Are technology companies a friend or the enemy?

CIMTIG Debate Special: Operators say they are not threatened by technology companies that are crossing the line. The issue of whether technology companies were increasingly competing with operators, rather than providing a service to them was raised during last week’s CIMTIG debate. The event centred on whether the travel industry was taking full advantage of the opportunities offered to it by technology. Cendant Travel Distribution Services regional director UK and Ireland, Alison Bell said the distribution chain was undergoing massive change and the key issue was about merging technology and content. She said her company had felt the blow of increased direct sell and was having to adjust accordingly: “The volume of traditional business through the GDS is declining because airlines are distributing direct.” “We are entering more into web services, where we see ourselves as the building blocks to facilitate access to our content.” She added: “You will see GDSs working with a lot more ancilliary type companies to help them survive in this changing world.” This comment was illustrated by Amadeus’ recent announcement that it is taking a share in technology provider, Comtec. Ms Bell said that everyone in the distribution chain, including agents have to adapt. “Commission cuts are a fact of life” she said. Cosmos commercial and product director, Stuart Jackson said there were a number of sticking points for travel companies when it came to investing in technology. He said that projects were often not delivered on time or to spec, and that travel companies had had their fingers burned in the past. He referred to the fear of the “millenium bug” as the year 2000 approached, which led to IT companies “draining investment out of travel companies” in a bid to protect their systems. Another point made by Mr Jackson was that travel companies spend only 25% of their IT spend on development, and of this, two thirds is spent on modifying current systems, so little is left over for new investment. Mr Jackson suggested that technology companies lower their prices, or that they enter into schemes offering shared risk and reward. TelMe Farebase managing director, Peter Muller said his company did offer risk sharing, as did Ms Bell who said that Galileo’s merchant model products were a good example of how it shared risk with travel companies. The last speaker of the night was Cunard Line senior vice president, Peter Shanks. He said the title of the debate, “Technology 10: Travel 2” suggested that there was a contest between the two. But he said: “It’s not a contest, technology is a service that travel companies can use to make their business more efficient and cut costs.” He said there is a great match between technology and travel, but in a comment that mirrored some of the points made by Mr Jackson he said that a number of issues prevented the two from always working together profitably. Firstly, there are low margins in the industry and secondly the fact that sometimes technology doesn’t work and is backed up by large service charges. He also said that there was a certain paranoia among travel companies that technology companies were going to start competing with operators and start taking over their business. On this matter he said: “But this is nonsense – you should be confident in your product and use technology to compete better in the market place.” Mr Jackson also said that he didn’t see the technology companies as a threat to well-developed brands like Cosmos. The next CIMTIG debate, entitled “Look for the silver lining” is taking place on 3 March in London. The debate aims to raise the issue of whether marketing strategies employed by the travel industry succeeded in persuading the public to travel. Speakers include Cathay Pacific marketing manager UK and Ireland, Paul Cruttenden and PATA chairman Tim Robinson. For more details go to www.cimtig.org. Report by Ginny McGrath More stories from CIMTIG events: The Viewdata debate rages on Operators stand up to online competition