A BPO Perspective

Revenue Leakage in the Travel Industry

01

Euromonitor values

global hotel industry

spend at close to

US$720 Billionand expects increased

demand to drive revenue

growth

IATA expects to see

growth of over 6% from

now till 2019 valuating

airlines spend at over

US$750 Billion

According to the World

Travel & Tourism Council

(WTTC), travel & tourism

directly contributed

approximately

US$2.4 Trillion

to the world GDP in 2014,

estimated to grow at

3.8% until 2025

International Air Transport Association (IATA) expects c.1% of world GDP

to be spent on air transport in 2016, totaling almost $750 Billion and

estimated to grow at a healthy 6.9% in 2016. The industry as a whole is

02

Introduction

bracing for increased competition and pressure on margins.

Today's consumer is a changed consumer. They no longer walk down the

street and stand in queues to make a booking or seek customer service.

It is the era of an empowered consumer who has choices and will come

with a number of expectations. Since basic products and services are

increasingly getting commoditized, in order to sustain, marketers can

only differentiate in terms of quality of service, convenience,

responsiveness and speed to market.

Over 50% of respondents to Ovum's 2014 CRM Outsourcing Business

Trends survey indicated that the budgets for companies in the Travel

Industry stay flat or shrink over the next 18 months and given the

challenges associated with this market. It is also unlikely that even

revenue growth will provide any additional budget flexibility.

Over all of this, there are a multitude of variables, geo political events,

changes in regional or government policies, spikes in fuel charges and

other such unexpected changes that can quickly escalate costs and

erode margins. To continue to provide value to shareholders,

organizations need to do more with less. Maximizing revenue and

reducing costs has always been somewhere in each board's agenda,

and reducing shrinkage or revenue loss is still a moving target.

Revenue Leakage

Revenue leakage is the revenue which is accrued, but not realized due to

multiple factors. Travel companies are especially facing a tough time,

especially because of the added dependency on multiple GDS such as

Galileo & Amadeus and the global nature of operations. The travel

industry is also prone to other non-controllable factors such as no-shows

and late cancellations adding to the value of leakage.

Intr

oducti

on

DisruptionManagement

Multiple &DuplicateBookings

Cancellation&

Amendments

Complianceto

Fare Rules

TravelRestrictions

Incorrectand

un-ticketedBookings

Top Sources of Revenue Leakage

03

Disruption Management

Airline disruptions are essentially caused mostly

due to systemic, staff, weather related problems,

air traffic control mandates, etc. This has a direct

impact in the operational costs and the overall

customer experience, affecting the loyalty of the

customers. An estimated 83% of the disruptions

between Jan-15 to Oct-15 were caused due to

unavoidable reasons, hence forming means to

create an early detection system to avoid

disruptions can prove to be of great help with its

direct impact on maintaining schedule integrity.

The system needs to be capable of identifying and

processing inputs received from multiple sources

to identify an emerging problem which can

maximize the avoidance of systemic problems.

Reports suggest that by 2017, 90% of the airlines

plan to use business intelligence solutions to

minimize such disruptions and hereby avoiding

additional burden on post disruption operations

such as customer service, fulfillment etc

Multiple & Duplicate Bookings

In the world of thousands of websites offering

bookings with multiple airlines, instances of

multiple or duplicate bookings due to various

reasons have sky rocketed in the recent years.

Most of the major carriers have invested in their

systems and technology to identify such bookings

in order to avoid its impact on customer experience

and seat availability, while the others are still

catching up. It has also occurred that many travel

agencies hold the seats at a lower fare to increase

their sales revenue and sell these to their

customers at a higher price, if the airline rules

permit the name changes. Without the required

technology, many travel companies are currently

relying on finding these bookings manually and

cancelling them upon checking with the customers,

hence increasing operational costs. Technology

upgrade and robotics at a global level can prove to

be a potential solution for this issue.

Cancellation & Amendments

All bookings made for any travel products have

their own terms and conditions mentioned which a

traveler needs to read, understand and approve of

before the booking confirmation. Moreover, any

special promotions usually come with a stringent

set of rules and conditions. In an event of

cancellation or amendment, any unavoidable

instance of natural causes calls for an exception

and non-compliance to the fare rules. While certain

causes are promptly considered by various

airlines, others require endless follow ups which

not only create extra work, but impact the

operations costs as well.

Compliance to Fare Rules

During any booking process, the customer is

expected to read, understand and approve the

applicable fare rules. In spite of the agreement, the

customers expect exceptions in an event of any

kind of change or cancellation. Depending on the

reason for the requested change or cancellation,

there is compliance or non-compliance to the

applicable fare rules. Any non-compliance requires

a travel agency to get in touch with the airline to

seek waivers to the applicable rules and charges.

The process of seeking these exceptions is

04

cumbersome due to lack of set guidelines with

some of the airlines. The time spent on these

follow ups and back and forth of the requests

impacts the productivity and operational costs.

This can be clubbed to the above one as both are

mutually inclusive

Travel Restrictions

With the rising instances of terrorism activities or

any other civil or political unrest, the government

and travel authorities issue travel restrictions to the

affected zones for travelers. This results

compulsory changes or cancellations to the

planned travel itineraries which causes spikes in

volumes hence impacting the workflow and the

time spent on getting the affected bookings

resolved. User friendly websites and impromptu

screen pops with dynamic intelligence around

global restrictions can assist in a big manner in

eliminating customer dissatisfaction along with

reduction in operational costs to manage those.

Incorrect and un-ticketed Bookings

Due to various factors or system failures, the

booking gets confirmed with incorrect details or

remains un-ticketed. The potential impact of such a

situation could be a customer ending up making a

duplicate booking which could potentially result in

revenue loss in majority of the cases. Taking the

necessary corrective measures could also lead to

an impact on the costs for the company.

Solutions to Revenue Leakage

Solving revenue leakage is not an easy task and

requires close coordination between the parent

Travel Company and the vendor partner (captive

or third party). Whilst Travel Companies can

influence development of robust backend systems,

the actual delivery or benefits can only be realized

if the staff and environment for managing travel

operations continue to innovate and improve.

Today, loss prevention has to work on inhibiting

loss in multiple areas, rather than focusing on only

a few problems. Loss prevention partnerships with

other organizations is a necessary part of learning

more about trends in a region and industry,

exchanging information and smoothing the

process of working together to combat loss.

Following are some key areas where the vendor

partner can influence and help reduce revenue

leakage:

WorkflowSolutions

SkilledStaffing

Intelligent Reporting

Analytics

Fare RuleEstimator

Robotics

Workflow Solution

Most companies depend on Multiple GDS to

enhance their sales capabilities and maximising

revenue opportunities. What this also means is

that pulling records from different sources and

ensure that all transactions are processed

accurately and ontime. Any errors committed in

fulfilling both the aspects of a transaction lead to

revenue leakage. Error reasons include

Transactions with different priority indicators are

not processed in the given timeframe leading to

missed timelines.

Workflow tools can help pull information from

across different distribution systems and

sequentially queue them based on the priority

allocated by each sales channel. This will ensure

that companies are able to maximise the revenue

opportunities and reduce errors through missed

deadlines on the fulfilment side of their operations.

Skilled Staffing

Travel & Hospitality today is one of the most

competitive market. Options available in the

market are so many that a customer practically has

a dozen options to choose from before he finally

makes a booking. Most organisations have this

concept of getting it first time right and increase

customer satisfaction. The experience the

customer gets when he is booking or calling is the

primary driver for the customer to give repeat

business to travel companies today. This increases

the pressure on travel companies to have the best

trained resources to ensure that they deliver the

highest level of customer service. Companies are

enhancing their training capability through

introduction of technology or are leaning on

building inhouse training courses to not only give

people project specific training but also Industry

specific training. This helps them not only have

better quality of resources but also are able to

deliver the same at a cost advantage as the need

to hire tenured resources is considerably reduced.

Intelligent Reporting

In today’s environment the need for a better

management information system is growing.

Deliver centres are required not only to report

performance, but also provide intelligent insight on

the data gathered from different data sources and

systems. This collectively provides a holistic view

or “Pot of Gold” which is invaluable to any

advanced analytics and provides a common view

of campaign performance at a click of a button.

The traditional approach of reporting via multiple

excel spreadsheets is not sufficient anymore and

there is a need for an advanced integrated portal

which can provide reports and dashboards by

integrating several data sources.

There is a noticeable shift now for customers

recognizing the need for such a platform which will

facilitate engagement with consumers throughout

the customer lifecycle and drive desired outcomes

such as performance and process improvement.

Data is usually mined by such platforms and

processed through complex algorithms resulting in

insight through interactions, custom-fitted to travel

companies. Such platforms integrates a number of

data ranging from bookings systems, transaction

volumes, escalations, workflow systems and CRM

systems to populate a suite of reports that can be

valuable at all levels.

05

Email | SMS/Call | Web | Offline

MarketingEngine

IdentifiedTarget

Audience

Web | Agency | Call Centre | Mobile | Social

Loyalty | Buying Pattern | Deals | Discounts | Customer 360 | Cross-Sell

BookingSuccessful

Modification

Cancellation

Upsell

Illustration : Travel Analytics Lifecycle

Following are some of the key advantages

associated with such advanced reporting solutions:

a) Single Version of Truth

b) Automation

c) Improved cost efficiency

d) Real time and historical views

e) Elastic and scalable

f) Accessibility

g) Advanced Analytics

h) Advanced data visualization

An additional trend is use of Mobility solutions with

such reporting platforms, which provide seamless

and real-time inputs to customers globally allowing

quick decision making and reducing losses.

Analytics

The Face of travel is changing. According to a

recent report, 35 per cent of online travel bookings

will be made with mobile devices by 2018.

Moreover, it has recently become possible to book

a holiday entirely via Twitter. The market dynamics

are changing and there is a decisive shift in the

economic, demographic and psychographic

indicators.Analytics, which has witnessed a

paradigm shift in business arena, has become a

critical enabler to achieve this. Role of Analytics

will have to be looked at from a totally different

context as a demand driver and synthesizer. To

cater to today’s tech-savvy digital consumers,

enterprises will have to redesign their delivery

mechanism and leverage various disruptive

technologies including Analytics.

06

07

The companies across various travel industry

segment have been handling large set of

information and data for years and Airlines, hotels,

cruise companies, travel management, railways

and travel agencies have tremendous opportunity

to optimize their efforts and the customer

experience though actionable insight from their

data. The way forward is to know you customer

needs and provide personalized options.

Perhaps the biggest opportunity for the application

of big data in the travel industry is in the extensive

personalization of offerings to match each segment

of the customer base. The organization have large

data of customers and that can be aggregated to

offer informed options to customers and their

needs, segmenting the customers and provide

tailored solutions.

In case of Revenue leakage, following are key

areas where Analytics has played a huge role in

reducing loss:

Predictive Analytics – Use of advanced

analytics has allowed companies to study

thousands of past retail loss transactions and

build advanced algorithms to predict possibility

of future transactions that may lead to revenue

leakage. Once such transactions are identified,

companies can take preemptive steps and

establish control mechanisms

Speech Analytics – This is one area which

allows analyzing customer conversations on an

almost real time basis. Travel companies have

been using speech analytics to study voice

traffic and use predefined key words or

combination of key words to highlight suspected

transactions. This allows companies in not only

training advisors, but also helps take proactive

measures in analyzing such transactions which

eventually helps in reducing revenue leakage

Robotics

As technology is driving the next level of

transformation, Robotics is gaining more and more

prominence as an engine that will help cut costs

through automation of tasks and reduction of

headcount. Phantom robotics provides reliable

service in order to achieve maximum efficiency

within the customer's production environment.

Deployment of this technology leads to re-

engineering of processes and thereby cutting

headcount as a result of automation. More and

more companies are today evaluating options

available to deploy this technology to be able to

cut their costs and also improve their

accuracy/quality of service they provide to their

customers.

Integration of Robotics with the company’s

systems can help eliminate substantial work in

keeping up with Queues. For example if deployed

appropriately, it can monitor all inbound PNR

queues for schedule changes and OSI/SSR

messages and take action based on configurable

parameters.

Fare rule estimator

Companies today sell their capacity upto one year

in advance. This helps them better manage their

load across sectors based on the sales numbers

and forecasted events which are bound to drive

traffic in those routes. Customers anticipating huge

spike in process closer to the vents book well in

advance capitalising on the various offers rolled

out from time to time and then either cancel close

to the date of travel or alter their itinerary to fit their

requirements. Travel companies while making

these amendments often miss out on the fine print

of the offer at the time the bookings were done and

end up making errors which cost travel companies

upto .25% of revenue leakage. Anything that can

be done to automate this process and make the

correct refunds or amendments, can help

mitigate/eradicate this source of revenue leakage.

08

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Helpdesk

Travel and

Hospitality Service

Offerings

Intelenet Travel and Hospitality

09

Train

Airlines

Car Rentals

Hotels

Cargo & Logistics

Travel Companies

tnemllfiluF

3200+ Workforce

Clients22+

Tickets Processed3+ Mn

Service & Sales Calls12+ Mn

Countries5

Language Support13+

Invoices15+ Mn

Cargo Operations1.2 Mn+

Tickets Processed3+ Mn

Creating an intelligent talent pool in addition to implementing a better structure to ensure optimum results in terms of recruitment and learning along with generating additional revenue

Reduced training time by a week Reduced learning curve of the advisors by a month Improved productivity & accuracy Reduced attrition

Real time simulation for short duration training and hands on practice that enables better training yield and on floor support through ready reckoner of processing modules

Better resolution time Enhanced customer experience

Capability to retrieve airline ticketing fare rules across multiple GDS and websites and calculate amounts

Ticketing and Schedule Change Reduce retail losses through automation of fare calculation Improve Turn around time for customer queries Better customer experience

Workflow Management Tool to allocate and govern transactions

Upfront savings of 5% in annual operational costs Upto 50% reduction in retail loss estimated through

better governance of timelines and timely processing

Availability of transactional reports and associated activities

Effective management of over delivery and efficiency metrics Better analysis of business performance, communication channels, service

offerings and other operational elements Access on your demand from anywhere

Social networking and Speech analytics support to enable quick business support decisions

Reduced operating expenses Improved revenues Reduced customer attrition

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For more details, please contact:

Anish Kapoor

Practice Lead - Travel & Hospitality

anish.kapoor@intelenetglobal.com

Intelenet Global Services is a

leading provider of business process

management services across

industries, including Travel &

Hospitality, Finance & Accounting,

Healthcare, Telecom, Banking &

Insurance and Retail. With more

than 50,000 people spread across

66 global delivery centers,

Intelenet supports over a hundred

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capabilities are customized to cater

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mandates, and resource needs. We

have consistently been ranked

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