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Travel and Leisure: IT As a Competitive Tool

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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Travel and Leisure: IT As a Competitive Tool

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

  2. 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

  3. 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

  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

  10. Data Broadcast BROAD- CASTER DECODER+ SLAVE DATABASE TOUR OPERATOR COMPUTER TRAVEL AGENT TERMINAL BOOKING CONNECTION

  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 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

  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 lastminute.com • 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 customer’s 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 • 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

  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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