Re-defining the Need for a Travel Booking Engine

For years a standard travel e-commerce approach to online booking involved licensing a "booking engine" for the Website. These booking engines began as a front-end to the GDS allowing the consumer to book air, car and hotel online. As travel e-commerce became more complex, booking engines often added business logic and customer profile information. An alternative trend to enable Website booking capabilities has an emphasis on the a robust middleware application. With this approach, the booking engine is nothing more than a presentation layer that sits on top of the middleware software and relies on it for all of its communication and business logic. The same middleware layer powers call center applications providing a common platform for online and offline customer interaction. A robust booking engine which contains customer profile information and business logic limits the use of the these functions for offline call center agents. Despite the hype around touchless travel, the offline customer agent still plays a critical role in travel e-commerce, especially for complex itineraries. Allowing this agent to pick up and complete partial reservations created by the consumer is an important role and turns call centers into customer care centers. This trend towards a robust middleware application continues to grow with many vendors providing this new functionality.

Personalization

When I launched my consulting practice in 1995, many of my early clients (Carlson Leisure Group, Broadvision) focused on using personalization techniques for travel planning and booking. It is surprising that now in 2006, we've still seen few efforts by the major travel players to filter queries and deliver more personalized information for their customers. There are some obvious concerns about embarking down a personalization track. Consumers have little patience to fill out detailed preference profile forms (as well as privacy concerns) and attempts to determine preferences implicitly often alarms consumers that "big brother" is watching. Despite these obstacles, I am still convinced that personalization has a role in travel planning. Currently a basic knowledge of past itineraries is not being used to predict future choices. If you are working on personalization techniques for leisure or corporate booking systems, please let me know as still believe that providing filtered content that meets customer's needs can improve the efficiency of online booking and value to the end consumer.

It's All About Aggregation

I wanted to further clarify my beliefs regarding the changing travel distribution environment. First let me make one point clear, I do not believe the GDS will "replaced" by the so called GNEs. A more realistic scenario is that both GDS and GNEs will exist as low cost distribution channels. The debate should not be framed around GDS verses GNEs. Instead the issue concerns the point at which travel content is aggregated. Whether the major industry players are willing to admit it or not, we live in an environment where inventory is already fragmented. Here are just a few examples to prove my point:
1) LCCs such as Southwest airlines cannot be purchased online other than at southwest.com
2) In Europe where 80% of the hotel inventory is from independent properties a majority of these properties are not in the GDS and therefore not available through traditional GDS-based booking engines. This applies to rail and ferry travel as well.
3) The major TMCs such as WorldTravel are investing millions in a new platform (project Renaissance) that will aggregate content from multiple inventory sources.
4) Large leisure agencies (e.g. Liberty Travel) have also been investing heavily in infrastructure changes to accommodate the new multi-source environment.
At the end of the day, suppliers (air, car and hotel) must have the right to chose how they want to distribute their product and at what price. This is basic market economics which has been masked by a distribution environment controlled by a few large entities (the oligopoly that has been the GDS). The Internet has permanently changed distribution by opening new and emerging channels. The GDS will continue to be a major source for travel inventory, just not the ONLY source.

Reuters Article

It was nice to be quoted in a today's Reuters' article. Unfortunately , the reporter became confused between the definition and concept of a GDS and that of an online travel agent. Though there is a connection between online travel and the GDS, (Travelocity and Orbitz are owned by two of the GDS, in the case of Cendant they own both Galileo and Orbitz) the way the reporter tied the two together is incorrect and misleading. The issue is about distribution and value, not online travel. Considering Orbitz's direct link technology, they themselves are already bypassing the GDS. My comment about leakage stands. I believe we will see some inventory go through GNEs in 2006. The real question to ask the GDS, is how low can you go? Is there a floor on their ability to match GNE pricing? What role does technology play in setting distribution costs? The GNEs say it plays a major role. The GDS says its all about price. We'll see who's right this year...

Dynamic Packaging verses Dynamic Shopping

Dynamic packaging has continued to be the topic du jour for many suppliers and intermediaries. In addition to online travel agencies offering dynamic packaging, many core supplier have also thrown in their hat to the dynamic packaging trend. A driving reason for suppliers to offer dynamic packaging is the underlying belief that dynamic packaging will lead to increased stickiness and greater value to the brand loyal consumer. In my study entitled "Selling Complex Leisure Travel Online: Focus on Dynamic Packaging Technology" I described the emerging platform for dynamic packaging along with some of the factors driving this trend. Despite a clear growth of packaging options, many consumers continue to shop across sites combining air, hotel, car, destination research, and activities into their own custom itinerary. Will we ever see a day where these two trends converge to allow consumers to shop across sites, but still obtain an overall package price? It is unlikely that this will happen anytime soon, but this capability should not be overlooked as the Internet travel space continues to evolve. The Web is about freedom and consumers will continue to do comparison shopping no matter the capabilities of an individual site.

New Start Up with Fetch Technologies

I wanted to let my blog readers know of a new start up I am launching in conjunction with Fetch Technologies. Without divulging too much information, the new entity is based on patented AI search technology from Fetch that indexes the "deep Web". The product will be a traveler tool that allows the consumer to "Collect, Organize and Share" information from ANY travel Web site. More news about this exciting new start-up as it develops. In the meantime go to the Fetch Website and check out the Fetch Technologies Featured on KCAL 9 News link to learn more about the company.

PhoCusWright NYU Study

My friends at PhoCusWright have released a new study in conjunction with NYU entitled: "The Effects of Emerging Technologies on the Travel, Tourism and Hospitality Marketplace". The research was created to measure the impact of new technologies on travel, tourism and hospitality companies, analyze their influence on current distribution channels and explore future technologies that will affect the way travel is purchased in the next five years. From that study the following list of Technologies with the MOST Impact on Travel Over the Next Five Years were published:
1) Data mining
2) Metasearch technology
3) AJAX
4) Data warehousing (tie)
4) SEO (Search Engine Optimization) (tie)
5) Dashboard marketing mix models
6) Wireless connectivity
7) e-Procurement systems
8) Automatic check-in/out (tie)
8) Deep Web searching (tie)
8) Business management applications (tie)
9) Mapping
10) RSS (Real Simple Syndication)

I am curious whether my Blog readers agree with this list. Is there anything missing? How would you change the order? Is this too US-centric?

Please post your comments.

TMC Musical Chairs

The game of musical chairs in the global TMC market continues with the announcement this week of the purchase of Synergi by The Travel Company who themselves where recently purchased by BCD (owner of WorldTravel). I view this as a stop gap measure designed to give BCD an immediate global presence. BCD will likely go ahead and purchase some of the members of this network, but for the time being the global reach of Synergi provides the new BCD TMC representation in 45 countries. The thing to keep in mind in that the "music hasn't stopped" in this game of musical chairs. Expect a lot more announcements from BCD, Hogg Robinson and TQ3 Navigant International over the next few weeks. These changes combined with contract renewals this year for GDS / airline DCA type agreements promises to make 2006 a turbulent year for business travel (sorry for the pun).

2006 The Year Wireless Travel Finally Takes Off??

In late 2003 I wrote a research report entitled Emerging Trends in Wireless Technology and The Global Travel Industry. In this study I reviewed current trends in wireless technology, specific wireless travel applications and ideas for future wireless apps. Much to my dismay, many of my predications have not yet materialized (certainly not in the US). The failure of my predictions are a function of timing rather than accuracy. With 3G (third generation) networks now standard in Europe and rapidly emerging in the US, and cities such as San Francisco and Philadelphia building Wi-Fi networks, 2006 may finally signal the explosion of travel oriented wireless applications. There are three key points I addressed in the study that still apply, travel apps must be: 1) Location based - the app should reflect the specific location of the user 2) Situational based- the app must apply to the particular need of the user (e.g. searching for restaurant's in NYC) and 3) Opt-in- any message received promoting a service or product must be on an opt-in basis (permission based marketing). If you have or are developing any travel oriented wireless applications, I'd love to learn about it. Please contact me at norm@traveltechnology.com

WorldTravel, BTI, and TQ3

Today's announcement may have caught many by surprise. In case you haven't seen it -
1) WorldTravel and BTI are dissolving their partnership
2) BTI UK will most likely be re-branded as Hogg Robinson and will likely purchase additional agencies in the US
3) TQ3 (TUI) is selling its European operations to BCD (the owner of WorldTravel)
4) Navigant will retain the TQ3 brand but now has limited operations outside the US
As part of study I am authoring for PhoCusWright (to be released in Q1 2006 and distributed by ACTE), I became very much aware that something was up with these three entities during my research late last year. The conflict was clear between BTI and WorldTravel as each had separate initiatives to provide GDS independence and aggregation services for its clients. In late 2005, TQ3 also announced an aggregation platform initiative, obviously now part of the WorldTravel project Renaissance.
What does this all mean? - Complete ownership is crucial to complete on the global TMC stage. When the dust clears there still will be four mega-TMCs - Amex, CWT, Hogg Robinson and WorldTravel. Navigant International either through the TQ3 brand or some other means now needs to build a global network to compete. Given the number of large global wins over the last 12 months by the BTI organization, it is unclear how the two former partners will be able to continue to work together given their emerging competitive stance, though both PR organizations are hard at work trying to reassure global clients. This change may trigger some of the large BTI clients to re-bid their TMC services. Overall this announcement is good news in the short term for Amex and CWT who have their global organizations in place. In the long run these new entities will represent stronger global players. Ownership in major markets around the world has become a requirement to compete for global accounts. This is challenging news for agencies that belong to Radius and Synergi.

Airline Channel Management

A lot has been written (including in this Blog) on the fragmentation of inventory and the emergence of alternate distribution platforms. One underlying theme that has not been discussed is the need for airlines to execute effective channel management strategies. There are a number of software solutions that allow hotels to manage different buckets of inventory through different channels, why doesn't this apply to airlines? The primary problem lies in the nature of the legacy airline reservation systems (CRS not GDS). It is difficult to deliver unique pricing to a particular channel if the infrastructure platform (e.g. the ability to store unique fares) is not in place. It is my belief that 2006 will see increased efforts by airlines to more effectively execute a multi-faceted channel pricing strategy, primarily designed to drive more business through specific channels. If the airlines can every combine dynamic pricing with customer value, the market will permanently change allowing the best customers to receive preferential pricing. This represents the ultimate in channel and customer relationship marketing.

Adventure Travel

Back in October I had the pleasure of speaking at the first Adventure Travel World Summit in Seattle. This was a super event that brought together for the first time a variety of outdoor and multi-cultural providers. The content was top notch and the attendees represented the leaders in this segment. A recent study by Cendant stated that " (the next generation of consumers) will challenge traditional vacations as they seek, on average, up to four very different experiences a year. A passion for 'doing' rather than 'having' will double the number of consumers flying by 2020. " This passion for doing reflects both adventure type of travel as well as multi-cultural trips. We all need to keep our eye on this segment.

Sub Market Online Travel Growth

2006 promises to see a significant growth for online travel sites that are targeted to specific sub-markets. Based on some current projects it is clear to me that online travel growth will come in terms of vertical market specific sites. These sites will either focus on specific market segments such as large ethnic markets or types of travel such as long haul travel to emerging markets. Sites like this have been in existence for some time. The interesting spin on these types of new companies is their ability to implement next generation platforms as their foundation infrastructure. These new platforms will capture inventory from a variety of sources (multiple GDS, Web search tools, direct connects) and combine it with unique content to deliver niche solutions for specific types of travel. As these sites emerge in 2006 and become more prominent, the traditional OTAs (Expedia, Travelocity, Orbitz) will likely try to create segmented versions of their products for specific markets in order to tap this sub-market approach. More specifics on this subject in 2006.

Grass Root Content

Content is king again, but I believe the concept of content is being turned upside down by the growth of traveler generated content. For years travel sites have believed that content was best delivered online using traditional offline technologies such as guide books. The reality of the Net is starting to change the nature of content. Two key technologies are driving this trend: blogging and camera phones. Weblogs are not a new phenomenon, but the idea that Blogs could influence the traveler's online purchasing behavior is still somewhat untapped. This can be both positive and negative. A recent negative corporate travel Blog rant from a senior engineer at a prominent computer company sent the corporate travel department scrambling for a new type of damage control. Specialty blogs on everything from snow boarding to adventure travel can influence a reader's choice of destination and travel supplier. Camera phones are now ubiquitous and as the quality has improved so has the amount of digital content on travel that is being put on the Net daily. Sites such as Flickr and Buzznet allow travelers to instantly post their digital photos and annotate their content to be shared with others on the net. Blog search engines such as Technorati not only allow search of Blogs, but now include shots form both these digital sources. This is just the beginning of the explosion of consumer driven travel content, stay tuned lot's more to come.

Forced packaging

As you probably know late last year I authored a research study on the subject of dynamic packaging. Most of the industry agrees that packaging is a major trend and that the technology behind dynamic packaging is improving. While purchasing an airline ticket at a major online site I was bewildered by the number of unnecessary screens offering packaging. This was a trip to Vegas (perhaps one of the top packaging destinations) which had some narrow flight times. For 3-4 consecutive screens, I was unable to simply complete my purchase without scrolling down to the end of the page while being bombarded by package offers. A better solution would be a simple button on the first summary screen with packaging offer, not three additional screens! Dynamic packaging should not be push packaging as by its nature often these packages don't always meet a traveler's requirements.

Online verses Offline travel reservations

I wanted to clarify my position on online verses offline travel. In a recent Travel Weekly article I was quoted: "People are going online to shop. Travel is no different. That's where the marketplace is going, and anyone who believes that things will originate with a phone call is completely out to lunch."I do stand by this statement, though it was taken a bit out of context. As clarification: My belief is that offline support will continue to be a critical part of the online transaction. During a recent engagement with a large resort company, it was estimated that 80% of the consumers who telephone the call center have been online. This is no different across all segments (hospitality, corporate travel, vacation planning). The Web should not be viewed as another channel, but the ultimate channel for consumer interfacing. The misconception that all travel will be automated with no human involvement, over estimates the ability of software to emulate the human mind. In reality, complex travel purchases whether it is a tour, cruise or multi-city international business trip, will likely require human assistance for some time. The key is where the human action comes into play and how it is integrated with the online reservation process. One need only to look at he growth of call centers for giants such as Expedia and Travelocity to see that offline support is still critical for online transactions. My friend and colleague, Philip Wolf, CEO of PhoCusWright has been talking for some time about the transformation of call centers to customer care centers. It is this integration between offline and online reservations that will make this transformation possible.

The Future of the GDS

I wanted to take an opportunity to clear the air on my opinion of the "future of the GDS". In various articles I have been quoted as being critical on the pace of innovation of the GDS and their challenges in respect to moving to a new lower cost distribution model. I wanted to state that it is my belief that in the long term the GDS will continue to be a major force in travel distribution, despite the growth of so called GNE (GDS New Alternatives). The GDS market has been oligopoly and as such has not experienced significant technological competition, until recently. I have never questioned that each of the GDS companies are moving to more open systems. The issue is the pace of market changes and the speed by which each of these companies move their core transaction engine off the TPF mainframes and truly embrace a new open infrastructure.
The other key issue is the continued fragmentation of inventory sources, a phenomenon that conflicts with the traditional GDS single source model. Travel distributors (travel agents, TMCs, tour operators) need to gain independence from the GDS at the point of sale. Relying on GDS POS technology limits the distributors ability to access multiple sources of inventory and integrate external and internal sources of content in a seamless manner. The major TMCs (Amex, CWT , WorldTravel BTI), travel agencies (LibGO) and online wholesalers (Expedia) all have recognized the need for this POS independence and have implemented technology that access multiple sources of inventory simultaneously. The GDS are still an important part of this equation, just not the single source.

A New Methodology for Procurement

Over the years I have been involved with a number of major procurements. This ranges from selecting a new reservation platform for an escorted tour operator to a major end-to-end acquisition for the U.S. Federal government travel. While at Sun Microsystems in the early 1990s I received my certification in purchasing from the Institute for Supply Management.
Over the years I have been amazed on how the traditional RFP process can be bogged down with overly complex RFPs with open ended questions which yield volumes of marketing spin, rather than true vendor capabilities. I believe there is a better way.
I am currently working with a major resort on an acquisition of a new central reservation system. After reviewing their 900+ RFP (created by another consultant a few years ago), I decided a more effective acquisition strategy was needed. The path we've followed, required my client to narrow down a list of (25) Mandatory Requirements. I then conducted interviews with a number of suppliers using the Mandatory Requirements as a guideline. If the supplier did not meet any of the requirements, they were eliminated. The selection team then used Web conferencing technology to view demos from the qualified vendors, and rated each based on their software application's functionality. A scorecard was used to translate each team member's qualitative evaluation into a quantitative rating, thus forcing a ranking of the remaining suppliers. Our next step will be to further narrow down the selection to a 3-4 short list of vendors. Each vendor will then be invited back for a multi-hour live demonstration controlled by test scripts which force the vendor to show their product's key functionality. The end result of this procurement process is a deeper understanding of a narrow set of qualified vendor's capabilities. This shortens the acquisition process and yields a better result for the client.

Podcast

If you are not aware of the new phenomenon of "podcasting" here is an example I've created:
traveltechnology.com/Podcast_1_06_06_05.mp3

Enjoy!

Meta-search and Dynamic Packaging

Recently both Sidestep and Kayak announced capabilities to search multiple sites for packaging comparisons. How do these technologies work with the trend towards dynamic packaging? The Sidestep beta vacation search engine allows the consumer to filter the responses by price ranges and quality of properties (# of stars) and provides an integrated display of vacation package options. The Kayak vacation search requires you select a specific site to search and therefore it not currently a meta-search vacation engine. Neither of these sites offers a way to compare dynamic packaging. There are many technological challenges in trying to offer a meta-search based on dynamic verses static packages. Foremost is the differences across sites on booking flow of various dynamic packaging engines. The initial offerings from Sidestep and Kayak involve agreement from the vacation packagers (mostly static package providers). It is my belief that a true dynamic packaging meta-search capability could be created across sites, but would need to enlist the cooperation of Expedia, Travelocity and Orbitz. Agreement from these sites may be an issue as each has taken a stance that meta-search commoditize their products. Keep tuned to this channel for further developments as meta-search and dynamic packaging converge.