evolution tech
4 years ago
 

A brief history of travel technology – from its evolution to looking at the future

It is said that necessity is the mother of all invention – and we need look no further than the travel industry to see this proverb in practice.

Since the beginning of recorded history, the travel and hospitality industries have faced challenges. Yet many of these challenges still exist even today.

Travel technology has changed over the years driven primarily by the stakeholders most affected by the use of the technology. I believe we have seen four distinct stages dating from the 1400s to the present day.

These stages are:

  • Supply creation
  • Supply management
  • Sales and distribution
  • Advanced discovery

Before we can look at what the future holds for travel technology, we have to look to its past to determine its path forward.

Supply creation

The very first recorded incident of overbooking and the subsequent denial of service to a guest can be attributed to the case of the pregnant woman and her husband who, after a long journey, were forced to look for alternative accommodation because the inn at which they wished to stay was already full.

The wife gave birth to their child in the stable next door, and well, you know the rest.

But how different that story could have been, if they had booked their accommodations in advance or used a last minute booking application like HotelTonight?

Think of the long term marketing opportunity that Innkeeper missed out on. Instead, the innkeeper is vilified.

It isn’t until the 1400s that we see a formalization of the hospitality industry when England and France (not at the same time) passed legislation that required hotels and inns to keep guest registries.

Essentially, this was the first instance of customer relationship management in the hospitality space.

During that time, over 600 inns were registered in England, primarily located along arterial coach routes and highways. Interestingly, this formalization and centralized registry of Inns and hotels also made it possible to create the first printed guidebooks for travellers.

The industrial revolution, starting in approximately 1760, resulted in the expansion of rail infrastructure across Europe and North America.

This was the beginning of the era of mass transportation and as a result, there was a boom in the development of high capacity hotels centred around city cores.

At the same time, however, there was a gradual decline in highway coach houses and inns as people shifted away from slower horse drawn coaches and opted for the faster, and in most cases, much safer rail transportation.

In 1841 Thomas Cook, a Baptist preacher, struck a deal with the Midland Railway to organize the transportation of 540 members of his temperance society.

The railway would offer a train ticket and lunch for the cost of 1 shilling or a current day equivalent value of approximately $70. For selling these packaged tickets, Cook received a commission from the railway.

Cook effectively became the first recorded travel agent and created the first publicly available packaged excursion. Cook’s success would go to define two important segments of the travel industry; travel agencies (and tour operators) as well as the packaged holiday segment.

In 1845, Cook arranged travel for 165,000 people without the aid of any technology. Consider for a moment, that the ball point pen had not been invented yet, the telegraph was not yet commercially available in the UK until 1846 and the telephone would not be patented for another thirty years.

Cook managed all that customer and booking data with nothing but a fountain pen and a paper ledger. The thought of managing that much information without the use of technology seems ludicrous, and yet, it was done.

But even given the pain that Cook must have felt managing that many customers in 1841, the pain didn’t fully materialize until the rapid growth of the airlines which began in the 1920s.

Many of the brands we are familiar with today such as the Queensland and Northern Territory Aerial Service, also known as Qantas, Delta, American Airways (today’s American Airlines), and PanAm were formed at this time.

An era of commercial aviation had begun.

But airplanes were not the only form of transportation that was becoming popular. Cars were now being mass produced and, along with the newly available vehicles, schemes to monetize them also developed.

Joe Saunders, an entrepreneur from Omaha, started an “Automobile for Hire” business that is recognized as being the first recorded car rental company.

Later that decade John Hertz would purchase one of Saunders’ competitors and form the Hertz Drive-Ur-Self System, which he eventually sold to General Motors.

Air transportation in the 1930s experienced rapid growth as new routes opened up as a result of government investment in airports and infrastructure.

With the arrival of World War II, many of the airlines benefited from government contracts to transport troops and goods all over the World.

Coincidentally, the increase in air transportation opened up opportunities for companies to combine two modes of transportation together.

In 1946 Avis Rent a Car started business as the first airport rental car service.

Supply management

During this period of rapid growth, the airlines, without the advantage of computerization were forced to systematize their airline operations.

The systems they developed included many of the trip components that are still in use today. But systemization could only do so much in terms of streamlining inventory and passenger management challenges.

In the early 1950s airlines began to look seriously at tools for automating the booking process which, at the time, would take airline agents upwards of 90 minutes per customer booking to complete.

The jet age was rapidly approaching and with it, the prospect of having to process millions of new passengers by hand.

In 1952, American Airlines installed the Magnetronic Reservisor, an electromechanical system of vacuum tubes and a magnetic storage drum that allowed the airline to store seat availability on a centralized platform.

Although the reservisor helped to reduce the time required to check availability and could store 31 days of availability for over 2,000 flights, it was still a largely manual process to book seats and required a reservisor agent to query the system.

Around the same time, TCA (Trans Canada Airlines) in conjunction with the University of Toronto and Ferranti Systems developed the world’s first computerized reservation system, known as the Reservec, which stood for Reservations Electronically Controlled.

American Airlines, which was aware of the early Reservec success, invested in the development of their own computerized reservation system in partnership with IBM.

The Sabre system was launched two years later at a cost of almost ten times that of the competing Reservec system.

Despite being a superior technology, Reservec didn’t see the same commercial success as Sabre because it was not able to effectively enter the IBM-controlled US market.

The success, however, of both Reservec and Sabre promoted other airlines to develop their own computerized reservation platforms.

In a very short period the Deltamatic, DATAS, Apollo, and PARS were up and running in the 1960s.

Sales and distribution

On a parallel track with the growth of the airlines was the growth of the travel agencies. Many of whom had become important sales and booking channels for the airlines.

As airline routes and booking processes had become more complicated, travel agents had become a more popular method for consumers to book their airline tickets.

But travel agents wanted more access to airline schedules and fares so they could sell tickets more efficiently and automate their side of the booking process.

This could only be accomplished with direct computerized access to the airlines reservation systems.

American Airlines, concerned by the potential growing influence of travel agents, proposed the creation of centralized computer reservation system that could act as a clearing house for US travel.

Other airlines opposed the idea and eventually, beginning with Delta, reservation terminals were installed in travel agencies across the US. The race to own the agent desktop had begun.

Opening up scheduling and fares to agencies proved to be a good move for the airlines. For some, primarily the airlines who owned their own GDSs, the temptation to manipulate displays became too strong.

After finding that American Airlines had purposefully biased search results in its Sabre reservation system In 1984, the US government introduced legislation to ban “screen bias”.

But this legislation has proven to be less than effective. Twenty years later, the airlines, GDSs, and now online travel agencies are still being reprimanded by governments worldwide for this practice.

During the 1980s, other GDS systems were being developed. European airlines reluctant to use the US-centric Sabre system banded together to create Amadeus.

Meanwhile, Sabre in partnership with the growing computer network services business, Compuserve, provided the first known instance of online bookings for both airlines and hotels via EAASY Sabre.

The increase in travel agent hotel reservations and the advent of smaller and more powerful desktop computer systems prompted the creation of hotel reservation systems that could be conveniently located at the hotel front desk.

Fidelio launched its first property management and hotel reservation system in 1987.

Thanks in part to the success of the commercial internet in the early 1990s, many leading travel brands began developing websites, some with online reservation capabilities.

In 1995, Viator Systems (now Viator) launched its travel technology business with a focus on providing tours and excursion bookings via the world wide web.

In 1996, a small division of Microsoft called Expedia launched its website offering online bookings for air, hotels, and car rentals. Later that year, Travelocity, owned by Sabre, launched its own site to help the “do-it-yourself traveler”.

Following on the growing trend of helping travelers book their own holidays, Priceline with it’s “Name your own price” opaque pricing model launched. It later extended the pricing model to include cars, home loans, and even second hand goods but ultimately reverted back to their successful hotel model.

The airlines, in anticipation of the increased connectivity demands that internet technologies afforded, came together to develop an industry standard for messaging. The resulting messages were to be managed and updated by the newly created OpenTravel Alliance (the first OpenTravel messages were published in 2001).

Coincidentally, in the same year, five of the six major airlines joined, still on some apparent mission of cooperation, joined forces to create their own online travel agency.

Despite protests of unfair competition and potential collusion brought forth by the existing online travel agencies and GDSs, Orbitz was launched.

Advanced discovery

As the growth of the Internet accelerated and the demise of the first dot com era subsided, new opportunities emerged to provide travelers with more information about the hotels they were booking in increasing numbers online.

Though travel forums and bulletin boards were around, there was no one forum that could provide the depth and recommendations on hotels that consumers were looking for.

In 2004, TripAdvisor launched in the hope of filling that gap.

In addition to providing consumers with access to reviews and recommendations, it became apparent that consumers were shopping across multiple websites looking for deals on airline fares.

Kayak, whose co-founders had previously worked at Orbitz and Expedia, allowed customers to find airline pricing results across multiple sites with one search.

The model, which has remained relatively unchanged, is known today as the metasearch model and is one of the fastest growing search models for airfare and now hotel bookings.

The mid-2000s was also a time for lesser known segments of the travel industry to begin their climb out of obscurity. The vacation rental market, led by Homeaway in 2004, has become one of the fast growing segments of the travel market, helped in many ways by the ubiquity of the web.

As managed data centres and dedicated servers were replaced with virtual private servers and cloud hosting, more and more traditionally desktop applications were moved online.

Software as a service businesses like Rezgo, TourCMS, and Guestcentric launched with the promise of helping small businesses such as long tail operators and boutique hotels manage their services and open up new sources or supply without the capital expenditures traditionally associated with dedicated reservation services.

Continued advancements in internet connectivity also meant greater access to web content on mobile devices. For years the travel industry had been toying with technologies like WAP and cHTML, creating websites that were compatible with early smartphone technologies like those from Blackberry and Nokia.

2008 marked a major milestone is the long awaited mobile revolution. Apple, after the very successful launch of it’s first iPhone the previous year, made the iOS SDK available for third party developers.

The move would prove to be a pivotal point in the history of mobile development, allowing travel companies to create dedicated applications designed specifically for the mobile consumer.

2008 also marked the first of a new trend of websites that would shake up the existing travel landscape and cause local governments around the world to take a second look at their housing policies.

Airbnb, the first of many “Peer-to-Peer” marketplaces launched providing home-owners (and renters) with a place to list and rent out their spare rooms to strangers.

Although other similar marketplaces, such as Couchsurfing, had already been around for a few years, they tended to be focused on niche markets such as the backpacker or budget traveler.

As with any new platform, it is not unusual to see many existing travel businesses develop mobile applications in order to take advantage of the marketing opportunities.

Often times, though, it takes a bit of time for companies to form that are dedicated entirely to the platform. One such company, HotelTonight, launched in 2010 around a last-minute mobile only model.

The company raised $35 million shortly after its launch proving that a mobile-only focus could attract significant funding. The belief is that many more mobile only business models will emerge over the next few years, though HotelTonight is viewed as one of the most successful to date.

In 2011, the internet was abuzz with controversy surrounding the proposed acquisition of ITA Software by Google.

Fairsearch, a group made up of online travel agencies, metasearch companies, and competing airline reservation systems, looked to block the acquisition citing anti-trust concerns and unfair competition.

Surprisingly, the airlines were not part of this protest since they stood to gain from the direct booking links that Google intended to include in their Google Flights service.

Though the flights project has failed to have any “material impact” on the original members of the Fairsearch, Google’s forays into both flight and hotel search have been closely scrutinized by both competitors and government agencies.

Of course, a discussion on travel technology would not be complete without some mention of the impact of social media on travel.

In 2012 Facebook reached one bllion active monthly users marking a major milestone for the eight year old company.

Recent studies have shown however, that traffic from social networks is quite small, so the influence of these networks is still quantitatively unknown.

Going forward ……. Personalization

When we look at the history of travel technology and review the trends in the types of technologies created during the four key stages, we see a shift from supplier centric technologies to consumer centric technologies.

In the beginning, the goal was to make supply available. Once available, the goal was to get it that availability in the hands of those who controlled access to customers, the travel agents.

When the internet arrived, the consumer direct access provided a new kind of travel agent to use the network effect to access a wider customer base.

But it has also allowed suppliers to connect directly to those same customers providing them with both direct and non-direct booking options.

Abundance of choice drove the creation of advanced discovery tools like meta-search, review websites, and alternative marketplaces.

The advent of mobile has triggered new business models that, although still rely on the same availability and general underlying infrastructure, take advantage of new and quite different consumer behaviours.

The next stage will be driven by personalization technologies and the ability for travelers to book travel components that best meet a combination of their location and preferences.

This next stage will also be driven by infrastructure changes including the adoption of lightweight messaging standards for the purposes of pushing traditionally heavy availability messages to smaller devices.

We are already seeing more and more suppliers and aggregators providing access to XML and JSON connectors instead of SOAP based APIs.

Efficient messaging will make it possible to send data to wearable devices, like Google Glass or the highly anticipated iWatch.

These devices will provide travelers with the ability to search and find local businesses, directions, and recommendations in situ.

Eventually, the ability to connect to supplier and aggregation systems means travelers will be able to book handsfree on location in real-time using their voice and a digital wallet or mobile payment system.

Booking services will change as well as we see multimodal systems complete with one step booking capabilities become mainstream.

Imagine planning your cross Europe trip and being able to book everything from your airport transfer, ferry tickets, rail pass, and airfare with a single click, heralding the continued march towards simplification of complex travel paths.

Travelers through their various online profiles will have the ability to share certain elements of their profiles with travel providers.

The use of this data, controlled by the traveler, will include sanitized travel history, preferences, and other profile building data that when combined with high end analysis of millions of travel profiles will provide the traveller with recommendations on travel components that best meet the traveler’s needs.

For example, a business traveler who flies out of a specific home airport and prefers morning flights and has a brand affinity will generally be provided with recommendations that meet these requirements without having to explicitly identify them each time a search is made.

Airlines, hotels, and other suppliers will be able to build custom offerings and deals specifically based on customer profiles by intelligently combining offerings together.

It’s all about YOU…

The combination of in-situ, personalized, and customized offerings with instant booking means that the future face of travel technology is YOU, the traveler.

Will I be right? I’ll ask you in ten years.

NB: Evolution image via Shutterstock. Thomas Cook Tours image via This-Day-In-History.

NB2: This article is based on a speech given at the Travel Trends conference in Sydney, Australia on 12 September. Here is a copy of the presentation:

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Stephen Joyce

About the Writer :: Stephen Joyce

Stephen Joyce has been a contributing Node to Tnooz since 2009 and has been working in travel and tourism technology 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 and currently sits on the Education Advisory Group for the National Tour Association (NTA).

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

 

Comments

  1. Tim

    Stephen. Great presentation. Was in the audience and really enjoyed this. Lots of hard work went into it and it was also very entertaining. Bravo

     
  2. Marco Aldeia

    Good morning,

    This is an interesting article, which gives a broad and chronological view about the advances in tourism.
    There is although one thing that the tourism trade should know:

    Viagens Abreu SA, is actually the first recorded travel agency in the world.

    more infos:

    http://www.linkedin.com/company/viagens-abreu-s.a.?trk=company_logo
    http://online.abreu.pt/AOL/ENG/company_profile.html

    Regards,
    Marco Aldeia

     
  3. Maddy

    Stephen, BRILLIANT anecdote.

    Access to new technology, ease of adoption and platform independence model is encouraging people to reinvent their business. In the near future we will see travel technology playing a part in improving usability, inter-operability, performance and AI. This will see consistent advancements on “BIG Data” front. Personally, I do not foresee substantial disruptive innovations coming out any time soon, or at least in next 5 years.

    Travel Tech in next 10-15 years, I believe, will be driven by speed of communication and innovations in machine learning. Another big (potential Disruptive) technological advancement to watch out is – “Quantum computing”. It has achieved tremendous success in recent years. A lot of interesting research in Quantum Computing is in progress which is going to add massive power into our day to day lives.

    Google had announced that they were launching the Quantum Artificial Intelligence Lab. So definitely it has attention from big boys.

     
  4. Jason Bragg

    Thanks Stephen. Awesome history lesson. A lot to learn from it.
    No operator today could process 165,000 pax a year with only a fountain pen. Does that mean our modern fan dangle systems designed to create efficiency over complicate our businesses? I doubt it. Just a thought…
    I meet Tour Operators every day who spend 80% of their time on administration. Cut that down to 20% using software specifically designed to create efficiency and profitability will go up thanks to lower expenses. More importantly Tour Operators can now focus 80% of their resources into sales. Sales drive new business not administration.
    I guess that is what the evolution of travel technology shows us. Technology is always changing and the industry will continue to evolve to keep up (or lead if you happen to be an innovator). Those that don’t evolve will go down the road (hic) of the horse drawn carriage.
    Cheers, Jason at http://www.tourwriter.com

     
  5. Benny Green

    Worth adding that standardized time and time zones came about as a result of the railways http://en.wikipedia.org/wiki/Railway_time

     
  6. Rob Wortham

    Steven, thanks for the history. I think one of the key new technologies for the future will be NDC. The airlines want to deal with their customers more directly and want to enrich the information available for the traveller, to enable them to make better choices and achieve better value.

    I’m not convinced that ‘personalisation’ per se will be a feature of the future. It was touted as the route to success around the turn of the millennium by IT suppliers like Vignette, but the idea made little headway in the travel industry back then.

    You might argue ‘big data’ has changed all that, but in the end I think markets are driven by consumers, and what they want is good (but not perfect) choice and better value. Search engines of various sorts give them choice and access directly to suppliers, and dis-intermediation will give them better value.

    So, for me, the future is all about the disappearance of those whose value add in the supplier chain is minimal, or who simply have historic ‘gate-keeper’ credentials, that will be eroded over time by innovations like NDC. We have already seen much of this with the decline of the traditional high street travel agent and the bucket-and-spade tour operator, and it’s set to continue.

    By the way, ‘value’ does not only mean price. Customers often place considerable value on brand, and so it may be that the winners are those who can leverage the highest brand value, rather than those that can offer the cheapest equivalent product. However, brand value is elusive and intangible. That’s a whole other discussion though …

     
    • Stephen Joyce

      Stephen Joyce

      Actually, the personalization element is in direct reference to NDC and to the concept that suppliers (airlines included) would have the ability to merchandize their products to consumers based on their preferences. Personally I think the airlines are doing themselves a disservice with NDC, not so much from a technology standpoint but from a traveler perspective. I think they would be far better off focusing on the personalization and consumer experience aspects that the technology will enable rather than focusing so heavily on the idea that it will give the airlines more control over pricing and merchandizing. It is mostly a matter of perspective, but the idea here is to shift towards looking at what benefits the traveler. The airlines that produce the most relevant and valuable offers to their travellers will ultimately benefit financially.

      Same outcome for the airline, just a different way of framing the discussion.

       
  7. Joe Bühler

    Great summary, Stephen. Made me realize that while I’ve been in the industry for a very long time, at least it’s not since the beginning! This paragraph especially, got my attention:

    “Imagine planning your cross Europe trip and being able to book everything from your airport transfer, ferry tickets, rail pass, and airfare with a single click, heralding the continued march towards simplification of complex travel paths.”

    It describes a future vision that I’ve subscribed to since the start of online travel. Oh, and by the way, what you describe its, or was, a reality back in 2001 when EuroVacations.com offered that functionality in the marketplace. Alas, at least a decade too early, resulting in lack of consumer adoption. Nevertheless way ahead of its peers, the still dominating OTAs. I remain convinced this vision will become reality eventually as consumers will expect no less.

     
    • Stephen Joyce

      Stephen Joyce

      Thanks Joe. The key to the multi-modal approach is the ability to integrate with various suppliers at an API layer for the purposes of merging disparate data sources together. I think you are correct that the concept was a bit premature. I think the infrastructure to fully realize this idea is not quite there yet. We still have some work to do to open up data sources and standardize messaging.

       
  8. Sceptical corporate traveller

    Nice summary of history Stephen – well done!

    It is a tribute to the foresight of the industry (airlines in particular), the complexity of the problem and the sheer cost and difficulty of change, that an awful lot of that ’60s technology is still humming away at the centre of it all!

    My only small disagreement would be …………

    “It isn’t until the 1400s that we see a formalization of the hospitality industry when England and France (not at the same time) passed legislation that required hotels and inns to keep guest registries.

    Essentially, this was the first instance of customer relationship management in the hospitality space.”

    – antecedent of travel industry CRM? I think not, more an antecedent of PRISM and the NSA I think!

     
    • Stephen Joyce

      Stephen Joyce

      Ha ha, that’s a good point. I hadn’t actually considered that. It could very well have been the first instance of mandatory guest tracking for the purposes of government monitoring. I prefer to be less paranoid about the whole thing though.

       
      • Sceptical Corporate Traveller

        It’s not paranoia, that is precisely why this process was put in place and has been used by the government to monitor people in a crude way ever since.

         
  9. Eric Thomas

    You seem to have missed Hotres.com launched in 1999 by a wholesaler in NYC they offered over 1000 rooms daily in NYC.

    Eric

     
    • Stephen Joyce

      Stephen Joyce

      Thanks Eric. I would like to have included every significant innovation in travel technology history into the timeline but alas, the actual presentation was only 25 minutes long.

       
 
 

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