“The use of XML and APIs to connect with clients and suppliers is playing an increasingly prominent role in the B2B travel segment”
Turbulence Interview #15 with Luis Tonicha, Founder of Globalybeds.
Our latest interviewee, Luis Tonicha, is a well-known travel industry veteran with 35 successful years at the Abreu Group behind him, which spanned a variety of roles and responsibilities. Following his recent decision to embark on a personal venture — in 2017 he founded Globalybeds, a B2B online bed bank system — we caught up with Luis to discuss his experiences over the years, his future at the helm of his new company and his vision of the industry.
Tonicha began his career in the tourism industry in the Abreu Group’s Administrative division in 1981. After spending a year gaining an insight into travel cost management and charter operations, he moved over to the commercial side. Here, he learnt the trade, doing a crash course in the Medium- and Long-Distance Reservations department, where he handled all sorts of arrangements related to the destinations on sale in the booking office.
“In those days, in 1984, all the staff did a bit of everything (sales, reservations, operations, marketing, contracting hotels and ground services, brochures, itineraries and so on). That’s when I started signing up hotels, first in the Algarve, then in the rest of Portugal and then, some time later, in international destinations across Asia, North America and elsewhere in Europe. Not long after, in 1990, I was promoted to head of the department — that was the very same year in which Abreu launched their first winter long-haul charter service to Margarita Island, Venezuela.”
This marked the beginning of a period during which Luis was personally involved in development, sales and distribution for destinations in the Caribbean, visiting the Dominican Republic in 1991, Cuba in 1992 and Cancún in 1995. These years also saw the launch of further charter operations, for which Luis led negotiations with other partners, airlines, hotel chains, local inbound agencies and official tourist boards in the countries where the service was being rolled out. Nevertheless, he told us — breaking off his chronological account — that his role had “always been linked with technology: I advised the programmers who got the business’s digital transformation underway back in the 90s.”
Luis went on to explain that the company’s steady growth enabled it to boost its influence in the distribution chain through retail travel agencies. This, in turn, allowed it to ramp up its charter operations to the extent that it was running almost 45 flights a week to destinations as far and wide as the Balearics, the Canaries, the Greek islands, Bulgaria, Croatia, Tunisia, Morocco, Cape Verde, the Caribbean, the Maldives, Jamaica and Miami, among others.
The years 2001 through 2007/2008 brought the golden age for these mass charter operations, with regular services operating to destinations in northeast Brazil, namely Maceió, Salvador, Natal, Recife, Fortaleza and Porto Seguro. By that point, Tonicha was part of Abreu’s executive team and was responsible for managing the group’s Wholesale Tour Operations area — including its commercial and operational strategy — and overseeing the negotiations with charter airlines and the group of wholesalers who had joined forces to share the risk entailed in the operations.
“In 2007, the board proposed that I expand a division of the company that was showing signs of potential. That is how I landed at Abreu Online, where I spent a decade building out the B2B hotel and ground services platform with a 130-strong team and learning all about online platforms, buying and selling on them and their technological development. Soon enough, the business was booming, which compelled us to internationalise the platform and open sales offices in a number of countries, including the United States, England, Spain and Brazil.”
At the end of 2016, Luis made the decision to go his own way so that he could have completely free rein to pursue his vision of a pure bed bank powered by technology. A few months later, in March 2017, he founded Globalybeds with the aim of creating an online hotel and services sales platform set apart by its product filter and its focus on the bestselling hotels in the major urban destinations and holiday resorts.
Arturo: Why did you decide to start Globalybeds and how do you differentiate yourselves from your competitors?
Luis: At Abreu Online, we had around 8,500 directly contracted hotels on our books, but some 3,500 of them actually accounted for 80% of the sales and turnover. In other words, we invested huge resources, and had a massive team in place, when such a large global direct contracting operation wasn’t really necessary. When that dawned on me, something clicked in my head and I realised that I could supply travel agencies with the hotels that people really want, which are known among travel agents.
So, one of the factors that distinguish us is that filtering process, whereby we offer the ‘bestselling hotels’ in the various destinations. This prevents there being an overflow of commercially unattractive hotels that consume a vast amount of human and technological resources.
Aren’t there possible drawbacks of having a reduced inventory?
Not really. On the one hand, we’ve got the most in-demand hotels signed up, and on the other, everyone knows everyone in the bed bank community and we all sell and buy inventory among one another.
I think that what gives us an edge over our competitors is our ability to build technology that — through API/XML connections — allows us to cater to and interact with clients, suppliers and channel managers.
That enables us to plug into third-party systems and contract hotels, transfers, excursions and insurance dynamically. For example, we make contact with hotels through channel managers. Every hotel chain has its own channel, through which you can connect with dozens of suppliers (whose systems aren’t standardised) if you do the relevant development work.
The sales and supply service for travel agents is entirely objective — they have a clear yardstick as regards the units that are most in demand among consumers.
Which markets are you active in right now and what are the company’s expansion plans?
We recently integrated our booking engine with Today Touristik Group (TTG). This international group has its own technology subsidiary, BRAINTech, with whom we worked to develop the XML platform that underpins the entire group and its clients, as well as jointly building out other lines of business like wholesale tour operation and a retail distribution network.
TTG is currently present in Portugal, Spain, England, Greece, Cape Verde, Angola, Turkey, Egypt, the United Arab Emirates and the USA. Its plan is to be present in 40 tourist destinations by the end of this year.
What have been the biggest challenges associated with your international expansion? Examples could include currency management, regulation, cultural differences or staffing.
The group’s model generates both major synergies and challenges vis-à-vis the various local suppliers that we come into contact and work with, especially as regards currency management and differences in culture and working practices.
Let me give you an example. In the UAE, if you buy a hotel in the local currency, it works out cheaper than if you buy it in euros or dollars. The stumbling block is that banks often aren’t equipped for this sort of transactions and, moreover, there aren’t a lot of mechanisms available to use different currencies. Add into the equation the substantial banking fees and the fact that this is a business with very low margins, and the hurdles are high.
In this sense, currency management affects a large swathe of the industry, as you have to handle payments in different currencies and exchange currencies in order to pay suppliers. Indeed, many companies lose time and money on account of FX. As a result, there’s an increasing need for more companies to emerge that can solve these problems for you automatically and make it easier for you to swiftly exchange currencies by plugging straight into your in-house systems.
What do you think are the most important technological transformations taking place in the travel industry and in your segment specifically (for example, dynamic packaging, online sales or connections with other players)? And how is your organisation tackling them?
Well, Globalybeds’ core business is based on technology and systems, so we are well versed in the ongoing technological advances, such as the changes to programming language required in order to integrate with different systems.
In general terms, the use of XML and APIs to connect with clients and suppliers is playing an increasingly prominent role. For instance, different connections are needed for GDSs (for regular and low-cost flights), bed banks, cruise companies and wholesale companies (in order to integrate charter products, packages, insurance and rental cars via XML). As I mentioned before, at TTG we’re lucky enough to have the help of BRAINTech, which makes this technological development much easier.
Lastly, from your point of view, what attributes will bed banks need in order to thrive in the face of an increasingly uncertain future?
Adaptability, evolution and differentiation are key concepts, albeit not the only ones. With the world around us constantly changing, it’s vital that you evolve and stay on top of the latest trends in the different markets and in technology, as well as adapting to the shifting habits of consumers and travel agents.
On a different note, from the client point of view, it’s important to offer specialised products and services and to establish a solid physical and logistical structure that adds value and can be relied on. Speed in confirming requests and delivering services is also paramount.
You’ve got to have intuitive, user-friendly systems that deliver products quickly (in under a second) and work seamlessly on the full range of devices that people use on a daily basis, wherever they may be.
With regard to technological development, this is a multi-speed world. For instance, habits and trends that are currently taking root in Europe will not be replicated exactly in other regions, such as Africa, and this represents an opportunity.
Technology is undoubtedly going to continue to change: we’re going to have devices equipped with artificial intelligence, more sophisticated and secure payment methods, and the likes of cryptocurrencies and other new products are going to emerge. However, the history of mankind revolves around adaptation and innovation. That is the key to ensuring that your business remains visible no matter how disruptive these changes prove. That’s why I have an optimistic vision of the future and why, although I know that the bed bank business will undergo major upheaval down the line, I expect companies and people to rise to this challenge.
Originally published at www.kantox.com on February 13, 2018.