eyefortravel - Travel Distribution India '06

Surfing the new wave

Technology has, with its Midas touch, managed to revolutionise every industry that it has come in contact with, and travel is no exception. Jyoti Koul examines its impact and future in the Indian scenario

That travel is beginning to contribute more and more to the Indian GDP has been established. What is the latest doing the rounds of the markets is the way technology has revolutionised it, like everything else it has touched in the past.

Factor 2010

Come 2010, what innovations in technology will make the biggest impact on the travel trade? Arjun Sharma, managing director of Le Passage To India Tours & Travel responds, "Online travel portals, low-cost airlines and integrated package deals are some of the emerging areas which will dramatically reduce the travel cost for the end customer. Technology will surely dominate the price of a holiday as the per transaction cost for the agent will be reduced in turn reducing agent commissions. The use of mobile technology, kiosks, and handheld devices will be the in thing. By 2010 we will have the final shift from e-commerce to m-commerce."

He further emphasises that growth of technology will shrink these media through which the traveller can book any travel itinerary. "Initially, travellers approached a travel agent. Today, we have so many travel portals which are trying to sell a basket of services. Mobile phones are used more as a medium for booking than for information. Today, we get SMSs from airlines even confirming our booking, delays, etc. But we are yet to graduate to the level where we can make our own travel itinerary using a mobile," Sharma says.

As of now agents, operators, airlines, hotels and all other travel service providers are automated and are using some or the other form of technology solution. Upcoming online travel portals, call centers and travel shops are in the rat race of trying to integrate various travel services to their website to make it look like a single-point shop for purchase. Click-and-fly mode is gaining popularity among prospective travellers which presently comprise 29 per cent of all air bookings. This percentage is expected to rise further to 46 by next year. Praveen Chugh, managing director of Travel Services International, which is aiming to provide IT-savvy techniques to enhance services for higher customer satisfaction, says, "Indian travel agents and tour operators are becoming increasingly aware of the importance of a well-established brand in today's market, and that they will definitely want to be affiliated with the top brands. Technology in general and IT in particular, will play a significant role in the network and participants will greatly benefit because of the reduced operational costs and increased efficiency."

The way forward

With the Internet taking over the role of the GDS, they (GDS) will have to offer more than just distribution solution to the service owners and travel agencies. Competition and customer needs will define introduction of new features. However, feature-rich and easy-to-use software will be more popular and cryptic entry software could eventually be phased out. GDS will continue to act as backbone for e- and m-business segments. According to Budhraja, technology will move faster and will have more than one component. "For instance, Amadeus is not merely a GDS. We have re-branded ourselves as 'your technology partner' and have taken many more verticals into our fold like e-commerce, m-commerce and airline outsourcing," he says.

Bruce Hanna, CEO (India Operations) at Galileo India, informs, "Clearly, the trend we have seen is the emerging online market. We are already providing solutions to the Indian travel fraternity for e-business via Internet Booking Engines (IBE) and customised online booking sites. An example is the travel portal Xplorz.com. Its back-end connectivity is provided by Galileo and the development of the booking engine has been done locally by i{tq}." Haranath Lokanadham, chief technology officer of Calleo Distribution Technologies, comments, "Since e-commerce will attain even greater market share as time goes on, GDSs will need to strengthen their offerings to keep their customers ahead of competition." E-business and m-business are additional sales channels that GDS companies must tap in order to broaden their ability to offer content and distribute inventory. They will become a dominant factor in the years to come and GDS companies will need to focus to enable efficient use of these channels in the future.

Chadha says, "Since GDS companies provide a single platform for the travel industry to converge, it is totally impossible to do away with them. However in the future, they could evolve and completely change the way it goes about its business like Travel2agent.com. With the launch of distribution products for intercity coach operators, car rental operators, travel insurance, we expect to increase our business volumes."

Tarka believes that the future lies with travel portals that serve as an information gateway. "The general trend is to create travel portals that deliver a more personalised travel experience - both in terms of the search for fares and in terms of the discovery process (deciding where to go). Try imagining your own personal travel home page, on which you can display your own chosen, customised travel information. This page would hold information such as fares for selected city pairs and their real-time updates, indexes to certain regions, as well as specific travel photos and videos related to a specific destination," he says.

The factors that are bound to drive the market by 2010 are surely price and instant availability. Apart from them, low-cost airlines, Internet billing, shrinking of the commission model, easy accessibility, etc will also play a role. At the same time, the quality of the service will be the most demanding factor for the success of any service provider.

According to Himmat Anand, COO of SITA India Travels, the key players that will provide technology solution could be the likes of Oracle, Microsoft and SAS. They have been successful in delivering a technology platform which is used in communications, banking, finance, trade, investments, securities and military. They might open a new area called travel and start a new revolution. However, it is very hard to say that today. Some smaller players are providing robust solutions for the travel domain. Big or small technology will enable the booking process to be easier for all channels. Trends in other markets indicate that dynamic packaging can be an enabler for all the enablers - this allows air, and full ground packages including car rental, hotel, tours to be brought together to match the travellers needs.

Key market drivers

More and more travel companies are deeming it necessary to have their establishment 100 per cent IT-enabled. Le Passage to India has a technology arm called TI Infotech, which is in the process of developing and integrating various applications for all its business functions. It will soon have its new business application launched which will further be integrated to its B2B, B2C, B2D and B2E customers. So be it back-office operations or a cyber traveller or a mobile user, Le Passage will provide easy accessibility to all.

At Kuoni, the future plans with respect to new technological implementation include having a world class SEO (Search Engine Optimisation) promotion, get listed on Google with pay per click, having a special banner advertisement with MSN and Yahoo, making its site available with as many languages possible, doing country-specific effective SEO promotions, getting into 24x7 working scenario, having a BPO, buy inventory to give instant confirmations, integrate with few domestic airlines, have solutions with the best forex deal of the day, give options of Internet tele-calling, have virtual tours, offer reverse bidding with few hotels, create bagpacker's solutions, create a smart card and client history. Besides these, the company plans to create an effective CRM, ensuring that every client gets an update about his or her passport validations, etc.

While Worldspan has a string of industry firsts to its credit, it has a global leadership position in the e-commerce arena and this has been achieved largely through technology innovation. Lokanadham says, "We will continue to focus on e-commerce as a primary growth area. We also intend to back up our GDS technology offerings with customised solutions for the different verticals in the travel business so that they are able to operate their businesses more efficiently and be ready to scale in the future." Worldspan recently launched into the Indian subcontinent and is going through a rapid ramp up phase. "We would like to position ourselves not only as a GDS but a total travel technology solution provider. We look at our customers as long term strategic partners. In this direction we will be building not only technology solutions but strategic alliances so that the customers get an all round solution that their businesses need," he added.

Obviously these will add a lot of value to its customers at the same time leading to other revenue streams for it.

Many companies are leveraging online channels to the hilt including keywords search via Google and SEO, besides using electronic and print for branding and tactical marketing from time to time. Companies are exploring India-specific marketing options and developing synergies with market players. Worldspan is positioning itself as a lead travel technology solutions provider in the Indian market. The benefits that its customers in the West have enjoyed being part of the Worldspan family are now being delivered in India as well.

To enhance its business through technology, Kuoni plans to get into effective SEO promotions. It plans to get in touch with portals worldwide that are offering India and seek business possibilities. Apart from embracing new technologies, it will try and promote the usage of the solutions which it would provide to its agents and suppliers worldwide. Amadeus has many new innovations and products and it would be looking at three aspects of a company that would include front office, mid-office and back-office. Budhraja says, "There will be few products that will be graphic user interface, which is like an Amadeus Vista product. It is not going to black and gray boring screen; it is going to be about virtual tour and virtual reality that is what we are coming up with. You can actually see a colourful product. You can take a virtual tour of a property and that is something that we want to offer to the customers. Technology is something you can replicate in 24 hours, so whatever products I am offering now can get outdated immediately. The dynamism of the industry is changing so fast and at this point the products have to come as reaction rather than a pro action. This I would say would be the defining trend for about a year till the time the industry stabilises. Right now it is a boom. After that new technology will come up and define the travel industry."

So, the future is about better, more personalised products that enable users to make a fast decision, save time and money, and eliminate the frustration factor when users can't find the options he or she is looking for. Tarka says, "The growth trend in online travel (more travel sites, more airlines, more hotel inventory - all available in disparate places) will make the end-user search experience more and more complicated. Specialised travel search engines such as Mobissimo will simplify the process and organise information for the end user - in one single search."

With the advent of new players in the Indian skies and competition becoming stiffer by the day as far as civil aviation is concerned, legacy carriers are faced with the pressure of introducing lower fares. The new scenario is already forcing airlines to re-examine their distribution costs, in fact the low cost carriers do not participate in conventional GDS at all. Realising that the airlines are continuously reducing commissions and the industry is contemplating a zero commission regime, GDSs may see their relationship with the airlines change as the latter re-examine their distribution costs too. Airlines and GDS have had a working relationship for some time now and understand the value that they mutually provide to each other's business. GDS are acutely aware of distribution costs being an area of concern and have demonstrated successfully the immense value that a GDS brings to an airline and have worked along with their partners to find effective methods to reduce costs, e-ticketing being one such example.

All said and done technology for any business is a necessary means for smooth, swift and successful operations. However, Indian travel industry technology is still associated with GDS and Internet. Travel agencies, tour operating companies and hotels still do not have a budget or a corpus specially earmarked for technology implementation. This translates into the fact that there still isn't the awareness of the importance and reach of technology. Therefore, it is high time that the solution providers make a new pitch to educate the trade and grasp the huge opportunity.

This could also lead to a shakeout, leaving the ardent innovators in the driver's seat within the next five to ten years. Regional and global players will co-exist with many opting for specialisation. It could however take the travel industry much longer to assimilate and accept the changes in the distribution industry that technology will invariably bring about. The number of OTAs can only increase and that is bound to render the interface between the agent and his client, more sophisticated. Likewise, the agent's relationship with the principal will also undergo a dramatic shift not just in perhaps distribution costs but the manner in which inventory is priced and distributed. That technology can only make things better, remains firmly in the realm of debate. That it will be the single-most relevant trend in travel is already settled.