Agents can expect game changers
Investment in people and
technology, partnerships and
measured risk vs reward will
all form part of the mix.”
The crippling rate of
exchange will have a
significant impact on traveller
behaviour in 2016. Adriaan
Liebetrau, ceo of the
Southern African Association
for the Conference Industry,
says the weak rand will
continue to negatively
affect the industry and will
make doing business more
expensive overall.
Beachcomber has already
seen this trend in forward
bookings, which are
well up in a very difficult
economic climate, says
md of Beachcomber Tours,
Terry Munro. “Clients
seem to be leaning towards
destinations where they
can budget accurately for
their holiday so they are
choosing destinations like
Mauritius that have meals,
entertainment and sports
inclusions.”
Terry says clients are
reluctant to book travel to
Europe or the States as
they fear their budget will be
blown out of the water with
extras such as basic meals
and drinks.
Clients’ need for value
has also impacted on travel
patterns, says Iain Meaker,
Comair executive manager
of commercial distribution.
“Clients are happy to book
last minute and also travel
outside of peak periods in
order to get value for money.
The trend is also to confirm
as many value-adds as
possible and passengers are
asking all the right questions
in order to secure these
benefits,” says Iain.
Length of stay will also
shorten considerably in
2016, he adds. “While the
seven-night getaway is still
extremely popular, there
is a definite move towards
shorter experiences.”
The rand exchange rate is
also expected to take its toll
on the aviation industry.
“The weakening rand will
bring added operating cost
pressures given the extent to
which Opex is denominated
in US dollars and other hard
currencies. Oil prices are
currently low, and if there
is upward movement, given
the weak rand, fuel-related
input costs will soar and
operating economics will
be more challenging,” says
Rodger Foster, ceo and md
of Airlink .
Technology will play a much bigger role
INNOVATION will prove critical.
“Technology is constantly
changing and so is the
business world. To stay
relevant, we need to move
with the times and not be shy
to try new things,” comments
Adriaan Liebetrau.
“We’ll see a new definition
for technology arise,” says
Mladen Lukic, gm Travel
Counsellors in South Africa.
He says technology within
the travel context has so far
been limited to the frontline
sales process but he predicts
it will play a much bigger
role in future. “Technology
will be applied in the initial
stages of identifying the
most appropriate product.
It is going to be part of the
sales process but, most
importantly, it is going to
be an everyday partner
throughout the trip.”
Travel agents need to take
advantage of technology to
take part in the traveller’s
journey, agrees Jannine
Adams, senior manager
marketing at Amadeus
Southern Africa.
“Travel agents need to
become more serviceoriented.
They need to focus
not just on selling tickets
but actually servicing their
travellers throughout their
journey. The client trusts the
travel agent more than the
people on the ground. Take
advantage of that. If the
travel agent understands their
destination well enough, they
can sell many different valueadds.”
Technology will also
influence the evolution of
managed travel, says Ben
Langner, Carlson Wagonlit
Travel md. He says when
the right tools and services
are used in the best way,
managed travel will become
faster, smarter and better
than ever before.
Mobile was the top trend
identified in CWT’s global
survey. “To truly manage
mobile and address data
privacy concerns, companies
need to steer their travellers
towards approved apps and
solutions. This is best done
by including mobile in the
overall travel policy,” says
Ben.
Jannine points out that
ancillaries offer a huge
opportunity for the travel
industry. “Airlines will
appreciate travel agents
not just for selling airline
tickets but also for selling
their added services. It will
also help the TMC with their
own bottom-line in terms of
retention of clients.”
Innovation will also remain
key to competitiveness in
the car-rental industry, says
Melissa Storey, executive
head: Strategy, Development
& Marketing at First Car
Rental.
Data-driven technology
and resource efficiency will
differentiate one car-rental
company from another.
“Personalise, simplify and
streamline for maximum
efficiency and minimum
effort.”
The ‘Internet of things’
(the transfer of data over
a network without humanto-human
or human-tocomputer
interaction) will
also substantially improve
customers’ experiences
and car rental companies’
efficiencies.
The “connected” car is not
a futuristic concept, says
Lance Smith, Avis Budget
executive of sales. “Selfdrive
cars that can transfer
themselves from drop-off to
the wash bay to the petrol
pump will soon be a reality.
With 360-degree highresolution
camera technology,
car-rental companies
will also be able to map
damage to cars, which will
automatically be logged when
a driver enters or exits the
car park, creating complete
transparency.
“Soon technology will be
available to track drivers’
behaviour and pick up
inconsistencies, helping us
predict when accidents may
occur so we can alert clients
and avoid serious issues,”
says Lance.
Revenue management
systems are also getting
smarter. Rather than working
on the basis of high or low
season, Avis head offices
– such as in the US – are
becoming more strategic
in predicting consumer
behaviour, with permutations
based on particular events.
“Using technology, we can
really get into the science of
revenue management,” he
says.
Locally, Avis Budget is
working on launching its
new website, which is being
designed for mobile devices.
“With their mobiles, clients
will be able to book, pay,
communicate with us –
basically do it all – which is
essential to the ‘connected
car’ experience,” says Lance.
Globally, there is a trend
towards consolidation in the
industry, with major car-rental
companies adopting multibrand
strategies. “In the
past year we have followed
our principle by taking on the
Budget brand in Southern
Africa and we will consider
whether to bring the other
brands in its stable, such
as Zipcar and Payless, to
our market in the future,”
he says.
Airlines face another tough year
THE airline industry will
continue to operate in a
very tough, competitive
environment, largely
driven by the slow
economic growth
projection of around 1,5%
for South Africa, predicts
Chris Zweigenthal, ceo
of the Airlines Association
of Southern Africa.
“Within this
environment, airlines
will try to consolidate
their positions and also
improve performances
from a tough 2015
towards sustainable profitability in
2016.”
This year will be about the survival of
the fittest once more, predicts Rodger
Foster. “The environment is extremely
tough and hostile at present – clearly
the market is grossly overtraded.
I expect there to be some
capacity fall-out.”
He adds that low
fares will continue into
2016, which will be an
advantage for customers
and the travel trade.
However, airlines will
continue to struggle as
there are no indications
of a radical economic
turnaround in the
foreseeable future, he
says.
Despite these dire
predictions, Chris says
the domestic airline
industry is expected to experience
passenger growth of between 2% and
3% per annum, with the international
market experiencing similar growth.
“Yields will continue to be
competitive, with profitability margins
on average still around breakeven due
to the slow economic growth within
South Africa.”
International airlines, particularly
those from the Gulf, Turkey and Europe,
will continue to look for opportunities
to expand operations within Africa,
says Chris, adding that airlines in Africa
operating international services will
continue to face stiff competition from
the international airlines operating to
Africa. “High operating costs, especially
those that are dollar driven will need
to be closely controlled and reduced
where possible in this environment.”
The African Union, supported by
South Africa, has plans to achieve
a single African aviation market by
2017, notes Chris. “In 2016 it will be
important for the African Union and
its respective aviation organisations
to push this agenda and extend the
commitment to this goal beyond the
11 states that agreed to this goal in
early 2015.”
Domestic tourism is an opportunity
IN 2016, growth within the domestic
and regional markets will be a huge
opportunity for local wholesalers, says
Iain Meaker.
The increased competition in the
domestic airline market will boost
domestic travel, agrees Melissa Storey.
“Since FlySafair launched at the end
of 2014, domestic fares have fallen by
as much as 39%. This is leading to an
increase in domestic flights as fares
become more affordable.”
Andrew Stark, md of Flight Centre,
foresees a major uptake of domestic
trips. He expects shorter holidays,
local is lekker and closer-to-home
destinations where the clients get more
bang for their buck.
Leisure travel
set to grow
CORPORATE travel has declined,
so agencies need to focus more
on leisure, says Terry Munro.
He says in 2016, the travel
industry will be faced with a
smaller travel pie, which means
that competition will be tough
and costs will need to be strictly
controlled.
Mladen Lukic agrees that leisure
travel will grow, as long as there
are no further terror incidents. He
notes that the leisure sector was
already showing some recovery in
the beginning of 2015. Corporate
travel will stagnate at best, but
will probably decline in 2016,
says Mladen. “Companies are
not investing in South Africa and
very few companies are investing
overseas. There is a move to sell
off assets in many parts of the
economy and this has an impact
on corporate travel demand.”
Wally Gaynor, md of Club
Travel confirms there will be no
real growth in corporate travel
in 2016. “The falling rand will
continue to impact South African
seat availability and internationally
based websites and meta search
engines will use their superior
availability to penetrate the leisure
travel sector and possibly impact
the corporate sector as well".
Relationships with
suppliers will change.
CHANGES to supplier deals, such
as the changes SAA made at the
beginning of last year, have had a major
impact on a few of the consortiums’
bottom-line results, says Andrew Stark.
“It will be interesting to see what
supplier deals will look like in 2016.
Will suppliers still expect growth as the
market is declining? Or, are they going
to look at keeping their percentage of
market share and be happy with that?”
Suppliers are certainly becoming
more cognisant of
the tough economic
times, says Claude
Vankeirsbilck, chief sales
and marketing officer at
Tourvest Travel. “They’ve
been lenient over the
years in terms of offering
credit, but they are now
tightening their belts.”
A big challenge in the
current market, according to
Iain Meaker, is that the
lines between retailer,
operator and supplier are
becoming increasingly
blurred. “This means that
a travel company has to
be all things to all people
and constantly ensure the
best possible price without
compromising product
– which will once again
benefit larger, stronger businesses.
What will happen to prices?
AIRLINE prices will remain flat on
a global and local basis due to
significantly lower energy prices,
steady increases in capacity and
stable demand, according to Ben
Langner.
He adds that globally, 2016 will
show an increase in hotel prices
because demand is overtaking
supply in every major global region.
In Europe, Middle East and Africa,
he predicts hotel prices will see a
moderate increase of 1,8%.
Car-rental pricing has been under
pressure in South Africa and
elsewhere, says Ben.
“Demand isn’t rising sharply enough
and fleets are not being managed
tightly enough, leading to stagnant
rates globally and regionally.”
In terms of meetings and events
business across the globe, Ben
predicts only modest increases in
cost per attendee per day.
Strong demand from China and
India is the major driver for the
region’s increasing cost and group
sizes. North America will also see
a 4,5% cost per attendee per day
increase, according to Ben, with food
and beverage continuing to be a
significant driver of costs.
New wave
of terrorism
“SECURITY concerns, in the wake
of the new wave of terrorism, are
bound to impact the hospitality
industry throughout the world,”
says Danny Bryer, director: sales
and revenue management for
Protea Hotels. He says the recent
incident in Mali illustrates the
kind of potential security issues.
“Hotels throughout the world
will have to revisit their security
measures,” he says.
The threat of terrorism could
also impact on the aviation sector,
adds Mladen Lukic. “Another
factor that is going to have a major
impact is the instability in the
Middle East. The vast majority of
airline routes fly over that region.
The amount of capacity that would
be impacted by that instability
might have a tremendous impact
on South Africa.”
To the point
Clifford Ross, ceo of the City Lodge Hotel
Group, says construction is under way on the
new City Lodge Hotel Two Rivers in Kenya
– boosting the group’s African expansion
drive. “Early in the year, we will be making
announcements on the progress of the
other African expansion plans in Tanzania,
Mozambique, Namibia and Uganda.
How valuable are associations?
THE travel industry will
increasingly start to question
the value of organisations
such as Asata, says Andrew
Stark. “We’ve just seen
Pentravel move away from it.
Now the three largest leisure
travel retailers, Travelstart,
Pentravel and Flight Centre,
don’t belong to Asata, which is
very interesting. As cash flow
becomes a real issue, people
will question every cost and if
the cost doesn’t have a return
on investment, then they’ll be
questioning the association.”
However, Claude
Vankeirsbilck disagrees.
“Asata is going to be
taking a harder line on
how some organisations
conduct business. That
can be the basis of far
more trusting relationships
in the industry. We as a
member want to make sure
the professionalism of the
industry is maintained. Only
then will corporates trust their
relationship with the TMC.
Cash-flow will affect business models.
BUDGETS will remain tight
for leisure, corporate and
even government travel. “It
is an election year so it will
not be business as usual
for government bookings
and this will affect some of
the corporate spend,” says
Adriaan Liebetrau.
Iain Meaker says Iata’s
new local financial criteria
mean that larger companies
with a strong balance sheet
and sound financial backing
will continue to grow, while
the smaller, cash-strapped
businesses will absorb the
brunt of the financial burden.
Interest rates are expected
to continue to rise and the
new Iata regulations will
tighten any available cash
flow in the travel industry,
says Andrew Stark.
Wally Gaynor says the
new Iata regulations will see
many Iata agents choosing
to give up their licences. The
only real reason an agent
has a licence, he says, is to
roll cash by not paying BSP
when money comes in, but
only at the end of the month,
particularly if they have
corporate clients on a 30-day
payment basis. “It’s a lot
cheaper and smarter to use
a specialised, centralised
ticketing company"
Will the NDC be a
game changer?”
NEWS of aggregators in
the SA market having
implemented the NDC
standard caused something
of a stir last year. Do agents
understand what the NDC is
and how it will affect them?
In a nutshell, the NDC
is a series of XML-based
schemes that will, says Iata,
enable participating airlines
to improve how third parties,
including GDSs and travel
agencies, search for and
book flights.
Head of the NDC
programme, Yanik Hoyles,
says the primary benefits
are that it will enhance the
way in which ancillaries are
viewed and sold. “When
it comes to viewing new
product on airline websites,
the process is really fast,
but the agent’s process for
viewing these products is
very clunky.” He says the
standard will also offer
greater personalisation.
However, as Robyn
Christie, gm Southern
Africa for Travelport,
points out, Travelport is
already offering this brand
of rich content through
products like Smartpoint
through the GDS’s Travel
Commerce platform. “We
have delivered a number of
unique and highly innovative
merchandising solutions
which are already live and
available to our customers
today,” she says.
Not only are agents
able to compare different
airlines’ ancillaries through
Smartpoint, says Robyn,
but they also have access
to rich content like imaging.
“Agents can see everything
from what the seats
look like to the airline’s
configuration.”
Robyn says, however,
that Travelport has been
working with aggregators
and will continue to do
so, as their content is
important. In relation to
the NDC specifically, she
says Travelport welcomes
standardisation across the
industry. “However, I don’t
believe it’s going to be a
game changer,” she adds.
Yanik conceded that GDSs
like Travelport are leading
the way with technology
such as Smartpoint.
However, he says the
NDC’s benefit is that it
enhances the use of GDS
technologies by making
them simpler to use and
more cost-effective.
His advice for agents is
two-fold. “They should first
have a discussion with their
airline partners to find out
how they are making use of
the standard – this might
either relate to the way they
sell their products or their
booking payment process.”
Yanik says agents
should also speak to their
technology partner to find
out how they are making
use of the NDC, and how
it will affect their mid- and
back-office functions.
