Digital transformation: creating value for customers in the travel sector

I'm continuing my journey, exploring what digital transformation means in the real world. I've been speaking to David Jarvis from TUI Travel plc (the world's largest leisure travel company). 

David works for Specialist Holidays Group (SHG) within TUI and is currently VP of Customer Engagement for Marine brands Sunsail and The Moorings. His experience with online goes back to the mid-90s with a focus on user experience, and he's now helping to drive transformation at TUI.

When I spoke to David he highlighted a few key themes he has been experiencing when driving change within his part of the business.

Digital transformation challenges facing the travel industry

TUI Travel made digital transformation a key message to shareholders in September 2011 with the cover of the annual report stating: "We're on a journey. To an online driven future".

This future has been shaped over a long time, with Online Travel Agents (OTAs) and low cost airlines making headway into tour operators' territory since the early 2000s. But, digital transformation is now at the top of the agenda at TUI.

The Group has always focussed on optimising its routes to market and owning the relationship with the customer. Now the drive is coming from the top to own and standardise the technology stack across territories and business units to increase the speed to market we can achieve as well as driving cost efficiencies. 

For some people, travel has lagged behind other retail-driven industries when it comes to technology adoption. David says that's because the industry is so complex and competitive. 

There's only two really big players in the UK market who can own the end-to-end holiday experience – and they are TUI (with the Thomson and First Choice brands) and Thomas Cook.Other holiday brands generally have to rely on cooperation with airline, hotel or technology partners to provide a great service which as tour operators they can then take to customers. 

Fragmentation then, plays a huge part.

Because travel is competitive, there is a lot of "lowest-cost" driven thinking which tends to be very reactive to the market and trading conditions. This leads to people feeling that often quite large investments required for digital are beyond their business's reach. And certainly a lot of companies lack the expertise required to deliver successfully; there's quite a few case studies of companies failing to deliver technology in the travel sector for one reason or another. 

 

Attracting top talent to travel

Expertise was at the top of David's list when it came to pressing issues that the travel industry now has to face.

I've long held the view that you can't deliver successfully on a long-term basis using digital agencies. You have to build a great internal team. It's cheaper, more fun and delivers a whole lot more value to the business. 

So why would a rising digital star want to join a travel company right now?

I think people who enjoy working in travel in the digital space are excited about helping customers enjoy booking and experiencing their holidays. It sounds silly but it really is a non-trivial problem. Consumers these days have a bewildering array of holiday options to choose from, but very few definitive brands or online propositions to help make decisions.

The ambiguity is a great opportunity for people like me who like to innovate and problem-solve. I'm lucky in that I'm in a business that knows the old ways aren't working so well any more. 

Driving change: the customer is a catalyst

David views digital transformation as a metaphorical iceberg with the parts the customer touches like mobile and the web at the top.

So what does it take to change the underlying fundamentals? 

I think throughout my time with TUI I've been able to show to some of my more dyed-in-the-wool travel colleagues that that some of their ways of thinking don't actually make sense when they are put in front of today's customers.

An issue may be screamingly obvious to you, but you can only get buy-in from others by forcing people to see it with their own eyes. Once you've got that traction, you start to get permission to look at alternative ways of doing things. This is where the fun starts. You often find customers were not considered as a part of the process, especially when it comes to complex backend legacy systems.

There are lots of other risks – to revenue and margins, to other distribution channels, to infrastructure and sometimes to established ways of doing things.

Change isn't easy and David is no stranger to that within TUI.

It's true that some of the things I've worked on have led to changes where whole departments have had to change their processes. You have to be pragmatic and look at it as a benefit to the customer, and to the business ultimately.

Show me the money! The outcomes of digital transformation

Talk is cheap in digital and consulting. So what has TUI done to transform itself over the past few years? 

In SHG we have delivered a major online re-platforming exercise for Crystal. This has had a huge impact on the business and driven up online share of revenue consistently since it went live. We've just had the best winter ever for ski and we've got more in the pipeline to keep improving.

Alongside that we have revolutionised how we service customers online using social media channels like Facebook and Twitter, a mobile information pack, as well as employing a customer service platform called GetSatisfaction. We're pretty confident that for the UK's ski market, we're leading the way.

We've been experimenting with mobile for a while and have recently published an iPad-based customer publication for one of our brands Austravel. We're progressing with a digital publication strategy that will eventually replace brochures in a few years.

Meanwhile, Thomson has just launched MyThomson – a mobile app for iPhone and iPad that takes care of the post-booking, pre-departure customer journey.

Travel and digital together

Travel is an industry that has been changed by digital, and continues to react. There are obviously great threats to, and equally great opportunities for, the travel sector.

Sometimes it doesn't work as David has mentioned, but it's clear that with shareholders are on board (no pun intended), and 'being digital' is now at the heart of TUI's strategy.

If you'd like to ask David further questions, please post your comments below. David writes over on his personal blog, on transformation, digital and marketing in the travel industry. 

Econsultancy does a lot of work for clients around digital transformation, organisational change and business restructuring. for further information.