Why developing your own tech is a bad idea

Many attraction, tour and activity operators in Asia are recognising the importance of having the best tech solutions in place to scale their online business, and reach today’s online travel shoppers. 

As we’ve worked our way through the trade show circuit this year, we were surprised to encounter a few tour and activities brands that are actually considering building their own digital products. After learning more about these mavericks and the solutions they’ve set out to build, we’re impressed with their tenacity, but at the same time, we also must stay grounded with a realistic perspective.

The fact of the matter is that, for the most part, operators should not be doing this. The results are wasted time, precious focus and hundreds of thousands of dollars (sometimes millions) trying to build in-house tech.

In reality, operators should leave tech work to professionals so they can stay free to focus on what’s most important for them: the customer. 

In no particular order, here are some key points to consider.     

Your tech will always react to OTAs

Some operators in Asia who aim to build their own technology try it because they think they can remove OTAs from the sales channel equation altogether. The thought process is sometimes along the lines of: 

Hmm, if I can just build my own booking platform then I won’t need to subject my brand to a margin loss of working with the local OTA. I bet I can save money this way...

Unfortunately, this is incorrect. In fact, even if your brand is able to snap its fingers and come out with its own automatic booking system, it doesn’t mean they will be able to change consumer behaviour at large. 

Phocuswright says Asia-Pacific's gross OTA bookings will reach US$96.5 billion by 2020. Modern consumers use OTAs because they can book their holidays in a linear and holistic way, from end-to-end. Usually, your hiking excursion in Thailand is just one puzzle piece in an otherwise fully booked holiday. If your offering cannot be found on the popular local OTA, then the user will probably not go out of their way to find you. 

Brands can offer users better prices when booking directly via their website, but this is a far cry from abandoning OTAs altogether. Truthfully, it’s foolish for operators to believe that they can pull 100 percent of their potential customers away from their preferred OTAs. Instead, operators should hedge their bets and try to let users book in as many different places on the web as possible. 

Additionally, if what you’re building is meant to integrate with OTAs, then you may be underestimating the high-touch nature of your own product. This kind of tech needs to be developed by experts in the travel experience field, and kept up-to-date with what OTAs require. It’s a truly fast-moving technical game, one which operators won’t have the bandwidth for if they also have to serve customers. 

Building tech takes lots of time and money

Experts will tell operators that any piece of meaningful tech innovation will require at least one to two years of focused development before a minimum viable product can be released. During this time, the brand will have invested heavily in research and development, not to mention beta testing groups, and hiring a whole new department of humans in-house. 

Serious tech plays incur fixed overhead costs and several new hires. Teams will need a chief technology officer, front-end programmers, back-end programmers, a product manager, one or more UI/UX designers and sometimes more. 

These are all full-time roles that require full-time salaries. They also create administrative and HR burdens. Folding more staffers into an experiential travel organisation represents a long-term investment. Brands and operators need to do an honest cost-benefit analysis and ask themselves if they’re ready for this kind of commitment and risk.  

What you're building usually already exists

Have you truly done your research? Often, what brands think they are building already exists somewhere else. What is more, these products can be ‘white labeled’ (e.g. used by an operator without representation of the brand that originally developed the product). Sometimes, this is just what the doctor ordered. The time and money that operators can potentially save by white labelling ready-made tech products (instead of developing them from scratch) cannot be understated.

Some of the benefits that come with white labelling software include but may not be limited to: boosting the visibility of your brand, having reliable tech that creates brand loyalty from your customers, and instantly getting a refined product to market (and faster than your competitors). 

Also, if the tech your brand wants to build is only meant to be used by your own company, you may need to rethink this strategy. The only reason experiential travel brands in Asia would need to develop their own tech IP from the ground up is if they plan to release it to the market at large, including competitors.  

Operators need to focus on what they do best

It comes down to a fundamental question: What is the goal you are chasing? Are you trying to upend an entire industry via the power of the internet? Or are you trying to see excellent business results for your brand? If it’s the latter, then you should consider consulting a knowledgeable tech solutions provider about what the right tech play is for your brand. 

In the end, while experiential travel companies need to embrace new tech solutions to scale up their core business, attempting to build in-house software is most likely a waste of time, energy and resources. Instead, operators in Asia should simply align themselves with savvy out-of-house experts to stay ahead of the game. This will free them up to focus on what really matters: delivering the best experiences possible to travellers.

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