INNOVATION REPORT 2015
TECH INVESTMENT AND THE MIDDLEMAN
Agents are reliant on computer services but spend consistently more per employee than tour operators
T
here are more than double the number of UK travel agencies as tour operators, but agents employ four times as many staff and spend three times more on technology. Figures for 2014 show there were
3,505 travel agencies and 1,730 operators, employing 61,079 and 19,902 people respectively. In 2015 agency
employment is predicted to return to its long-term decline, falling to
60,824 after an increase in 2014, while operators are expected to grow staff numbers to 20,161. Agency enterprise numbers are expected to remain flat at 3,505 in 2015; operator numbers are forecast to rise to 1,760. A pattern of declining employment
and increasing technology spend and turnover since 2010 indicates rising productivity in the agency sector. Agents spent £335 million on
technology in 2014 compared with operators’ £116 million and both sectors are predicted to grow their IT
Q&A with Matt Somers, managing director, Qwerty Travel
Q What has been the impact on investment in technology during the recession? A There is no question that most OTAs have tightened the purse-strings, but the much bigger problem is getting a return on spend. Q What technology areas are the key focus for online travel agents? A We are all chasing the perfect online booking engine with fantastic content, a tool which is so smooth, fast and consumer-friendly that we are confident to spend vast amounts on marketing to drive traffic into it. Q To what extent is technology a key differentiator? A Some OTAs have made huge inroads selling online, such as Travel Republic and Sunshine Holidays. To what extent
this is down to their technology or clever marketing spend, only they know. The vast majority of us are poor cousins. Q To what extent is the OTA sector hampered by legacy technologies? A There are lots of old legacy systems out there; these no doubt hamper the ability to modernise our platforms. Q Has the emergence of cloud computing and software as a service seen a shift away from hardware? A Yes, but I’m only just starting to see this. Q In what areas are OTAs looking to exploit technology to automate functions? A In order to attract bookings online you need extremely low margins. For the model to work you must have scale and automation; this has to have an impact on staffing numbers.
Q Is there a greater focus on back‑office operational technology or customer-facing retailing websites and marketing? A Everyone is far more focused on the front end. There’s no point in having a great back office if you don’t have anything to put into it. Q How would you rate the overall level of innovation in the OTA sector? A This has probably been the single biggest problem over the last few years. It’s very easy to invest profits without return. Google owns the marketing opportunity and only a few can afford to play. Our sector is going through a transition and will look very different in a few years. Hopefully the winners will be true innovators rather than those with the deepest pockets.
budgets by over 5% in 2015. In both sectors larger firms accounted for nearly half of all technology spend in 2014 but the smallest agents (up to nine employees) spent more per employee than firms with 10-49 and 50-99 staff. Technology spend per employee did
not differ markedly between the two sectors in 2014 but, although their budgets are less, operators spent more per employee – £5,849 versus £5,479. However, small to medium-sized
travel agencies’ spend per employee on technology did outstrip that of their
26 — FEBRUARY 2015 —
TRAVOLUTION.CO.UK
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