Strategy for Small Travel Solutions companies

This article was inspired by my visit to the travel Technology Show 2007.

See previous blog

At AXSES we believe that ultimate control of distribution rest with the travel operator. That means the hotel, activity and rental company supplier.

Hotels have encouraged distribution dominance by offering huge discounts to tour operators in exchange for guaranteed bookings. At the same time the distributors had marketing clout and could afford the technology that consumers demanded (on line booking, dynamic packaging etc). In a fragmented global market, distributors emerged as the place to shop.

The tour operators set their own rules and resell price. Prices in distribution were thus often much lower that the hotel published rates. As competing distributors try to match rates the pressure on hotel profitability is intense. Often a hotel that would not meet a requested price would be dropped. In this agressive distribution driven market, the hotel Brand was eroded and rates fragmented.

The large hotel chains have moved effectively to take back control with Best Rate Guarantees and by offering consumers the service (technology) they demand. (on-line costing, bookings, packaging). Thanks to technology, operators have increased and continue to increase their influence via direct bookings and by greater clout in managed distribution pricing and inventory.

At the same time “travel consumers are exchanging more information and exerting much greater influence over online content - from travel blogs to social networking, they are driving change” (source).

Travelers prefer to deal direct(1) and the core technology that is driving this trend is Field Management Systems and small travel application developers and integrators play a large part in delivering these solutions.

Consider AXSES portal clients like Intimate hotels of Barbados. The Intimate portal is managed by Portal-keeper.com and arcRes-CRS (central reservations Systems) these solutions are fully integrated with GDS and with the hotel bookings and (bookings-expert.com) and Property Management System http://axses-innkeeper.com.

In this senario the small hotels can manage the rates and inventory on the Intimate Hotels Barbados Portal as well as the GDS. The technology they use not only powers Intimate in Barbados but at least 10 other channels that are vital marketing forces for Barbados and the Caribbean. The next step is to add full channel management extending to sites like Expedia, Travelocity and all 40,000 IDS sites.


Notes
1. PhoCusWright 2005: "In fact, more than twice as many online travelers (36%) believe that the supplier-direct channel provides the best customer service compared to 15% who choose the online travel agency channel. Even offline agencies, which are coveted for their personal touch in a technology-driven world, did not fare as well, with 33% claiming they provide the best customer service". ....more

Travel Technology Show 2007

Travel Technology blog on TTS 07.

I will report in full next week. Here are a few thoughts of what it might mean to small travel technology companies like AXSES

Many of the show vendor were distribution aggregators. These mega-systems, search multiple platforms and sites to find, aggregate, evaluate and render results in under 35 MS. The task is massive.

Nearly everyone claims to offer dynamic packaging!!. Mostly this is limited to accommodation, cars and air. The booking of destination activities is still underdeveloped. >>> more to follow.

A number of experts point out that with all this massive computing power, the systems are not working well. FredHopper and HitchHiker demoed how many empty results there are for a detail request on several of the large systems. There are it seems many "holes" in the content. While the search algorithms and options have improved the content lags.

Luke Mellors of Expotel http://exportel.com says hotel content on GDS is a joke. Most hotels on the GDS are chains. The few small hotels on the systems load just 1 or 2 rooms and these are usually at HIGHEST rate. "Its just not respresentative of the industry".

I attended 3 session: "Mobile markets", "Blogs" and "Hotel Distribution".
>>> more later!!

I also attended many product demos including: Airline tickets to mobiles (e2 systems). Website merchandising (Fredhopper; observs the need to employ user logic to provide alternatives to all the "holes" in information). Eliminating the papertrail (stortexfm). Developing a winning wesite strategy (Netizen incl. incl. an interesting SEO summary). >>> more later!!


I handed out cards for our business but left no brochures. Solution suppliers at this sort of show are interested only in selling their solutions. A couple of vendors were interested in on-selling our hotels through their networks (travelberry.com and expotel.com). Expotel has 15,000 resorts and is bigger that any GDS!!. Some marketing co's were interested in advertising their major clients like British Virgin, on our sites like http://barbados.org .


INSIGHTS for travel technology development

While most TTS exhibitors were concentrating on massive distribution system there was not much for the small hotel and specialty channels.

Luke Mellors of Exportel, suggest that field management systems (eg: PMS, Yield management, Channel Management etc) will control distribution in the future. He points out that the massive distribution systems are not grass routes. They are not ultimate suppliers and cant control the content well.

This leaves an opening for small companies to build feld management solutions that are integrated with Global distribution and specialty channels >>> more >>> see AXSES Travel Technology Strategy.


THE MESSAGE:

The travel supplier is the hotel and activity not the GDS and aggregator.

The best dynamic packages technology solutions will be grass route systems on hotel websites and focused destination channels.

Give hotels the tools to take back control of the market!!