The travel forecast is uncertain, other than the presence of the cloud – PhocusWire

As things stand, the travel industry is facing intense short-, medium- and long-term uncertainty.

No-one really knows what the future holds, other than the fact that handling uncertainty is now a priority for suppliers, sellers and technology partners.

At the height of the first phase of COVID-19, industry cheerleaders were talking about a timeframe for travel to return to normal. But as a second wave lurks in the shadows, those cheerleaders have been silenced. Its not about travel returning to normal, its about travel returning at all.

For our SME clients, uncertainty manifests itself across the entire operation. But weve identified that the most business-critical aspect of uncertainty for SMEs at least - relates to the cost of doing business. Fixed costs when there is no revenue, or even the realistic prospect of an uplift in revenue, is kryptonite for SMEs.

What SMEs need from their tech partners is for the costs of doing business to align with the volumes of business transacted. Cloud-hosted SaaS models were around before the first phase of COVID-19, and the benefits of the cloud over on-premise are even more compelling in the current uncertain climate.

A "pay as you go" approach serves two purposes travel companies can not only minimize current costs in the near-term but also scale up if and when travel comes back, still with costs in synch with volume.

"Pay as you grow" is an enterprise software phrase which could become familiar in travel as many SMEs demand commercial terms from their tech partners which reflect the uncertainty over future revenue streams.

Other pre-Covid-19 cloud benefits are also important. Cloud hosting supports easier and quicker implementation of new products, services and upgrades. This frees up of internal resources away from tech and IT, at a time when your staff should all be concentrating less on support and more on selling.

Wbe.travel has always been cloud based. We know how the cloud works, technically and commercially, and what it can bring to the table. We have developed a platform for the post-COVID age, WBE.start, which allows travel companies to operate in the current uncertain climate.

Travel companies can access inventory from big GDSs, bedbanks and consolidators via a single platform under a SaaS model, all integrable with mid and back office components and which can be installed from scratch and live within hours rather than weeks. This "core" can be added to as the business grows or finds a need for additional content.

However, despite our status as an early adopter and advocate, we accept that some travel tech companies are still reticent to move their operations to the cloud. Pre-COVID rationale - security, privacy and commercial sensitivities - are still in play.

But our take is that the risk/reward balance has changed. The risk to tech companies wedded to an on-premise model is that their clients are no longer willing to commit to monthly licence fees, installation costs, maintenance charges because of the uncertainty.

The risk of existing clients switching to a partner with a more flexible approach rather than renewing is real; the risk of the pipeline drying up and prospects disappearing is real, the loss of market share is real.

Across travel and mainstream media there has been a lot of column inches devoted to how travelers' buying patterns and behaviours have changed as a result of COVID-19 shorter booking windows, domestic before international, better health and safety information Our expertise is in travel tech rather than travel, but we see a connection here because the tech buying patterns of our target audience have changed too.

Our SME clients have traditionally been more sensitive to technology costs and have the benefitted from cloud-based partnerships. But we are also hearing that there is no appetite for big tech investments, even from the global blue-chip giants which are suffering in their own way, on a scale that is relevant to them and their competitors.

This creates a dilemma for a large technology company with an on-premise model - the budget to move operations to the cloud simply isn't there, however compelling the reasons.

We think that some big tech payers will actually double-down on their commitment to on-premise because that's how they've always operated.

When everything is uncertain, some bigger players might be thinking, "why risk losing the annual licensing deals and recurring revenues upon which the business has been built, in exchange for the variable income stream from an SaaS model?"

Our response is that the fixed tech cost model is no longer viable for many travel companies in the current climate because of the uncertainty about future booking trends.

Even travel sellers which had the scale pre-COVID to justify on-premise partners are likely to be looking at their cost base and wondering if their on-premise partners have any flexibility. Chances are the answer is no.

The commercial relationship between sellers, suppliers and tech partners cannot but change as a result of a seismic shift in how the world travels. Flexibility in terms of the cost of doing business is essential.

Cloud-based SaaS models are the best way to bring flexibility to the travel industry, and there are many options out there for businesses looking to take the leap.

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The travel forecast is uncertain, other than the presence of the cloud - PhocusWire

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