Digital distribution key to fixing travel’s “weak link”

The digital transformation of ground transportation is under way, and as the world opens up again, the demand from travelers for a seamless ground transportation booking experience is growing.

But some suppliers are missing out on this market opportunity. If a bus operator does not have digital distribution capabilities it cannot sell its seats online. Without a brand dotcom or agreements with third parties such as OTAs or retail agents, a supplier’s reach and revenue is limited to what it can sell locally, offline. Commercial partnerships with other travel providers such as airlines are not possible.

To change this, operators need a transport management system (TMS), which acts like an airline’s Passenger Service System, storing all the operator’s available seats, prices and availability. This is a prerequisite to being able to make that inventory available for sale by OTAs and third-parties in a scalable way.

As things stand, ground transportation is fragmented. There are some big players on both the supply and distribution side but the vast majority of operators are small and independent. In fact, a vast majority of the businesses in APAC and LATAM are offline and analogue.

Travelers expect online capabilities and booking a bus ticket or ferry ride in advance should be as easy as booking a flight or a room. Until TMSs are more widely taken up by these small, independent businesses to make seats available online, ground transportation will remain the weak link in the travel ecosystem.

The ultimate travel tech goal of end-to-end/one-stop-shop/super-app remains elusive if the bus from the airport to the city center or the ferry to the boutique hotel has to be booked offline and in the moment.

Solving this ongoing obstacle to seamless booking is one focus for TMS providers, but there is more that can be done. TMSs can help ground transportation suppliers to grow their business by transitioning many operational requirements from offline to online. These include: loyalty schemes and rewards, logistics, maintenance, vehicle readiness, mobile office, onboard sales, cargo pickup, staff schedules, route planning, yield management, financial reporting and – last but certainly not least – data and analytics.

The fragmented nature of the global ground transportation industry means that TMSs need to serve local market needs at the same time as connecting to global systems. There are layers of difference between countries in the same region, and even a single country operator might have different needs from its TMS for different routes. Similarly, operators will want their TMS to give them some degree of autonomy when it comes to third-party sales. The data and analytics functions, for example, can allow an operator to compare and contrast the value and volumes of tickets sold by their distribution partners.

The net result of bringing in a TMS is that operators can sell more seats to travelers, while travelers are likely to have a better experience because the business is run more efficiently. This will lead to higher standards across the industry and also give ground transportation the chance to share its sustainability credentials with a wider audience.

Looking ahead, there is potential for bus operators to position themselves as a more climate-friendly option than flying, but to do this effectively travelers need to be able to book online and to have the information needed at the point of sale. Elsewhere, ground transportation can encourage visitors to experience remote destinations, helping to address overtourism and to spread the economic benefits of tourism more widely.

For ground transportation to get the attention it deserves within the digital travel ecosystem, transport management systems will need to be center-stage. All these benefits the sector can bring to travelers are predicated on speeding up its digital transformation so that operators are more efficient and travelers are better served. With so much of bus and ferry business sector ripe for conversion, the TMS sector will be (the) one to watch.