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Strategiesto successfullycompete Jan 2018

Digitisation ofthe travel andhospitality industry

PACED I M E N S I O N S

2. WHITEPAPER - PART 2 WWW.PACEDIMENSIONS.COM

Contents

Challenges for incumbent businesses

i. Reliance on existing lines of businessii. The “me-too” approach

. New strategies for success

i. Defineadistinctivevisionii. Builddefendablestrengthsiii. Design for scalable growthiv. Becomeamarketmakerv. Platformsvs.solutionsvi. Decomposemulti-facetedbusinessesvii.Carveoutandcommercialise

Essential capabilities

i. Customercentricityii. Iterativelearningatpaceandscaleiii. Designandinnovateatspeediv.Dynamicdistributionmanagementv. Revenueproductivityvi. Buildandshapebrandreputationvii.Businessintelligenceviii.Operationalproductivity

Conclusion

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1. Challenges for incumbent businesses

The nature of competition in the travel market is evolving at an increasingly fast pace. To survive and thrive, incumbent businesses must understand the nature of these changes and formulate actionable strategies to respond.

Ourfirstpaperinthisseriesidentifiedthreekeyimperativesforchange:

Digitalreadinessisaboutmorethantechnology.It’saboutnewbusinessmodelsandprocesses,companymind-setandculture.Tobereadyforthenextdecadeoperationalprocesses–aswellastechnicalsystems–needtoevolve.Thisincludesthewaybusinesseslearn,makedecisionsanddevelopproducts.

Thoseleadingthefieldarestreamliningandacceleratingtheirsystemstoincreasetherateofcustomerfeedbackandproductiteration.Onlinetravelagenciesarereachingcustomersthroughapps,websites,socialmediaandvoice-activatedsearch.Newbusinessmodelsinthesharingeconomy,suchasAirbnb,havemadeavirtueoftheirpeople-poweredplatformsandareseeingsignificantgrowth;49%saidtheyhadreplacedatraditionalhotelstaywithanAirbnbstayin20163.

Thispaperexaminesthewaysinwhichincumbentbusinessesintravelandhospitalitycanmostsuccessfullycompeteinthecurrentmarket.

High levels of growthTravelandtourismoutperformedtheglobaleconomyforthesixthyearrunningin20161.

Increased competitionDigitisationhasincreasedthelevelofcompetitionintheindustry.TheWorldEconomicForumpredictsashiftof$100billionfromtraditionalplayerstonewcompetitors2.

Changing expectationsCustomerexpectationsarechangingrapidly.Technologyinnovationisempoweringcustomersandtheyarebecomingmorediscerning.

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i. Reliance on existing lines of business

Whereexistingrevenuestreamsremainstrongitistemptingtoignoretheimperativeforchangeandcontinuewithbusinessasusual.

Figure1showstheriseandfallofindividualbusinessmodelsovertime.Noticingandrespondingtodisruptionattheearlystagesallowstimetodevelopalternativelinesofbusiness,whichwilllaterovertaketheexistingmodel.

Regular reinvention allows incumbent businesses to maintainperformance over time

Fig. 1 Business performance for any given model declines over time. By reinventing for evolving markets it becomes possible to sustain high performance over time.

Existingbusinessstructurescanobstructthepathtodigitaldevelopment.Successcomesnotfrom‘addingon’thedigitalcomponent,butfromre-evaluatingthecorebusinessfunctionandredesigningtocompetenowandintheimmediatefuture.

Busi

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Per

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Time

Existing Business Model

Reinvented Business Model

Future Model


Technology enables a business; it shouldn’t be the driver for the business. You need to understand what you’re trying to achieve and then look to the technology to try to achieve those goals, rather than the other way around. 4

John Seaton,Managing Director, Cendyn

ii. The “me-too” approach

Itiscommonforincumbentbusinessestotrytoreplicatenewentrantsordisruptorstrategies.Thiscansucceedwherethestrategyistailoredtofitexistingbusinessstrengths,butrisksfailurewherebusinessstrengthsandstrategyaremisaligned.

Figure2showshowtheeffectsofagoodfast-followerstrategycoupledwithexemplaryexecutioncancounterbalancelostrevenueasaresultofdigitisation.Thecrucialpointhereisthatexemplaryexecutionconstitutesthelargestpartofsuccess.Forareplicationor“fastfollower”5strategytobesuccessful,thenecessarydigitalcapabilitiesneedtobeinplace.

Fast-follower strategy and strong execution can counteract the effect of digitisation

Fig 2. Fast-follower strategy and executionSource: McKinsey. Feb 2017

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Revenue-growth profile, %

Revenueeffect at fulldigitization

Fast-folllowerstrategy

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Neteffect

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2. New strategies for success

Fordigitaldevelopmentstrategiestobesuccessful,an“all-in”approachisessential.Digitalstrategyshouldbetiedtoanoverallgrowthordevelopmentstrategy,ratherthanisolatedasaseparatebusinessfunction.Itisimportantnottounderestimatetheculturalshiftsthatgowithdigitalexpansion,includingopennesstoexperimentationandamorerapidpaceofdevelopment.Thismaychallengeexistingorganisationalstructures.

Coretosuccessisadeepunderstandingofyourtargetcustomers.Thisshouldincludepsychographicprofilingofinterests,preferences,attitudesandexpectationsaswellasonlinebehaviour.Digitaldevelopmentshouldbeledbyaclearvisionofvalueforyourcustomers.

Hoteliers are going to have to learn to accommodate multiple segments of consumers who want to interact with the property and technologies in different ways. 6

Alex AltPast President, Sabre Hospitality

i. Define a distinctive vision

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: Buildoffexistingbusinessorbrandstrengths

Solveaproblemthatissignificantforalarge number of consumers

Focusonspecificcustomersegmentstobetterunderstandtheirneeds


Brandscanestablishastrongvisionbyfocusingontheneedsofvaluablecustomersegmentswherethecompanyhasmostrelevance.Byfocusingonpenetrationratherthanscalethereistheopportunitytodevelopaproductthatservesadesignatedconsumernichebetterthananyotherproviders.Largehotelcompaniesalreadydothisthroughtheuseofsmallerbrandsthatcorrespondtoparticularcustomergroups.

Acompanyvisionmustholdweightforbothcustomersandstaff.KurtEkertrecentlyledthedigitaltransformationofCarlsonWagonlitTraveltoaddvaluethroughanimproveduserexperience.Hehighlightstheimportanceofclientandstaffinvestment:

The interesting thing is it’s relatively intellectually simple to develop a new strategy, but winning the hearts and minds of the customers, the market, and especially the employees is the hardest thing. 7

Kurt EkertPresident and CEO, Carlson Wagonlit Travel

ii. Build defendable strengths

Understandingyour‘corestrengths’orareasofadvantageoverotherbusinesses is the crucial starting point. Mapping these areas of excellence againsttheattributesyourtargetcustomersmostvaluehelpsclarifytheareasforfocusanddevelopment.Bytargetingthosestrengthsthataremoredifficultforotherstoreplicateitispossibletobuildamoreresilientbusinessmodel.

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Degree ofgeographic coverage

Product orservice quality

Research anddevelopmentexpertise and investment

Patterns of ownership(i.e. own and control,subsidiaries, rightsand IP)

Product orservice diversity

Type of distributionchannel used (i.e.low cost and directdistribution to market)

Technological position(the degree to whichyou are thetechnology leader)

Degree ofvertical integration

Reputation

Size and relativeshare of market

Number andtype of marketsegments served

Market position(the degree to whichyou lead the market)

High efficiency andlow delivery costs

Spending power/ reach

Hotels worry about how they can beat their competitors at what their competitors are best at. It’s very unlikely that you’ll provide a better booking experience than booking.com; it’s very unlikely that you’ll provide more choice than Expedia. Success is about identifying where your real strengths lie. For hotels this is in the guest experience and level of service. 8

Maarten Plesman CRO, Revinate

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Examples of defendable strengths include:


iii. Design for scalable growth

Fifteenyearsagothetopfivehospitalitygroupsusedtoownandoperatetheirhotels.Nowpracticallyallhavesoldtheirproperties,havedivestedhoteloperationsandarefocusingongrowingbrandsthroughrepresentation,franchiseormanagement.ThisisascalablemodelforgrowthandcompanieslikeHilton,MarriottandIHGhavemovedfromrepresentinghundredstothousandsofhotels.

Scalable businesses can attain exponential growth with incremental increasesinresources.Anasset-lightstructurehasenableddigitalchalleng-erslikeAirbnbandbooking.comtoquicklyaggregatehugepoolsofinventorywithnostakeinthepropertiesthemselves.

Core to scalable growth are a few key factors:

Centrally accessible assetsBusinessintelligence,intellectualproperty,capabilitiesandcoreassetsincludingdistribution,onlineretailing,loyaltyandadvocacyprogrammesthatcanbetranslatedacrossmultiplechannels.

Synergies for scaleInvestinginonekindofactivitytogrowthebusinessthathasa‘haloeffect’ongrowinganotherelement.Thiscanincludepromotingadditionalservices,upsellingandcross-selling.Expedia’splatformmakesmoneyfromtravelbookingsbutadditionallygathersmarketinsightsandsellsadvertising.

Repeatable processesAutomatingproductsearch,discoveryandpurchasepathwaysallowsforrapidscalingthroughrepetition.Asanexample,globaldistributionsystemsenablemultipleconcurrenttransactions,rapidlyacceleratingthebookingprocess.

Rapid data processing Gatheringandutilisingmeaningfuldatatoimproveexistingpurchasepathwaysandbuildreliableinsightsaboutcustomerbehaviourtoinformfuturebusinessdirection.


A guest touches multiple systems, from searching on Google to booking on the hotel website or an OTA, followed by the check-in system. It’s vital to aggregate this data and create a single version of truth about that guest so that you can engage with them on a meaningful level through the right channels, at the right time. 9

John SeatonManaging Director, Cendyn

iv. Become a market maker

Google,Expedia,TripAdvisor,Pricelineandmajorhotelgroupsholdsignificantpowerbecausetheyaggregatebothcustomersandsuppliers.

Themarket-makerstrategyplacesthebusinessatthecentreofalltransactions.Thebusinessisnolongerthesourceofthesupply,butpolarisesdemandbetweensuppliersandconsumers.Brandvaluerestsonprovidingchoiceandimmediateavailabilitytocustomers,anddistributionchannelstosuppliers.Bycontrasthotelowners,carrentalcompaniesandairlinesproduceandsellinalinearfashion,withouttheaggregationfunction.

Theemphasisonaggregationhaschangedthenatureofcompetitioninthetravelindustry.Anybusinessthattakesacutofthetotalrevenueisnowanindirectcompetitor.Thisincludespaymentprovidersalongwithmedia,distributionandadvertisingchannels.Thedefinitionofthetravelindustryisblurring,allowingfordisruptivestrategiestoprovidevaluetocustomers.

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Biggerconsumer market

Hotel

Smallerconsumer marketHotel

Market to consumers

Market maker aggregates

supply + demand


v. Platforms vs. solutions

Platformbusinessmodelsfacilitatetheexchangeofgoodsorservicesbetweenproducersandconsumers.Inthissensetheycanbeconsideredanextensionofthemarketmakerstrategy.

Platformscreatevaluebycuratinganecosystemofproducersandconsumers,offeringaninterconnectedsuiteofservicesorprovidingthefoundationtobuildnewproducts.Platformsgiverisetoorganicnetworkeffectsinwhichtheplatformbecomesmorevaluableasmorepeopleuseitandbeginsacycleofself-reinforcinggrowth.Asof2015,70%of‘unicorn’startupsvaluedover$1bnwereplatformbusinesses10.Averagemarketcapvaluationsforplatformcompaniesstoodat$2.56trillionasof2015,comparedwith$16.75billionforInternetcompaniesin1995(seeFig.4).

Market cap valuations for platform companies far exceeds that of Internet companies

Market cap valuations - Top 15 Internet vs Platform companies

Fig. 4 Comparison of market cap valuations for Internet companies (1995)and Platform companies (2015)Source: Accenture 2016

TECH COMPANIES AND BORN-DIGITALORGANIZATIONS

AlibabaAlphabetAmazon.comAppleBaidueBayFacebookJD.comLinkedinNetflixPriceline.comSalesforceTencentTwitterYahoo!

$16,752

PlatformCompaines

InternetCompanies

INTERNETCOMPANIES

AppleAxel SpringerCopartFox CommunicationsIAC/InterActive Corp.iLiveiStart InternetLive MicrosystemsNetcom OnlineNetscapePSINetRentPathStorage Computer Corp.Wave CorporationWeb.com

$2,560,902

1995 2015+15,187.1%

$M


Platforms add value in three ways:

Transactional platformsFacilitatingtransactionsbetweenindividualsandorganisations.Theseplatformsaddvaluepredominantlybyaggregatingrelevantprovidersandsuppliers,aidingdiscoverability(throughsearch,recommendationalgorithmsorpairingsofsuppliersandconsumers)andreducingtransactionalfriction.

Examples:Uber,Airbnb,GoogleSearch,AmazonMarketplace,Ebay,OTAs,majorhotelbrandwebsitesandotheronlinebookingapplicationsofferingmorethanoneproduct.

Airbnb 2015 valuation exceeds that of leading competitors

Airbnb vs. Public Competitors: Valuations Over Time ($B)2011 – 2015YTD (6/18/2015)

Fig. 5 Airbnb vs public competitors: Valuations over time ($B)Source: CBInsights, June 2015

Airbnb has affected the hotel trade in a number of different ways. It is going to act as a brake on RevPAR in the hotel trade, because supply and demand will balance in a different place. 11

David RocheChairman, GuestlinePast SVP, Expedia

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AirbnbMarriott WyndhamStarwood Expedia HomeAway

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2011 2012 2013 2014 2015YTD

* Airbnb did not raise a round between 2012 and 2014 and therefore its valuation stayed the same during this time** Valuations were taken at dates where Airbnb raised. 2013 data was taken at 6/1/2013


Service platformsProvideacollectionofconnectedproductsorsolutionsthatcanfunctiontogetherorseparately.Integrationwithotherapplicationsisakeyadvantage.Establishedserviceplatformscanbecomethecommonplacestandardwithothercompaniesprovidingcomplementaryservicesandintegrations.

Examples:Amadeusprovidesasuiteoftravelservicesthatcanfunctioninconcertorinisolation;SalesForceprovidesaplatformofcloud-basedCRMservices.

Innovation platformsProvidesthetechnicalbuildingblocksasafoundationonwhichinnovatorscanbuildcomplementaryproductsandservices.Thisinvolvesanopenaccessapproach,providingthetoolsandconnectivityforotherstobuildandaddtotheplatform.Theplatformprovidesvaluethroughanevolvingecosystemofrelatedproductsandservicesrelevanttooneormorecoreusergroups.

Examples:TheAppleAppStoreandGooglePlayallowindependentdeveloperstocreateappsfortheirplatforms;SabrePlatformServicesallowswebdeveloperstoaccessapplicationsandtransactiondatatobuildnewtraveltools12.

vi. Decompose multi-faceted businesses

PackageholidayproviderslikeTUIbenefitfromamultifacetedbusinessthatbundlesproductsandservicesforcustomers.Forothercompaniestherearebenefitstoseparatingandscalingseparatebusinesselements.

Establishedbusinessesoftenhaveseverallinesofrevenue.Whiletherecanbebeneficialsynergiestothis,decomposingstrandsofbusinessispreferablewheregrowthhasslowedandthemarkethasreachedmaturity.Particularlywhereotherbusinessesstandtooutcompeteyou,thewisermovemaybetoseparateandscaleindependently.

OneexampleisthelaunchofUberEatsasaseparateofferingtoUberrides.ThisdiversificationenabledUberEatstocompetedirectlywithotherfooddeliveryappsincludingGrubHubandDeliveroo.SimilarlyasGooglehasgrownithasseparatedmultipledifferentstrandsofthebusinesses,somefarafieldofGoogleitself,whicharenowhousedundertheholdingcompanyAlphabet Inc13. Thisallowsfortheindependentfocusandscalingofbusinesslinesthatarelargelyunrelatedorindependentofeachother.


Inthecaseofhospitality,restaurantsofestablishedhotelbrandscanbescaledindependentlytoreachexpandedmarketswhileexploitingtheirexisting strengths.

Independentlyscalingeachlineofbusinessopensopportunitiestotargetanddifferentiatecustomergroups.Inamarketcrowdedwithcompetitionthisspecificityintargetingiscrucialtocreatingadifferentiatedbrand.

vii. Carve out and commercialise

Thedigitaleconomyhasincreasedthelevelofcompetition.Withthisithasbecomehardertosucceedinmanydifferentfieldsatonce.Thosecompaniesthatsucceedinthecurrentclimatefocustheireffortsonbeingexceptionalinacorefield.

Whereabusinessprocessorserviceisnotcoretoacompany’soverallbusi-nessstrategy,acarve-outcanbeadvantageous.Inastudyofprofessionalsinvolvedincarve-outsordivestitures,81%saidthatoneoftheirtwomainreasonsfordivestingwasthattheentitywasconsiderednon-coreto the business13.Separatemanagementanddistinctareasoffocuscanleadto better performance for both entities.

Non-core assets are the most important reason for divesting

Fig 6: Most important reasons for divesting a business Source: Deloitte 2013

In some instances it can be preferable to outsource non-core functions. ThiswasthecaseforIHGwhooutsourcedthedevelopmentoftheirnewreservationssysteminapartnershipwithAmadeus.MattLuscombe,whowasCCOofEuropeatthetimeofthedeal,explainshowIHGwasabletoretainacompetitiveadvantage:

Non-core assets

Market change

Financing needs

Lack of internal talent to grow the business

Received unsolicited offer by interested party

81%

40%

23%

10%

38%

62%

8%

17%

8%

19%

32%

21%

15%

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Ranked #1 Ranked #2

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It’s all about competitive advantage. We have intellectual property rights over the components that we think of as being differentiating in terms of guest experience, so they can’t be reused or sold to a competitor. That’s an example of trying to ring-fence the elements which are core when we’re outsourcing. 15

Matt Luscombe, Past CCO, Europe, IHG

3. Develop essential capabilities tocompete

Theexistingcapabilitiesofincumbentbusinessesneedtochangeinordertokeeppacewiththeevolutionofthedigitaleconomy.Thisisn’tsimplyaboutaddingnewskills,butreviewingandupdatingexistingstructures.

Inthecurrentmarketincumbentsarecompetingwith“borndigital”businesses.Whileincumbentbusinessesshouldnotnecessarilylooktocopysuchventures,itisessentialtoidentifytheskillsandexpertisethatwilldeterminethefuturesuccessofthebusiness.

We have to transition in our skills, capabilities and mindsets to deliver a great experience physically, along with creating great experiences digitally. 16

Chris Silcock, EVP & CCO, Hilton

Thefollowingcapabilitiesarecoretofuturedevelopmentintravelandhospitality:

i. Customer-centricity

Itisnowpossibletoorchestrate1-1customerengagementonamassscale.Personalisedmarketingandresponsiveuserexperiencesarekeydifferentiatorsinthecrowdedconsumermarket.Successreliesonup-to-the-minute,meaningfulconsumerinsightstoinformaction.

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Customerprofilingthatreliesondemographicsaloneisnowoutdated.Psychographicprofilingrevealspersonality,interests,habitsandopinions,whilebehaviouraltargetingrespondstocustomers’onlineactions.Understandingthesecharacteristics,alongwiththepurposeoftravel,providesameaningfulbasisforsegmentation.

ii. Iterative learning at pace and scale

89%ofbusinessleadersbelievethatcustomerexperienceisalreadybecoming their main point of competition17.Trackingdigitalbehaviourovertimeandatscaleenablessounddecision-makingbasedonstatisticallysignificantuserdata.Thisallowsteamstoiterativelyimproveonexistingcustomerinsights.A/Btestingacceleratesthelearningandimprovementprocess.

We see customer experience, personalisation and our hotel offering, along with data, as unique or differentiating opportunities for this company. So we’re investing very aggressively in those specific areas. 18

Kurt EkertPresident and CEO, Carlson Wagonlit Travel

iii. Design and innovate at speed

Theproductinnovationprocessisagoodexampleofhowdigitalcapabilitiesextendintocultureandoperationalstrategy.Implementingagileorganisationalprocessesalongwithacompanycultureequippedforrapidinnovationcanhelpincumbentbusinesseskeeppacewithcompetitors.

Inpractice,anagileprocessmeansanincremental,iterativeapproachallowingforchangeandevolutionduringtheproject,ratherthanasingleheavyplanningstageatthestart.Formanyincumbentbusinessesthisisasignificantchangefromprocessesthatdemandsignoffondetailedplansbeforeworkcanbegin.

What truly distinguishes and gives a digital enterprise its com-petitive advantage is its culture, strategy and way of operating. 19

Digital Transformation of IndustriesWorld Economic Forum

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iv. Dynamic distribution management

Businessesneedtobeabletosegmentcostsandrevenuesbychannel,customergroupandmarketinordertoaccuratelyassessandmanageprofitcontribution.

Mosthotelscurrentlymeasurethebookingstheyreceiveandtherevenuefrombookings,butcan’taccuratelymeasurethecostelementsinbringingthatbookingintothehotel.Theystructurecostsbydepartments,ratherthanbychannel.Movingtoanattributionsysteminwhichrevenueandcostsareallocatedbychannelwillenablemoreprofitabledistributionmanagement,coordinatingpricingandavailabilitybasedondirectprofitcontribution.

It’s one thing to know in real time that a guest has certain preferences but the ability to actually act on that at the guest level is much more difficult. There’s a lot of great technology, but operationalizing is going to be the challenge. 20

Alex AltPast President, Sabre Hospitality Solutions

v. Revenue productivity

Advanceddatagatheringcoupledwithartificialintelligenceisalreadyadifferentiatorforpredictingandrespondingtodemand.Machinelearningandnaturallanguageprocessingenabledirectresponsestoconsumersinrealtime.Manycompanies,includingKayak21,arealreadyusingthistechnology.

Dynamicpricingandfareforecastingisnotnew,butmoreadvancedandprecisemeansofanalysingandrespondingtomarketchangesandconsumerbehaviourhavemadesignificantimprovements.WithtechniqueslikeExpectedMarginalSeatRevenue(EMSR)airfaresareoptimisedinrealtime,factoringinnotonlythegivenroutebutincludingrevenue-generatingopportunitiesacrosstheairlinenetwork.22

AirfarecheckerHoppertakesthereverseapproach,usingdatasciencetohelpcustomersbookthecheapestflightsusingpredictiveanalysis.Theapphasalreadygainedpopularity,raising$104minfundingandselling$1minflightsperday.23

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vi. Build and shape brand reputation

88%ofconsumerssaytheytrustonlinereviewsasmuchaspersonalrecommendations24.Brandreputationsaremadeandbrokenonline.Harnessingcustomersupportandmotivatingadvocacythroughpeerreviewsandsocialmediaactivityarenowcoretobrandbuilding.

Withthewealthofchoiceavailable,consumersareincreasinglymotivatedandabletosearchoutbetterdealsandbetterexperiences.Inthiscontextloyaltytakesonanewshape;itisnotjustthepriceoftheroomorflightthatmatters,buttheprocessandcustomerengagementinvolved.59%ofpeoplearelikelytorecommendabrandifitdeliversafrictionlessexperienceacross channels25and65%ofTripAdvisorusersaremorelikelytobookahotelthatrespondstotravellerreviews26.Successfullyorchestratingthislevelofengagementandfrictionlessexperienceacrosschannelswillcontinuetodifferentiatetheindustryleadersinthecomingyears.

TripAdvisor’s consumer reviews, whether they’re for hotels or restaurants or attractions, have been fundamental to changing and improving the consumer experience. 27

David Scowsill,Past President & CEO, World Travel & Tourism Council

vii. Business intelligence

Havingafullviewofessentialcommercialdataputsbusinessesinapositionofstrengthtomaketheswiftandaccuratedecisionsdemandedinthecurrentmarket.Makingtherightdataimmediatelyavailablecanempowerfrontlinestafftotaketimelyandrelevantaction.

Manybusinesseshavestrongfinancialreporting,butlackreadilyavailableinsightsintootherbusinessareas.Modernbusinessintelligenceshouldinclude:reportingonessentialKPIs,customerintelligence,relevantmarketchanges,andprocessimprovementinsightsalongsidecostsandrevenuesbychannel.Automatedalertsandupdatesreducetimespentinspreadsheetsandincreasetimeavailablefordecision-making.

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Hotel companies have to invest heavily in shifting from transactional-based data to event-based data, meaning that we understand what our customers do at every step in their journey and we collect that in order that we can learn about them, so that we can personalise in a relevant way. 28

Chris Silcock, EVP & CCO, Hilton

viii. Operational productivity

Existingforecastingprocessesareoftenslowandclunky,withoutoptionstoincreaseefficiencyusingautomation.

Withend-to-endautomation,pricingmodificationscanbemadeinminuteswithlow-levelautomateddecisionsoccurringatregularintervals.Tokeeppacewith“borndigital”enterprises,incumbentbusinessesmustevaluateend-to-endprocessesandfindwaystostreamlineandautomate.

You want to create a skill level in your hotel that becomes an advantage. If you ask your people to do something, make sure they can focus on the content and results, and not on the mechanics. For hotels, the mechanics underlying are not a competitive advantage. 29

Maarten PlesmanCRO, Revinate

4. Conclusion

Successfulcompetitioninourdigitallysaturatedagerequiresaholisticapproachtoclarifyandestablishbusinessvaluefortodays’consumers.Arelentlesscustomer-focusgoeshandinhandwithdigitalstrategy;evolvingproductsfromaplaceofdeepconsumerinsightandimplementingaprocessforiterativedevelopmentistheonlythingthatwillensurelastingproduct-marketcoherence.

Digitalcapabilitiesarenota“bolt-on”,butarequiredeepstrategychange.Byunderstandingthenatureoftoday’scompetition,andthechallengesonthehorizon,incumbentbusinessescanpreparethemselvesforlastingsuccess.

Thefinalpaperinthisserieswilladdressthebarrierstodigitalchangeforincumbentbusinessesintravelandhospitality.

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Endnotes

1. World Travel & Tourism Council. Travel & Tourism Global Economic Impact & Issues 2017

2. Digital transformation initiative: aviation, travel and tourism industry. WEF, January 2017

3. Who will Airbnb hurt more – Hotels or OTAs? …One year later. Morgan Stanley, 2016

4. Pace Dimensions, independent research, July 2017

5. The case for digital reinvention. McKinsey, February 2017





10. The rise of the platform enterprise: A global survey. The Centre for Global Enterprise, January 2016


12. Sabre dev studio developer.sabre.com

13. About Alphabet abc.xyz

14. Deloitte Divestiture Survey Report, 2013



17. Top 10 Strategic Predictions for 2015 and Beyond: Digital Business is Driving 'Big Change'.

Gartner, October 2014


19. World Economic Forum: Digital Transformation of Industries. January 2016


21. Kayak product news release, July 2017

22. Airline pricing secrets: How carriers come up with fares. CNN, June 2017

23. Hopper closes $82M series C. Hopper, December 2015

24. BrightLocal Consumer review survey 2014/Think with Google. July 2016

25. Rising Expectations in Consumer Experiences. Google/Greenberg. March 2017

26. TripAdvisor network effect and the benefits of total engagement. January 2017







PACE Dimensions is an innovative management consulting company with the experience and insight to transform your business in todays digital environment.

Our clients include many well-known names in the travel and hospitality sectors, as well as providers of technology,distribution, marketing and other commercial services.

The PACE team consists of seasoned practitioners withpersonal experience and proven success in executive roles at leading companies. We work alongside industry and domain experts to bring business strategy to successful reality.

We help businesses achieve their growth goals throughcorporate development strategy and advising seniormanagement. This approach covers fundraising, mergers, acquisitions, joint ventures, high capital start-ups, andoutsourcing and commercialisation opportunities.

Above all, our approach is focused, outcome-driven andpractical. We help companies grow faster and with less friction and ensure they stay agile in a changing world.

www.pacedimensions.com

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