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According to IDC's vertical markets analysts, the most significant technology-related trends taking place in the LET industry today include the following:
- Avoiding commoditisation — Travel, hospitality and entertainment companies are focusing on new product and service developments in order to differentiate their offerings from competitors. This is becoming critical as a growing proportion of customers are buying services and comparing services from different providers online.
Increasing IT investment — Although lagging behind other sectors, the ability of technology to drive business value is starting to be better understood by all LET companies, currently under-resourced in IT terms. While small companies remain anchored to their local environments, larger companies (especially in 250–499 employees segment) are now competing in a wider geographic area. For this reason, connectivity will grow strongly in importance in order to allow LET organisations to better operate internationally.
- Understanding customers — CRM-style applications that support marketing, account management and service delivery are changing and adapting. Most important is the ability to deliver personalised, one-to-one information and services, tailored to individual customers. Overall, this is increasing the value of the relationship between supplier and customer, and is giving many LET companies a real competitive edge.
- Implementing direct online sales and distribution — Direct online sales between supplier and customer are outmanoeuvring online intermediaries, due to greater brand trust and the relative ease of implementing robust, high-quality and secure Web storefronts. In addition, online distribution is growing rapidly, with online booking becoming a critical tool for accommodation services, restaurants, spa resorts and museums when planning their occupancy and visitor rates well in advance.
- Building self-service capabilities — Customer online selfservice capabilities are spreading from large, full-service hospitality and entertainment organisations down to midmarket companies. This expansion will drive the need for a consistent multichannel approach to self-service, including the Web, kiosks and wireless devices.
These technology trends are taking place against a backdrop of macro trends affecting different areas of the LET sector — high oil prices, responses to climate change, food/health scares, terrorism, political instability — as well as those that are affecting consumer spending — high debt levels, rising interest rates and US dollar rates.
Views From the LET Industry
IDC recently conducted a survey of 90 LET companies to better understand these issues. Despite the abovementioned significant challenges, 73% of companies regard their business prospects as positive or very positive. Furthermore, only 3% regarded their prospects as negative.
The survey also found that the single most important issue driving LET companies' business agendas is the responsiveness and efficiency of their ICT operations (Figure 1).
Heavy emphasis on ICT driving the business agenda is typical of industry sectors that are in the midst of migrating from legacy to next-generation ways of working. This is also reflected in the fact that 63% of LET companies in the survey expect their voice and data budgets to increase, and that the average budget increase is 11% over the next year. This is against a backdrop of expected growth in the overall European business telecommunications market in 2007 of only 1.2%, according to IDC's European Telecom Services Database, 1Q07.
Another indicator of this migration is seen in the way that LET companies use a wider variety of data network simultaneously than companies in other sectors (finance, manufacturing, retail, transport and public sector), including markedly higher use of legacy services (Figure 2). This is similar to the results seen in the manufacturing, retail and finance sectors in previous years, as they too transitioned from legacy to next-generation services. In addition, this progression is seen in the well above average rates of LET companies that plan to stop using their legacy services over the next year. Another standard indicator that, overall, the LET industry is in a major transition phase.
LET companies can help themselves to meet the challenges identified above by using advanced, flexible and integrated ICT solutions. For example, The Leading Hotels of the World (an exclusive organisation of luxury hotels) has deployed international MPLS IP VPNs to carry voice, video and data across the whole group and is using them to consolidate pan-European call centres, which now handle more than one million minutes of phone traffic across Europe per annum.
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