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The online travel market now offers some exciting prospects

Only a short time ago everyone was talking about internet business. Surprisingly enough, now that the internet…

Only a short time ago everyone was talking about internet business. Surprisingly enough, now that the internet bubble has burst, online business on the travel market has become much more interesting, according to Ian Wheeler, Managing Director of e-Travel, the e-commerce business unit of Amadeus, the leading global distribution system (GDS) in Latin America and Europe. Today it is one of the fastest growing business sectors.



While the industry in general has contracted, online travel providers and travel technology companies are recording growth rates of up to 100 per cent in the consumer sector, which is considerably higher than in the business travel field. In this respect they are benefiting from their customers` increasing experience of the internet and of online shopping, as well as from ongoing technological improvements, coupled with the difficult economic situation. Not only are customers going online in ever greater numbers and becoming less apprehensive about conducting virtual business, with the growing uncertainty about jobs and earnings, although people may still be keen to travel, they are finding it more difficult to plan holidays in advance and to set aside the necessary funds.



The trend towards impulse buying, making reservations at short notice and last-minute business continues, accompanied by a heightened price-sensitivity. E-business offers some interesting solutions with regard to all these aspects. One major factor in this process has been the proliferation of easy-to-use web sites. As Wheeler admits: In a technological sense the internet that we now use in our work differs greatly from that of just two or three years ago.



Moreover vigorous efforts are being made at all levels to improve the user`s experience, whether this is in the area of graphic design, user guidance, new functionalities, speed, content, efficiency or the integration of various different channels of communication (multi-channel integration). The key to success is to structure the web site and its functionalities as simply as possible, rather than making them more complex. If you are putting your business online, you have to simplify the booking processes, and avoid imposing anything that is unnecessary between the customer and the purchase just because the internet enables you to.




Stabilisation of the industry at the ITB 2003 too



The stabilisation of the technology segment of the tourism industry is also reflected in the applications from those wishing to exhibit at the International Tourism Exchange ITB 2003. Last year cancellations due to the economic difficulties facing the IT sector caused problems for Messe Berlin when allocating hall space, but the situation has improved this year.



So far over 60 technology companies (main exhibitors) from eight countries have announced that they will be taking part. This market segment is becoming more international all the time, with companies from Eastern Europe (Lithuania, Russia) attending for the first time. Close collaboration within the IT working group with companies in this sector and the in-depth dialogue about their requirements are already bearing fruit. Any fluctuations have only been slight, thus confirming that Messe Berlin has adopted the right concept.



The editorial team of the Electronic Congress, now in its 24th year, has decided to change the name, choosing instead the designation ITB Travel Technology – Congress and Exhibition. Along with the change of name, a different venue and a new itinerary, the content of the congress has been restructured for the ITB 2003. The intention is to emphasise the closer links with the displays by exhibitors at the Travel Technology section of the ITB Berlin. In future this well-known event, with its focus on information technology, multimedia and reservation systems, will be held in Halls 7.1 a, 7.1 b, 7.1c, 6.1 and parts of Hall 8.1.



Promoting clearer pricing and greater security



Above all there is still a great need for security and a desire for the maximum clarity with regard to information and pricing explains Jurgen Seiler, Marketing Manager of the online travel portal Expedia. This is the largest online travel agency, and it is responding to this situation not only through technology but also with tangible elements such as the TUV certificate for its range of internet services, and by introducing best price labels. The aim is to underline the company`s credibility and reliability, as well as its pricing policy on an online travel market that, for many people, remains obscure. Online customers still want to find the best deal, and to be able to view and compare everything that is available comments Seiler.



To achieve this objective this internationally active internet provider is not only constantly improving the efficiency of its search engines but is also using its purchasing and distribution strengths in its direct negotiations with service providers in order to obtain separate tariffs and submit its own best price offers.



It is hoped that suitably marked products will facilitate and accelerate purchasing decisions, an area where decisive action needs to be taken, in view of the diversity of offers and prices available on the online travel market, as well as achieving further improvements in the effectiveness of the marketing portal, i.e. in the ratio of visitors to the site and actual buyers (look-to-book or conversion rate). In so doing the company is departing from its role purely as a travel agent and becoming more of a package tour provider with all that this implies with regard to liability and the law, areas which traditional travel agents have tended to avoid. The demand exists and we believe that it offers us attractive profit margins explains Seiler. However, it is also vitally important to be able to provide flexible packages in order to be able to respond to the individual wishes of customers. The focus is increasingly on so-called dynamic packaging concepts and technology to create variable, all-inclusive packages made up of individual services via the internet, and intended to satisfy customers` specific requirements.



Concentration and outsourcing of the IT infrastructure using just a few, large scale specialists



Not only have technological changes taken place in the business, there is also evidence of a greater professionalism. Only a few years ago virtually anyone could create a web site with a few lines of programming, and many small technology companies used innovative ideas to capture a substantial share of the market. However, IT requirements are rapidly becoming more exacting and, combined with the pressure exerted by the cost factor, have made this virtually impossible in today`s travel sector. In principle the economic development and utilisation of competitive online technology can only be achieved by employing economies of scale.



On the one hand this produces a greater concentration of ITB infrastructure among a few major suppliers of technology, who will continue to consolidate their position through selective marketing. On the other hand there is evidence of a growing trend towards more outsourcing and the utilisation of centralised e-commerce applications as a result of agreements signed with so-called application service providers (ASP), because the cost of setting up their own competitive technology platforms has become more or less prohibitive for many small and medium-sized service providers such as hotel groups, airlines, tour operators and car rental companies. The gap between them and the large travel technology specialists is still widening. The latter have now achieved a significant technological lead in their own particular field, and newcomers would have to make massive investments in order to catch up. Those attempting to break into this market are finding that the obstacles are now much more difficult to overcome.



Segmentation of the market calls for niche strategies and a focus on core competences



In addition to a company`s financial strength and stability, niche strategies and the concentration of their core competences are becoming ever more vital for travel technology too. On those markets in which we are not among the leaders we have to rely on providing more services, better quality and more value for money explains Michael Boaden, Sales and Marketing Director for Germany and the Alpine Regions for the global distribution system Galileo. That is why Galileo`s strengths in Germany lie in its ability to develop flexible, specific solutions for other companies in a way that is not available to its larger competitors. Here Galileo concentrates its efforts on improving travel offers and on their presentation in the system (content), as well as on mid- and back-office applications for travel agencies.



Web-only: price war, pricing and a clear pricing policy are the main issues for the coming years



On the German market in particular the subjects of pricing and pricing strategies have come to occupy centre stage as a result of the growing number of cheap offers and special rates that are only available via the internet, combined with the clearer market picture that the internet provides. New fare search functions and technologies for comparing prices give customers improved facilities for comparing offers around the world reports the Managing Director of e-Travel, Ian Wheeler. As a result some business travellers can now compare the fares paid by their companies with cut-price offers at the click of a mouse and, subject to their own business travel policy, they may be able to switch to cheaper fares. This is forcing suppliers to simplify their pricing strategies, to also offer net prices to end users and to reduce their agency commissions accordingly. This will eventually lead to a cross-the board simplification of prices, and increasing numbers of travel agents will be applying services charges.

Co-Founder & Managing Director - Travel Media Applications | Website | + Posts

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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