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Published on Tuesday, October 19, 2004

Leisure travel distribution space 'becoming crowded'

A review of TTI’s recent Autumn 2004 conference, by Paul Richer, senior partner at travel technology consultants, Genesys.

Listening to the presentations and debates at Travel Technology Initiative’s (TTI) Autumn conference, The Future of Travel Distribution, it was clear that the UK leisure travel industry has embarked on a distribution revolution.

As we all know, for many years now, leisure travel has been booked via Viewdata, that much maligned, but surprisingly enduring booking technology. Despite its obvious limitations, Viewdata has remained the mainstay of b2b leisure travel bookings. Has its very simplicity been its appeal? Has it continued to be used, just because it’s there?

The Global Distribution Systems (GDSs) have also been undergoing a revolution. They have, by and large, primarily serviced the corporate travel sector with their extremely efficient distribution of scheduled flights. However, airline pressure to cut distribution costs is bringing the GDSs’ traditional business model under pressure. All four, represented at the conference, stated their commitment to serious diversification of their businesses into leisure travel distribution. If they do this and succeed where will it leave the established leisure network suppliers, ntl:business (Travel Division) and Telewest Business? They would be facing competition from both the GDSs and new network entrants such as Call-Link and Comtec.

These were some of the issues addressed by the conference, opened by Ed Spiers, Director of the event’s sponsor, Anite Travel Systems. Ed has a long and illustrious history in travel distribution, dating back to when most computers had less power than the average mobile phone. The message from his keynote speech is that the industry is inevitably moving towards a business model of multi-channel distribution - call centre, retail, web, etc. – where a single view of the customer sits at the heart of the business.

The next speaker, David Cowell, Sales & Marketing Director of Holiday Extras, presented a case study of their website and extranet. Close on 50% of bookings are now taken on the web, both from travel agents and direct clients. This includes bookings taken by Holiday Extras’ 3,000 online affiliates. David believes that one of the key success factors in making their website so successful, both for trade and direct bookings, is the constant improvement in the booking process. In 2000, this took eight screens to complete. This has now been reduced to just three screens, resulting in the site’s look-to-book improving more than twofold. Trade conversion rates are now higher on the web than Viewdata, which has encouraged Holiday Extras in its recent launch of a German website.

Following David’s presentation was a session describing the launch of TORIX (Tour Operator Reservations in XML), TTI’s new industry standard for leisure travel bookings. A group of major tour operators and technology companies have been active in this ground-breaking work that will finally see the death of Viewdata. The TORIX project has proven that tour operators can work together for mutual benefit. TORIX will revolutionise the distribution of leisure travel. It will break through Viewdata’s limitations, allowing tour operators to distribute their products to travel agents and electronic intermediaries in a far more sophisticated manner than was previously possible. You have heard about the death of Viewdata before and it has not happened. This time it is a dead cert for extinction. TUI UK, First Choice, Thomas Cook and My Travel, who have jointly developed TORIX and will be rolling out the technology in 2005, will have little interest in prolonging Viewdata when it becomes too expensive to support. The best estimate is is that Viewdata will be phased out by 2007. As Carl Dawson of Thomas Cook said, "The development of the XML standards for travel represents the next revolution - it’s been a long time coming but promises to have an even greater impact for all of us - and a step change in customer service."

With TORIX in mind, the next session examined the changing role of the travel value added networks, those organisations who have been concerned with distributing Viewdata. Far from doom and gloom that their Viewdata cash cow was being taken away, they welcomed the announcement.

The panel of Simon Powell, CEO of Comtec, Peter Healey, CEO of Vertical Group and Keith Webber, Head of Travel Sector, Telewest Business, were unanimous in their agreement that TORIX is a great opportunity for the industry. Keith reported that Telewest Viewdata revenues are already in decline but overall travel sector revenues are up due to the sale of services such as broadband connectivity, voice and data solutions. He predicted a future in which multi-media over IP will become the norm, with the travel community benefiting from fixed price Voice over IP services. Simon Powell’s dramatic message to the industry was "Innovate or die," there is no option to stand still. Like Simon and Keith, Peter Healey believes that the future is one of convergence where all services are delivered over IP networks and that voice services over IP will be free! All three panellists stressed the value-add of applications at either end of the distribution pipeline. Some observers think that this might leave Telewest vulnerable as, unlike Comtec and Vertical, the organisation has no application offering.

The final panel session of the day looked at the GDSs in a changing world. Facing disintermediation by airlines promoting their Web-based booking services, with forthcoming deregulation in Europe which will result in airlines shopping around for the best GDS deals, the traditional GDS model is under threat. However, all four GDS representatives were confident that their organisations are rising to the challenge. They voiced a common goal to expand into leisure travel distribution. Bill Barnes of Amadeus mentioned the 20% stake Amadeus has acquired in Comtec. Gary Howes of Sabre announced a tie up with Vertical and the formation of a Leisure Advisory Board. Graham Nichols of Worldspan mentioned their German tours distribution product. Jason Clarke of Galileo pointed to the organisation’s Cendant parentage.

The conclusion from the conference is that the leisure travel distribution space is becoming very crowded. Whereas once ntl:business and Telewest Business had the market to themselves with their Viewdata networks, now everyone is a player. Leisure travel companies are using the web, the launch of TORIX will give tour operators more flexibility, the GDSs are making moves in the market and newer entrants such as Comtec and Vertical are building solid customer bases. Exciting times indeed. How the mix will pan out is almost anybodies guess. Do you have an opinion?

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  • So who owns leisure distribution?

    Unfortunately I was unable to attend the TTI conference, though Paul's summary provides a well-presented review. Thanks Paul. From what I observe, Telewest and NTL (the legacy viewdata networks) have had a good run for the last 20 years. Perhaps if they had "innovated" they wouldn't be at risk of "dying". The GDS are showing an interest in leisure, but with a few exceptions, don't really understand the business or what can improve profitability and customer service. The direct sell operators should win, as long as they get their web sites to deliver. Some are, but most still have a long way to go. Only the other week, a niche player remarked that technology bored her to death. The company's web site had no interactive product search or booking features, whereas many of her competitor's did. I think there is a serious risk of the business losing market share. But what about the T4 as TUI, Thomas Cook, First Choice and Mytravel are known? What are they doing to secure their future and distribution channels? Well, Torix isn't the answer. Whilst I genuinely applaud the co-operation of the T4 through TTI, these long overdue standards won't secure distribution. What will replace viewdata? Will it be a tour operator web site with agent login or a new intermediary using XML? With viewdata and agent shops, the T4 controlled distribution. But the Internet (and competition from low cost carriers and bed banks) has changed all that. Torix will help intermediaries sell pre-packaged holidays, either direct or with enhanced point-of-sale systems. But these systems will be developed and owned by the intermediary, not the tour operator. With fewer high street shops and reducing commission, leisure travel distribution is definitely changing and he (or she) who innovates will survive. Let's hope the T4 can innovate. Mike Cogan Partner Equinus

    By Mike Cogan, Tuesday, October 19, 2004

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