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Travel and Leisure: IT As a Competitive Tool Peter Bubb 16 October 2001.

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Presentation on theme: "Travel and Leisure: IT As a Competitive Tool Peter Bubb 16 October 2001."— Presentation transcript:

1 Travel and Leisure: IT As a Competitive Tool Peter Bubb 16 October 2001

2 The IT Industry I dont 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

3 Structure of the Industry 10,000,000 holidays 7,000 travel agents 700 tour operators 100,000 hotels 100 airlines CUSTOMERTRAVEL AGENT TOUR OPERATOR HOTEL AIRLINE BUS

4 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

5 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

6 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

7 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

8 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

9 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


11 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%

12 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

13 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

14 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 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

15 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

16 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

17 How is IT being used to Compete? (3) New types of travel agents –Internet eg –Public Access Machines eg Holidays Now –Replace travel agent staff by public systems eg Thomas Cook –Preference elicitation/profiling

18 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

19 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

20 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

21 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

22 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

23 Building Tilt (2) Once connected –Never say no –Mimic competitors commands –Ignore the customers requirement –Keep the customer in your system –Display things in your order of preference –Breadth of product

24 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

25 Tourist Attractions Theme parks –Alton Towers –Chessington World of Adventures –Port Aventura Visitor Attractions –Warwick Castle –Flagship Portsmouth –Madame Tussauds

26 How do they compete? –Marketing –Repeat visits –Visitor experience –In visit spend –Dwell time

27 What about their IT? Ticketing –Distribution –Speed Marketing –Databases –Loyalty Operations Retail All the usual ledgers etc

28 Ticketing at Alton Towers Key requirements –Guests perception of quality of experience –Speed of transactions –Reliability –Flexibility for pricing and promotions –Financial controls –Capture of marketing information –Capable of handling trainloads

29 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

30 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

31 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

32 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

33 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

34 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

35 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

36 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

37 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

38 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

39 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

40 Travel and Leisure: IT as a Competitive Tool Peter Bubb

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