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Asia will set pace for change and innovation: Bailey.
By Yeoh Siew Hoon ~ thetransitcafe.com
Tuesday, 5th August 2008
 
Yeoh Siew Hoon catches up with Robert Bailey, the new president & CEO of Abacus, to learn more about the man, his style and his thoughts.

You took this job because …

The opportunity to join the market leader in one of the most complex and fast growing and set to be the largest region in the world was too good to pass up. Within the marketplace, there are a lot of innovations happening in the application of technology. SMS messaging originated in Asia. I believe changes in behaviour from the use of technology will emerge from this marketplace.

Robert Bailey, Abacus president & CEO (pictured left)

Some people say it's the worst of timings. The former CEO left on a record high. The global economy is in trouble, fuel prices are at record high, the travel and tourism industry is in crisis.

True, at the time I made the decision, fuel prices hadn't gone as crazy. People were calling the financial crunch the bottom when it was merely the start. There was a feeling that Asia would be less impacted. I couldn't see how this region would not be affected – so I am coming into this, eyes wide open.

In just a few months, aviation has changed remarkably. With the rapid inflation in fuel costs, top line revenue is probably not as important as cost management and the situation where fuel costs are now 40% vs 15% of an airline's costs is untested.

In the low cost sector, high fuel costs might cause a bit of a shake-out but it could also open up tremendous opportunities for some players – those who can move quickly to fill the gaps, invest wisely and keep a tight control on costs.

So I don't see it as the worst of timing. The industry is already going into a structural change, and it's being driven by technology, economic wealth and a generation effect – the ubiquity of technology in everyday lives.

This will enable step changes in the business and we will see rapid innovation. The time is right for amazing change to happen. Yes, the global economy is bad but it's cyclical. It will come back, and it will probably be stimulated by this region.

You sound like you thrive on change.

I'm a change junkie. But not for change's sake.

What will you change about Abacus?

I am doing my due diligence to see what we are strong at, what we can improve and what our customers want.

Some people might say the "perfect storm" is not the right time to do due diligence, that you need to act fast.

On the one hand, yes. On the other, if you don't, you might sink faster. If you tear up things before knowing what you need to, you might do more harm than good.

It sounds like you believe in the collaborative/consultative approach in your management style.

I try to encourage that, I like to be challenged, I like new ideas to surface. When you're in a rapidly changing environment, if you don't have that continuing quest to engage market stakeholders and organisational stakeholders, you won't be able to come up with the right solution.

Don't get me wrong though. I'm also a driver, very task-oriented. Let's say, I won't sit down and talk all the time. When it's time to act, I will.

Some people contend that GDSs are recession-proof. That you are like a utility and that in a way, you are like the oil companies. There are just a few of you, you provide the "fuel" for travel distribution and you therefore get to dictate prices.

(Laughs) Where did you get that? Totally recession proof, no. If travel volume declines, we are affected.

Are we like oil, a utility? No, we are an enabler for the airlines and travel service providers, we help them to sell more cheaply and more efficiently by leveraging the travel agency model.

There are those who contend that it is difficult for Abacus to innovate when most of the development work is done by Sabre in the US?

We do a lot of development work ourselves and we also benefit from Sabre's investment. You could say we blend the best of both worlds – regional and local capabilities with global resources. The core booking engine, yes, that's Sabre's but there are a lot of other products and services that are developed locally.

Is it foolhardy to rest the bulk of a company's fortunes on travel agencies when they are in the process of being disintermediated?

We are what we are.

This marketplace is still highly served by travel agents. The service culture and the way people buy travel – it will take a long time to change behaviour. In the US, there's still a high percentage of people who book through travel agents, either online or offline.

We will see the different channels evolve in Asia – offline, clicks and mortar, online, direct, low cost direct. We are seeing faster growth in the online travel agency space than airline or travel services providers direct.

Intermediaries will always have a role. There will always be a need for aggregation and travel service providers simply cannot deal with the end consumer in such scale, so someone's got to be able to deal with the end consumer.

The thing is, other players could end up in this space. Innovation could come from outside. It's the art of the possible, isn't it, made possible by nascent technology?

To stay relevant and add value to the distribution channel, a smart travel agent should:

Add value. Let's take e-ticketing. That's like the last physical totem pole of the industry and it's gone. In a sense, there was value to the physical ticket. But now that's gone, what's your value add?

The one thing Abacus staff should know about you is:

I am passionate about customer service and adding value to the customer. If we don't do that, we don't deserve to get paid.

The one thing Abacus partners should know about you is:

I am pretty straightforward and business oriented.

If you had to choose three things to focus on during your time with Abacus, they would be:

Helping the company become more market focused, build up the team's skills and capabilities so they can manage in the changing environment and making the company more customer focused.

When you leave Abacus in five years, this will be your biggest achievement:

It'd be helping the business transform the distribution model in Asia by enabling more online business and the adoption of technology in travel distribution and to grow Abacus top and bottomline results.

When you leave Abacus in five years, you don't want this to be your biggest disappointment:

That we missed the boat, that we missed the opportunity to transform.

When you are not working, you are:

Sleeping? Swimming, exploring the region.

Yeoh Siew Hoon, one of Asia's most respected travel editors and commentators, writes a regular column on news, trends and issues in the hospitality industry for 4Hoteliers.com.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her other writings can be found at www.thetransitcafe.com

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