The Travel Industry Makeover
by Hinny PH Kong, CMPNet Asia
With the Internet fast becoming the platform of the day for conducting commercial activities and business transactions, it is important for companies to take advantage of information-communication (info-comm) technologies--Internet commerce, mobile computing, and software agents. Internet technologies bring about opportunities for automating customer transactions, internal business processes, as well as business collaborations with associate companies or alliance members for both B2C and B2B e-commerce activities. Here's a look at this info-comm technologies that are used today
and that will impact the future of travel.
A growing number of companies in the travel industry make use of the Internet platform as virtual shops for marketing and selling travel products and services. Web travel sales has almost doubled annually for the past three years and are expected to reach S$20 billion (US$11.4 billion) by 2001. It is estimated that by 2003, Internet online sales would reach 10% of the total bookings and business transactions of the travel industry, including the airlines, hotels, and car rental companies. The followings are indications of the current trends.
1. Many hotels have set up their own Web sites to market and sell their hotel rooms (e.g. Holiday Inn, Sheraton Hotels, the Marriott chain). Most sites allow visitors to check rates and availability, make reservations, and receive a confirmation number within a minute or so of the reservation request.
2. Airlines (e.g. United Airline) are selling tickets via their Internet portal at reduced prices.
3. Car rental companies do not hesitate in putting up Web sites to handle reservations (e.g. Hertz, Avis).
4. Travel companies compete with one another and various Internet travel portals by offering their own Internet e-shops that market their travel packages as well as provide reservation services for airfares, lodgings, and various travel products (e.g. ThomasCook.co.uk, ChanBrothers.com.sg).
5. Internet portals that offer general travel information and related services (e.g. travel.yahoo.com, travel.lycos.com, travelocity.com) are quite common.
6. There are plenty of vertical portals that were set up to provide niche travel services. Some concentrate on offering reservation services for hotels and resorts in Asia (e.g. AsiaTravel.com), some specialise in providing discounted lodgings in the US (e.g. Travelscape.com), some specialise in air tickets booking worldwide (e.g. Airfares.com), and others cater specifically to travel needs of students and youths (e.g. STAtravel.com).
Hotel In-room Technology
In an increasing number of business hotels or major chains (e.g. Sheraton, Westin, Hilton), their technology-savvy guests are enjoying the convenient access to the Internet as well as tourist, hotel facility and up-to-date billing information via a client machine in their own guest rooms.
The client machine could be a WebTV or personal digital assistant (PDA), which is connected to the integrated hotel guest system. In fact, some more progressive hotels even go further to provide high-speed Web access by installing cables, data ports, and complete with cyber-assistants offering technical guidance to the guests.
Data Mining for Business Intelligence Today, hotels store information about their customers in property management systems, point-of-sale systems, frequent guest databases, and even on their Web servers. Because the data can be spread pretty thin among the different systems, it may seem impossible to get a true picture of a single customer.
That is where the concept of customer relationship management (CRM) fits in with an aim to make things a bit easier. CRM encompasses the elements of a business intelligence (BI) system that include data warehousing, data mining, campaign management, and Web site analysis. Different segments of customer information are gathered together into a data warehouse, from which the data can be analysed, enabling hotel companies to build customised marketing programmes.
Hence, leveraging the BI to improve the level of customer satisfaction is what differentiates the hotel from others to its customers. A number of hotel companies started some form of CRM and data mining to help foster guest loyalty and develop targeted marketing programmes.
A software agent is a computer programme that performs specific tasks on behalf of users either standalone or in conjunction with other software agents, and at the host machine or on another machine connected by a computer network.
A software agent normally exhibits one or more of these qualities: persistence, intelligence, autonomy, and mobility. Examples of software agents in travel applications are intelligent shopping agents helping travellers find airfares or holiday bargains, and helping tourists look for speciality restaurants.
Companies providing travel services and products can collaborate in servicing consumers by collectively satisfying the travel needs of a consumer via a software agents-based e-commerce system as well. For instance, a travel agency would host a travel Web site where prospective consumers visit and submit requests for finding travel packages for their vacation needs.
A mobile software agent would then be dispatched to visit the list of designated collaboration sites to look for travel packages that meet the requirements of the requesting consumer in terms of schedule, budget, and other preferences. All the collaboration sites would be visited and the mobile agent would bring back a collection of all the packages meeting the requirements. A collaboration site is a Web site or networked computer system of one of the collaborating companies, which could be a provider of airfares, land packages, lodgings, car rentals, or other travel-related services.
The collected information would be sorted and compiled before being presented to the requester. After viewing the list of choices and selecting a desired package, the consumer would activate the agent system again to do the booking of the selected package.
Mobile Commerce Connectivity
Travel users enjoy the convenience of mobile connectivity to e-travel systems. Changes in travel plans can be effected instantly by changing flight schedules, hotel bookings via handheld devices (mobile phones or palm-tops) through e-travel systems.
The GartnerGroup recently predicted that within the next five years, 70% of new cellular phones and 80% of all new PDAs would have some form of access to the Internet. And even more interesting, was that more than 80% of new applications deployed in this time-frame to mobile workers and other consumers would be designed for these non-PC devices.
This trend has in fact made mobile Internet a form of pervasive computing. The travel industry has already embraced mobile Internet or pervasive computing as part of their CRM strategy as evidenced in the following developments:
1. Thanks to the wireless application protocol (WAP) technology, many travel Web sites can now be viewed on WAP phones or wireless PDA. The wireless access is either via a gateway (e.g. OracleMobile.com or mobile.msn.com) or direct dialling to WAP-compatible sites (e.g. Wcities.com, Hilton.com).
2. Cathay Pacific has introduced real-time flight information on its Web site (Cathaypacific.com) and is offering access to flight schedules and special deals via mobile phones using WAP.
3. Delta Air Lines is working with IBM on a new travel service that gives its customers wireless access to up-to-date flight arrival/departure information, same-day gate information, and worldwide flight schedules via handhelds, PDA devices, and next-generation cellular phones. Delta will extend the implementation this year to allow travellers to purchase tickets and change flight schedules via their hand-held devices.
4. The biggest hotel chain in Scandinavia, Scandic Hotels, started a wireless hotel booking capability, enabling members of the Scandic Club to make and change their hotel room reservations through a service based on WAP.
There are two main challenges facing the travel industry: Business and Process Integration--In order for enterprises to work together closely via some kind of Internet-based virtual organisation, establishment of a formal working relationship among members of a virtual organisation is necessary. This is to facilitate the orchestrating of the overall workflow, streamlining of common business processes and inter-enterprise interfaces, standardising of documents exchange, and optimal system interconnection.
Hence, enterprises with complementary or synergetic values which could form alliances at an early stage of the market development would have strategic advantages in terms of economy size, market penetration and coverage, cost-effectiveness and reduced business cycle times.
Technical Know-how--The question is how will you use the network to your advantage in every aspect of your business? How will you implement your dotcom or Web architecture? And most important, how can you get there faster? The answers to some of these questions are:
1. Define a sound business strategy that covers customer relationships, supplier and strategic partner interaction, sales operations, and products and services.
2. Build a sound Web architecture that is service-driven, robust and scaleable.
3. Develop a sound integration strategy that integrates legacy systems into the Web architecture and includes an outsourcing strategy for network services.
4. Deploy and manage the infrastructure (Web-based production environment) in such a way that it delivers the quality of service (QoS) levels the end users demand.
On The Horizon
The Internet is here to stay. Travel companies cannot afford to miss out on the many e-business opportunities presented in enhancing customer services and sales channels and improving operational efficiency.
However, for B2B e-commerce, standardisation of business practices and streamlining of procedures to facilitate collaboration among associate companies or members of alliances are the critical success factors. Whereas for B2C e-commerce (like customer services), customer-centric focus (like CRM) is the critical success factor.
Then there's eXtensible Markup Language (XML), an emerging technology that facilitates data or document exchange especially for B2B e-commerce. Software agent is an enabling technology for personalisation of customer services, consumer bargain hunting and shopping comparison.
M-commerce and wireless Web access are the next waves to come. More and more Web portals would become WAP-enabled, and most companies in the intermediate future would provide wireless access to the Internet.
So, members of the travel industry will have to quickly do some strategic thinking on how they will embrace technology in the near future to re-engineer their business to an advantageous position otherwise they may just miss the boat altogether.