Standards can ease the online travel industry’s problems

What is the most painful problem the travel industry has today?

NB This is a viewpoint by Maksim Izmaylov, founder and CEO of roomstorm.com.

For the majority of airlines and hotels it is the fees charged by online travel agencies (OTAs) and global distribution systems.

It’s so painful that Lufthansa Group has decided to add a €16 surcharge to every booking made via the GDSs in a bid to reduce its yearly GDS costs, currently coming in at “a three-digit million euro amount.”

It’s also painful for hotels. The hospitality industry’s response to the problem was creation of Roomkey, a hotel search engine conceived by six major hotel brands.

It’s unsurprising that Expedia’s acquisition of Orbitz provoked such a negative reaction from many of the industry’s players, because this transaction creates a Expedia-Priceline duopoly that controls 95% of the online travel agency bookings in the US and a dominant position in other markets around the globe.

Another problem is outdated technology that travel companies are using. Just this summer three major US airlines experiences system-wide software outages that affected hundreds of thousands of passengers.

Mind the gaps

Outdated technology and a lack of standards allows space for a multitude of third-party vendors to exist between hotels and distributors.

In many cases, information from the hotel has to make 5-10 hops through such systems before it reaches a travel agent, incurring an extensive lag, measured in minutes rather than milliseconds, as one would expect in 2015. This increases the cost of transmitting information from suppliers to end users dramatically.

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The travel tech ecosystem is incredibly complicated. Most new companies’ have to fight their way into it. It can take just minutes to make your software to accept credit card payments or send text messages, but significantly longer if you want to your app to show and sell hotel inventory.

The underlying problem is that we don’t have a master plan for travel, there are no standards and the market leaders and established players want to maintain the status quo.

Raise the standards

Consider the following use cases – virtually non-existent today – but which, with simple industry rules and open standards should be very easy to implement.

  • You could book a true door-to-door business trip, including flights, train tickets, taxi and hotels. The system would automatically adjust your schedule, if your flight is delayed, or book a hotel room for you, if your flight is cancelled.
  • You will be able to choose a single mobile app for travel from hundreds of third-party solutions. There will be no need to install five different airline apps, ten airport apps, seven ground transportation apps. The ideal situation would be to have a universal travel app, connecting multiple carriers and airports, and a separate app from the airline that you a loyalty program with.
  • Hotels would be able to just give a third-party developer an API endpoint, where they will be able to access hotels’ prices and availability. In case the hotel doesn’t like their distributor or OTA, switching will be very easy.
  • There will be multiple marketplaces for hotel rooms, where companies will be able to buy individual rooms and room blocks as well.

Making an example

What are the examples of the standards that would make the above possible? Here’s just a few:

  • Traveler Data Sharing Standards
  • Realtime Hotel Availability API
  • Flight Load API
  • Trip ID (PNR for all parts of the trip)

But first we have to admit that we have a problem. The current system is too old and though you can repaint a house a few times to make it look nice, but eventually you will have to move to a more modern dwelling.

We have to start working on open standards and APIs today. There are standards bodies out there who are doing a decent job, such as IATA with its New Distribution Capability initiative. But those organizations move slowly – it took three years for the first NDC standard to be released.

We have to start working on open standards and APIs today. There are standards bodies out there who are doing a decent job, like airline lobbying group IATA, with its New Distribution Capability and, now, with One Order.

I salute the many previous efforts to create standards, such as the efforts by OpenTravel Alliance and by Schema. Other sectors of the industry also deserve credit for trying to work toward inter-operability, such as the open booking efforts in the travel manager ecosystem.

Yet there is more work to be done: Our industry needs more standards if it wants to evolve as fast as other tech sectors.

What our industry needs is to organize all these standards and APIs into one place, make them open for use, for improvement and for contribution from the community. This model is known as open source, or open collaboration, and it’s successfully applied in a wide variety of fields.

After all, the internet is powered by open source. Right this second you are using tens of open-source technologies and products just to read this article: Linux, WebKit (engine for Chrome and Safari) or Firefox, Apache, MySQL, just to name a few.

Why is this approach better? We’ve already seen how slow and inefficient big organizations can be. There is an argument for a someone such as  Google or Amazon to take over and solve travel tech problems once and for all, but that in turn will create a new monopoly and in five years we’ll be in the same situation as we’re in today.

The conversation has already started and there are hundreds of people in the industry who think and talk about this. The only question is how to organize all these people and start working on these problems. But I’m sure we’ll see it will happen very soon.

NB This is a viewpoint by Maksim Izmaylov, founder and CEO of roomstorm.com

NB2 Main image by Shutterstock. The infographic was created using icons from Print Express

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About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are the views and opinions of the author and do not reflect or represent the views of his employer, tnooz, its writers, or partners.

 

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  1. Valentin Dombrovsky

    “We have to start working on open standards and APIs today. There are standards bodies out there who are doing a decent job, such as IATA with its New Distribution Capability initiative. But those organizations move slowly – it took three years for the first NDC standard to be released.
    We have to start working on open standards and APIs today. There are standards bodies out there who are doing a decent job, like airline lobbying group IATA, with its New Distribution Capability and, now, with One Order”.

    This 2 paragraphs repeat each other – seems it’s needed to be rewritten somehow.

     
  2. Greg Poirier

    Thank you for the article Maksim, the passion and call to action were spot on and I enjoyed the reading.

    As the newly appointed Executive Director of OpenTravel, I can assure you that we have been very focused on efficiency and speed, and we continue to look for creative ways to get that same community you are calling out, to get even more actively engaged. Our membership has been wonderful in supporting our efforts in this respect to date, and we are now re-emerging stronger than ever.

    The next-generation open source standard is finally gathering steam, and this will help make solve many of today’s problems – while also creating a faster more efficient path forward to address tomorrows. (Yes, using an Object Oriented platform & I’m aware that we made that noise a bit prematurely before…;-)

    I’m happy to announce that the first release will include schemas for eRFP (Request for Proposal) for hotels, and will quickly expand into messaging for profile and preferences as development of those areas are now in their final stages. We will release this for our member review and comments next week!

    Before the end of this calendar year we are on tract to design the objects for Hotel Reservations, and this will get quite interesting. (By the time we get to our next Annual Forum May 16th-19th in Orlando, we will certainly have had made many more announcements that are related. So stay tuned.)

    We do have to remember, too, that after a great global recession, the anemic nature of this recovery in the general sense, that the travel and hospitality problems needing solutions could not be more pressing and timely – once again. This too is somewhat cyclical in nature, and resources have been steadily coming back on line to help lead and accelerate this next cycle of problem solving. The reality today is that the today’s problems can no longer wait for tomorrow’s cycles of support, and this has to change in our collective mindset – OpenTravel included.

    Looking at just the months ahead, let alone all the related activities we are seeing in 2016 this can only mean one thing, and your article correctly calls it out. The timing couldn’t be better to engage, re-engage and generally get more involved.

    Do we sense additional travel industry hackathon(s) coming in 2016?
    You bet!

     
    • Maksim Izmaylov

      Greg, thank you for your feedback.

      My concern is that what you are doing is not aligned with other people’s visions. What I see is that IATA, APEX, Open Travel Alliance, etc., etc. don’t work together. And moreover, all these 3 entities don’t even think to work together, they want to lock their members to their standards. It’s understandable that your profits come from your members, but it’s not right for the community.

      I’m very excited to learn about new hotel standards, but unfortunately you can not call them Open Source. They were developed by Open Travel members. We would love to contribute to that standards, we work with hotels and hotel distributors directly and we know our tech, yet you don’t have our feedback and that’s the source of the evil.

      Greg, we are organizing an event in April in San Francisco related to all the issued I mentioned in the article and above. We’d love for you to join us. You will learn a lot from people on the bleeding edge of innovation and they will learn a lot from you. I think it’s a great opportunity for all of us.

       
  3. Gillian Morris (@gillianim)

    The lack of standards is one of the things that confused me when I first started in this industry. It would be like having the internet without ICANN. The question is how to drive adoption of any new standard this late in the game – but I think it’s a problem that will be solved because the current system will break eventually. I’d be very curious to learn more about how Uber is building its dispatching and demand prediction software…

     
  4. Maksim Izmaylov

    I would like to say thank you to Mohammad Gaber of Adobe (@McGaber) and Jason Rowley for reading drafts of this article and contributing to the final version. Without your help it wouldn’t be possible.

     
  5. Alex Bainbridge

    The author correctly points out that there are multiple companies touching a hotel booking between consumer and supplier. I agree that standards COULD remove one of the needs for these technology companies to exists.

    However would that help the supplier? Would that help consumers? Wouldn’t it enable an OTA to flip between one supplier and another with just a single switch, rather than a 2 month development? Is this what suppliers really want? I thought suppliers were pushing for uniqueness, not to empower further product commoditisation.

    Right now, personally, I prefer status-quo fragmentation to standardisation. Innovation can thrive as if we have a good solution to a problem, we can implement for our customers immediately, without waiting for months for others, including competitors, to catch up.

    The author gives examples of open standards for infrastructure layer technologies however the key thing to remember is that in those examples the layers above (e.g. a CMS built on MySQL) tend to be proprietary not open. The same goes for the travel industry.

    Great debate starter Maksim 🙂

     
    • Maksim Izmaylov

      Alex, thank you for your feedback.

      The problem I want to see solved is the high cost of transmitting information from suppliers to customers. Right now that cost is high, because if I spend a few weeks or months of engineering time, consumers will pay for it.

      It is good for OTAs to change suppliers, it is good for suppliers to be able to change OTAs easily, because it enables competition. As a customer, I want hotels to compete on quality of their services. As a hotel manager, I want OTAs that I work with to compete on their ability to sell my inventory, not on some other irrelevant things (like cost of integration).

      Regarding the CMS/MySQL remark. I don’t want all software built on top of those open standards to be free or open-source. I just want these products to be able to talk to each other.

       
      • Valentin Dombrovsky

        Sorry, but from technology stand point isn’t that what channel managers are doing (enabling hotels to switch OTAs)?
        Do you think that we need to have standards to have OTAs directly connected to PMS and to remove channel managers layer?

         
 
 

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