Open Travel Alliance and the Future of Travel Distribution

Originally posted by Stephen Joyce @ Travel & Tourism Technology Trends.

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xml_at_work For many in travel, distribution would be considered the lifeblood of the industry. The triumverate of travel, or the BIG THREE of distribution, would tend to agree. These companies, born from the days when the only products you could distribute were airline tickets, have now expanded into other products like hotel rooms, cruise, and car rentals. But we are now at the point where many of the systems required to distribute the basics of travel are quite mature, so what is the next frontier for distribution?

In a recent PhoCusWright Roundtable discussion, the big discussion was around vacation rentals and the value of this disparate and fragmented market estimated to be around $24 Billion annually. This vertical in addition to the destination product (tour & activities) market, also estimated to be worth $24-27 Billion dollars are, in my opinion, the emerging markets for distribution. Both these markets share many commonalities that make them ripe for distribution:

Little to no representation in the supply chain – In both the vacation rental market and the tour & activity market, there is very little distribution in the current supply chain. Except for a few larger players like Viator, Isango, and Homeaway, these products are not distributed at all and there are certainly very few vacation rental or tour operator software solutions out there for small tourism businesses or individual property owners to use that allow for distribution.
Lots of non-traditional marketing opportunities – A lot of tour & activity products can be sold on a freesale basis (unlike hotels and air), and as such, they are a great candidate for non-traditional marketing opportunities more commonly associated with traditional tangible products. These may include Ebay, Craigslist, Vast.com, or other on-line marketplaces.
Ripe for consolidation – There are many smaller software solutions out there that provide small tourism businesses and individual property owners with reservation capabilities but there are only a few leaders that have embraced distribution and, it is these products that will set the stage for the next step in distribution.
No distribution standards – This is where organizations like OpenTravel Alliance can play a significant role in determining the standards for this sector. Unlike air, hotel, and car, there are no widespread standards for this sector of the travel market. Tour and activity products, adventure products, and attractions can (at their core) be supported by a common set of xml messages. Additional messages can be appended to support new media and content distribution requirements.
Destinations & Travel Resellers are looking for products – Destinations around the World are not generally in the booking business and as such offer only limited capabilities to stakeholders. By providing standardized methods of connectivity, destinations can get access to a wider range of products and simplify their technology requirements. This is always a good thing when working with shrinking technical budgets.

Over the next few years I am convinced that we will see standards developed that will shape the future of distribution for a wider array of travel products. Our role as travel technologists and industry insiders will be to encourage the development of these standards and to educate suppliers and vendors alike to embrace these standards. Unlike air, hotel, and car, we have the opportunity to shape the systems that develop around the standards rather than trying to build standards around systems that already exist. What a great opportunity this will be to shape the largest untapped segment of the travel marketplace.

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Date: June 17th, 2009 @ 02:07

Author: Stephen Joyce

Categories: Blog, Syndicated

Tags:

http://twitter.com/Douglas_Quinby Douglas Quinby

Stephen,
Great post. What's your source for this fig?

“Destination product (tour & activities) market also estimated to be worth $24-27B”

Douglas
http://www.isango.com/ Daniele Beccari

Stephen – great quick way to start a long conversation.

My thoughts on this is that we're facing a dilemma.

Some early standards like AIRIMP exist for airline tickets and constitute the backbone of the 3 big GDSs, and have never really been replaced by OTA initiatives as OTA came too late. It is the suppliers (airlines) who have started standardization in order to better integrate their processes and reduce distribution costs by shared distribution systems.

For cars and hotels OTA is used slightly more because these segments have been consolidated and automated later, but it still leaves a lot of room for interpretation. Same goes for OTA attempts to standardize profile managements, where in practice everyone has been forced to use custom fields.

OTA does have a set of transactions for the tours and activities segment but no one is using them. We have honestly taken a good look at OTA but we have not found any supplier or partner currently using it and it seemed too complex to convince anyone to adjust if we'd go first.

When it comes to tours and activities there is one critical factor: most of the suppliers are small and are too busy riding their hot air baloons than thinking about IT standards. The content does not even exist in electronic format: most of them don't even have a reservation system. Some are starting to use solutions like yours, but how many more are not?

I agree with your prediction that we will see standardisation one day but I think the timeline in this segments is far out. There is lack of scale, expertise and even interest from the supplier standpoint, and too much fragmentation to justify the aggregators to comply to a potential standard that only solves a small part of the aggregation challenge.

It's a chicken and egg problem.

Daniele

PS: you're vastly underestimating the tours and activities market!
http://twitter.com/danbec danbec

Stephen – great quick way to start a long conversation.

My thoughts on this is that we're facing a dilemma.

Some early standards like AIRIMP exist for airline tickets and constitute the backbone of the 3 big GDSs, and have never really been replaced by OTA initiatives as OTA came too late. It is the suppliers (airlines) who have started standardization in order to better integrate their processes and reduce distribution costs by shared distribution systems.

For cars and hotels OTA is used slightly more because these segments have been consolidated and automated later, but it still leaves a lot of room for interpretation. Same goes for OTA attempts to standardize profile managements, where in practice everyone has been forced to use custom fields.

OTA does have a set of transactions for the tours and activities segment but no one is using them. We have honestly taken a good look at OTA but we have not found any supplier or partner currently using it and it seemed too complex to convince anyone to adjust if we'd go first.

When it comes to tours and activities there is one critical factor: most of the suppliers are small and are too busy riding their hot air baloons than thinking about IT standards. The content does not even exist in electronic format: most of them don't even have a reservation system. Some are starting to use solutions like yours, but how many more are not?

I agree with your prediction that we will see standardisation one day but I think the timeline in this segments is far out. There is lack of scale, expertise and even interest from the supplier standpoint, and too much fragmentation to justify the aggregators to comply to a potential standard that only solves a small part of the aggregation challenge.

It's a chicken and egg problem.

Daniele

PS: you're vastly underestimating the tours and activities market!
http://twitter.com/stephenjoyce Stephen A. Joyce

I think you are right that it is a chicken and an egg situation, however, I also strongly believe that someone has to lead the charge in this case. Like you have mentioned, I think the market is grossly underestimated too, but no one really knows by how much. I think the whole idea behind the standards is to make sure that when we get to the point where systems like yours can talk to systems like ours and facilitate distribution for small suppliers without the cumbersome methods that exist now.

I also agree with you that the existing messages are too complex, but I also think that a lot can be done to simplify them and make them more effective. Remember that systems can be closed and proprietary but communicate in an open and standardized way. I think part of the fear with the OpenTravel schemas is that it implies a lack of control or loss of competitive advantage, when I believe it encourages the exact opposite.
http://buhlerworks.com/wordpress jebworks

Note the post about No more booking fees – what's next. Refers to this discussion.
http://twitter.com/Douglas_Quinby Douglas Quinby

Stephen,

Great post. What's your source for this fig?

“Destination product (tour & activities) market also estimated to be worth $24-27B”

Douglas
http://www.isango.com/ Daniele Beccari

Stephen – great quick way to start a long conversation.

My thoughts on this is that we're facing a dilemma.

Some early standards like AIRIMP exist for airline tickets and constitute the backbone of the 3 big GDSs, and have never really been replaced by OTA initiatives as OTA came too late. It is the suppliers (airlines) who have started standardization in order to better integrate their processes and reduce distribution costs by shared distribution systems.

For cars and hotels OTA is used slightly more because these segments have been consolidated and automated later, but it still leaves a lot of room for interpretation. Same goes for OTA attempts to standardize profile managements, where in practice everyone has been forced to use custom fields.

OTA does have a set of transactions for the tours and activities segment but no one is using them. We have honestly taken a good look at OTA but we have not found any supplier or partner currently using it and it seemed too complex to convince anyone to adjust if we'd go first.

When it comes to tours and activities there is one critical factor: most of the suppliers are small and are too busy riding their hot air baloons than thinking about IT standards. The content does not even exist in electronic format: most of them don't even have a reservation system. Some are starting to use solutions like yours, but how many more are not?

I agree with your prediction that we will see standardisation one day but I think the timeline in this segments is far out. There is lack of scale, expertise and even interest from the supplier standpoint, and too much fragmentation to justify the aggregators to comply to a potential standard that only solves a small part of the aggregation challenge.

It's a chicken and egg problem.

Daniele

PS: you're vastly underestimating the tours and activities market!
http://twitter.com/danbec Daniele Beccari

Stephen – great quick way to start a long conversation.

My thoughts on this is that we're facing a dilemma.

Some early standards like AIRIMP exist for airline tickets and constitute the backbone of the 3 big GDSs, and have never really been replaced by OTA initiatives as OTA came too late. It is the suppliers (airlines) who have started standardization in order to better integrate their processes and reduce distribution costs by shared distribution systems.

For cars and hotels OTA is used slightly more because these segments have been consolidated and automated later, but it still leaves a lot of room for interpretation. Same goes for OTA attempts to standardize profile managements, where in practice everyone has been forced to use custom fields.

OTA does have a set of transactions for the tours and activities segment but no one is using them. We have honestly taken a good look at OTA but we have not found any supplier or partner currently using it and it seemed too complex to convince anyone to adjust if we'd go first.

When it comes to tours and activities there is one critical factor: most of the suppliers are small and are too busy riding their hot air baloons than thinking about IT standards. The content does not even exist in electronic format: most of them don't even have a reservation system. Some are starting to use solutions like yours, but how many more are not?

I agree with your prediction that we will see standardisation one day but I think the timeline in this segments is far out. There is lack of scale, expertise and even interest from the supplier standpoint, and too much fragmentation to justify the aggregators to comply to a potential standard that only solves a small part of the aggregation challenge.

It's a chicken and egg problem.

Daniele

PS: you're vastly underestimating the tours and activities market!
http://tourismtechnology.rezgo.com Stephen Joyce

I think you are right that it is a chicken and an egg situation, however, I also strongly believe that someone has to lead the charge in this case. Like you have mentioned, I think the market is grossly underestimated too, but no one really knows by how much. I think the whole idea behind the standards is to make sure that when we get to the point where systems like yours can talk to systems like ours and facilitate distribution for small suppliers without the cumbersome methods that exist now.

I also agree with you that the existing messages are too complex, but I also think that a lot can be done to simplify them and make them more effective. Remember that systems can be closed and proprietary but communicate in an open and standardized way. I think part of the fear with the OpenTravel schemas is that it implies a lack of control or loss of competitive advantage, when I believe it encourages the exact opposite.
http://buhlerworks.com/wordpress JEBworks

Note the post about No more booking fees – what's next. Refers to this discussion.