The Sync: Alexei Miller & Greg Abbott Discuss the Now and Near Future of the Travel Industry

Greg Abbott, Global Head of Travel & Hospitality Practice at DataArt, talks about the state of the industry since the moment it became almost illegal to travel, the future of TravelTech, and healthcare features in post-pandemic travelling.
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By Greg Abbott
Head of Travel, Transportation and Hospitality
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By Alexei Miller
Managing Director at DataArt
The Sync: Alexei Miller & Greg Abbott Discuss the Now and Near Future of the Travel Industry

In this episode, Alexei Miller, DataArt Solutions, Inc., and Greg Abbott, SVP, Global Head of Travel & Hospitality Practice at DataArt, discuss the impact of global pandemic on the Travel industry, what recovery might look like, and how TravelTech & MedTech would jointly bring security of health back into the minds of travelers.

Full Script

Alexei Miller: Hi everybody, my name is Alexei Miller, and we are on today with Greg Abbott – Global Head of Travel and Hospitality Practice at DataArt. Hey Greg, how are you?

Greg Abbott: Good morning, Alexey, I'm well. How are you?

A.M.: I know the Travel and Hospitality industry is heavily hit with this crisis, so, first of all, thanks for finding the time to talk to us. I know you and the rest of the industry are putting out fires 24/7. So, we are going to ask you a few questions about the fires and how things come out on the other end of this. So to start with the obvious: we all understand that no one is traveling, and the travel industry broadly is suffering enormous losses. Can you put it down to numbers for us? What has the impact been so far in the industry, and more specifically in travel tech?

G.A.: Thanks, Alexei, for giving us the opportunity to chat a little bit about the industry. We love to talk these days because we try to find new adjectives about just how bad things have gotten. How quickly it has almost become illegal to travel. So let's start with the numbers, because it's fairly grim when passenger traffic is 95% down, hotel occupancy is about the same 95% down year over year, flight capacities have been substantially reduced. So while you might have had lots of options before to take flights if you did want to fly, the capacity is down 70% to 80%.

There are two large components of travel, business, and leisure. Leisure, of course, evaporated quickly, but business travel was a little bit more resilient because people still needed to finish up some of the trips they were doing, and companies didn't have their positions set very quickly. So business travel, as the dust has started to settle a little bit, we see 97 % down year over year and call center-based organizations that we are serving have had real difficulty in shifting to work from home. It's been a rough four to six weeks figuring out where the bottom is. The good news is I think we've reached the bottom. And now, conversations have started about what recovery looks like. And hopefully, some of your questions will start to allude to that, but now we've all kind of said ok it's decimated, now what?

A.M.: I saw a quote somewhere from a United Airlines CEO who said that the demand for flying right now is essentially zero. It's probably hard to argue that we have indeed hit the bottom and the only way from there is up. Well I'm just curious on a personal level, even though no one is flying today, are people still booking trips for next year, late fall, next winter? Does the industry know anything about that?

G.A.: Well, we are a resilient and hopeful bunch, and travel is something that draws people. It's kind of innate in us to want to see the world. So yeah people are dreaming, cruise lines are talking about 2021 bookings. Certainly, what you've seen is the industry as a whole has started to implement a lot more flexibility in travel planning as a response to this. So many airlines have come out and said, look if you're booking for the future we’ll wave changes, we will be much more flexible. And I think the response to that has started to get people imagining traveling again and that's a good thing, so yes, we are seeing an uptick in future bookings.

A.M.: Do you see activity in travel tech? Are people or companies still investing with the caveat that the present and perhaps future is uncertain, but is it generally a good time to refresh technology?

G.A.: It's a great question. And it's really time-sensitive. At the initial onset of the crisis, there was a lot of firefighting, everybody's call volumes were up significantly, and the fight was: how resilient can our systems be, how we can handle the cancellation volume. So one of the very first things that we started working on with some of our clients was on how to handle queuing of cancellations and how to automate some manual components of cancellations. So it was building under crisis and being flexible and quick and resilient in response to the situation.

As the dust has started to settle, those that are in a cash position to invest or were able to quickly convert to some liquidity, are seizing the opportunity. We have this expression: you can't change the engine in the plane while it's flying. Well, the planes aren't flying, and I'm not talking about the physical planes, but about the technology under the hood for a lot of the distribution and inventory systems that are out there. Those companies that are in a stronger cash position are already talking about how to leverage some of their legacy modernization projects and convert to what we call “cloudify projects” to build in resilient systems that can easily scale up and down when needed and can respond to situations like this better in the future.

A.M.: You've mentioned those in the cash position. I understand that having access to capital is a huge factor in determining who gets out of this in better shape. What about financing for early-stage travel tech companies, which was, in my understanding, a booming sector until recently. Are those conversations still happening and new financing deals still being discussed, or is everything on deep freeze?

G.A.: A good question. So we did see things go pause. Conversations have started, we recently held a webinar to continue to engage in the community both at the startup level, mid- and large-scale companies and each company has a different position depending on where they are at. Those companies that were in the middle of seed rounds a lot of times have paused them until things start to normalize, a lot of the private equity firms have paused, and they are talking about the fourth quarter or early 2021 for things to loosen up, but I think right now everybody is looking at how steep the recovery curve will be or how relatively flat the recovery curve will be.

A.M.: On the subject of recovery, I know there has been a bunch of interesting conversations internally about the travel industry being united in ways that were not realistic before with healthcare. Can you talk about what you see happening? What kind of healthcare feature is being discussed in relation to the future of travel?

G.A.: So, one of the advantages of working at DataArt is watching other verticals and other sectors respond to this. The industry itself has had a tremendous outpouring in this time of crisis of trying to adapt and help in the situation. So, Airlines' response to those on the front line and first responders, giving them free travel and hotels opening up for those on the front lines being able to have free places to stay, convention centers converting to Hospitals overnight. You've seen lots of that response, and that has drawn the travel community that was all dispersed in their own growth trajectories, really drawn us together. Everyone is in this together, and I think maybe that is beyond the travel industry globally.

But one of the things that started to percolate is how do we get back to a sense of normalcy with the indication, that it's going to take 18 months or more for a vaccine, and everybody saying that would be the only event that would bring travel back in a strong way. Many thought leaders start gathering around the concept of MedTech and looking at gates and ports in a new way. And I'll talk about this using 9/11 as an analogy, but it was really about how to bring safety and security back into the psychology of travelers. And TSA was a response to that. And now it's a different type of battle, a different type of enemy and it's that psychology of having the security of health as you travel.

You see some responses like Emirates Airlines that are always on the front line of adoption looking at medical testing before flights. And we have been chatting with a number of the providers who provide fast lane kiosk technology in the industry to think creatively about how it might tie in with healthcare systems. To look at preventative measures that would suppress the spread or allow for a quick response when there is an indication of an event in a particular location and how they might respond. I guess the short answer to my long monologue is that I believe without a doubt that there will be a tie-in between MedTech and TravelTech in the coming future.

A.M.: A lot to discover, a lot to do there and to finish, a personal question: when we can travel where will you go first?

G.A.: Well, my family has hopes for its late summer vacation to the South Pacific, we will see if that happens.

A.M.: You have not canceled yet?

G.A.: Haven not canceled yet, keeping the fingers crossed, we'll see if that happens. I hope it does.

A.M.: If a person running a large Travel and Hospitality Technology Practice is not canceling his late summer / early fall vacation in the South Pacific, there is certainly hope in the industry. Thanks for chatting!

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