Presentation on Travel Agent Roadmap by

Ms Karen Ann Leong Deputy Director, Tour & Industry Development, STB

Mr Ang Eu Khoon

Chairman, Information Technology Committee, NATAS

Ms Fiona Lim Chairman, Manpower & Training Committee, NATAS

Travel Agent Roadmap

Becoming Designers of Travel Experience

Let’s talk about how travel has transformed.

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THE CONSUMER JOURNEY IS INCREASINGLY DIGITAL

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In the past, the consumer path to purchase was linear

RESEARCH

PURCHASE

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Source: Deloitte, Travel Consumer 2015: Engaging the Empowered Holidaymaker

The digital revolution has changed the way consumers shop for vacations

Consumers are empowered by the ability to browse and compare travel products, and the power to share experiences and influence others

7 Source: Deloitte, Travel Consumer 2015: Engaging the Empowered Holidaymaker / Statista, Digital travel sales worldwide from 2014 to 2019 / Forbes, “Are OTAs Really Killing Brick And Mortar Travel Agencies?” 2015

Travel has changed from a seller’s to a buyer’s market

59% of holidaymakers turn to review websites and online forums Only 12% visit a travel agent shop

Digital travel sales worldwide are expected to grow at 10% from 2014 to 2019

Need full reference

In Western Europe Number of trips

booked with a travel agent declined from

one-third to one-fifth from 2008 to 2012

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CONSUMERS INCREASINGLY DEMAND EXPERIENTIAL TRAVEL

9 Source: Peak + Skift, The Rise of Experiential Travel, 2014

Mainstream is no longer enough.

“Globalisation and technology have led to the homogenisation of cities, which has resulted in travelers craving locally made and authentic experiences.” - Jamie Wong, Founder/CEO of Vayable

10 Source: Peak + Skift, The Rise of Experiential Travel, 2014

Experiential travel - the idea of more immersive, local, adventurous and/or active travel.

Across all age groups, from Millennials to Gen X to Babyboomers, 34% of American Express travel counsellors (agents) share that their customers are “specifically looking to immerse themselves in the destinations and to travel like a local.”

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CONSUMERS EXPECT PERSONALISATION

12 Source: Tnooz, “The why, what and when of personalisation and ancillaries in travel”, 2016 / Amadeus + Skift, “5 Reasons Why You Can’t Ignore Personalization in Travel”, 2014

Consumers expect to be

treated as individuals

69% of UK consumers think it is important to receive travel options catered to their personal travel history and preferences

Four out of 10 travellers are willing to share data in the interest of personalisation

13 Source: Adobe, “The Personalisation Payoff: The ROI of Getting Personal”, 2014

Personalisation helps shift the

customer’s focus from purely price to real

value

Nearly nine in ten consumers say that personalisation has some impact on their purchasing decisions.

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How has travel transformed?

1. The Consumer Journey Is Increasingly Digital

2. Consumers Increasingly Demand Experiential Travel 3. Consumers Expect Personalisation

How are Singapore’s travel agents coping with all these?

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What we have heard from you

Source: STB Manpower Study of Travel Agent Industry, 2015 / STB Technology Audit of the Travel Agent Industry, 2015

Business Challenges • Competition from OTAs • Suppliers going direct • Consumers expecting more

Weaker economic outlook will see slower traffic growth to and from Singapore. Expectations for future inbound and outbound growth capped at 4%. The number of inbound visitors to Singapore on free and easy or packaged tours grew less than 2% in 2014. Disintermediation is also affecting travel agents as more consumers and suppliers choose to bypass them.

Manpower • Difficulty hiring • Poor perception of sector • High turn-over • Poorly trained staff

Decrease in manpower supply nationwide will mean fewer job seekers. Growth is capped at 2% till 2020. There is job mismatch as industry provides fewer PME jobs which are sought after by Singaporeans. The travel agent industry reported fewer than 40% PME jobs in 2014.

Technology • Lack knowledge • Lack financial resources • Lack in-house IT team • Lack support from staff

Low technology adoption will affect productivity of travel agents and inhibit their ability to meet the needs of today’s consumers. Only ¼ of travel agents actively plan for technology in their business.

Is there still hope?

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Yes, by putting the consumer at the

centre of our business

Here are some opportunities to consider

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Travel Agents may seize such opportunities and more,

There are areas where travel agents continue to provide value to consumers

and commit to become Designers of Travel Experience.

Optimising the customer’s time Holiday-makers may spend up to 30 hours researching online before booking a trip. Time-sensitive corporate travellers, families or those on luxury trips with little time for research

Giving exclusive access Offering special experiences that consumers cannot easily get on their own Travellers looking for unique experiences which are not widely available

Providing expert advice and care Special itineraries, visas and aid in contingencies Travellers on speciality trips such as mountain-climbing, or those travelling with young children and seniors

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Travel agents can be

Designers of Travel Experience Experts that consumers turn to in the curation of their travel

A workforce that is professional, creative and always up-to-date

A high-value economic contributor and jobs creator

A Roadmap paved through studies and industry engagement

STB’S ROLE

Support Industry Efforts

Facilitate Partnerships

Catalyse First-Movers

• Travel Agents Manpower Study

• Technology Audit

• Engagement with industry leaders

• Deep-dives with NATAS

How we can help

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Travel Agent Roadmap

Designers of Travel Experience

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Annual Industry Forum

Study Trips and Case Studies

NATAS Business Transformation

Committee

Business Transformation

Playbook Share ideas and engage C-suite leaders in

conversation

BUSINESS TRANSFORMATION

1. Drive Thought-Leadership Sharing 2. Support Business and Job Redesign

Showcase relevant learning experiences

for the industry

Focus on business remodelling

opportunities for the industry

Provide step-by-step guide for change

management

Assistance schemes

Business Improvement Fund

(BIF) from STB

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BUSINESS TRANSFORMATION

Process of Business and Job Redesign

(1) IDEATION AND PLANNING Guidance from ‘playbook’ by consultant – step-by-step guide for travel agents on how to plan the remodelling process

Areas to remodel

Source: Singapore Manufacturing Federation, Business Model Innovation Centre

Lifestyle/Lux

(2) IMPLEMENTATION Funding support by Business Improvement Fund

Examples of remodelling

Examples of travel agents overseas

Carving out a specialty and becoming experts in the field

Using technology and concept stores to inspire travel

Departure Lounge, US • Combines coffee house, wine bar,

event space and travel agency with visual technology and destination-focused foods and beverages

• Over 60 percent of travel business driven by walk-ins who visited to enjoy the F&B

DIgitalisation

Specialisation

MoonRings, US • Positioned as travel specialist on destination weddings • Charges separate fee for planning and

booking services

TECHNOLOGY Mr Ang Eu Khoon

Chairman, Information Technology Committee, NATAS

Technology can build better travel agent businesses

New products

As many as 18% indicate interest

in visiting a travel agent with virtual reality facilities, rising to 27% for those aged 16-24.2

New customers

Companies with omni-channel customer experience management programs gain

6% year over year in average profit

margin per customer. 3

Happier customers,

higher returns

Source: IBM, “Enterprise Resource Planning Systems drive cost reduction and efficiency in Finance and accounting operations”, 2013. / 119% savings is in finance function cost as a % of selling, general & administrative costs / 2Mintel, Travel Agents - UK - December 2015, Interest in Technology / 3Phocuswright, Travel Innovation and Technology Trends, 2015

TECHNOLOGY

Cheaper, better, faster with integrated systems and automation to manage cost Companies with enterprise resource

systems can save 19% more than

companies without.1

Sales Marketing

Product / Suppliers Operations

Accounting Human Resources

Customer

FRONT OFFICE MID OFFICE BACK OFFICE

• Use of accounting and payroll systems are relatively higher (67% and 40%)

• But only 7% use an

enterprise resource planning system

• Less than 30%

have a Customer Relationship Management System

• Only 2% have

customer-facing mobile apps

• Only 20% have a

Content Management System

• Only 15% have an

Inventory Management System

Technology adoption among Singapore’s travel agents has been low

Source: STB Technology Audit of Travel Agent Industry, 2015.

TECHNOLOGY

Most spend less than $50,000 over three years on technology

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For customers who need expert advice and special arrangements…

...how do you equip your team and processes?

TECHNOLOGY

<<Click on image to be directed to video hosted on YouTube>>

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For customers who want that once-in-a-lifetime experience…

...how do you build that deep expertise?

TECHNOLOGY

<<Click on image to be directed to video hosted on YouTube>>

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For customers who are just looking for affordable economical travel…

... how do you do things more productively?

TECHNOLOGY

<<Click on image to be directed to video hosted on YouTube>>

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TECHNOLOGY

e.g. CRM, eCommerce

e.g. front-to-back integration, ops mgmt

e.g. data analytics, visitor experience

1. Encourage Technology Adoption

2. Fund Technology Development

3. Support Innovative Prototypes

Technology Showcase and Guidebook

Showcase relevant technology solutions

for travel agents

Software-as-a-Service Solutions

Aggregate industry demand for shared

service solutions

Matching Services Leverage available services

to help travel agents customise technology solutions

Technology Talks and Experiences

Provide opportunities such as study trips and fireside chats for

C-suite leaders to learn about emerging technologies

for test-bedding Assistance schemes

Business Improvement Fund from STB

MANPOWER Ms Fiona Lim,

Chairman, Manpower & Training Committee, NATAS

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MANPOWER

Travel agents are challenged by manpower needs

% HEADCOUNT SHORTAGE1

What we see in 2020: ~12% manpower shortage in non-management roles which make up more than 50% of TA jobs

Up to 2020: travel agents workforce projected to grow at 2-3%1 while national workforce growth is capped at 1-2%

Travel agents’ manpower needs National supply VERSUS

Source: STB Technology Audit of Travel Agent Industry, 2015. 1Shortage forecasted for 2020 based on optimistic scenario

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MANPOWER

Less than 40% of TA jobs are PME jobs while 2/3 of Singaporeans expect to hold PMET jobs by 2030

Travel agents’ supply of jobs

“… many employees don’t stay long, or

are easily poached”

“it is hard to find staff with the right

skill sets…”

From students: “No point considering a sunset industry like

travel agent…”

National aspirations VERSUS

Travel agents are challenged by manpower needs

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MANPOWER

Source: Malcolm G Patterson et al, Impact of People Management Practices on Business Performance, 2003 / Aon Hewitt, “Measuring the Impact of Employee Selection Systems”, 2012

There are significant upsides to managing manpower well

Good HR practices can positively impact profitability and productivity

Good training of staff can substantially enhance returns

19% 18%

Highly qualified staff produce $24 more sales than marginally

qualified staff per hour

An example from UK’s manufacturing industry

An example from the retail industry: <- Need country

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MANPOWER

Talent Recruitment Strategy

Engage educators and students through

enhanced internships and industry profiling

Curriculum and ‘Work & Learn’

Programme

Offer suite of 29 WSQ courses and flexible working arrangements

HR Excellence

Enhance HR practices through

government resources and

NATAS-led seminars

1. Drive Talent Recruitment

2. Encourage Up-Skilling 3. Enhance Talent Management

Onboarding Materials

Develop plug-and-play materials for

the industry to induct new rank-

and-file hires

Enhanced Accreditation for

Travel Professionals

Recognise skills and professionalism

through personal accreditation

Assistance Schemes Training Industry Professionals in Tourism grant (TIP-iT) by STB for training and HR consultancy

How Can I Embark on the Roadmap? Programmes

Initiate Business Improvement Projects Leverage STB Business Improvement Fund (BIF) for: • Business transformation projects • Technology projects • HR improvement projects

Enroll Your Staff for Up-Skilling • ‘Work & Learn’ Programme • WSQ Tour & Travel Services Courses

Participate in Recruitment Initiatives • Talent recruitment talks and roadshows

Register Your Interest to Attend Events with STB or NATAS

• Technology Showcases • HR Seminars • Study trips

Give Feedback on Upcoming Roadmap Initiatives

• Software-as-a-Service Solutions • Onboarding Materials • Business Transformation ‘Playbook’ • Enhanced Accreditation for Travel Professionals

Begin your transformation today.

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