NB: This is a guest article by Andrey Spektor, CEO of Gimmonix (owner of Carsolize).
It's not unusual to hear people say that over the past few years, travel companies worldwide have witnessed tremendous change in the industry.
But as more and more wholesale resources become available via XML connections and online B2B systems, travel agents are forced to access a growing number of platforms to perform queries.
At the same time the industry has witnessed (and continues to witness) strong growth in new distribution channels (mainly mobile and internet). It is not always clear how a single agency can manage them all, allowing large OTAs to fill the void.
The main challenge and the key for future success lies in one’s ability to establish an efficient distribution network of competitive products, accompanied by effective business controls with automated administration tools.
Here are five areas which are pivotal to the success of any travel business in 2012.
1. Access great resources and improve your offering to customers
A vast majority of travel product suppliers, wholesalers, and brokers provide online access to their inventories.
Online B2B systems allow travel agents to instantly access a multitude of inventories when searching for the best rates and availability for their clients, across all product categories.
Not long ago, strict financial terms hampered one’s ability to contract with many providers simultaneously. Many of these providers now offer flexible financial arrangements, making it feasible for travel operations to access and distribute their products to their travelers.
Creative travel companies are constantly on the lookout for new providers: With the right resources you can provide your clients not only with the best rates, but also with highly specialized products that are difficult to find elsewhere – providing your company with an essential competitive edge.
2. Access all of your resources from a single point of access
The hunt for the best rates and availability has led travel companies to simultaneously manage a multitude of B2B systems.
Many attempts were made to aggregate resources using XML technology – somewhat simplifying the search process. However, while XML integration is simple and inexpensive, several crucial problems remain:
- Wholesalers providing XML connectivity to their inventory transmit imperfect data - as they compete against others for your attention they strive to differentiate themselves with unique product IDs, and product categories. XML aggregation is of little help, if for example, you cannot instantly compare all of the offers for the same hotel, or immediately identify the best offer for a specific car.
- Moreover, an imperfect merge of several XMLs, without the proper business logic and sophisticated system infrastructure, cannot be used to develop a network of sub agents and affiliates – which can serve as a catalyst for significant growth of your distribution network.
- Systems allowing multi-product search of ‘Mapped’ content from numerous suppliers – enable travel companies to quickly put together the most competitive travel package – online, over the phone, or in person.
3. Grow your B2B/B2C presence and expand your distribution networkNo doubt, the more points of sale you set up – the greater your chances are for success. It’s no wonder that all of the large OTAs offer affiliate programs – iFrame distribution is cost effective, and gets them featured on numerous websites, ultimately leading to exponential sales growth.
HotelsCombined has had tremendous success in this respect, while Expedia’s Affiliate Network has become a major source of growth for the company. How can you compete with that?
- By providing sub agents with a unified access point (B2B) to all of your resources, complete with a B2C booking engine to place on their website.
- The ease of becoming an affiliate of a large OTA attracts novice travel entrepreneurs, but has little value for professional travel agents. If you can provide instant access to a unified and intuitive B2B system suitable for local travel professionals, and compliment it with an online booking engine to place on their website (all under your agreements). All this complete with professional support stemming from your market expertise – and you are bound to become an attractive partner by local and international travel professionals alike.
- If you can get 100 travel agents to make five bookings a month on your system – you’ve already won. Now all you need to focus on is negotiating better rates, and finding new and exciting resources.
4. Business controls: Margins, user access, credit, risk, currency conversionManaging multi-user operations requires having sufficient controls in place.
Your system must be able to define role-based user-access to information, grant your authorized agents the ability to instantly control margins across products, suppliers, users, destinations – down to single properties and bookings, etc.
i. Access Control
- Managing numerous users calls for role-based user setup. Who is authorized to make reservations? Create new users? Control mark ups? Cancel orders? Modify credit limits? See the original supplier price, or the supplier’s identity?
ii. Margin Control- Growing your distribution network implies working with a variety of financial arrangements each with different profit margins. The ability to establish a hierarchical fee-structure will simplify your revenue-stream control on one hand, while providing the essential freedom to your sub-agents to manage their own sales.
iii) Credit Control- Providing travel agents with access to your supplier agreements requires you to control when and how financial concerns are addressed. What happens if a booking cancelation date is coming up and no payment from your agent is in sight? How much can a single user book before having to clear his balance with you?
- It is essential that your system provides you with automatic notifications of approaching deadlines, and even auto-cancel the order before your account is charged. It should allow you to set up booking caps, and release credit as payments are received. Ultimately, it should allow you to do so across numerous levels, and according to varying user specifications. A well designed distribution system should provide you with tools and automated controls that are essential for safe and efficient operations.
iv) Currency Conversions- Make sure you don’t lose money due to outdated currency conversion rates with manual and automatic-updating of representative rates, and even add a percentage or fee for currency conversions.
5. Streamline processes (multi-segment reporting, CRM, data entry)Working with several suppliers on their B2Bs poses a huge data-entry challenge. Booking a flight from one source, a car from another, and a hotel from a third, requires someone to access three different systems, pull out three different reports, and consolidate them into a single accounting management system.
Multiply this process by all sales handled by your in-house and sub agents, and your online booking engines. Your data entry task must be error prone, arduous and time consuming, and ultimately a very expensive task.
The advantage of managing all of your suppliers from a single platform is that your order management process is considerably simplified to: working with a single XML or CSV file which includes all of your orders, across all product categories.
The result: substantial time savings and significant data entry error reduction.
The need for travel operations to adapt to the changing nature of the global travel industry, and at the core of this process is the deployment of the right technology portfolio.
This technology mix should not only enable uniform connectivity to existing resources, but to also to take into account future content needs. It is of an essence to be able to push the resulting output across as many channels as possible – sub agents, affiliates, and direct consumer facing websites.
The right technology should allow an effective control of the entire cycle – both to protect the operation from unwanted credit exposure, as well as to provide independent users with the best set of tools to grow their sales.
At the end of the day, it’s all about being able to offer the best and most comprehensive travel product – to as many consumers as possible without losing your pants in the process of doing so.
NB: This is a guest article by Andrey Spektor, CEO of Gimmonix (owner of Carsolize).
NB2:TLabs Showcase - Carsolize.
NB3: TLabs Reprise – Carsolize 12 months on.
NB4:Image via Shutterstock.