Bonotel CEO Talks of the Perils of Brexit, Dynamic Pricing and Commoditization: “The worst is yet to come,” Faisal Sublaban, president and CEO of Bonotel Exclusive Travel, half-jokingly told delegates to Connect Travel’s RTO Summit Florida last week in Orlando as he concluded his keynote remarks on the state of the travel and tourism industry. Chuckles of relief rippled across the room, as those in attendance had just heard Sublaban, in the style of a peripatetic tent preacher as he walked back and forth for 55 minutes, stopping to make points of emphasis and addressing key challenges—especially those of technology-driven commodification—while holding the attention of listeners for every moment of his presentation.
Sublaban said quite a bit—we estimated that, using the average radio announcer pace of 160 words a minute and taking into account his more rapid pace (about 180 words a minute)—just under 10,000 words. What INBOUND has done is to present the key points of his remarks epigrammatically, in his own words, occasionally edited for clarity. And mostly in the order in which he made them.
The Impact of Brexit and Other Events in Europe:
—”The state of the industry is … there are headwinds coming like never before. Some of them we can control. The largest headwind coming is Brexit. Whatever the outcome ends up being, there will be a significant impact on those of us expecting UK travelers.”
—Because of the tension over people wondering if Brexit will come soon or not, “the uncertainty is an indication of what’s going on in the market. Nobody knows the British market because (the British) don’t know if they should travel or not.”
—The UK market is going to be significantly impacted with Brexit or without it. You need to acknowledge that, lift your head out of the sand and understand that, regardless of ‘everything is going to happened as it always did,’ it’ not going to.”
—“There’s a lot of shock and awe that’s gone down with Thomas Cook (the 178-year-old UK tour operator that shut down on Sept. 23). There’s a lot of denial when it comes to the likes of AMOMA.” (AMOMA was a Geneva-based meta-search portal described by HospitalityNet as “infamously known for undercutting hotel rates and/or distributing net wholesale prices,” which went bankrupt in mid-September.)
—“AMOMA essentially took the money up front, from everybody, put it in their pocket and used it to fund their forward operations—Why is that a problem? Because, once the music stops, as it eventually did, the impact was significant.”
—After Sublaban asked for a show of hands of those in attendance who are following the Brexit issue, he noted that “80 percent have said that they haven’t followed it. Yet, it’s going to have a massive impact on global tourism. 80 percent in the room is essentially ignoring what’s happening with Brexit. You’d better be catching up on Brexit, At the end of the day, travelers either don’t have money to travel or, if they are traveling to the U.S. or North America, they are doing so in a different manner.”
—Instead of booking an 18-day vacation, they might shorten it to 13 days or 13 days or 9 days or seven.
—Among British travelers, “Nobody knows whether they should travel, whether they should be planning for their future vacation or not, whether (those in the industry) are going to have a job or not have a job, whether they’re going to be forced to leave, in a short period of time, the UK market or not—all these things are indicative of the market today.”
Technology s Commoditizing Distribution:
—“Now, we get dynamic rates. We used to have static rates, rates that were tied to certain periods—rates that were fixed. Now, the reality is that we’re dealing with revenue managers. The revenue manager probably has more power than the general manager.”
—“The reality is that technology is enabling distribution to happen in a faster and more efficient way than ever before; revenue managers are not focused on more than 90 days out.”
—“When you look at what is happening, technology is the leading indicator in our industry as to what’s to come and the path forward. You’re going to have a lot of headaches.”
—“Even if the way you receive rates is different, it doesn’t change because revenue managers are not focused outside of major events or conferences; they are not focused outside of 90 days.”
—“Commoditization is happening because technology is making it happen.”
—“We can ‘pretend’ that we’re going to have dynamic rates … but the reality is that technology will commoditize the way that you distribute rates and availability.”
—“The way that people research and book is going to change. Technology is going to commoditize the very picture of what we’re doing today. We can look at connectivity, technology and try to deny the fact that it’s very pervasive and taking over the world. “
—“It’s a scam to some, but I raise my hand and say ‘Hell yeah!’“
The Way It Used to be, and the Shift to Last-Minute, and Other New Verities:
—In Europe, Bonotel “has had a 147-day booking window. Now, the largest companies are actually booking within 10 days. People are making buying decisions based on the ability to move when the want to move.”
—Travel and destination information “is being served in your face using algorithms.” (He suggests that it has become a “hash-tag” world.) If you’re not-top-of-mind, you’re dead in the water.”
—(Holding up his cell phone) “The cell phone is the remote control of your life…”
—Today, “you may not buy 180 days out, but you’re thinking about it.”
—Does the traveler visit 30 sites on the way to making a booking decision? “No, but they talk with 30 friends who they follow (on a social media site).”
—We’re enabling the last-minute traveler. People are traveling last-minute because hotels and airlines are dropping their last-minute rates—rewarding the last-minute travelers.”
—“So, if you’re not top-of-mind when the consumer wants to make a buying decision, you’re dead in the water.”
But What do You do about Creeping Commoditization?
—“If you think for a second that an owner of a property or a tour operator or travel venue is not going to enable technology to provide efficiency or scalability, you’re probably going to be the person in the room who’s going to be let go—you avoid that by providing value.”
—But, “You cannot allow technology to commoditize your product … There’s always going to be the human touch. There’s always going to be a relationship. However, the form which that relationship is changing, and you have to change and adjust it.”
—“If you’re providing value, irrespective of whatever industry you’re in, you will never be commoditized, because you are relevant to a hotel owner, you are relevant to a hotel supplier, you are relevant to your distribution partners, you are relevant to the end consumer.”