Strategic Insights Sessions: Transported to the Future - English

Strategic Insights Sessions: Transported to the Future - English

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Welcome everybody to our next Strategic Insight Session. I'm Peter Greenberg and the title of this session is, "Transported To The Future," whatever that means. But of course we know what some of it means.

Artificial intelligence, big data, space travel, driverless cars, technology as well as the applications of that technology, information about passenger and traveler behavior that applies to that technology. And of course, the age old question, at what point do we have a tipping point where technology may take precedence over the process itself or, to the other extent, to the extent that it creates it. So, let me welcome our panelists, Peter Smith, who is the Executive, excuse me, who is the Vice President, excuse me, of Global Franchising for Enterprise Holdings.

I will not say where Peter is today, but he's not in his headquarters location of St. Louis, he's actually in, I'm gonna say it, Cabo San Lucas. Welcome Peter. We've got Monika Wiederhold who has a great title, the EVP of Global Ecosystems Initiatives. It sounds like she's about to rule the world, from Amadeus. Welcome from Germany and in Washington, DC, Kelly Craighead, the CEO of the Cruise Lines International Association.

So welcome panelists. And let me start off by just talking about, we talk about the world of artificial intelligence. I'm hoping today that we'll embrace some real intelligence about how we approach that. And I'll give you an example, and this is something I'll share with Monika to start. So many people today, and this is nothing new.

This is pre-pandemic of course, an overwhelming number of people making their travel reservations online, doing everything electronically, communicating electronically, being alerted electronically. And in that process, putting in information that allows the travel providers to tailor make, or at least understand their preferences, their affinities, their interests, but I'll give you a story that happened to me. I was going from Los Angeles to New York, which I do all the time for CBS News. And I didn't know what day I was going to travel. So I was just researching online to see what the airfare was going to be from Los Angeles to New York on a Tuesday or a Wednesday. I didn't know which day I was going to go, and I came up with a fare of $428, but I couldn't book it yet, because I didn't know what day I was gonna go, until I talked to the editors and the producers in New York, about four hours later.

And so, four hours later, with an airfare of $428, I found out I was going to go on a Tuesday. And when I went back online, the fare was $488. I went, wow! I had done this at two o'clock in the morning. So how did the fare go up that much between two o'clock in the morning and six o'clock in the morning? When I called the airlines, I said, I'm working on a story here. What happened? Could you explain this to me? And they had a logical explanation.

They said, "Well, it's really supply and demand. It's a very popular route. The transcon route between Los Angeles and New York and a lot of people want to go.

And so, basically, as the seats become no longer available, the price scale goes up." I said, you know what? Logical - makes sense. But then that night I decided to put that to the test, and I went back online. This was in November, and I found a flight in March on a Wednesday at 11 o'clock in the morning from New York to Des Moines, Iowa, on a Wednesday in March.

And I got a fare of $228. I waited four hours and I went back and the fare was $278. And no one could make the argument to me that at that hour of the morning, there were 50,000 demented, crazed, passengers who needed to go from New York to Des Moines, Iowa, five months later on a Wednesday morning at 11 o'clock. So, I was now introduced to the world of big data.

And in that regard, I'm still getting emails to this day, telling me about all the great deals I can have in Des Moines. So I guess the question is in the world of artificial intelligence and big data, knowing what my preferences are, where do we go from there? From a positive point of view and from a negative point of view? Because information is power for me and it is power for the industry. But from a consumer point of view, where do we go? - That's an exciting story. And it nicely illustrates that technology can create very nice experiences, but also very bad experiences.

So, I would say as with any technology, although the usage and the analytics of data needs expertise and expertise that creates, actually a pleasant travel experience, a seamless and understandable travel experience that gets you a personalized, contextualized offer at the right moment in time. And it's not spamming you, with something or getting out of your understanding. So it's really how to apply and how to use data and how to make sure that, from traveler perspective, it is perceived as a value adding and the right offer at the right moment.

On that specific topic, we call it dynamic pricing actually in the airline context. So, the pricing is indeed super dynamic, and it's difficult to follow from just human behavior what's happening there. But it's also difficult to comment on a specific case, but I guess the main topic here is really from a travel provider perspective, be it a hotel, be it car rental company, be it booking, make sure that your customer and the customer as a traveler has a good experience and that you use the data with expertise for the benefit of the traveler.

- So I guess the idea is we all want to know more information about our customer because it allows you to serve their needs better, but in talking about dynamic pricing, in the pandemic and post pandemic world, the original playbooks have been thrown out, right? You can no longer project demand and set pricing because passenger behavior went completely off the shelf. - It's absolutely correct, that the traditional or historic forecasting models based on past data, you would predict the future basically, that is not longer the case because behavior has changed so much that historical patterns are not as useful as they used to be to predict the future. So actually that's a whole new, let's say, field emerging, how to predict based on real time information actually the traveler behavior. Very, very different for decades has been the methodology and the data used you know historical patterns, forecasting the future, shifting towards getting as much real time information around the traveler and using that to create a contextualized and personalized offer. - You mentioned that, in terms of prediction, of course, it's based on history that you can no longer depend on. In this situation, I'll give you an example...

My airfare from Dallas to La Guardia four weeks ago, and nobody watching this panel is going to guess this, on a nonstop flight on American Airlines was $38, because the airline felt from past predictions and patterns, that the way you you get out of a bad situation is to discount. By the way $38, it didn't generate any traffic. I could have gone bowling on that flight.

Now cut to now, a month later, that airfare is $320 and the plane is full. It is so counterintuitive in terms of pricing. And I'm assuming the same is true in the rental car business, Peter. - Well, welcome to the science of revenue management. As Monika says, we're in a new world because the bedrock of that ideology has to do with the previous data.

So we all have to work harder. We all have to communicate more closely. Revenue managers and our in-business fleet strategists and then operators on the ground, and we need much more real time data. I would suggest that your very, very inexpensive flight on American, was an aberration.

I think most brands try to protect the value of the brand. Even if the seat or the hotel room or the car does go unused. And, for sure, from a consumer perspective, it's possible to find inconsistencies that are unexplainable and probably frustrating. I would say that data in terms of revenue management and as Monika says, dynamic pricing has made at least our industry much stronger, our operators around the world much stronger. And when we get it right, we reinvest that strength back into the business to enhance the overall customer experience. - So the question I guess is how does technology and this is for Kelly as well.

How does technology and the advance in understanding your consumer, your traveler drive that pricing? And how quickly can you pivot? How does it help you pivot to adjust to something that you couldn't even predict in the past? - Well technology allows us to change rates on permutations of customer choice, literally million of times. So, for example, to the consumer, a car is a car and a city is a city. And to us, if you're going to book on a Tuesday and it's a midsize car that might produce a different result, than if you are going book on a Friday and it was an SUV for example, in ski season.

- I understand. And in the cruise industry, I mean pricing traditionally, and I'm talking about the traditional playbook, is, when you come out of a bad situation, and the cruise industry has come out of a bad situation for over two years, would be to discount. And yet I'm not seeing that.

How do technology and AI and big data help you come to that decision Kelly? - And that obviously Peter is a better conversation to have with the individual companies themself, but I'll tell you on the greater point I think that, to something Peter said earlier, which is not devaluing anything, I think you're not seeing a tremendous amount of price slashing because the ships are attracting consumers without the need to draw them in with lower prices. But for the pricing question, you should really ask Peter or Monika. I think they'll be better situated. - All right Monika.

- May I make an observation please Peter? - Sure. - It's an interesting time because you're asking how we can assist the customer and know them better through more information. And it's true on one hand that the customer wants that, but on the other hand, and Monika being in Europe would be closer to the epicenter of this than maybe others of us, at the same time there's a tension because of the interest in data security and privacy, which is only getting stronger. And also in a case where technology maybe has accelerated at a pace that's greater than law or operations.

And so you can have a customer who on one hand says, "Why don't you know this about me?" "Why do I need to fill this out yet again?" And then the next customer will say, "How do you know this about me?" "This is my personal information." So we're in a moment to me where there's a tension. - There's one thing about understanding your customer, and being able to communicate with them. There's another way to track your customer. In the world of big data and the world of artificial intelligence and in the world of just the technology in which we live. I can no longer say to you, Peter, "Oh, I wasn't in Cleveland, I was in Cincinnati."

And you could say, "Oh no, you weren't." You can actually know where your cars are at any given time. - We can know is a technological matter, but is a customer service matter and a privacy matter. We are not able to know and don't want know.

- But, now from technology point of view, let's move on to how you get to where you're going. And we'll start with the car rental business because we're now in the threshold of course, of driverless cars. We have the technology that's been proven. I guess the real question now is not the technology here, because we're there, it is the liability. - Well with a pre-pandemic fleet of more than 2 million cars, which we believe to be the largest in the world, and demand for that kind of fleet present even yet today, we're just struggling a little bit with supply. At scale, everything is different than one Waymo car that's buzzing around San Francisco, for example.

Our view on that would be the customer's at the center of everything we do, and whether the customer is in the driver's seat or the customer is in the back seat, we're able to provide the same level of customer service through the reservation fulfillment process. And then, of course the very, very important aspect of our business that we would call vehicle or asset management. - And from that point of view and the trends that you're seeing, Monika of passenger traveler behavior, what has changed and what has technology allowed you to do to basically monitor that change and then adapt to it.

So that if somebody, for example, wants to reserve a room in a hotel where there's no carbon footprint, or they want to get on an airplane, that's burning alternative fuel, or they want to run a driverless car, or they want go on a ship, that's got new scrubbing systems, and their concern is with the environment, how fast can you actually pivot to direct them in that area? - I think quite important trend. And we call it attribute based selling. Yeah, for example, in a hotel you're not just selling a hotel room, but certain aspects and attributes with association with that hotel room. Or, on a flight, you would like specifically to book on a flight with sustainable fuel and all these new trends and wishes, which are much more granular than they used to be.

That is certainly a trend. And we are creating this ability, let's say, to be able to book those attributes, if you may call them that. Certainly important. And you've picked on sustainability, that is something which we clearly observe in all travel sectors, that there's a strong, strong trend for more sustainable travel, for sustainable alternatives, for eco-friendly travel, for knowing what footprint you leave. And that is a whole part to get this kind of transparent and inform the traveler, and give them the possibility to have an educated choice around those topics. Strong and an important part of our work.

- Of course, the information has to flow almost instantaneously these days Because people want instantaneous answers. When we talk about revenge travel and travel comes back, it comes back quickly. And I'm sure you've seen that Peter in your business.

I mean, I'm in Hawaii right now. And there was a time when my friends here would send me photographs of a parking lot filled with thousands and thousands of what Peter would call non-performing assets, otherwise known as cars going nowhere during the pandemic. And then of course travel came back, and the law of supply and demand. It was difficult to find a car. How has technology allowed you Peter to better assess your fleet to better project, to better position it? Because here's my understanding of the rental car business.

It's a flock of migrating birds. You always have to figure out where the cars are as well as where the cars aren't, right? - Absolutely. Well, the cars need to be where the customers are ideally.

But, you make a good point and here of course the pandemic was seemingly arbitrary or brutal in terms of winners or losers. And it looked in March or April of 2020 when we had 2 million units around the world and no one wanted to rent one and no one wanted to buy one, it looked like we were a big loser, but only temporarily because customer use cases changed even when our airports weren't open. And so, every day we would have a global call with my 100 franchisees around the world.

And, initially, it was a plan we called 'hibernation', right, to survive, and then gradually as the thaw came, we began to explore new ways to meet the need of the customer through technology. Really accelerating in a way that I think would've taken us years, not months, had necessity not been the mother of invention. - Well, give me an example of that. - Well, in the beginning...

Well, first there were many customers who, of course, no longer used the airports, the airports were closed, but we made the goal that we were going to recover 100% of our 2019 rental bays worldwide before widespread vaccination or full recovery of the airport. And the way we did that, using technology as one example, would be social media because as Kelly knows and also Monika, because of similar distribution, we have had a way to reach customers before through what we'd call the Global Reservation system, right? In a generic term. And, all of a sudden, the customers weren't on the other end of that. So we had to get local. We had to use social media locally, our operators in our corporate owned stores, and our franchisees around the world had to find ways through every different kind of social media to locate local customers. Many of whom now were interested in getting into a car, because the plane wasn't available and they weren't interested in the bus or the train anymore, because as I urged my marketing department to say, and somehow it fell on deaf ears, "Car rental, because you can't catch coronavirus from yourself."

(Peter laughs) - That will be your brand messaging going into the next decade. I understand. - Well, it was rejected summarily. They told me to stick to franchise. - And Peter mentioning social media and also being able to contact passengers.

Now, this is opening a whole new, great world of possibilities and really cool solutions. And to give you one example, it's one of my favorite products I would say, and you still remember the time and maybe it happens sometimes still, that a flight is delayed and then hundreds of people are delayed. - I've never heard of that. - You've never heard that Peter? 100 people pouring to the airport queuing for hours, not knowing what's going to happen. So based on ready data and full automation and AI, we are now able to kind of rebook a full flight within three minutes, and the passengers have, already on their mobile device, the rebooked possibility or choice when they enter the airport. And this is a completely destressing experience for everybody in such a situation, fully empowered by technology and possibilities to reach the customers, to reach the travelers.

And I think that we need those kind of examples to really see the benefit and the power of technology. Now let's... - You make sure Monika that their bags all don't go to Cleveland.

Could you work on that? - Of course. Of course. - But now you talk about communicating to your customers and that gets into Kelly's area, because if you go back to the early days of the pandemic, the message was not beneficial to the cruise lines. There's indelible images of ships being quarantined in Yokohama or ships being unable to discharge their passengers, who were very sick in other ports, you had a big messaging challenge. You had to get your message out. You had to let people know what you as an industry were doing.

How have you used technology in the last two years to improve that? And also to be able to target the people who need to hear it the most? - So, first of all, I'm just thrilled to be on this panel with Peter and Monika, because these are the insights that help me as I make my own travel plan. So thank you, Peter, for getting us together. But on your point, the cruise lines were a victim of being the early symbol of the pandemic while people were still learning about the virus itself. And so there was a great deal of education that had to take place.

And from the standpoint of the Trade Association, working on behalf of all of the cruise lines, and frankly all of the suppliers, including the ports and the destinations who were impacted by cruise to a certain degree, it was, as Peter said, to get hyperlocal, to make sure that at every state, every stakeholder, whether that was a policymaker, which is clearly critical to our ability to operate, but through to the consumers, including through the travel agents, because so much of cruise is still booked by a travel agent. It was about putting people first and making sure that the information about how you could either depart one of those early ships, how you could correct misinformation was really driven through a very targeted digital effort that was combined with an activist element to mobilize cruisers. I think one of the things that you saw later in the pandemic was just how differently cruise was treated as related to the other travel and tourism segments.

And it really was the frustration of the consumer, who was ready to cruise, who recognized all of the serious enhancements that were made and advised by medical experts and scientists. They were ready to get back on a cruise ship. And the ability to activate through online tools, I think was a real tipping point in the United States and less necessary in other parts of the world.

But the education, the confidence, the consumer confidence in the protocols that were being used on the ship were primarily delivered online, complimented by what each individual company was doing with their own consumer base. - I've had an ongoing argument with so many of my friends, who say, it's okay to do everything online. And I'm saying online should only drive you to a conversation. And so when you're dealing with a product, whether it's a rental car or a cruise ship, or any kind of a travel reservation whatsoever, you get to a certain pivotal point, I think, where you have to have a conversation, or at least you should. So I guess the question to all of you is, at what point are we now where the technology doesn't take precedence over the conversation but can actually drive you to the conversation. - We are certainly already in a very hybrid world.

And I really have to say, if you look just 10 years back or a bit more when the iPhone was introduced and where we are now. So we've really seen that all these digital devices and possibilities actually help the world to connect much more. I mean, look at social media, what was enabled through the technology. It's amazing.

And the conversations change in a way, the type of conversations change, and still on the other side, they lead also to more personal connections and personal relations. Now, though, this will not go away. So what we see is really a hybrid approach where on the one side increasingly the digital means are super important and adapted, even up to fully automated conversations, through chatbots and so on to help you. And on the other side, the human touch becomes so much more important than I'm sure, and maybe Kelly, especially in the cruise environment can confirm, if there's a moment of choice, you really need help then you want to talk to somebody who solves your problem, which is very different moment. But I would say the technology also frees the staff from the routine to enable them to focus on the high value relations, the high value moments, and it's shifting, that is what we see. - And I'd love to just jump in on that because I think that is an area where cruise really excels and where technology is really enhancing the exceptional customer service that they've enjoyed before.

But through things like biometrics and facial recognition and AI, and what has become a touch-less, seamless experience to both board and disembark a ship has really freed up the crew, the teammates to be able to directly engage the passengers on each of these ships in a really direct and personal way. And to take out some of the kind of mundaneness to create these efficiencies that really let the staff onboard, the crew onboard to really shine. And so for the cruise industry, those types of technological advancements have only enhanced the customer experience. - Let me jump in here for one second and suggest something because your technologies allow you now, as Peter said, to adjust your fares millions of times a day, to track your assets, to understand travel preferences, Monika, to figure out where those shifts are happening, but it's all taking place in a world of staff shortages, and it's all taking place in a world where, you can only go so far. And then all of a sudden, you either lose the conversation or you lose the participants. You know, we saw the airlines, for example, realizing they could track it very quickly how the trends were changing last June.

And so they announced 35 new routes and they were going everywhere. They forgot something. They didn't have the people to fly the planes. And then I could actually, go online or pick up the phone and what would I hear? I've got a wait time of four hours to get someone to talk to. And the biggest irony of all, which I'm sure we've all gone through, is in the beginning of that phone call, when they tell you it's gonna be four hours to get to somebody, they'd say, "Oh, would you please stay on the line for another two minutes after this call to give us a survey on our service?" Are you kidding? So I don't need to wait four hours to answer that survey. So I guess the real question is, how have you been able in this world of staff shortages to use AI or the technology to be able to reposition your biggest assets, your people, to be able to have those customer service interactions? - That's the whole, - I'm so sorry, Peter go ahead.

- Oh, I'll start with this one. And, Peter, that's funny that you raised that. Certainly I observed that too. And I'll share my personal rule is that I'll only, I'll only participate in the customer service survey if the wait at the contact center is shorter than the flight. But to your point, this is a people thing, right? And I think that customers returning to the earlier conversation before responding to your great question, I think there's a distinction between, for technology, between the booking process and then the fulfillment, and then also as are more important, can be the post transaction customer experience, right? And so customers do want to be able to book seamlessly and they want to be able to do that I think without interacting.

Now, ironically, the staff shortages that you raised have driven customers in that direction in a way, that's accelerated it. I never booked air travel online before. And now I only will. I guess it's fair to pick on the air industry because they're the only ones not directly represented on the panel. But then in the fulfillment process, it's a hybrid, right? Everybody says they want what we call seamless or frictionless, but the moment they want maybe a different color car or a larger car, or a different model car, or they have a question about how to utilize the car, they want people. And so there's no substitute for that.

And then when you have a problem posed in our industry, post rental, if you need a receipt, if you are miss billed, whatever it might be, you wanna talk to a person. And so that is a big challenge for us. And particularly in this environment, because there are wholesale changes in the way that younger people, who, of course, we all rely on for our workforces in the service industry, one would not exclusively, but how they want to experience their profession, and their job.

And that's a work in progress, because now with work for home embraced by so much of the economy, there are choices and employees just like customers have new demands on the brands, and many of them are emotional or intellectual, not just financial. - You bring up one very important point to what extent can technology drive or even maintain an emotional connection to the brand? - Well, I think it's interesting harkening back to an earlier part of this great session. Technology can help provide a sustainable product or service and why in order to meet the emotional needs, or the intellectual needs of the customer and that's technology at its best. - And I think Peter, you know this well on ships, some of the ways that technology is really building affinity for the brands is the competition the brands have with each other to create the next greatest device that really customizes your experience while you're on board the ship, meets all of your needs, whether you're a parent looking for one of your kids... I was just cruising recently with my kids on spring break and the fact that they could. - You're brave, you're brave.

- I have a lot to say about that, but that is not for this panel, but the wearable technologies, the different accommodations that are being made in the cabins, it really has created just an ease of traveling that makes the experience so enjoyable. That really builds the affinity for the brands who are really adopting and embracing some of these, you know 22nd technologies that it's really impossible to recreate on land. - It's interesting in preparation for this panel, I went back and watched a movie that's I hate to say it, because it's gonna make us all feel older. It's 35 years old, "Planes Trains and Automobiles."

So Kelly, you're off the hook here, but the most interesting... I wanted to watch the movie to see what it's really changed in technology in the passenger experience in 35 years, I encourage all of our audience members watching to try it and find it on Netflix, wherever you look for your movies, and as Peter knows all too well, the defining scene in that movie was the rental car counter. And he's laughing as he knows.

But I guess the real question is before we run out of time, it's technology telling us how we're gonna go somewhere, but what about where we're gonna go? And of course, we're now on the threshold as we're being told every day, of space travel, of and I like to laugh a little bit because everybody says we're going to space and we're astronauts. And if you take a look at the actual trajectory, literally the trajectory of where they're going, they're not going to space, they're going space adjacent, right? The Russian monkey, and Sputnik got a better deal. So we're really not there yet. But the point is, we're being driven there.

People are fascinated by it. They wanna take that next step. And what are you doing in that respect to embrace the new technology? Not that I'm gonna be able to rent an enterprise car and go up into the stratosphere, but where are we going in terms of passenger demands? And this is Monika may be a question for you as to what the next level is. - Well, I mean, space travel is quite expensive.

I think it's... for a while it'll be a hurdle just from a price perspective, that's clear, but we do a lot of traveler research actually and over the last two years, we have run several panels on traveler surveys. And we've seen a lot of demand for more technology, actually, touch-less technology, automated validation, and Kelly I build on what you said, this kind of seamless flow, identity checks of biometrics, automated validation of health documents. Now all of that we developed over the last two years, this will be everywhere in all the journeys in destination, in the hotel, in the airport, that little change.

But if you fly to space, certainly Amadeus would like to be the first one to make the GDS. - And then Peter, I think on the point of space adjacent, some of the exciting developments in the cruise industry really has to do with expedition travel and the advancements that are being made in the innovations using different technologies, but innovation broadly to build these magnificent ships that are environmentally friendly, specifically designed to go to places like the Arctic and like Galapagos. And so whereas it may not be as close to the Sputnik experience, it is otherworldly to be able to explore some of these incredibly sensitive places, knowing that you are benefiting from some of the most technologically advanced modes of transportation that is benefiting from billions of dollars of research around propulsion and other ways to really develop some more environmentally friendly ways to see some really important parts of the world. - Yeah. I agree with that.

And I think in many sectors of the travel industry, certainly including ours, it won't be the moonshot to a flying car. It'll be the 50 iterative initiatives that together package up in a way that, again not only enhance the current experience, but provide travel experiences for customers that they couldn't have before. And an example of that, it's simple, but still revolutionary in my mind, would be in Japan... No one can read the local language who is an inbound traveler virtually, right? And, of course, if you are more in the Central part of the country, you can rely on mass transit, but if you're in the South or you're in Hokkaido in the north, there are great opportunities and beautiful roads. The problem with GPS, which is magnificent now was, well, how do I put the name of where I'm going in there, if it's a Japanese name, and now they've developed numbers, almost like a combination of a phone number and a Zip Code. You put the number in, and that represents the restaurant, the mountain, the hotel, whatever it is.

And that's an example of technology allowing people to do what we've always are desperate to do at the core of human nature, whether it's on the ground or in space, which is explore. - Exactly. I remember I was one of the first adopters of the Hertz NeverLost System.

That's how old I am, and believe it or not, I liked it so much. I put one in my car, and it still works. I mean, and now it's old school technology, but then again, I still have rotary phones, but that's another conversation. (Peter laughs) And speaking of the conversation, I want to thank you all for participating in the panel. Monika, Peter, Kelly, Kelly I will see you soon in New York. Peter I look forward to seeing you when you're back from Cabo in St. Louis

and Monika, see you back in Germany, and thank you all in the Philippines for watching.

2022-05-31 09:27

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