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Comment: Differentiation is key for travel firms

Businesses are looking to stand out from their competitors by building brand recognition and making the most of emerging technology, says Chris Lee, head of travel at Barclays

Obtaining investment for growth is a key focus for many companies. We’re certainly seeing investment in the travel sector but it continues to be a somewhat one-dimensional marketplace.

Travel investors

While a number of travel firms have been bought or sold, private equity (PE) and venture capital (VC) firms have dominated the marketplace – with the obvious exception of dnata.

In fact, ownership of a number of companies has changed hands more than once between different PE/VC firms. While these purchases fulfil the objective of injecting cash into a business, allowing it to grow and develop new products and services, trade buyers that could bring sector-specific expertise and synergies appear to be in short supply.

A number of travel customers tell me they are looking for acquisitions, but very few trade‑sale deals have completed in the past year or so.

Online trends

On the theme of growth and development, many in the industry think the likes of Skyscanner, Google and TripAdvisor will start offering their own holidays in the not too distant future.

Ryanair recently hinted that it could consolidate the extras it offers, such as car hire and hotels, into an overarching holiday brand. And such a step could certainly be logical for some companies.

Ultimately, much of this comes down to differentiation. Businesses are constantly looking at ways to stand out from their competitors, and travel is the archetypal, competitive marketplace where standing out is crucial. Think of Virgin Atlantic’s adverts or recall the British Airways jet slowly making its way through the streets of London in TV ads in the run-up to the London Olympics.

Indeed, it appears a number of travel firms may now be spending more on ‘traditional’ forms of advertising – TV and print – than in the recent past.

In some cases there appears to be a subtle move away from pay-per-click advertising, which many think is expensive.

By building their own brand recognition, companies increase the chance of consumers visiting their website directly or searching for their name specifically.

Technology developments

Another way many companies look to differentiate is through technology. Travel companies have been quick to embrace online – flight check-in is one example – and broadening the range of options customers have to engage with companies is a focus too.

Mobile technology is a fast-developing area, especially in the payments space. Many travel companies want to position themselves at the forefront of developments. For example, Tui’s Specialist Holidays Group offers customers the option to pay for holidays via Barclays’ Pingit – a virtually immediate mobile-phone payment service that just requires both parties to have a UK bank account and phone number.

This kind of option can help enhance the customer’s experience and drive cost-efficiencies for the company.

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