Tourism Information Technology PDF

CABI TOURISM TEXTS 3rd Edition Tourism Information Technology PIERRE J. BENCKENDORFF ZHENG XIANG PAULINE J. SHELDON COMPLIMENTARY TEACHING MATERIALS ...

CABI TOURISM TEXTS 3rd Edition Tourism Information Technology PIERRE J. BENCKENDORFF ZHENG XIANG PAULINE J. SHELDON COMPLIMENTARY TEACHING MATERIALS  CABI TOURISM TEXTS Chapter 3 Travel Intermediaries and Information Technology  CABI TOURISM TEXTS Learning Objectives After studying this chapter, you should be able to: 1. Explain, compare and contrast traditional and digital tourism distribution systems; 2. Understand the evolution, role and features of Global Distribution Systems (GDSs) as travel intermediaries; 3. Analyze the challenges faced by GDSs as a result of technological change and innovation; 4. Explain how traditional travel retailers use IT; 5. Explain how IT has led to disintermediation and evaluate how this has impacted travel intermediaries; 6. Describe and critically evaluate the different types of online travel intermediaries that have developed as a result of IT; and 7. Explain how tour operators can use IT to improve productivity and competitiveness.  CABI TOURISM TEXTS Key Concepts  Travel distribution system  Computer Reservation System(CRS)  Global Distribution System (GDS)  GDS New Entrant (GNE)  New Distribution Capability (NDC)  Tour Operators and Wholesalers  Travel Retailers  Online Travel Agents (OTA)  Channel Managers 4  CABI TOURISM TEXTS SUPPLIERS Car Activities Airlines Rail Cruise Hotels Rental & Events Supplier Reservation Systems (CRS, ARS, PMS) CONNECTIONS Global Distribution System Switch (GDS) BOOKINGS Tour Operator / Wholesaler Point of Sale (POS) Call Centre Traditional Travel Agent FIGURE 3.1 Traditional Travel Distribution System 5  CABI TOURISM TEXTS SUPPLIERS Car Activities Airlines Rail Cruise Hotels Rental & Events Supplier Reservation Systems (CRS, ARS, PMS) CONNECTIONS Channel Manager Switch Internet Booking GDS New Global Distribution Destination Management Engine (IBE) Entrants (GNE) System (GDS) System (DMS) Tour Operator Travel Management Wholesaler Company (TMC) BOOKINGS Call Centre Online Travel Agent (OTA) Meta Search DMO Website Point of Sale (POS) Supplier Website Social Media Mobile App Affiliate Traditional Travel Agent FIGURE 3.2 Digital Travel Distribution System 6 CABI TOURISM TEXTS FIGURE 3.3 American Airlines Advertisement showing seat availability on wall charts Source: American Airlines 7  CABI TOURISM TEXTS 1960 IBM, AA 1960 SABER 1964 1964 IBM SABRE PARS 1968 DL DATAS 1971 TW, NW 1971 UA 1970 PARS APOLLO 1976 BA, BR, TRAVICOM CCL 1980 1982 DL 1982 CO BA, KL, OS, DATAS II SYSTEM ONE 1986 AZ, SR, OA, AF, IB 1988 SQ, CX COVIA 1987 SN, TP, EI, 1987 LH, SK DL, ABACUS GALILEOCovia AMADEUS 1990 TW, NW 1990 WORLDSPAN 1993 GALILEO INT. 1995 APOLLO, GALILEO 1998 AMADEUS SABRE 2000 2006 2010 2015 TRAVELPORT 2015 SABRE APOLLO, GALILEO, WORLDSPAN AMADEUS FIGURE 3.4 The evolution of major Global Distribution Systems  CABI TOURISM TEXTS Characteristics of Major GDSs Marke Founde GDS Founders t Locations d Share Sabre 1960 American Airlines 36.4% 57,000 travel agency Acquisition of Abacus locations. Global presence, strong in US & Asia Pacific Amadeus 1987 Air France, Lufthansa, 42.4% 102,000 travel agency Iberia & SAS locations. Mainly Western Europe, Middle East & Asia Pacific Travelport 2006 Galileo-Worldspan 21.2% 65,000 travel agency merger locations. Global 1990 United Airlines presence, strong in US & Worldspa Western Europe n Galileo 1987 Nine European airlines Apollo 1971 Delta, TWA & NW Airlines 9  CABI TOURISM TEXTS Core GDS Functions Passenger Informatio n Rates and Booking Condition Requests s E- Core ticketing Availabilit GDS & y Functio Itinerary ns Managem ent 10  CABI TOURISM TEXTS Secondary GDS Functions Decision Financial Support Management Systems Integrated E-Commerce Travel Tools Management Passenger Corporate Document Travel Requirement Management s Seconda Booking Ancillary ry GDS Communicati on & Services Function Scheduling s 11  CABI TOURISM TEXTS 112MAYLCAATH« 12MAY TUE LCA/Z‡2 ATH/‡0 1CY 322 J7 C7 D7 I7 Z4 Y7*LCAATH 0700 0845 319 S 0 123 DCA /E B7 N7 S7 M7 T7 W7 L7 X7 2A3 903 C4 D4 Z0 A0 I0 J0*LCAATH 0830 1010 321 B 0 DC /E Y4 B4 M4 K4 W4 S4 H4 L4 FIGURE 3.5 Traditional GDS ‘Green Screen’ Display  CABI TOURISM TEXTS FIGURE 3.6 Sabre Red Graphical Workspace Source: Sabre Holdings, 2014  CABI TOURISM TEXTS OTA Web GUI API API Suppliers API GDS Agent GUI FIGURE 3.7 GDS Interfaces  CABI TOURISM TEXTS SWOT Analysis of GDSs Positive Negative Strengths Weaknesses Market Power Legacy-based Systems Internal Homogenized Content Connectivity Interline Bookings Pricing Innovation Back Office Integration Client Loyalty Opportunities Threats External New Suppliers GDS New Entrants (GNEs) New Clients Open Systems Dynamic Packaging Direct Bookings Interoperability 15  CABI TOURISM TEXTS GDS Trends  Diversifying IT solutions  Consolidation  Connectivity and interoperability  Transparency  Personalization  Social, Local and Mobile (SoLoMo) 16  CABI TOURISM TEXTS Tour Operator Use of IT  Package creation  Tour package distribution  Reservations and customer management 17  CABI TOURISM TEXTS Traditional Travel Retailers  Front Office Systems  Back Office Systems  Accounting Systems  Human Resource Systems  Customer Relationship Management (CRM)  Communication  Commission Tracking  Transaction Settlement 18  CABI TOURISM TEXTS Enterprise Resource Planning (ERP) Systems  Back office functions can be integrated into cross- functional systems known as Enterprise Resource Planning (ERP) systems.  Benefits:  Productivity  Reporting  Customer Satisfaction  Forecasting 19  CABI TOURISM TEXTS SWOT Analysis of Traditional Retailers Positive Negative Strengths Weaknesses Time and cost Cost Internal Expertise Bias and errors Security Less choice and transparency Value adding Less control Personalization High fixed costs Special needs Limited opening hours Opportunities Threats External Emerging markets Decommissioning Hybrid models Digital competitors Consolidation Public perceptions Failure to attract talent Lack of investment  CABI TOURISM TEXTS Travel Management Companies (TMCs) Unique Characteristics  Contracts and Preferred Suppliers  Travel Policy Compliance  Employee Productivity  Risk Management  Travel Expense Management 21  CABI TOURISM TEXTS Types of Online Travel Intermediaries Trip Planning Affiliates Sites Group Aggregators Buying Sites Metasearch Opaque Engines Sites Online Travel Online Product Agents (OTAs) Intermediaries Review Sites 22  CABI TOURISM TEXTS Online Travel Intermediary Innovations Flexible Semantic date search search Opaque Dynamic pricing packaging Search filters Matrix Alternative displays airport search Low-fare notifications Mapping Pressure selling 23  CABI TOURISM TEXTS SWOT Analysis of Online Intermediaries Positive Negative Strengths Weaknesses Low entry costs and investment Lack of transparency Internal Pricing and convenience Cancellation and changes Customization Security Flexibility, choice, control Time consuming Instantaneous Limited advice Comparison Lack of expertise Multimedia Support (general and special needs) Opportunities Threats External Social Competition Mobile Direct Bookings Integration Innovation  CABI TOURISM TEXTS Discussion Questions 1. What challenges do small and medium tourism enterprises (SMTEs) face in travel distribution? How might SMTEs respond to the increasingly complex structure of the digital tourism distribution system? 2. What is the difference between a GDS and a GNE? Visit the GDS and GNE websites to help you answer this question. Do you think GNEs are a threat to the GDSs? Justify your answer. 3. You have started your own small travel retail business. Which GDS would you choose and why? 4. What is the role of traditional intermediaries in the travel distribution system and are they still needed? How might traditional intermediaries use IT to compete against the innovative features offered by OTAs? 5. Watch the following video about IATA’s New Distribution Capability: http://youtu.be/Rru0RgWxtqQ. What impact is this IT development likely to have on travel intermediaries?  CABI TOURISM TEXTS Discussion Questions 6. What is disintermediation and how has it impacted the different types of travel intermediaries described in this chapter? Do you think some of the intermediaries discussed in this chapter are likely to disappear in the next 10 years? Which and why? What role has IT played in this process? 7. This chapter provides SWOT analyses for the GDSs, traditional travel retailers and OTAs. Use the information in this chapter along with your own research to conduct a similar SWOT analysis of TMCs. What do you think the future looks like for TMCs? 8. Visit two metasearch engines (e.g. Hipmunk, Room77, Skyscanner, Trivago, Kayak) and search for a return flight and hotel to a destination of your choice. Compare and contrast the two sites by identifying the strengths and weaknesses of each. Do they offer different features? Which features do you like the most? What ITs are used to improve the search experience? 9. The pressure selling tactics used by OTAs have attracted recent government scrutiny. Find some press stories about these tactics and use them to identify the key issues that have generated  CABI TOURISM TEXTS Useful Websites Expedia Kayak www.expedia.com www.kayak.com Sabre Holdings TUI www.sabre.com www.tui-group.com/en-en lastminute.com Booking Holdings www.lastminute.com www.bookingholdings.com Winding Tree windingtree.com 27  CABI TOURISM TEXTS Case Study Sabre Corporation  Founded by partnership between American Airlines and IBM in 1953  SABRE was the first private real-time online transaction system  9,000 employees and clients in 160 countries  Diversified beyond GDS to become a travel technology company offering a range of IT solutions for airlines, airports, travel intermediaries, hotels, car rental providers, rail providers and tour operators  Acquired GNE Fairlogix in 2018  Three business units: 1. Sabre Travel Network 2. Sabre Airline Solutions 3. Sabre Hospitality Solutions  CABI TOURISM TEXTS Source Copyright © 2022 CABI. 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