How data can overcome commoditisation in travel

Travel has become a commodity in many markets, making price the only differentiator but big data can help to differentiate offers, writes Andrew Hennigan

In many cases travel has become a commodity like sugar, oil or steel, where the product is mostly indistinguishable from competitors’ products and the primary way to differentiate offers is in the price. Indeed it is fair to say that today there is little difference between one low-cost flight and another, or between one mid-priced business hotel and another.

The pricing dilemma was a central theme at EyeforTravel’s recent flagship show in the US where there was a clear recognition that this approach is never going to be enough, and the only way to stand out is through digital and data innovation.

Clearly there is a challenge for travel vendors who rely on differentiating their product to maintain competitivity. So the big question is, how can suppliers create meaningful differentiation in their products to build customer loyalty while at the same time remain competitive on price? The answer to this challenge lies in the effective use of big data analysis.

“The only way to overcome commoditisation in the travel market is through personalisation and smarter use of big data,” says Carlos Sánchez, Senior Manager for Big Data Analytics and Product Innovation at the business travel agency Carlson Wagonlit Travel. “Suppliers need to understand who their customers are, where they are travelling, when and why. With this data they can work out what they need to do to make themselves stand apart from the competition.”

One way to make a standardised product look different is to wrap around it an experience so that it can be distinguished. While every ticket is essentially the same if you are looking at just the basic flying part, airlines are beginning to understand that they can improve the end-to-end experience by adding ancillary services.

Read more at Eye for Travel