Company Profile: Orchestra ready to conduct…

According to the French company, the takeover of Traffics last month by Orchestra’s parent company, Travelsoft, will not mean the end of consolidation in the European travel technology sector.

Traffics, Germany’s leading independent software-as-a-service (SaaS) provider, gives French Travelsoft a significant presence in the neighboring country.

Christian Sabbagh, founder and chairman of Orchestra, said he expects further consolidation in Europe, with acquisition the most likely driver.

He said that due to the fragmented nature of the European market, there remains a need for localized technology supported by a central core offering more generic solutions.

“We believe there is a need for consolidation in Europe,” Sabbagh said. “We have a very local travel tech industry.

“The travel industry is, of course, global, but in the leisure sector, for operators, agencies and distributors, travel technology is very local.

“There are historical reasons for this because the way people book is different. The systems were built locally and consolidation won’t change that.

Sabbagh said this feature of the European vacation market is what makes it difficult for big global OTA groups like Expedia and booking.com to dominate.

“For leisure packages, I don’t think the local differences are diminishing, even with modern technology like the cloud.

“It’s for single item flights, hotel or car rental, but when it comes to packages and vacations, I don’t think so.

“Even the great players don’t go into this area. They only play in the global airline and hotel business, which is obviously huge.

“When booking.com wants to do packages, they use lastmimit.com technology because it’s local and very European, plus the fact that the volumes are lower.

“In smaller markets with a high level of complexity, you don’t usually see the big companies.

“They prefer to take share in global single component markets and this is a good strategy for them. But you still have this leisure vacation market which is small for them but big for us.

The two areas where Orchestra has focused its development resources during COVID – NDC connectivity and integration of tours and activities providers – require holistic solutions.

But Sabbagh said travel technology is so specific to particular markets that it’s impossible to grow organically in other markets with a single system.

“It will not be easy to consolidate without an acquisition. If you want a proposal for a big market like the UK without acquisition, that’s really tough.

“There is an ecosystem, 20 years of technology, connectivity, specific processes between operators and agencies and relationships with airlines.

“You can’t rebuild that, and you can’t rebuild trust in the ecosystem. If you’re acquiring, you need to stay focused on that market and not have one global platform. »

Sabbagh said the pandemic has made most travel agencies more dependent on their technology partners after being forced to downsize internal teams.

This has allowed Orchestra to recover well from COVID with revenues this year expected to exceed 2019 and projected growth of 10%.

“We are stronger than two years ago because we have a lot of new features, a lot of new things to bring to the market.

“And we have a more mature market because everyone saw that the need for technology was huge. Even higher than before COVID.

“Travel is very demanding, now more than before, and you have companies with less staff because there is a staff crisis all over the world, in software as well as in our sector.

“The current situation is that there is a huge need for technology and yet smaller and smaller teams within tour operators to develop these systems.

“That’s why companies like ours in Europe will be even stronger than before, if they managed the last two years well.”

Sabbagh added, “Doing technology in-house is getting more and more complex. Your technology must be operating at very high levels or you are in trouble.

“You hear people talk about having very automated technology, but ultimately the technology is human.

“If you don’t have the team, if the team leaves, then you have a big problem. Even if you are able to pay more to bring in more resources, it’s very difficult.

“You need to connect to a lot of supplies and that’s part of our expertise. We have over 300 connections, so this is part of our core business.

“Today we have 20 different payment gateways, 10 years ago we would have only had two or three, so it’s getting more and more complex.

“If we bring in a new customer, they have immediate access to those 20 payment integrations. Doing that internally is very difficult.

“The most important thing for us was to keep people who know how to integrate these providers into Orchestra.

“Young IT people want to work for a tech company where you think about technology all day and it’s your business. In the travel industry, it’s less easy to do that.

Sabbagh predicted a revolution is underway as Iata’s new distribution capacity standard begins to really gain traction this year and next.

Orchestra retained all of its development resources during the pandemic and directed it towards integrating more airlines into its NDC direct connect platform.

“We’ve seen a huge acceleration on this,” Sabbagh said. “Today, we have nearly 20 airlines for which we can use Orchestra to manage direct connection reservations.

“NDC adoption is starting. Initially, the developments were very tailored to the needs of OTAs, with very simple processes.

“But when you work with tour operators, you have very specific issues. You have particular fares and need a way to cache lots of flights.

“You also need to have a very solid back office. If you are an OTA, you have huge volumes, so you can have three people in the back office for each airline.

“But if you’re a medium-sized tour operator, you only have one back office. You cannot dedicate teams to specific airlines, so you need a unique back office.

“That’s why adoption hasn’t been very fast. We are only four months away from rebooting and you should see an evolution of processes internally.

“This year will be an important year to switch to this new world, which is really new for everyone.

“We are coming from the old GDS world to something more like a marketplace world connecting many sources. This is a revolution in our industry.

“The airlines are really pushing for this because there’s been a change in the economics of the business and they can’t keep paying ten, eleven or twelve pounds or euros each way.”

A second area of ​​focus has been the activities and content delivery from a hugely fragmented but large sector of the travel industry.

Orchestra has a strong presence in the ski industry through direct partnership with popular alpine resorts and has onboarded leading suppliers like Viator.

Sabbagh said agents and operators need the ability to add activities to packages to differentiate themselves, but low margins mean the process needs to be automated.

“For activities, you need connectivity and a marketplace because the margin you will get is very low compared to a full package.

“If you can do this in an automated way, you can generate revenue and relationships with your customer.

“So maybe you can think of selling activities that are not just related to travel but also to the customers’ lives at home, what they want to do on the weekends.

“It could help agencies stay in touch throughout the year, not just once a year or once every two years.”

Orchestra sees its role as providing a proven technology platform that can meet customers’ needs as they need them, but can adapt as they evolve.

Sabbagh said, “If we didn’t have the platform, it would be impossible to provide a solution, but we have to adapt.

“Our strength is the platform, and then we think about the needs of our customers and how to implement it. It’s like a service company but with software.

“More than development, it’s driving change with our customers and understanding what we need to do to be as close as possible to their processes because operators have specific needs.

“How can we help them change without losing productivity, maybe gaining productivity, but the focus is on how not to lose productivity.”