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Travel and Leisure: IT As a Competitive Tool. Peter Bubb 16 October 2001. The IT Industry. I don’t mean Information Technology I mean Inclusive Tour Otherwise known as Package Tours An Information Intensive Industry Sells by exchange of information Fulfils by providing information

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Presentation Transcript
the it industry
The IT Industry
  • I don’t mean Information Technology
  • I mean Inclusive Tour
    • Otherwise known as Package Tours
  • An Information Intensive Industry
    • Sells by exchange of information
    • Fulfils by providing information
    • Satisfies customers through information provision
    • Competes by processing information
structure of the industry
Structure of the Industry

TRAVEL

AGENT

CUSTOMER

  • 10,000,000 holidays
  • 7,000 travel agents
  • 700 tour operators
  • 100,000 hotels
  • 100 airlines

TOUR

OPERATOR

AIRLINE

HOTEL

BUS

how can you sell by exchanging information
How Can You Sell by Exchanging Information?
  • 700 tour operators print 100M brochures
  • Send them to 7,000 travel agents
  • Customers call in and take brochures
  • Customers talk to 50,000 travel agent staff
  • Staff connect to tour operator computers
  • Search for available packages
  • More searches: find a product
  • Purchase transaction
  • Agent acts as banker for tour operator
how is it being used to compete
How is IT being used to Compete?
  • Avoiding the cost of brochures
    • Cds; Teletext; Internet
  • Reduce other operating costs
    • Target information
    • Substitute staff costs
    • Complaints etc
    • Communications within distribution channel
  • Closing the sale faster
seligo brochures
Seligo brochures
  • Seligo (based in Birmingham) is the market leader in selling accommodation to travel agents
  • Used to produce 200,000 brochures
  • Many brochures per sale
  • Now distribute accommodation photos and details from database with tickets
  • 8,000 brochures go to travel agents; moving towards cds
  • Savings funded database
how is it being used to compete 2
How is IT being used to Compete? (2)
  • Speed up the transactions
    • Capacity and performance of tour operators’ computers
    • Travel agent terminals/PCs
    • Data broadcast
  • Monitoring competitors
  • Tilt
horizon holidays
Horizon Holidays
  • Year 1
    • 3% market share
    • slow network
    • poorly viewed selling application
    • unreliable system
    • still handled 40% of sales in Jan and Feb (ie peak 2.2 times average)
  • Year 2
    • network quadrupled in size
    • applications rewritten
    • system capacity up 5 times
horizon continued
Horizon continued
  • Year 2 (continued)
    • 24 hour availability
    • awareness campaign
    • 6% market share
    • peak 5 times average
  • Year 3
    • new booking system
    • new processors
    • additional capacity
    • peak now 150 times average (0.9% sales in 30 mins)
    • 11.5% market share
    • becomes favourite system for travel agents
data broadcast
Data Broadcast

BROAD-

CASTER

DECODER+

SLAVE

DATABASE

TOUR

OPERATOR

COMPUTER

TRAVEL

AGENT

TERMINAL

BOOKING

CONNECTION

data broadcast pilot
Data broadcast pilot
  • 200 selected travel agents
  • Search transaction reduces from 4 sec to 0.03 sec
  • 5 minute inventory updates for broadcast
  • 5% extra load on reservations system for inventory updates
  • Equivalent to 40% reduction in load from searches downloaded
  • 40% increase in sales
  • Net reduction in load: 31%
horizon monitoring system performance
Horizon: Monitoring System Performance
  • Typical transaction thread: search-option-confirm
  • More searches than other transactions
  • Searches are processing hungry
  • System resources are monitored and tuned, for resource balancing etc
  • Showed sub second response times
  • However, travel agents still complained
horizon monitoring system performance1
Horizon: Monitoring System Performance
  • Visits showed Horizon system slow and variable
  • Horizon built a system to simulate travel agent searching on its system, to monitor performance including both network and processing
  • Showed search response times varying from 9 to 300 seconds
  • Led to completely different programme of work to modify and tune the booking system
  • This enabled reduction of search times to 3.6 seconds with little variation
horizon monitoring system performance more
Horizon: monitoring system performance -more
  • As it owned a chain of travel agents, it had access to other ABTA tour operator systems
  • It pointed the monitor at its competitors
  • This showed the two main competitors took 8 and 30-50 secs for the same transaction
  • The variability of this measure also gave clues to pressure points in their systems
  • These were used daily by Horizon for marketing
horizon monitoring system performance more still
Horizon: Monitoring System Performance -More Still
  • Horizon sequentially numbered options
  • Used the option number as prime tracking identifier
  • It realised belatedly that this told the world how much business it was doing
  • It immediately encrypted these sequential numbers
horizon monitoring system performance even more
Horizon: Monitoring System Performance –Even More
  • It then examined what its competitors were doing
  • They had different schemes, but it was possible to deduce the algorithms used
  • Modified the performance monitor to place an option, and record the serial number daily
  • It then had a daily assessment of how much business its competitors were doing
how is it being used to compete 3
How is IT being used to Compete? (3)
  • New types of travel agents
    • Internet eg lastminute.com
    • Public Access Machines eg Holidays Now
    • Replace travel agent staff by public systems eg Thomas Cook
    • Preference elicitation/profiling
holidays now
Holidays Now
  • Network of Flight Points
  • Stations/Motorway services/Hypermarkets
  • Screen/Keyboard/Ticket printer/Card reader
  • Robust packaging
  • Holidays Now Ltd is ABTA travel agent
holidays now1
Holidays Now
  • Pilot Network of public access machines selling holidays and flight tickets
  • Artificial intelligence used to establish customer requirements
  • Machines shared knowledge of where to find product
  • Better hit rate than travel agent staff
  • Public resistance to high value purchases
  • Company purchased so that technology could be used for selling car insurance
how is it being used to compete 4
How is IT being used to Compete? (4)
  • Disintermediation ie leapfrog the travel agent and tour operator
    • Internet booking of components
    • Direct sell brands
  • Service improvement through data mining
  • Many other retailers now selling holidays
  • Tour operators going direct
current trends
Current Trends
  • IT enabling DIY packaging
  • Stagnant demand
  • IT changes product to a commodity
  • Internet provides low cost of entry
  • More difficult to tilt
  • Vertical integration
  • Strong shift towards Internet for business to business (e-)trading
building tilt
Building Tilt
  • Tilt is about stacking the odds in your favour
  • How a travel agent connects to a tour operator
    • Viewdata terminal autodials / PCs default diallers
    • Shared networks such as AT&T Istel
    • Make it easier and quicker
    • Get counter staff to prefer you
building tilt 2
Building Tilt (2)
  • Once connected
    • Never say no
    • Mimic competitors commands
    • Ignore the customer’s requirement
    • Keep the customer in your system
    • Display things in your order of preference
    • Breadth of product
what has happened since september 11
What Has Happened Since September 11?
  • Air travel is less attractive
    • Immediate 60% drop in US trips
    • Many airlines cutting capacity or prices
    • Budget European airlines predicting growth
  • IT prices heavily reduced
    • Cruise prices discounted 30%
    • Late offers down by up to 78%
  • Expected to recover, but might take some time
    • Business reduced some 20% after the Gulf War, but recovered after a year or so
  • Enhanced dependence on IT
tourist attractions
Tourist Attractions
  • Theme parks
    • Alton Towers
    • Chessington World of Adventures
    • Port Aventura
  • Visitor Attractions
    • Warwick Castle
    • Flagship Portsmouth
    • Madame Tussauds
how do they compete
How do they compete?
  • Marketing
  • Repeat visits
  • Visitor experience
  • In visit spend
  • Dwell time
what about their it
What about their IT?
  • Ticketing
    • Distribution
    • Speed
  • Marketing
    • Databases
    • Loyalty
  • Operations
  • Retail
  • All the usual ledgers etc
ticketing at alton towers
Ticketing at Alton Towers
  • Key requirements
    • Guest’s perception of quality of experience
    • Speed of transactions
    • Reliability
    • Flexibility for pricing and promotions
    • Financial controls
    • Capture of marketing information
    • Capable of handling trainloads
ticketing at alton towers 2
Ticketing at Alton Towers (2)
  • System acquired
    • Supplied by Tor Systems
    • Tor systems developed a high speed ticket printer
    • Guest displays, souvenir tickets
    • High speed local network
    • Cash transaction in little more than 3 seconds
    • 15 minutes downtime in 2 years
ticketing at portsmouth
Ticketing at Portsmouth
  • Flagship Portsmouth is the largest attraction on the South Coast
    • Complex ticket types
    • Ticketing Hall
    • Initially purchased bespoke system with touch screens - became unreliable
    • Replaced with industry standard package
ticketing at portsmouth 2
Ticketing at Portsmouth (2)
  • The Renaissance of Portsmouth Harbour - £46M Lottery funding
    • Consortium of varied independent partners
    • Joint ticketing mandated
    • Choice of open access or tokens
    • Choice of networking harbour or smart card technology or low-tech low function
    • Technology choice dependent on political decisions
marketing at tussauds group
Marketing at Tussauds Group
  • The Tussauds Group operates Madame Tussauds in UK, US, Australia and Holland, Alton Towers, Chessington World of Adventures, Thorpe Park, Warwick Castle, Rock Circus and the London Eye
  • Development of marketing database
    • customer details
    • visit details
tussauds marketing database
Tussauds Marketing Database
  • Became 2nd largest club database in UK
  • Helped to increase entries to record levels
  • Target promotions for groups, coach operators, cross sales etc etc
  • Showed how critical data quality was
  • Enabled strong growth of volumes
style of it in tourist attractions
Style of IT in Tourist Attractions
  • Most smaller attractions build up from retail systems
    • integrate ticket sales with shop
    • eg Isle of Arran Distillery, Merseyside Maritime Museum
    • Low costs but limited functionality
style of it in tourist attractions1
Style of IT in Tourist Attractions
  • Middle sized and large operations often combine several separate applications
    • retail + ticketing + financial package
    • eg Warwick Castle
    • enables best of breed decisions
    • Low costs high functionality
    • but integration sometimes complex
style of it in tourist attractions2
Style of IT in Tourist Attractions
  • Some of the larger players specify fully integrated applications
    • eg Port Aventura uses SAP
    • High costs high functionality
    • Costs sometimes limit possibilities
operations at port aventura
Operations at Port Aventura
  • SAP used for all kernel applications
    • Finance
    • Human Resources
    • Scheduling
    • etc
  • Specialised fringe applications tightly integrated
    • Ticketing
    • Point of Sale
    • Time booking
  • Costs per visitor about 4 times Alton Towers cost
what has happened since september 111
What Has Happened Since September 11?
  • Overseas visitors spend in UK down 20%
  • Hotel bookings down 15%
  • Visitor attractions suffering more if they depend on overseas customers
    • Tower of London down 30%
  • Security increasing
  • Opportunities for IT to contribute more
it in tourism and leisure
IT in Tourism and Leisure
  • Very competitive industries
  • IT is particularly relevant because of their dependence on information
  • IT is often used as a competitive weapon
  • Some examples of IT being used very aggressively
  • Competitive use of IT will probably increase