Saturday, 17 February 2007

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 and arcRes-CRS (central reservations Systems) these solutions are fully integrated with GDS and with the hotel bookings and ( and Property Management System

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.

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

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