalyst for promoting efficiencies and boosting operational performance, travel industry players are now leveraging these emerging technologies to transform the customer experience, disrupt existing business models, and innovate new areas of service.
Digitization in aviation, travel, and tourism is expected to increase profitability throughout the ecosystem, creating up to $305 billion in value over the decade spanning 2016 to 2025, according to a January 2017 Accenture and World Economic Forum report. In fact, the climate has become so competitive that $100 billion of value is expected to be transferred from traditional players to new competitors over the next few years, the report found. The mandate for companies throughout the travel sector is to stay ahead of the competition by embracing digital innovation or risk being left behind.
“In this industry, you have to be able to do things others can’t do,” Schnapauff says. “We’ve made a continuous investment in being innovative and in shifting the rules of the game forward.”
What’s Driving Travel Industry Transformation?
It’s not just travel industry companies that will profit from the seismic changes resulting from digitization. The shift will generate benefits valued at up to $700 billion for customers and society, studies have found, including a more sustainable environmental footprint, improvements to safety and security measures, and a multitude of time and cost savings for consumers.
In addition, the changes are designed to smooth out the turbulence that often accompanies travel, creating a seamless, frictionless, high-quality experience for customers. Hyper-connectivity, smart everything, and intelligent machines are changing the travel business at a furious pace, says Gerd Leonhard, a noted futurist who spoke at an Amadeus Travel Leaders Connect conference last fall.
As in other consumer-focused industries, the North Star of transformation in travel lies at the point of seamless experiences through every aspect of the buyer’s—or this case, literally the traveler’s—journey. The travel experience is more fraught than ever; stressed-out travelers crave experiences in which their preferences are known and met at every stage along the way, from the time they begin planning their trip until arrival back home. High-end travelers expect their providers to understand and cater to them with one-of-a-kind experiences that require skillful use of analytics as well as a holistic view of each customer.
To that end, the Accenture/World Economic Forum report found that more relevant recommendations made before, during, and after flights are expected to expand revenue per passenger by 20 percent in 2025. Travel companies are stepping up—in an Amadeus survey, 43 percent of travel companies cited “targeting and personalization” as the leading priorities in their digital strategies, second to mobile optimization of online properties—a top goal for 25 percent of respondents.
The rise of the digital consumer and a surge in demand for travel are also driving disruption and transformation in this sector. The International Air Transport Association (IATA) expects 7.8 billion passengers to travel in 2036, almost double the 4 billion air travelers flying in 2017, fueled by such demographic developments as the swelling millennial class, which values experiences over material goods, and a growing middle class in certain global regions.
Moreover, most travelers are now digital natives and expect online experiences, perhaps more so than consumers in other industries. The Accenture report found that 37 percent of airline travelers had an online presence in 2014, compared to 6.5 percent for other industries. In fact, the average traveler performs nearly 50 online searches, visits 38 sites, and reads a dozen reviewso , according to Amadeus' Online Travel 2020 research. And consumers increasingly want to book travel arrangements (airlines, car rentals, and hotel accommodations) through a mobile experience: an eMarketer forecast predicted that digital travel sales in the United States would reach $189.62 billion in 2017, with 40 percent of that activity coming from mobile devices.
Transformation in the travel sector is all about increasing speed and creating the agility to spot and respond to customer needs even before customers recognize what they want. Yet too many companies in the sector are saddled with legacy organizational structures and technology platforms that don’t easily accommodate the new demands. What’s required is an IT infrastructure that provides maximum efficiency and agility, allowing companies to deliver end-to-end experiences based on real-time data and hyper-personalized services while also reducing wait and transfer times.
Amadeus Leads Travel Innovation
Amadeus faced those challenges, due to its massive transaction volumes and travelers’ expectations of ultrahigh availability or expediency in booking travel. The company embarked on a multi-year effort to embrace cloud services and open systems. This effort involved substantially upgrading its infrastructure and digital operations to ensure the highest levels of agility, scalability, innovation, and resiliency.
The engine for transformation is Amadeus’s Cloud Services platform. Thanks to the cloud, Amadeus continuously releases new services to market faster than it could before. This platform, along with the company’s data centers, is part of the 4.8 billion euros that the company has invested in research and development since 2004. In total, the Amadeus nerve center manages more than 60 petabytes of storage and processes two billion transactions every day. In peak times, it handles more than 100,000 end-user transactions per second, Schnapauff says.
Along with VMware NSX network virtualization, VMware Integrated OpenStack plays a critical role in Amadeus’s infrastructure technology upgrade. The Amadeus Cloud Services platform is designed to deliver superior responsiveness and enable the always-on, ultrahigh-availability digital services that will shape the future of the travel industry. “We work in an open systems environment,” Schnapauff says. “It improves our time to market, allows us to better control operational cost, and provides better access to talent.”
Support for the cloud and open systems like OpenShift and OpenStack—including technologies such as containerized applications, open APIs, and the open-source Kubernetes system for automating deployment—were design strategies chosen to ensure new services can be rolled out quickly, Schnapauff explains. As a result, Amadeus airline, hotel, and other customers are empowered to quickly and easily inject new functionality into the Amadeus platform, continuously extending it with new services and capabilities.
Amadeus’s architecture also ensures services can run close to where they are being used, which increases response time and agility. Instant search capabilities drive responsiveness even further, allowing travelers to get answers to their questions instantly, as they physically type queries.
To round out the customer experience, Amadeus is implementing new technologies like conversational commerce, chatbots, artificial intelligence, and big data. For example, working closely with airline operation controllers to reduce the impact of bad weather or air traffic congestion, Amadeus developed Amadeus Schedule Recovery to help airlines make rapid decisions, such as whether to swap aircraft, reassign landing slots, or delay or cancel flights. This solution, developed in partnership with Qantas, has helped the airline achieve a 60 percent reduction in air traffic delays. There is also the possibility of employing virtual assistants in call centers to significantly reduce operational costs, drive down call center traffic, and deliver personalized customer service.
Amadeus is also using predictive analytics for greater personalization and to link customers with experiences matched to their preferences. “We need to be able to inspire them with the right offers, not just the old-fashioned lookup that returns a list of times and flights with specific prices,” Schnapauff says. “The same things are not equally important to all people; therefore, customization and openness in the system are critical for finding the right solution for the right person.”
Forging partnerships with a trusted provider—in Amadeus’s case, VMware—is essential to navigating all the twists and turns in the digital transformation journey and for ensuring all the changes stay on course.
“We’ve advanced along the path to creating a flexible digital platform for our ecosystem, but there is still a journey in front of us,” Schnapauff says. “There’s a lot of innovation happening and the industry is still evolving, but our choice of VMware technology supports us to build the platforms that deliver all these new services and experiences.”