fgrocery store shelves
728 days ago
 

Putting the supplier cart before the distributor horse in travel

Imagine yourself walking into a grocery store.  The shelves are stocked full of brightly labelled cans and boxes of goods.  You gaze in awe at the vast selection of product.

Excited to purchase something for dinner, you reach out and pick up a can.  To your surprise the can is empty.  You take a closer look at the label and it states that the can is merely a representation of the food you are buying created exclusively by the grocery store.

In fact, once purchased, the grocery store will call the manufacturer to make sure the food you purchased is still available.  If it is, then you are instructed to take the can to the food manufacturer who will then happily fill the can with the food that you purchased.

Oh, and by the way, there is no guarantee that the food that you purchased will actually still be available when you arrive, so you may have to settle for an equivalent substitute.

Now, imagine that all the cans and boxes on the shelves are the same; empty representations of products that must be redeemed at their point of manufacture.  I think you would agree that consumerism as we know it would come to a grinding halt.

Although you are probably saying to yourself what a ridiculous way to distribute goods, many segments of the travel industry do, in fact, distribute this way.

I realize this is an oversimplification of the problem, but it’s not that far off the mark.  Heck, both the wunderkinds of the travel space like Airbnb and incumbents alike work on the premise I have described.

A customer looks at a vast catalogue of amazingly beautiful photos and descriptions of places they can stay or things they can do.

They select one, pay for (or pre-authorize) their selection, and then wait for a message to go to the property owner or tour operator to confirm that they can accept the booking.  If the booking is confirmed then the customer’s card is charged and they receive their proof of purchase or voucher.

If the operator rejects the booking, for whatever reason, the customer is out of luck and has to pick something else thereby repeating the cycle.  Sometimes this process can take up to 48 hours or more.

Into tours and activities

In the last few months I’ve watched with some satisfaction, the number of stories on Tnooz relating to the tour and activity space.

As an outspoken evangelist for the segment for many years, it is certainly nice to see that the segment is getting some much needed love.

But what worries me is the number of start-ups and innovations that are popping up that are not dealing with, what I consider to be, the number one problem plaguing this segment; the empty can.

Let’s be clear, I’m not talking about a lack of supply, I am referring to a lack of access to real-time supply. There are, as PhoCusWright confirmed in its study, tens of thousands of small tour and activity operators in the North America alone.

There is no lack of supply in the tours and activities marketplace.  The issue still remains however that, as of 2011, only 14% of these businesses have electronic reservation systems, and of those, I would estimate that less than 10% have systems capable of supporting electronic distribution with real-time availability.

I doubt highly that the number has changed much since that time.

So what can be done to make sure that the cart is placed firmly behind the horse?

Those who are interested in distribution need to open up instead of creating walled gardens of supply.

Look under the hood of any OTA specializing in a niche market, whether it’s vacation rentals, tours and activities, or people’s couches, and what you will find is a proprietary extranet designed to allow suppliers to load their content into the OTA’s database.

Some are fancier than others, some have nice features, and some might even pass as a basic management system, but they are all proprietary and by virtue closed systems.

Ask yourself these questions:

  • So why wouldn’t an OTA just open up it’s extranet and allow suppliers to use their extranet as a tour operator software or property management system?

Because managing product for the purposes of distribution is very different than managing the supply of products.

  • Is an OTA really going to allow a supplier to use their technology to sell direct to a consumer?
  • Is an operator going to allow an OTA to be the sole repository of their content, both marketing and availability?

The answer to both those questions is most likely to be no.

One answer to the real-time supply problem is to build inbound APIs.  The APIs that are currently available (from a distribution standpoint) are outbound APIs.

This means that they are designed to push content out to marketing partners rather than pull content from suppliers.  In order to access real-time supply, the onus is on the large OTAs to connect to third party systems for the purposes of accessing availability or to process real-time bookings.

Fig.1 – Current OTA connectivity model

For anyone other than the largest of suppliers, getting the attention of an OTA is simply an impossibility.  For most OTAs, creating a custom integration is generally not a priority because the revenue levels don’t justify the cost of a direct connect to a single supplier.

But, if the OTA had an inbound API that was standardized and properly documented, the OTA could stipulate the methods for sending and requesting content, availability, and booking transactions.

Fig. 2 – OTA with an inbound API

By opening up such an API, the OTA could connect with an unlimited number of third parties with only a single API build.  If the API were built using Open Travel Alliance Schema, the potential to reduce build time and improve the likelihood of connectivity would also increase.

The burden to connect and maintain compliance would shift from the OTA and land firmly in the lap of the supplier or the supplier’s reservation system provider.

But how does this help get more small suppliers to adopt electronic systems?

Opening up channels for distribution can act as a strong motivator for suppliers to adopt systems that will allow them to distribute.  Small system providers would jump at the opportunity to build to a distributor if it meant more suppliers adopting their systems.

Just look at the increased adoption of systems in Australia as a result of Tourism Exchange Australia.  An OTA, or any large distributor for that matter, advertising that they have an API that is accessible for real-time availability push, means that thousands of operators who offer availability restricted tours and activities could distribute without the fear of overbooking and without the headache of back and forth emails.

Even if those suppliers are not ready to distribute yet, taking that step towards distribution by adopting a reservation system will increase their ability to book directly with consumers, which is still the primary booking channel for the in-destination tour and activity segment.

From a purely technical perspective, I am a bit surprised that this hasn’t happened already.  My guess is that it is not a technical issue but a commercial one.

Maybe now that it has been brought to light, we’ll see some innovators or forward thinking OTAs actually build distribution platforms without the requisite half-hearted but still necessary extranets that tend to go along with them.

Maybe, just maybe, these organizations will have an API first approach, with a big banner that says “want to distribute through us, connect to our API and feed us your content”.

Maybe – just maybe – then we’ll see the vision of last minute real-time mobile bookings become a reality for the tour and activity and other niche segments.

Hey, I can dream can’t I?

NB: Grocery store shelves image via Shutterstock.

 
 
Stephen Joyce

About the Writer :: Stephen Joyce

Stephen Joyce is a contributing Node to Tnooz and has been working as a travel and tourism technology consultant since 1995. Stephen is the CEO of Rezgo.com, a cloud based software as a service reservation and booking platform for tour and activity providers.

Stephen is the Past Board Chair of the OpenTravel Alliance.

Stephen is a graduate of Capilano University, is a certified commercial pilot, and holds a certificate in IT Management.

 

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  1. Murray Harrold

    Thought provoking. Before online, we had viewdata and telephones. Someone came in wanting a holiday and you either called the operator or booked it on viewdata. Job done. In some cases, especially for more complex bookings, you placed the holiday “on request” and held a clients crad details or deposit. The operator went away fixed it all up, then came back and said yea or nay. If yay, the charge went through, if nay it didn’t – or one looked at possible variations.

    On balance, people were quite content with this system.

    The supermarket analogy is driven by technology, I would venture, rather than consumers, to the extent that it has made a bit of a rod for its own back. People are not prepared to wait. As the need for instant gratification has increased, this need to instantly gratify any demand starts to become a bit of a problem.

    The big issue is money. Techy types tend to think techy money. They do not think travel money – and travel money is not very big. To a hotelier or small tour operator £1,000 is an awful lot of money – and unless someone can guarantee (with nobs on) that that £1,000 will produce £2,000 in a months time, then they are not going to be keen to part with it. This may be why so few have API’s and all the paparphenalia that goes with producing them. This is the “margin management” talked about above. That one distributor wanted 25% just shows how little the technology side understands the reality of life on the hardcore travel side.

    We know that there is a lot of money being thrown at travel tech. Travel tech will stay bogged down in endlessly trying to present, ad nauseam, the limited amount of information currently available with slight variations on a theme – which is why we see (or saw at PhoCusWright) very little really new stuff. Tech is only going to make advances if that money starts to go down to the travel coal face – to the smaller hoteliers, tour providers and other such, who will then be able to provide the technology side with the data and product it so craves.

    In other words, don’t say to a hotel (or small tour person etc) “You must provide…” Say “We will do all the hard work and provide you witth the kit and kaboodle to provide us with the information – free” Later on, when the tech side has proved it can produce the goods, then one can take a (sensible) percentage. Only issue may be that it has to be a travel money percentage, not a technology money percentage….

     
  2. Travis Pittman

    Nice article Stephen…

    Over the years of working with suppliers of all shapes and sizes, we have learnt a number of things here at TourRadar about this topic ;-) Our focus has always been multi-day tours, so I’m talking more from that perspective than local activities.

    The inbound API that you speak of is something that we have been doing since the very beginning of TourRadar. Whilst we don’t use any of the Open Travel standards that you mention, whenever we start working with a new supplier we ask them:

    1) Do they have their own XML feed
    2) Are they using one of the reservation platforms like TourCMS (as we have connected TourRadar’s inbound API with TourCMS’s outbound API)
    3) If they have neither of the above, they have a number of options:
    a) Our Content Team scrapes the data from their website for the tours they want to list with us
    b) Our Content Team receives an Excel sheet containing their tour data
    c) The supplier can login to our Extranet and add their tours themselves

    As you can imagine our preferred options are 1) and 2) as this is how our data remains up to date, whenever the supplier updates the content in their own systems. Sometimes we do get suppliers asking for an example TourRadar XML schema so they can get their IT team to create a feed for us (not very often). The common theme we see is that these small to medium suppliers spend most of their time creating/running amazing tours and just don’t have (and simply shouldn’t have to) spend the time on development of an in-house website/booking engine solution or data feed. Some try and do it, but really it makes the most sense in terms of cash, time and frustration to just signup with one of the many great cloud-based reservation platforms represented in this discussion, who’s business it is to handle the tech side of taking online bookings.

    Even today, only a very small % of the operators listed on TourRadar provide us with their own XML feed of data – i.e. mostly large organisations like Intrepid, G Adventures, etc. The number of suppliers with data feeds has definitely increased over the years, however it is still sadly a minority. The next challenge arises when we look at the data contained inside these feeds. You do suggest that by adopting Open Travel standards, it would help with connectivity and whilst I don’t disagree at all with you there… I unfortunately just don’t see it happening anytime soon with individual suppliers. The number of different formats, field names, variables we receive in XML feeds from supplier to supplier is quite astounding. This all comes back to the supplier’s legacy systems and databases that they have been using for years and getting them to convert these into an official ‘Standard’ format is something I would LOVE to happen… but again can’t see it happening soon. The benefit of the rez systems like Rezgo, TourCMS, Trekksoft, etc is that there are many suppliers using the one system (which is great for platforms like us, as we get access to many suppliers through one single API connection) but then, as Alex Bainbridge mentioned above, it’s up to you guys to decide if it makes sense to use a Standard like Open Travel in your APIs.

    Here at TourRadar we took the challenge on a number of years ago, of creating this ‘inbound API’ that you speak of, as we simply didn’t see any other way of going forward without being so flexible that we can literally adapt any type of data feed into talking and integrating with our backend. To date, we have never not been able to integrate a new supplier. We naturally internally standardise, clean and add value to this data into a common TourRadar format which we then re-distribute out via:

    - TourRadar.com
    - Suppliers using our Facebook Apps on their Facebook Pages
    - Large Affiliates using our outbound API
    - Small Affiliates using our white-label ad units and web search apps
    - Travel Agents using our Facebook Apps
    - DMOs using our Web and Facebook Apps

    For us though, the vision of last-minute real-time mobile bookings isn’t really our focus, as it’s not very likely that a person is going to look up a 6 week safari of Namibia worth $5,000 on their phone and book the departure leaving tomorrow ;-) That being said… as you mentioned in your comments above, in the best interests of the customer, if they want to be able to buy their can of food on the spot without speaking with the manufacturer to fill the order, they should be able to do just that.

     
    • Stephen Joyce

      Stephen Joyce

      Thanks for the very thoughtful comment Travis. Firstly, I think there are very important and fundamental differences both in product data structure and buying patterns for single day activities and multi-day tours. Not least of which is the average price. That said, I think you’ve done a nice job of “eating your own dogfood” by building your own inbound API and then integrating with it.

      As far as standards are concerned, it is often said that the standards are slow to update and lag behind innovation. I disagree. They only appear to be slow to update and lag behind because no one is stepping up to the plate to help ensure they stay updated and contributing to their development. There is a clear need for some standardization in terms of product structure for the adventure travel space (around multi-day tours) and yet only one company Peak15 has stepped up to tried and address it. I think your inbound API and the work you have done to help normalize product data could go a long way to helping to make your lives easier for the long term and set the standard for other systems looking to connect.

      –start rant –
      Frankly, you, Alex (TourCMS), James (from Peak15), Resmark, and a few others who are specifically serving the multi-day tour operators need to lead this charge and get it done before the connectivity issue fragments even further. Until that happens though, I don’t want to hear anyone slagging the standards, since none of you have contributed to them (except for James ofcourse).
      – end rant –

       
  3. Alex Narracott

    Hi Peter, yes I see that. I guess my point is that distribution via the classic OTA business model that has been taken as a given in this thread it is not necessarily the inevitable conclusion for everyone in this sector.

    You are right to say you are not sure independent adventure companies will be able to dominate search engines for niche sectors once the large distribution companies have their sites full of product. But there are other marketplace aggregators at work who may be able to compete in this arena too – operating on a different business model to classic OTAs, and providing marketing exposure to those kinds of independent companies who still wish to focus on direct business. If an aggregator is not handling clients, bookings etc, their costs are lower after all, and this gets reflected in the commissions or subscriptions models available. The mechanics of APIs and distribution are irrelvant here, we are now talking about who handles the customer. We both know how important that aspect is in this whole equation, especially multi day.

    Time will tell how this plays out. Supermarkets are getting rid of checkout staff too, so maybe we will end up following suit after all!

     
    • Stephen Joyce

      Stephen Joyce

      The supermarket is probably not the best analogy, but the point I was trying to make is that when a customer purchases something, they expect to get what it is they purchased, and they expect it in real-time. The model that I am proposing is one where the fundamentals of product management are controlled by the supplier and where distributors/retailers control marketing and positioning. Suppliers need to sell direct, that is a given, but in the process of improving their direct sale capabilities, they will also better prepare themselves for distribution as well. The data shows that only 18% of online (not total revenues) in the tour and activity segment are through distribution channels. So there is a lot of room for growth. What I am proposing is that when distribution becomes more prevalent for both day and multi-day tours, that the suppliers will be ready to handle channel management, pricing, and margins more effectively, because they won’t be able to do it using a paper and pen.

      As far as handling the customer is concerned, I think Peter is right. It is about using distribution to help drive higher margin direct sales. Seeing a brand or tour on a reputable OTA or travel website will only increase the trustworthiness of the supplier. The billboard effect works for tours and activities as well.

       
  4. Alex Narracott

    Very interesting Stephen, thank you. Our experiences at Much Better Adventures (multi day on the most part) have told us that for every supermarket chain there is also a high street full of interesting and unique shops….

    As you are very aware, a large % of suppliers (who knows what, probably 85% based on your figure?) are a million miles from even thinking about the idea of distribution. They don’t even have a pricing model that comes close to offering the kind of margins that multi layer distribution requires, so until that is addressed everything else is very much still a pipe dream.

    Importantly though, I’m not convinced a large chunk of these businesses even will address it. This is not however because they are somehow ‘backwards’ or behind the times. It is a very real business decision by some very shrewd people. Their interest is not in high volume low margin business (the golden promise of serious distribution), but in low volume, high margin business.

    Call it a lifestyle business if you like. Many of these suppliers might only be about for 5, 10, 15 years, then decide to go do something else all together (when their knees fail them and they have a few kids to spend more time with perhaps). It is these 2, 3, 4 ,5 man shows that often offer the kind of unique, professional and personal experiences that gives consumers the biggest smiles they ever had. It is the kind of business that thrives on word of mouth, direct bookings and high margins. Why would they want to distribute that? It hits the margin, reduces rapport with the client and runs a high risk of being mis sold (headaches all round).

    So rather than the supermarket shelf, you might consider this not insignificant volume of suppliers as the independent high street. They proudly differentiate themselves by not being in every supermarket. Even in retail, if a consumer wants something truly unique they are gonna have to trawl the high street to find it. For those that make the effort are well rewarded. Of course, there are ways of making that easier for the consumer…

    Don’t get me wrong, we will support those TO’s who have moved on from extranets and made their product available through APIs, but I doubt the extranet is going to die out for quite a while. Anyway, it may be a sad day for consumers if it does.

    Long live the high street!

     
    • Peter

      Alex I do agree that every independent business will have to make a decision on distribution and for many the system may not suit them for all the reasons that you state.

      However, as other sectors of the travel industry has demonstrated as distribution kicks in it makes it more difficult for the unique travel products to get their marketing message out there. For example independent adventure businesses can dominate the front page of google at present for their niche. I am not so sure they will be able to do that one the large distribution companies have their sites full of product.

      Also for everyone who does not go the distribution route another will often with the same product. Of course the marketing message may be different but the product is essentially the same and the market always learns that through time.

      The issue of margin management is core to this. I refused a sign up yesterday with a large USA based distribution network as I could not justify the 25% margin they were charging for what would have been small volume. However, that is for us the suppliers to manage and innovate on.

      I know I have gone from over 95% direct to 75% direct over the last few years and I can see my direct business continuing to decline and be replaced by distribution. I deal with it by ensuring we still make profit on the distribution volume type business and ensuring the guests have the best possible time in order that a % will always then purchase high margin direct business which in theory replaces the margin lost to the distribution chain.

      Interesting, frustrating and challenging times but heh it could be worse we could really be working for supermarkets!

       
  5. Matt Zito

    Stephen, great post.

    OTAs want to sell packages.
    In talking with multiple OTA software providers over the last few months all have told me that the tour and activity isn’t being distributed because the OTA platforms can’t package it with the hotels. There is an opportunity for the OTAs to create in-bound APIs to acquire tour and activity inventory if the technology enables the OTA software providers the ability to package the tour and activity component with the hotel.

    So to me this is less about price and more about technology and distribution terms of the tour and activity product. I think price can be overcome especially if the OTA can maintain their margins.

    An activity product that has been successful with OTAs for the last 7 years is ski resort lift tickets. The activity is easily packaged with the hotel inventory and sold as a vacation package with or without air. The major ski resorts all manage extranets with the OTAs and do business as Figure A in your post.

    I think a solution moving forward is to reach out with the OTA software platforms themselves and see how your Figure #2 can help them package the activity component with their hotel rooms.

     
    • Stephen Joyce

      Stephen Joyce

      Thanks Matt. In either diagram, the ability to package the activities with hotels is left up to the OTA to manage. If they have the product data available, along with live availability, they should be able to package the components together dynamically.

       
    • Alex Bainbridge

      “The activity is easily packaged with the hotel inventory and sold as a vacation package with or without air. The major ski resorts all manage extranets with the OTAs and do business as Figure A in your post.”

      Matt – this is incorrect in Europe. In the US the infrastructure of ski resorts is largely owned by 2 companies. In Europe, because originally ski resorts were mountain villages (not built and owned by ski resort companies) the lift infrastructure is much more fragmented, hence actually much more like the rest of the local tours sector!

       
  6. zachary

    love the article.

    “There is no lack of supply in the tours and activities marketplace. The issue still remains however that, as of 2011, only 14% of these businesses have electronic reservation systems, and of those, I would estimate that less than 10% have systems capable of supporting electronic distribution with real-time availability.”

    The issue here is the hyper local nature of the product. this is the main issue Groupon had (you need a huge sales force to keep the local deals coming). Also, think Seamless. They have to go to these restaurants (many which they actually fax the order to!) and sign all of them up.

     
    • Stephen Joyce

      Stephen Joyce

      Very true Zachary. Education is big portion of the challenge with engaging the tour and activity segment. These are small businesses that are often times not particularly tech savvy. They don’t care about the behind-the-scenes technology. They just want to know that when someone books online, they get paid, and the customer gets a confirmation.

       
  7. Timothy O'Neil-Dunne

    Firstly Bravo to Stephen for putting this issue front and centre. In my view the problem is about pricing integrity. Everything should feed off this.

    Let’s back track a bit and deal with some basic premises.

    1. Travel is complex – the creation of even individual travel products is a complex process.
    2. Travel is not a simple SKU business. So the analogy of a supermarket with cans is inappropriate. Yet consumers have been educated into thinking that there is actually a real warehouse of products.

    Thus with no actual “warehouse” and corresponding logistics system in place to deal with supply – we do have to address some common expectations of product.

    There are essentially 3 common elements of each travel product. A product is defined as something that one can buy with a price.

    A) Constructed real time products – IE a combination of price and inventory availability = product offer
    B) Performance of product offer systems – for example Cached Availability of Products means that there is a perception of product actuality vs the true state of the product.
    C) Dynamic relationships between the provider of the product and the consumer of the product (and the chain in between).

    Thus everything is a compromise. Just taking Air for an example, the creation of a product has multiple components and its getting more complex.

    1. Availability of the seat on the plane. IE is there really a coach seat
    2. Availability according to the rules dependent on a WIDE array of factors (time of day, time before departure, routings etc etc)
    3. Type of Customer – generic or actual specific person
    4. Channel of distribution
    5. Associated and dependent products (e.g. Seat Assignments)

    I could go on ad infinitum on the subject.

    To address these issues – inventory owners and product sellers alike have created both business rules (and corresponding contracts) as well as technology that purports to show a state of product offer… just like a supermarket.

    Just taking Air again – let’s say that I have my own website XXAirline.com, I distribute through the GDSs and the Farelogix/LUTE system, I sell via my own call centre. I also have and support meta-search services.

    The truth is that the meta search price is not real. (Shock horror). It is not guaranteed and it is just a notion of what the price COULD be.

    Each of the GDSs has a contract in place that GUARANTEES that the offer based on what that GDS provides is true. Except that the engines of calculation are all different and therefore we can have 4 or more 100% correct but 100% different prices. I use ITA on XXAirline.com website to calculate the price which I DO guarantee. Oh yes its different as well as ITA uses a different engine. Finally the agent can see the price that the PSS (Airline res system) calculated. So when the airline says that the price is the lowest (READ THE FINE PRINT!!!). For an explanation of the possible vagaries check out my previous post on the subject. http://www.tnooz.com/2011/11/15/news/why-air-results-are-as-predictable-as-european-finance-ministers-or-marriage-vows-of-kim-kardashian/

    In my view – before we start to do anything else – the industry should address price integrity as a fundamental problem to be solved. That means that the party who controls that must deal with it.

    So far I see no effort to achieve that goal. PLEASE someone prove me wrong.

    Cheers

    Timothy

     
    • Alex Bainbridge

      Timothy
      I believe we have addressed price integrity with our end to send solution (suppliers, distributors working together).

      We price, realtime, from real availability (we hold availability as we run the reservation system)… distributors have wanted to send us bookings at prices they wish to store in their system (e.g. several hours/days old)… we don’t accept that way of working (technically)

      Additionally, once we have created a price (and issued it via API) we hold that price for an hour – so even if the price changes in the meantime – the original price can be booked.

      Now distributors COULD hold older data – and case a price integrity problem (But they wouldn’t be able to book on the wrong price) – or they could use our tour search / show APIs – and keep everything consistent.

      [I am not talking about merchant model prices here - with those distributors can of course sell at what price they like]

      [I am also not talking about services as tours - e.g. freelance tour guides or multi-day trips that are tailored... those have to be considered separately]

      Alex

       
      • Timothy O'Neil-Dunne

        With all due respect Alex, I dont think you have done anything other than address the niche you sit in. If you control the end to end state then in general that SHOULD be what you do. But as you clearly point out you dont have 100% coverage. Further – you dont address what happens with things like latency and other common issues.

        The issues must be addressed on a broad basis. Bravo if you can do this to all your channels and services. I think that even though niche that would make you among the very few.

        Cheers

        Timothy

         
        • Stephen Joyce

          Stephen Joyce

          The complexity of air aside, my stance has always been that the price and availability control should be driven by the supplier. Distribution / retailers can play with their margins if they wish to adjust pricing (within the allowable limits set by the supplier) but at the end of the day, it should be the supplier (for better or worse) who determines what their product should be priced. Ultimately, the market will prove them right or wrong. Simplistic? Maybe, but it moves us towards single source inventory which is where I think we need to be.

           
  8. james dunford wood

    Good article, wrong analogy. A package tour – even a hotel or flight booking – is not ‘goods’ in the same way as a can of tomatoes. It is not manufactured, no two products end up the same, and they are date dependent. It is a collection of experiences, and as such follows different rules of distribution and supply.

     
    • Stephen Joyce

      Stephen Joyce

      Great point James, but from the consumer perspective, they don’t necessarily see it that way. As an industry, we have to remember that travelers and consumers don’t care about our logistics, supply chain, or complexities… what they care about is getting their holiday to somewhere at the right price and knowing that it is available and confirmed when they pay for it.

       
  9. Eric Thomas

    Stephen,

    The utopia you describe is from the perspective of a tech supplier, as a receptive tour suplier I can assure you that our decreasing margins make most of us think twice about having reservation systems. Those that are cloud based usually are charging by a per booking fee and are available to all of our competitors alike, so many try to go it on their own, only to realize that they come to an impasse, which is; Are we a technology company or a tour company.

    There are a tremendous amount of variables that go into tour planning and while distribution is high on the list, it is only one variable. So, if we must choose between getting published in a Tour Operators manual, that is basically a stamp of approval, as opposed to being accepted blindly by an OTA most would go with the Tour Operator.

    The cost for a back office system that allows for online distribution is exhorbitant for a small supplier to justify. Unfortunately the old story of building it and they will come is not always true, which is why many small suppliers still atend trade shows and cold call the TUI’s of the world.

     
    • Alex Bainbridge

      Eric –

      “Those that are cloud based usually are charging by a per booking fee and are available to all of our competitors alike”

      a) Usually, yes, but not all

      b) The competitive advantage you can gain (and retain) over your competitors, even on the same system, comes from
      - investment (yes really investment) in your data (descriptions, images, having it in multiple languages)
      - developments you build over and above the res system “out of the box” functionality – that you own the IP to
      - operational processes
      e.g. most bloggers use WordPress – you don’t hear them talking about problems of them all using the same platform…

      Alex
      TourCMS

       
      • Eric Thomas

        Alex,

        Thanks for your response. As a TO that operates internationals arriving into the US the investment you speak of is a concern for us. We are squeezed by our suppliers (components of our tours) and the localities we operate in, as in ever increasing legislation, personnel issues etc.. The fact that we need to hire people to manage CMS is beyond us, when we understand that all this content is out there, and not always free.

        The solution is not always leonardo who I have been using since the early 90′s, the idea is how do we maintain the ever changing landscape of content, that is out there. Let us not forget that we also deal with rigorous EU consumer laws, that penalize us for content that is no longer relevant to a hotel undergoing a renovation, which we were not made privvy to by the developer.

        Design a dynamic content management system that can be licensed by the industry and I am sure we would all line up to sign a contract.

         
    • Peter

      Eric

      Alex has explained it better than I can ( disclosure I am on his reservation system)

      However , I would add try to think 5 years out from where we are now! How many hotels are just relying on their own website and systems to fill their beds? The reality is this is happening and of course it brings margin challenges but if it delivers the volume then these are issues that can be managed.

      Our challenge as suppliers is to design unique tours and ways of explaining why they are unique. If we go to the hard work of doing that I cannot see why we would not want to tell the World about them via distribution.

       
    • Stephen Joyce

      Stephen Joyce

      I agree with Alex. The technology you use isn’t the differentiator or the competitive advantage, it should be the content you produce that defines you. Eventually all your competitors will be using one system or another. At that point, you’ll all be competing on your offering. Hence my can analogy… the cans (or containers) are pretty much the same, it is the contents and the representation of the contents that differentiates your offerings from your competitors. Our motivation as a res system is to help provide the container and make it easier to find shelf space, so you can focus on making the best possible product. (Sorry for the grocery store analogy again)

       
  10. Joe Bühler

    Isn’t it rather sad that in about year fifteen of online travel this isn’t already reality and you have to dream it?

     
    • Stephen Joyce

      Stephen Joyce

      I think we have to take a step back and look at it from the consumer’s point of view. We get so caught up in controlling content, owing suppliers (if there is such a thing), and owning the customer relationship, that we forget what is in the best interests of the customer. We can work out the rest of the details once we figure that part out.

       
  11. Peter

    Great article Stephen. It explains the situation exactly as it is. However, that 10% of suppliers on a global basis who are in a position to hook up with the OTA’s via API still represent tens of thousands of tours maybe over one hundred thousand. The combined value of which would be substantial. If the OTA’s would do as you suggest this inventory could be up and trading within weeks.

    The result of this is obvious , a large % of the suppliers without current API ability would get their act together pretty quickly. Having said that many are still chapping on my door saying upload to our extranet which is hugely frustrating when they are supposed to be technology driven companies, many of whom backed by VC funds which seems ironic when they cannot take a API feed.

    Keep up the good work

     
    • Stephen Joyce

      Stephen Joyce

      After having spoken to a number of distributor channels, none of them have even thought about having inbound APIs… hence the motivation for this article :-)

       
  12. Alex Bainbridge

    Stephen, great thinking.

    However, unlike say the flight or hotel sector, much of the innovation in tours & activities is still happening on WHAT data to ask for from suppliers (i.e. what would be useful to consumers). Soon as you mandate an incoming API like you suggest – that data collection innovation will cease on the supplier end….

    OR the data collection innovation will continue, and distribution companies not supporting the master standard will benefit from the additional data (via the res system API directly)…. hence commercially will be in a better position than those who support the standard data format….

    If you were a distribution company and could go res system direct (Figure 1) and get additional levels of data that are not available in the standard – I think that is exactly what I would do. Distribution companies should always be striving for the best data…

    Hence Figure 1 looking more likely than Figure 2….

    Alex
    TourCMS

    [As an example - the other day was discussing the problem of guaranteed to run day tours in Asia for solo travellers..... turns out with some simple API changes at our end we can solve a massive industry problem in that region..... now we can just do that - because its our supplier direct API. Immediately we do that change, it is available to any non-standard adopting distribution company who connects to us, if they want it. We don't have to wait for it to be incorporated into a central agreed data format for their consumers to benefit. Commercially I can give our distributors therefore 12 months advantage over their competitors who wait for the standard to be updated.... if ever]

     
    • Stephen Joyce

      Stephen Joyce

      My point here is that the distributor can dictate the standard that they want since they are the ones that need to define what information they wish to show to the consumer. Whether they use a standard or not is not as important as shifting the development burden from the OTA to the supplier (or supplier system). If suppliers want feel it is important to connect, then they will connect OR they will pressure their res system providers to connect.

       
 
 

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