Travel firms are constantly looking for new ways to streamline their business and consumers are forever after the best deal and in this quest IT can help. Ahead of the new upcoming Smart Travel Show in Boston in October, Pamela Whitby explores some rising trends, controversial moves and challenges in the information technology space.

With the ongoing consolidation of the airline industry, James Filsinger, President & CEO at technology firm Yapta, believes that airfares will continue to rise and award seats will become more difficult to book. In spite of this, or perhaps because of it, he expects to see consumers and businesses becoming increasingly reliant on automated price-tracking technologies in order to capture the best price.  “They [consumers and corporations] will become more accustomed to utilising credits gained from rebooking at lower fares,” he says, adding that he thinks “airlines will try to take a tighter reign over their pricing and reduce the ability of consumers to compare prices across airlines.” 

One development that could have a major impact on the industry is the International Air Transport Association’s (IATA) controversial New Distribution Capability (NDC) initiative, which will reform how airline content such as airfares, routes and seat availability reaches passengers through websites and travel agencies. IATA argues that NDC is about providing the passenger with more choice of products and services, more personalisation, more transparency and increased competition among providers. However, among the criticisms are that it could lead to issues around customer privacy and kill off global distribution systems like Sabre and Amadeus. NDC pilot tests are already underway, allowing airlines to deliver airfares directly to consumers and ignore GDSs. If the initiative succeeds, it will mean a multibillion dollar shift in the distribution balance of power from intermediaries to suppliers,” says Filsinger.  In fact some predictions indicate that the GDS share of worldwide airline reservation volume could drop to 7%, down from today’s 60% share.

Travel on the rise

Whatever happens, one thing seems clear, both leisure and business travel are growing.  In the US business travel spending is expected to rise 5.1% this year to $268.5 billion, a substantial increase from 1.8% growth in 2012, according to the Global Business Travel Association, the trade group for business travel managers. That's an upgrade from the group's previous prediction for a 4.6% boost in 2013.”  According to Natasa Christodoulidou, Director of the Hospitality Technology Research Institute at California State University business travel is picking up but in a new way. “More executives are being asked to book tickets in advanced and non-refundable fares,” she says. “In addition, the latest trend I read in a travel trade journal alluded to business travellers in the UK being asked to book economy tickets to the US if they are travelling to the East Coast as this is now considered short-haul!”

Companies like Airbnb and HotelTonight have also gone some way to redefine the definition of the hotel and lodging sectors even in the business travel sector. “With the success of web-services like Airbnb and HotelTonight, the emergence of ‘open booking’ will become more prevalent in large managed travel programmes,” argues Filsinger.  He points to Concur which he says is trying to help companies embrace their savvy business travellers with an ‘open booking’ solution that enables employees to book directly on these sites – and yet, at the same time, pull them back into policy when it makes sense.

The rise of mobile and the cloud

With the advancement of mobile devices and applications, one starts to see where big data and location-aware services will be able to offer the right travel product or service to the right customer at the right time.  Delta, for example, is already beginning to offer a personalised services for travellers that download their mobile app – from booking and check-in to in-flight services like an interactive trip map and the ‘what’s next’ feature to help guide customers to the next point in their journey.  “And with the arrival of this technology, you’ll also see the continued growth in travel bookings from mobile devices.  They’re not just being used for shopping anymore!” stresses Hilsfinger. In fact a recent Comscore/Expedia study revealed that around 61% of tablet owners now purchase travel via their tablet, and 51% of smartphone owners pay via their phone. 

When it comes to cloud-based technology, Hilsinger believes travel firms have made more headway than people think. “It’s just that it’s not always visible because of the ‘behind-the-scenes’ nature of cloud computing,” he says.  By utilising the cloud, companies have been able to automate a number of core back-end functions, such as PNR monitoring, ticketing alerts and queue management and redistribution.  It’s also being used to automate management reporting and analysis capabilities.  All of these functions that once needed a local server-based application are now being managed in the cloud.  However, the challenge with the cloud is the perception of risk including security vulnerability, protection of data and stability or uptime.  “But these are perceptions, not reality,” argues Hilsinger, adding that “Amazon now provides Payment Card Industry compliant environments and easily enables technology companies to build high availability applications”.

Christodoulidou argues that the cloud has not been given the attention it deserves because of the number balls the industry is juggling. “In the USA, budget cuts at airports and the latest terrorism threats are taking a toll on the industry,” she says.

Driving new revenues, cutting costs

Although WiFi is a challenge because it requires airlines to update their fleets, and hotels and cruise lines to update their accommodations, forward thinking operations are investing.  “Change is coming as airlines turn over their fleets and hotels and cruise lines make necessary renovations,” says Hilsginer.  In fact, a number of airlines are now rolling out WiFi across short and long haul routes. They are also starting to cater to iPads as a replacement for expensive seatback in-flight entertainment systems. By becoming more reliant on passengers to ‘bring your own device’ airlines are no longer installing inflight entertainment systems which are extremely heavy and add millions in additional fuel costs.  So WiFi is definitely becoming more of a priority – especially if it helps cut costs.

The question is should airlines charge for WiFi? According to Christodoulidou WiFi is the numberone ancillary revenue model that is consistently successful for the airline, hotel, and cruise industry. “When the cruise industry charges on average 75 cents a minute for something that costs them 8 cents a minute and guests are willing to pay over $500 in internet charges for a 7-day cruise, then this definitely is a cash cow,” she says.

Natasa Christodoulidou, Director of the Hospitality Technology Research Institute at California State University will be speaking at The Smart Travel Technology Show in Boston (Oct 22-23)