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Monday, August 08, 2005

Travel Technology Overview
I have now spent some time on travel technologies and am going to write a series of blogs on that.
The travel space is divided into
Suppliers : These are airlines ( scheduled, low cost, chartered), hotels ( big chains, individual hotels, b&bs etc.), apartments, tour operators, car hire companies and so on. There are lots of these supplier - maybe a million of them. All these suppliers have limited inventories of the products they supply. The products they supply may be seasonal in nature and may have varying costs associated. These suppliers may or may not have their own reservation systems. Many of these tie up to one or more "Central Reservation Systems".

Central Reservation Systems : Central reservation systems provide a booking interface for multiple suppliers. The supplier may chose to have an online link with the CRS, they may provide "allocation" of inventory to the CRS or they may allow the CRS to sell the products freely. The same supplier could be selling inventory directly or via a supplier.
The CRS usually have the rates of these products also - but that need not always be true.
It is also possible to get rates from the supplier and do reservations on the CRS.
There are 4-5 big CRS and 100s of specialist CRS ( like hotel providers which typically concentrate on a certain area). Agents (online or offline) subscribe to these CRS and have a contractual obligation to pay for what they buy, immediately or delayed.

Agents: Agents sell products from one or more CRS and possibly diretly from suppliers. The agents may either get commission from the supplier, or may be allowed to bump up the price that the supplier or CRS quotes them to quote to travellers. In the latter case - the agent will have to take the payment himself. In the preior case, the supplier may take payment and give a cut to the agent. These agents could be brick and mortar agents or they may be online travel sites.
Online travel sites come in multiple flavors - for agents, for retail and for corportate customers.
Agents may also make packages and sell them.

Traveller: Traveller is the first and the last person in the chain. Traveller can seek agents help to plan the travel, demand a quote before booking the vacation, shop around or make the agent shop around on their behalf and if satisfies - books and pays. On payment the agent may pass back tickets and vouchers to the traveller. If on an online site, the traveller can print the tickets , or agent may require to post them.

So there are multiple challenges we see above:
Multiple suppliers, multiple rates, multiple or no CRS affiliations. Directed, Value for money shopping- across CRS and suppliers.
The travel sites address these problems partialy by trying to provide shopping capability across a varying set of suppliers, negociating better rates with supplier and aiding planning and shoppling with tools like maps, online payment. They also try to keep the costs low by robotic ticking if feasible.

The size of the agencies needs to be bigger to do the above better. So the travel agents either participate in a chain, or they take help of "consolidators". Consolidators are companies to which the Agents direct their prurchases via. Since consolidators consolidate purchase from multiple agents, they get better buying power hence better clout with the suppliers for better rates and better service.

The above are primary participants as far as travel technology is covered. Next blog will be on challenges and opportunities.

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