Francesca Benati, Amadeus executive vice-president for online Western Europe, Middle East and Africa, explained to Ian Taylor

Growth in online travel is slowing in Europe, posing a challenge for major online travel agents (OTAs). But Francesca Benati, Amadeus executive vice-president online EMEA and managing director Italy, believes there are also opportunities.

Benati says: “Europe is a mature market, especially in the UK, in Germany, in Scandinavia. Growth in online travel has plateaued, which calls for more targeting of market share. At 5%-6% a year, online growth is still outpacing growth elsewhere, but it is slowing.

“The boundaries between digital search and online and offline agencies are increasingly blurred. The challenges now are quite different even to three or four years ago.”

She says. “The first challenge is to gain and retain customer loyalty. There are several strands to loyalty – relevance, brand, customer experience and technology. The experience needs to be seamless and instantaneous because patience is not a feature pf today’s traveller.

“The second challenge is the fight for relevance. It’s difficult to find a real element of differentiation between the major OTAs.

“The third challenge is to gain brand equity. Expedia was the first OTA in Europe to understand the need to create brand preference to develop customer loyalty. Now all in the European market understand and try to leverage this through advertising.”

Benati adds: “There is content fragmentation, especially among airlines. It is difficult because the market is fast changing, complex and there are new players.”

And there is the need to maximise revenue – “to monetise different parts of the user experience to cover the costs of acquisition [because] OTAs can’t rely on the flows of money of the past. They are in a battle on price because of metasearch and margins are diminishing.”

At the same time, she says: “When you look at what technology can bring, there are opportunities to deliver a great experience to the customer.

“Artificial intelligence (AI) and the use of data can help deliver a seamless experience. Data can be used in a much more relevant way than in the past, and using predictive analytics, deep learning and natural language processing can deliver relevant choices.

“There is an opportunity to use technology to optimise and better monetise the offer to the customer with all the opportunities to up-sell and to increase yield through merchandising.

“Offers will be much more relevant than today, using data to offer only what is relevant, based not only on the individual but on the profile of the type of traveller.

“In the future, we will get to a deep level of merchandising, of cross-selling and up-selling. The idea will be that you build up travel, you buy a flight and add a [choice of] seat and fast-track-airport access or transport from your home.

“The closer it gets to the date of a trip the more inclined customers are to receive different messages.” Benati suggests: “This works well with travel insurance and transfers. It also has less impact on your wallet than if you put everything in a single transaction.”

She adds: “A lot of elements enabled by technology were not there even three years ago. We can already provide an initial ‘traveller-type’ profile – for example, a traveller who books to travel on a Tuesday for one or two nights is likely to be a business traveller who will want a hotel with free Wi-Fi – and there is a level of personalisation already.

“[In future] you will see different levels of offer [when] you perform a search, even if you are a new customer. Combine that with the database and a certain degree of personalisation [and] the easier and quicker you will find what you want.”

Benati says: “At present, pre-paid baggage and advance seat selection are the only real ancillary options being offered by OTAs. We are only at the beginning [of this]. Amadeus’ Live Travel Space will help us service content and personalisation – and deliver content that is relevant through any source.”

This future will not arrive everywhere simultaneously. Benati says: “Western Europe is one of the most mature markets, [but] it is wrong to consider Europe as one market, because every country is different, and there are big differences.

“Some are due to infrastructure weaknesses, for example in Spain and Italy, some due to cultural differences.

“The online market in Spain slowed a lot because of the recession of 2010-11. Italy is still very slow [as an online market]. There are still 9,000 travel agencies in Italy and a lack of a strong online agency. Many people still don’t have credit cards, especially south of Rome. Also, it is a very fragmented market. Italy has 40,000 hotel properties, 97% still family owned.

“It is difficult to build anything relevant online in Italy. Just the big four OTAs – Booking.com, Expedia, Lastminute, eDreams – account for 95% of the OTA market in Italy, while OTAs account for about 33% of the online market across Europe,” Benati says, quoting Phocuswright figures. In most markets in Europe other than Italy, she adds: “There is still a big local [OTA] player.”

Mobile has opened a new chapter, she says, suggesting mobile now accounts for 25% of online travel transactions across Europe – chiefly rail, air and accommodation.

The UK leads in online travel transactions, partly because it is the only country with multiple rail operators. Benati says: “The UK is special when it comes to rail. In Spain, France, Italy there is only one big rail company which has had no reason to push online until recently. But in the UK, the rail market is more advanced in terms of technology.”

She points out: “The top-five major OTAs in Europe include [UK train ticket retailer] Trainline, after Booking.com, Expedia, eDreams and Lastminute.”

Benati adds: “Commodity products are easily booked by mobile. We expect growth in mobile travel bookings of 12%-14% a year in Europe over the next four years.”

But she notes: “There is still an important split between the device used in booking phases and the device used in research phases. Consumers are still booking travel 60% via desktop. Mobile is used when making bookings in a destination.

“Beyond booking, mobile use is expanding quickly – for everything from research to sharing. Mobile has a lot of traction for everything related to the travel experience.”

This is an extract from the Travel Weekly Europe Report 2018.

The report, ‘Travel, e-commerce, distribution and insurance in Europe’s major markets’ was launched at the Travolution Summit on September 26