Amadeus is taking its technological capabilities and expertise beyond travel to tackle the challenges posed to societies by rapid urbanisation and the growth of mega cities, and Asia will be the test bed.
Its Smart Cities initiative, launched last week, is aimed at building a stronger understanding of the problem and how it can develop true ‘smart mobility’ to counter the negative effects of urbanisation.
The ambition is to then tie that back to its core travel businesses to create a massive data platform that will enable seamless travel on all fronts. It comes at an ideal time as Amadeus IT Group performs well financially, as indicated by its Q1 2018 financial report. The report highlighted 3.1% revenue growth between January to March compared to 2017, reaching €1.23B. In distribution, travel agency air bookings reached 160M, representing 3.7% growth. In IT Solutions, there was a 22.7% increase in passengers boarded too, raising the total to 416.9M.
But first, the urbanisation problem. According to current predictions, 70% of us are expected to live in cities by 2050, and 75% of the world’s resources and energy will be consumed by urbanites.
“We see it particularly in Asia, it is the epicentre of these problems,” said Simon Akeroyd (Vice President, Corporate Strategy and Business Development, Amadeus). There are 22 megacities in APAC, 11 in China alone, making the region the perfect ‘test bed’ for this programme.
“The mandate for me is to go and test [startups]… and pick the ones that have a chance of success. Asia is a very important region for us from that perspective. There is so much diversity that we can check ideas in lots of different Asian cities and get a much better guess on which will globalise across to America and Europe,” said Akeroyd.
“It’s overseeing our east to west innovation – how we find things in east and ship them out to the west.”
Breaking down the “Smart mobility” piece
Amadeus believes the solution lies in six elements – smart living (how people interact with private space), smart environment (like city planning), smart government (reducing ‘bottlenecks’ to improve relationship with the public), smart economy (tap-and-go payments to speed up transaction times), smart people (improving education, emergency responses etc.) and smart mobility.
The “Smart mobility” piece is where Amadeus comes in. Once the other five aspects are fully developed, its success becomes contingent on the way in which people are able to move within and between ‘smart’ spaces.
“The way that movement happens is very key to the success of a smart city,” stated Akeroyd.
Simon Akeroyd is spearheading the Amadeus Smart Cities initiative
As is well known, the travel technology sector has undergone a mammoth change over a relatively short period of time.
“It has been revolutionised in a way that we haven’t really seen in many other sectors,” he said, arguing that the “mobility revolution” occurred on two fronts, one in private funding and the other public.
The former occurred in the form of ride hailing and sharing apps, autonomous cars and mass transit. “Brands became household names very quickly and attracted an unprecedented level of investment.”
It produced not just an influx of money, but a mountain of choices and options for the consumer.
“Car sharing is urging people to sweat their assets… that are otherwise laying idle… Bike share is a new way of creating critical mass. These startups have hundreds of millions of users, in a very habitual way, using their app. You’re already starting to see them move away from bikes and moving to short haul, selling bus and train tickets, it won’t be long until there is an LCC … it’s already connected to the wallet and it’s about travel.”
In the public sphere, Akeroyd argued that governments must also be recognised for their efforts in opening up to allow different types of innovation in transport solutions, particularly with high levels of investment going into solving congestion problems within cities.
“If you look at how much they’ve digitised over the past five years, it is an amazing step forward.”
Akeroyd identified Thingful – a search engine for IoT – as proof of this point, in how it is able to share live data collected from city sensors that monitor virtually everything. He said that while it was fantastic to have this resource that is open and free to use, it also grants people with the opportunity to leverage that data for new ideas.
Diversifying investments and acquisitions to build a connected backend for the travel journey
The challenge for Amadeus will be to marry these two dimensions, bring public and private investment to create a massive data platform that will enable seamless travel.
It is a complex task as the ecosystem is unsurprisingly extremely fragmented, with each dimension having its own microcosm of various players.
“Solving the fragmentation problem is the key to the ‘smart mobility’ part. That’s going to be an expensive business,” said Akeroyd, estimating that it will take an aggregate investment of US$41 trillion in the next 20 years.
To pursue this initiative, Amadeus has defined travel beyond the scope of traditional business and leisure, into four key domains: Smart Tourism, Smart Travel, Smart Commuting and Smart Destination.
With this, Akeroyd and his team will take a consolidated approach to build the backend by diversifying Amadeus’ portfolio of acquisitions and investments.
In 2017, Amadeus committed US$800m committed to R&D and innovation, with at least half directly linked to technology that furthers the company’s smart mobility initiatives. Between 2016 and 2017, US$1.5b was invested across strategic focus areas like airport and hotel IT.
“We’ve been buying many parts of the IT backend for many parts of the travel journey… when we piece those backend IT parts together, it allows us to connect the journey for any traveller by increasing the number of touch points we have.”
The end goal is to create a cloud-based system that integrates all of these different units, so that data can flow more easily between them. “We are trying to build a complete portfolio, to aggregate all the assets you would need to create a seamless journey.”
From there, every traveller will be able to move under a single PNR (passenger name record) throughout every step of his or her journey, working to eliminate the usual friction points.
Video: Amadeus Ambient Services as an example of the ‘seamless travel experience’
Building the backbone community of ‘smart mobility’
While a large part of the initiative will need to be taken by state governments to ensure that every component of a smart city plugs into a ‘community system’, Amadeus wants to position itself as the ‘central meeting point’ for those in the travel industry.
Akeroyd argued that there is simply no use approaching various businesses individually. It will need to take the ‘Amadeus Next’ approach of building a community with the shared ambition to push the industry forward and attract companies to that.
“It is not an ‘Amadeus-only’ business. We bring people together so they can find each other to promote the idea of smart mobility and tourism [by working together.]”
In that respect, it is important to assert that the Smart Cities initiative is not commercially driven. “When you’re trying to build something, you have to put the commercial aspect on hold for a bit, it can’t be the main driver.
“What we shouldn’t be is just representing ‘supplier plus group of suppliers’. We need to have interested parties that are not yet buyer and supplier, but are just user, problem solver, supporter.
“In a way, the drive for smart cities has happened at a fantastic time for us. We have built all these assets for a door-to-door journey… now the opportunity is here.”
Data cannot follow a one-size-fits-all rule book
As with all data sharing, perhaps the biggest obstacle Amadeus will face is with issues surrounding data privacy, protection and security, particularly in light of tightening regulations.
For one, to achieve a true ‘smart city’ would require the integration of data from both private companies and public bodies. To achieve that would mean navigating through the increasingly tangled webs that make up government regulations surrounding personal data.
“When regulation like the EUGDPR comes in, there’s a group of companies that are going to be caught off guard [by regulation] and there’s a group that are in a better position already.
“Rather than a challenge to regulation, it could be of benefit to us. We’re good enough at it already that we become another level of assurance [to customers].”
Nevertheless, Amadeus (along with everyone else) will need to anticipate how these rules and regulations will continue to change over time.
Akeroyd argued that, “our data rules are written for a period before today” and will be rewritten constantly. Organisations that can create an infrastructure that is highly adaptable to changes will fare best.
“We would need to not have one-size-fits-all rules on data, he argued, pointing out that “we have to think about different buckets of data that appear in different ways and have different sensitivities.”
For example, immigration-based data is of the utmost security level, while information on your retail preferences perhaps doesn’t need the same level of reassurances.
“We need differentiated levels and the whole world needs to write them together. The challenge will be which countries and cities are able to do that fast enough.”
