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Why Asia needs to lead the next era of travel technology innovation

Nurdianah Md Nur | June 22, 2016
We hear from Hervé Couturier of Amadeus IT Group on how the travel industry is evolving, what it takes for travel agencies to remain competitive and how open source is enabling innovation for the industry.

Why is Asia the only region that continues to see influx of R&D investments?
Aside from the U.S., Asia Pacific continues to see an influx of R&D investments. Asia Pacific as a whole is an exciting hotspot for investment and innovation. This is driven by APAC's continued growth as the leading powerhouse across economy, growth and technology. From having one of the highest mobile adoptions globally, to being the region with the highest potential in terms of spending power, companies are keen to invest in R&D in APAC to be closer to where the action is. They benefit by having a better perspective of their opportunities and challenges here, which allows them to innovate and create solutions that are aligned to local needs.

At the same time, the nature of R&D in the region has also changed. While APAC's R&D investments in the past were seen as a way to cut costs, investments are now pouring in largely because R&D centres have moved up the value chain of businesses, according to the Economist Intelligence Unit.

Amadeus is committed to R&D globally - having invested 16.6 percent of our total revenue since 2004 and employing more than 5,000 people in R&D across 23 centres worldwide, including Sydney and Bangalore. By having R&D centres in Asia Pacific it allows us to be closer to our customers and stay on the pulse of new trends and needs.

As travel companies face increasing pressure to innovate in an increasingly competitive landscape, how do they stand out and do better?
Travellers today are more distinctive, connected, and well-informed. As travellers' expectations and behaviours change with the times, the travel industry also needs to adapt to industry trends and respond to them faster. 

Travel companies will need to go beyond being simply an intermediary and gain a deep knowledge of emotional drivers to become trusted experts. To differentiate from competitors, they also need to find the right blend of technology and personal, consultative selling to build enduring relationships with travellers. More than ever, it's about taking a traveller-centric approach, which means personalisation and instantaneity. Their ability to link their product, merchandising, marketing and digital strategies to a behavioural understanding of travellers will be a key differentiator. Travel players that are able to appreciate the behavioural motivations of travellers and effectively merchandise against those motivations, at each discreet stage of the traveller journey, will be in a much stronger position.

How is Asia poised to lead the next era of travel technology innovation?
We are seeing a couple of factors that contribute to APAC leading the next era of travel technology innovation. Firstly, APAC is now the new centre of travel. Apart from its established reputation as a popular destination, it is fast becoming a leading source of outbound travel with the largest outbound markets in 2020 being China, followed by South Korea and Japan, according to Mastercard's 'The Future of Outbound Travel in Asia Pacific 2014' report. We are also seeing increasingly sophisticated Asian travellers.

From a spending power perspective, the millennials in this region account for 35 percent of the total travel expenditure in the region, spending some US$280 billion a year on international travel. Imagine the potential as this is even before they have reached the peak of their earning years.

Secondly, APAC is also leading from a technology standpoint. eMarketer predicts that by 2019, at least 75 percent of mobile subscribers in 13 of 15 APAC markets will own a smartphone. This is significant as it indicates that travellers are more connected than before.

APAC is already the top destination for corporate R&D spend, accounting for 35 percent of total in-region R&D last year, including both domestic and imported R&D. This places the region ahead of North America and Europe, according to Strategy&PwC. APAC's readiness to adopt new technologies also makes it an ideal testbed for innovation and R&D. Companies will invest in travel technology innovation here to be closer to the action and where the appetite lies too.

 

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