Struggling Air Travel Industry

It’s best to start with a bad news because you can’t hide it from the public. They already know that the economy is struggling and that the  travel   industry  is hit hard as well. And many experts say that things are only to get worse. But for the free economies that’s OK because they have the way of adjusting.

No plan to fix travel

We have a republican plan to build up economy, we have democratic measures that have been made recently but still we don’t have a plan to fix the  travel   industry . It’s not part of any of their campaign platforms and it should. And that’s for the single reason it’s the largest industry in the world. It employs the most number of people, it is singularly responsible for the GDP over a ninety three countries. And yet, the United States government is the only country of it’s size that doesn’t have a cabinet level post for travel and tourism while every other county has a ministry of tourism.

Worse news

Worse news is that in few months almost every airline in the United States is going to start parking their planes. They are going to cut capacity almost 16% on domestic routes. Continental airlines is going to park 70 planes, American is going to park 80, United is going to park more than 100. Even the smaller airlines like Midwest airline is cutting one third of their fleet. This inevitably will mean that this summer will not see the resurgence of air traffic but on the contrary, we are into another 6 months of stagnation.

Travel MLM – An Industry That Would Grow Bigger

The last years there is a big growth in the  travel  MLM  industry  as many new network marketing companies have entered that field and many individuals choose to book their vacations through their independent  travel  agents. Nevertheless despite the growth that the industry experienced the whole sector is posed for more growth in the near future. Two factors would greatly contribute to that.

First, the  travel   industry  is a multi-trillion one in terms of dollars spend as almost everyone takes vacations in the western world today, even if it is for a few days. Add to that that there are billions of people in the rest of the world that are seeing their disposable income to grow every year, people that would naturally at some point spend some of that money towards vacations, and would talk about trillions more entering that market.

Even if the  travel  MLM companies hold the same percentage of that market we would still talk about a phenomenal growth that could only be matched by the health and wellness  industry . Of course someone can argue that at the current time due to the problems in the US economy the whole world is poised for an economic recession. Although such thing is possible sooner or later the American economy would get healthy again dragging the rest of the world with it. So the current setback is only a fluctuation to the overall trend which is upward.

Second, the network marketing companies that are active in the vacation business are getting more mature every year and are offering a greater variety of travel products and deals for every budget. From high end luxurious vacations to cheap choices satisfying everyones needs depending on his financial situation. Due to this the people start choosing this companies and their independent agents more often than they did in the past. And we are talking about real customers not distributors booking their own vacations.

The public starts seeing the multilevel marketing companies in this field as real legitimate businesses that have to offer them value for their money and not as mere network marketing schemes. That shift in the publics attitude, although still many disregard businesses that operate under this model, would continue in the next years sending more and more customers to independent travel agents. That would lead to an increase in the market share that MLM companies have which means even more money for its distributors.

Of course, myriad other factors would play their role, no matter how small, in the growth of this industry under the direct sales network marketing business model. But the above two that we mentioned are the more important and would play a very significant role in the future expansion.

As we can see those involved in a travel MLM are very lucky as a bright future expects them, if they are good in their business of course. The sales are going to increase and many others would decide to join their organization as distributors as the industry expands which means additional income from referral fees.

Furthermore, the public is to benefit also as the competition from multilevel marketing business would drive prices down and offer to the people more value for their money. And this time the profits would not end to a few giant corporations that control a big share of the market, but to many individual home business owners that joined such income opportunities. This is a good thing for the economy too when money gets distributed to many individuals instead of concentrating in the hands of a few. So be ready to experience a great expansion and growth in this industry in the near and further future.

Understanding the Travel Industry

With the improving economic condition of the common man, every person around the world looks forward to enjoy some leisure of life. Travelling to exotic places is one of them. With improved technology,  travelling  has become much more safe, enjoyable and cheap too and that is why the  travel   industry  is thriving all around the world.

Yet, it is not easy to become a travel agent and attain success. Many small and individual travel agencies are now jobless off because most of the people are becoming computer literate. They can now learn most of the information needed to have a successful pleasure vacation tour or purposeful business tours. They can book tickets, reserve hotels and can plan a proper stay in the most cheaply and yet leisure way at any destination of their choice. The big travel agencies are also finding stiff competition to maintain their customer base and hence they are trying to offer more innovative ways at cheaper rates to attract customers.

Yet, there are many people who don’t like to indulge in booking and managing a travel that can bring headache. Many of the people don’t have enough time to spend on planning for a tour. Hence, they look for the services of good travelling agents or companies to enjoy a good travelling package.

In order to be a good and successful travel agent, you should have excellent and impressive communication skills. You should be able to create and manage links to make the work of making hotel reservations, cruise bookings and other similar tasks easier.

The travel agent needs to be harmonious and willing to understand the needs of the travelers and what they expect from their travel agents. They should try to adopt innovative approaches to serve the travelers. They may offer travel plans, rental cars, assistance in finding rental villas or condos or homes for visiting travelers at a destination, other alternative accommodation etc. travel agents may also offer security for passports, visa formalities, traveler’s checks, money exchanges etc.

The more innovative a travelling agent is in his approach to serve the travelers, the more successful he will be.

Foreign Exchange and the Travel Industry

How foreign exchange fluctuation is dealt with by travel operators is a matter of some controversy. In the period between a booking and the actual date of departure the value of the currency in which the holiday was paid will of course fluctuate against Sterling constantly and, occasionally, considerably. A holiday, therefore, costing GBP20,000 at time of booking could, 6 months later at the time of departure, cost substantially more, or less depending on the fluctuation in the value of the particular currency against Sterling. Of the difference in cost incurred by these fluctuations, a travel operator is legally allowed to pass on a surcharge of up to 10% (after this the client has the option of cancelling the booking with a full refund) to the consumer. Many consumers have therefore found themselves presented with considerable surcharge bills for forex swings against the pound on the eve of their holiday. Of course, when currencies move in Sterling’s favour, the consumer will not see this money discounted, rather it will serve as a nice little booster to the company’s profits.

In turbulent times the value of currency can fluctuate catastrophically and, in worst case scenarios, companies have actually gone under due to massive, unforeseen forex swings which they simply have not been able to handle. In 2008 three AITO operators went bust because they did not manage their currency risk sufficiently on EUR, USD and JPY respectively. A swing of 50% on the USD against the GBP was simply too catastrophic that not even surcharging could have saved them. In other years, 2007 for example, currencies moved in Sterling’s favour and lots of companies saw nice bumps to the their profit margins.

Despite the occasional bump to profit margins, forex fluctuations are a risk that need to be managed carefully. This can be done through hedging – by carefully forecasting exposure in the main currencies with which a company is trading, that company can obtain a sound level of security and therefore avoid both costly forex fluctuation stings and having to pass on unfair surcharges to clients. The downside is that the company is tied to the forward contract rate and if the GBP strengthens then that could leave it uncompetitive at quotation stage. The answer to this is to allow for an element of leeway in the forecasts to allow for occasional situations in which a booking can be slightly discounted to make the sale.

Hedging foreign exchange therefore effectively manages the risk for both company and client. Many travel companies however either do not hedge properly or simply choose not to hedge and will quite happily pass on surcharges to their clients whilst reaping in the profits when forex swings their way. This is not only unfair but completely avoidable. Most ludicrously, ABTA, the association of British travel agents, allows companies to pass on surcharges providing that they reserve the right to do so in their booking conditions, and absorb an amount equal to 2% of the holiday cost. This is actively supported by the government, which has made no steps to pass legislation preventing travel operators from doing this. In this way, time and time again clients have had to face paying extortionate forex surcharge fees just before going on holiday because the travel company with whom they booked through simply couldn’t be bothered to hedge its foreign exchange effectively.

In 2007, Nick Newbury, the director of bespoke travel operator Original Travel said live on the BBC that his company would not pass on any surcharges to clients post booking. This the only time a British tour operator, big or small, has said this and as a result it has caused a bit of a stir from competitors in the industry. In his own words: ‘on balance, not surcharging is a better strategy then running the gauntlet in the hope of a slice of the upside.’ To make a promise of this kind and benefit to consumers, Original Travel is required to manage its foreign currency requirements very closely and actively engage in a hedging strategy. A practice many other tour operators are still to take on.

The Impact of Recent World Crisis on Travel Industry

The  travel   industry  is influenced by the crisis in the economy worldwide. The soaring price of crude oil led to increased cost for airlines, trains, cruise lines, and bus lines. The  travel   industry  had no option but to pass on their increased costs to consumers in the form of higher ticket prices. This was at the same time that consumers had less discretionary income for travel. Even though the price of oil has dropped tremendously, the airlines still predict multi-million dollar losses in 2009 due to the expected three percent drop in passengers.

Because of the banking crisis, carriers who were having financial difficulties have been unable to get the credit necessary to weather the economic storm. The British  travel   industry  began to feel the impact when tour operator Travelscope and carrier MAXjet Airways collapsed at the end of the year in 2007. This illustrates one consideration that travelers have when making reservations: is the carrier going to be in business still when it’s time to travel? Many travelers are postponing making arrangements until the last minute, hoping that they will get a deal on last-minute fares, and ensuring that the carrier will be in business.

It is expected that the winter ski resort reservations will be down 9% for this year’s season. Economists point out that the traditional deterrent to taking vacations “can’t get away from work” has turned into “economic conditions”. Previously many Americans used the equity in their homes to finance vacations, among other things. Now in the reality of tighter credit availability, people will be taking fewer, shorter vacations close to home. Tourists also expect to spend less on souvenirs and shopping, meals and entertainment, and on hotels.

These trends mean that travel destinations will need to market their properties to potential customers in their own backyard. People are looking for a vacation that includes the activities close. The changing demographics of the United States will also dictate that tourism changes the target population and adjust the services provided accordingly.

Another factor is the rise of tourism from emerging countries. Although it is not expected that this sector will lead the way in increased travel, it will help. International tourism expands on the same path that other economic indicators such as the GDP. One international arena that has had a boom in tourism over the last 15 years is India, due in part to the loosening of restrictions on the airlines. It is expected that there will be losses for high-end-tourism for the first time, but that the downturn and eventual recovery will be slow.

The value of the U.S. dollar abroad has an impact on travel. It is argued that this is the main issue to determine the future of the  travel   industry . For Americans, a rising dollar will allow them to travel abroad more, and spend more money while they are gone. The sagging U.S. dollar will boost inbound tourism to the United States from overseas. Tourism officials are hopeful that when the new Obama administration takes office in January 2009, it will take action to bolster the value of the dollar and initiate policies favorable to the industry.

It is expected that Amtrak will have continued support from the Obama Administration. The Passenger Rail and Innovation Act of 2007 was co-sponsored by Obama and provides for long term funding for Amtrak. The new Vice President, Joe Biden, has been using Amtrak to commute to from Washington D.C. to his home in Delaware for over 35 years now. All of this should bode well for the passenger train industry.

So what steps can the  travel   industry  take to make the impact of the recent world crisis less? New marketing plans should be designed to help travelers, whether individuals or businesses save money. Resorts and hotels can offer all-inclusive plans to entice business meetings and corporate retreats. Another option is to give the meeting room free with a block of rooms rented for the meeting.

In Argentina the government has gotten involved to boost tourism in the South American country. They have announced a plan of offering interest free loans for individuals and families who will be traveling in the upcoming months and year. Payment plans allow the loans to be paid back in either three or six months. Small businesses in the  travel   industry  find that they can avail themselves of interest-free loans with the same payment terms.

Cruise lines can offer deep discounts or ship credits to fill cabins. Due to their fixed costs of operating (fuel, staff, fees), they are in a position to entice tourists to book cruises at bargain prices.

The current world crisis will definitely leave its imprint on the  travel   industry . Successful businesses will adjust their plans to be the most efficient models possible, and be able to lure stressed out and skeptical consumers into traveling.

The Online Travel Industry: The 4 Business Models

The Internet offers an effective means for developing a single and sustainable electronic infrastructure for information gathering and business transactions for both travellers and suppliers. It is an ideal method for people to source information on travel. It is an essential for travel-related Websites to offer useful, pertinent and easy-to-find information alongside a booking facility if appropriate.

It can be used to fully research a destination, book all aspects of the holiday including travel and communicate others who have the same ideas or have been through similar experiences. It gives travellers an excellent opportunity to compare and contrast everything on offer before they make a purchase.

The information available online is continually being reformatted and presented in a more logical, easy-to-use and read format. The volume of consumers that rely on this information to make travel-related decisions will therefore continue to rise. In addition, features and benefits of using the Internet to research and book holidays are improving and being added to all the time. For example, consumers no longer have to receive printed tickets from the travel operator. They simply print out any information that they require themselves after they receive it automatically via email.

The ‘Net’ has meant that people can now easily plan trips for themselves. This has not only opened up a greater amount of discounts available to the general public, but also given people the fun and enjoyment of planning and booking their own trips.

Prior to the Internet, travel agents were the primary source of information and facilitating bookings within the travel industry. However, the onset of Net popularity has seriously impacted upon the future success of a telephone or face-to-face based travel agency. The Internet now allows individuals the ability to plan and book their own trips. It has revolutionised the travel industry as a whole and instigated a trend away from the customer using a travel agent.

There are four Internet business models that can be applied to the travel industry. The business models and examples of businesses within them are as follows:

1) The merchant model, which brings buyers and sellers together. It could be argued that this model is effectively an online travel agent. Websites in this business model category include Travelocity who have recently purchased LastMinute.com and Expedia – an offshoot from Microsoft.

2) The advertising model, providing valuable travel information whilst generating revenue through various adverts. The significant advantage of this model is its low cost base. A website in this business model that provides information on the UK is TREKtheUK.com.

3) The direct model allows the service provider themselves to deal directly with the general public. First of all, British Airways is the longest established and has a large marketshare and conventional competitive advantage. Secondly, EasyJet have established the Internet as being key to their core competency.

4) The community model is one of the longest established operating models on the Internet without having a history of generating a significant revenue stream. Two websites reviewed that fall into this category are Lonely Planet – based upon the books that have been published for more than thirty years, and VirtualTourist.com – a community of individuals who have a passion for travel.

Although it can be argued that some websites are using a mixture of several business models, it is interesting to acknowledge that just because a business generates the majority of its revenue online, it doesn’t mean that conventional business models can’t be applied to them.

Family Reunion Tradition Boosts Travel Industry

Family reunions have been a rapidly growing tradition since 1999 and is now accelerating at an enormous pace as technology and travel combine with family interest and genealogy making finding, communicating and meeting family members a fun and exciting pastime.

Family reunion planning has become a virtual industry in itself. Family reunion planners like wedding planners are opening up shop on and offliine. These planners are offering more creative ideas to enrich the event. Many families now meet at the nations capital to follow time lines of history, tell stories of family legends and memorialize family surnames.

Others want to combine the family gathering with an opportunity to relax and rejuvinate. One family reunion planner remarks. “There is too much work to do planning a family reunion at home! Between cooking and cleaning up the mess you have to plan and supervise activities. Not to mention worrying about a relative driving to their hotel after drinking too much.” That said many have opted to send the family off to an exotic site where all needs are catered to by hospitality staff. “With a Family Reunion Cruise, there is no preparation shopping, no cooking, and no cleaning,” said one family reunion planning committee member.

Royal Caribbean International is introducing a new program, Royal Reunions, designed to enhance family and group gatherings. Organized group activities are run by the ship’s cruise staff. Group members compete against each other in reunion themed games.

Still family reunion planners have the challenge of making the affair a meaningful enriching experience that draws the family closer. One site, Fimark’s Family Genealogy And Reunions, located at http://family-reunion-planner.fimark.net notes “family reunions are becoming the big event far surpassing Holiday celebrations and July 4th picnics. To that end we see the need to develop products that help them plan and organize local and remote gatherings in ways that draw the family line closer together.”

Travel agencies have seen the need to do the same as multigenerational family travel and reunion-type family travel increased from 20 percent in 2000 to 34 percent just one year later.

A survey of 400 ASTA and Vacation.com members found that 67 percent reported booking travel accommodations for family reunions within the year since Sept 11 2001, while 64.5 percent reported an increase in requests to book family reunion trips over the past five years. Noticing an increase in family travel, Sonesta launched the “Our Family Invites Your Family” package.

From the foregoing the  travel   industry  sees that family oriented packages with traditional family reunion themes offers lucrative returns.

Online Travel Technology and Online Travel Industry Future

Are On-line Travel Portals and Travel Search Engines advanced than ever?

Large or Small, Travel companies are continually looking to use the latest technology to enhance their on-line presence. This is the main reason on-line  travel  website technology has grown faster than any other on-line related  industry . The On-line Travel Hotel Accommodation Booking marketplace is a very competitive area and ultimately the user’s decision to purchase depends on 3 key factors:

  • Website functionality
  • Availability of the chosen travel package, flight or hotel
  • Price (obviously)

Most of the leading online travel agents or online tour operators who are connected with one of the highly recognised flight suppliers, hotels and/or transfer wholesalers via XML. Through these suppliers they can search online users’ needs relate to any destination around the world.

These Online Travel Websites are continuously growing their supplier base by regularly adding boutique, destination specific XML suppliers. This will offer more hotel, Flight and Transfer options to their web users, allowing us to broaden their exposure to new market segments.

Most of the Online travel websites use the latest “filtration technique” across a number of supplier feeds in real-time. Meaning that they can always deliver the latest availability information and most importantly the best available rate to the consumer. Further to above most of the leading travel and leisure websites have;

  • Ability to manage, adapt and dynamically improve the system according to the marketing and usability purposes
  • Flexibility to handle the load according to the business improvement
  • Easy to find and fix bugs and issues
  • System is guaranteed for 95% up time
  • Secure backup and recovery processes
  • Ability to launch new sites for their new markets.

Travel Website and GDS Development Overview.

Leading Travel websites and corresponding Systems are based on an open architecture concept which is an independent platform and multi tier internet technology.

  • Systems are built according to SOA (Service Oriented Architecture)
  • Mostly built on JEE technologies
  • Use of web services for external connectivity and data processing
  • Distributed / multi team development using SVN

Market analysis summary to get an idea about OTA marketplace.

The travel sector is a growing marketplace. With traveller numbers set to double in size over the next 10 years there has been a steady increase in the number of people booking their travel independently i.e. book flights, accommodation etc. separately and not as a package online.

In spite of occasional shocks, international tourist arrivals have shown almost uninterrupted growth from 25 million in 1950, to 277 million in 1980, to 438 million in 1990, to 681 million in 2000, and the current 880 million. By 2020 international arrivals are expected to reach 1.6 billion.

The total capacity in hotels and similar establishments worldwide is estimated at 18.4million rooms. This has been growing at about 3% over the last five years.

  • America 6,500,000 rooms
  • Asia Pacific 4,460,000 rooms
  • Europe 6,550,000 rooms
  • Middle East 355,000 rooms
  • Africa 485,000 rooms

The estimated value of hotels booked through Online Travel Agents (OTA) in 2010 is over $22 bn. as per Online Traffic and Conversion Report Second Edition – February 2011.

Online Travel Agent (OTA) focus will be on driving sales exclusively through the Internet. This is a well established and ever-growing marketplace. Online travel revenues in Asia-Pacific, Europe and the US, 2006-2010 (% of total travel):

  • 2006: 49% (US) / 23% (Europe) / 9% (Asia-Pacific)
  • 2007: 52% (US) / 27% (Europe) / 11% (Asia-Pacific)
  • 2008: 51% (US) / 33% (Europe) / 14% (Asia-Pacific)
  • 2009: 56% (US) / 37% (Europe) / 18% (Asia-Pacific)
  • 2010: 59% (US) / 43% (Europe) / 21% (Asia-Pacific)

Since 2008 the percentage of UK adults booking their overseas holidays online has risen by 15% to over 54% (one-in-two consumers). 45% of the hotel bookings in 2010 was made via the Internet.

Travel trade competitive edge compared to market leaders.

Main competitive edge will be your product pricing. As you have to manage your OH relatively low by automating most of the administration functions using latest technology. Then you will be able to offer Hotels, Flights and Travel packages at a rate that the larger OTA will find difficult to match. Whilst they work on margins of about 25% you will be able to run profitably at 10%. This gives us a significant advantage in the marketplace.

Impact of Cloud Computing on Travel Industry

Introduction

The last decade has seen major changes in the travel distribution landscape. First, it was the Internet that started a revolution and forever changed how the  travel   industry  operates. This online boom followed by subsequent economic slowdown has created new dynamics in travel distribution. The proliferation of smart phones and social media has resulted in further creating both chaos as well as new opportunities. While opening up new avenues for growth, these developments have also created new operational challenges.

Challenges faced by  travel  distribution  industry 

Dynamic Demand

One key nature of the  travel   industry  is that the demand for  travel  is highly seasonal and cyclic. This creates a challenge for any operations manager in terms of capacity planning and right sizing of the IT support infrastructure. Planning for peak size can result in underutilization and lead to higher marginal cost. On the other hand, not planning for peak load runs the risk of lost transaction opportunities, unsatisfied customers and finally business losses. This is one of the primary reasons why most travel distribution players end up having higher IT infrastructure cost and lower operating margins.

Increased Search Volume

Increased number of travel portals along with a changing pattern of travel booking behavior of the travelers, has resulted in a huge surge in ‘look to book’ ratio. This increased number of availability request per booking now runs into thousands from a mere single digit number few years back, putting an enormous pressure on existing IT infrastructure. According to Pegasus Solutions, global processor of hotel transactions through the GDS and ADS channels, the look-to-book ratio soared to around +60% over 2009 levels and is expected to rise further. Today’s common look-to-book ratio is almost at a 2,500 -3,000 to 1, -primarily due to growth of online reservation and the changing consumer behavior who is now looking ‘value for money’ deals. For this, travel shoppers use multiple avenues such as search engines, referral sites, websites, mobile applications, and social media.

Business Disruptions

Just prior to the recession, online travel booking soared to all time highs attracting further investments in IT infrastructure in demand anticipation. However, discretionary travel was one of the first spends that was cut down during the slowdown. This caused a severe strain on financials and travel companies had to rethink their models yet again.

Increase in number of sales channels

Popularity of smart phones has persuaded travel players to embrace mobility as a medium to manage bookings and provide other experiences to increase customer stickiness. At the same time, social media sites have also become very popular and travel portals are trying to utilize this trend by integrating different social media components with their sites. Of course, more number of channels also increases complexities in product management.

Cloud computing from a travel distribution perspective

The Cloud helps enterprises to have a dynamically scalable abstracted computing infrastructure that is available on-demand and on a pay-per-use basis. This model not only saves the IT teams from investing heavily on infrastructure, but also shields them from the intricacies involved in infrastructure setup and management. Presently, apart from providing the on-demand IT infrastructure, cloud service providers typically provide interfaces for other related IT management services. To understand the application of Cloud computing to the  travel   industry , availability searching or shopping is probably the best example; it is by and large the biggest resource consumer in a typical  travel  process. In today’s circumstances, travel enterprises who run their entire travel application on a single infrastructure platform put unnecessary stress on operational budgets. One of the probable solutions to this problem is to decouple the availability search functionality from the traditional CRS system transfer it on an infrastructure that can support flexible demand. At the onset, it seems to be a complex and upheaval task, as it creates operational challenges such as latency. However, these challenges can be handled through a cloud based solution which offers higher scalability by using modern architecture patterns. On the other hand, mobility is witnessing an unprecedented growth in demand – this is another area where a cloud strategy can bring in competitive advantages for travel organizations. The key challenges that travel enterprises are facing today regarding mobile and social media channels are manifold, viz.,

  • With the advancements of mobile devices such as iPhone, iPad, Android, Symbian, and Blackberry, travel enterprises need to invest in leveraging these to further their distribution and fulfillment channels.
  • Mobility, being a rapidly evolving technology, is difficult to predict in terms of short term as well as long term demand. Due to this, travel enterprises are facing a challenge in scoping the required infrastructure for supporting mobility channel.
  • Travel enterprises need to create a business model to measure increase in revenue and profit against the costs incurred on mobility & social media investments.

Cloud based flexible and on-demand infrastructure enables a travel enterprise to offer mobility and social media channels without incurring any fixed cost. Using a cloud infrastructure, a travel enterprise can start in a small way and grow into these evolving markets with a lower risk and financial strain.

Key concerns in adopting cloud based system

Availability of a Service

Organizations worry about whether utility computing services will have adequate availability, and this makes them wary of Cloud Computing. But in reality, cloud infrastructure providers such as Amazon and Google have much lower outage compared to any internal IT system.

Data lock-in

The primary way to access the cloud platforms is through proprietary APIs. Thus, enterprises feel that they cannot easily extract their data and programs from one site to run on another. But in reality, all major service providers have an obligation in their contract to return the data to the enterprise. These service providers also have data access APIs that can be used to extract data in standard formats.

Data Confidentiality and Statutory Requirements

Many enterprises believe that their data will not be secure in the cloud, since current cloud offerings are essentially public networks. However in reality most of these cloud service providers have better data protection and security mechanism than most IT organizations. They achieve this through the usage of audit trail, encrypted storage, and network middle-boxes. Service providers also comply with various statutory and audit requirements related to enterprise and personal data security and usage.

Integration with external systems

Since travel distribution systems interact with multiple external applications, travel enterprises always have a concern about integrating the cloud based system with other external systems. However, all major cloud service providers have web service interfaces that can be utilized to integrate the cloud based system with other external systems.

Solution for the ‘long tail’

As we know, the  travel   industry  comprises of many small to mid-sized companies. A large majority of which are very entrepreneurial and niche in terms of the products and services they offer. Companies in this ‘long tail’ have little or limited IT knowledge or support and rely on numerous third parties for IT. Such companies always find it difficult to balance their IT spending between IT upgrades and innovating on their solutions, and this tends to become a barrier for business growth. Even today, many small time travel enterprises do not even have an IT system, because they cannot afford to setup an IT operation in-house. Economics of Cloud environment can change this basic premise and make it both affordable and beneficial for travel enterprises of any size who can use this service to derive a competitive advantage. Such an environment brings tremendous advantages to such companies because it also helps them to manage their cash flow better. At the other end of the horizon, start-ups are finding it easier to build and offer products like CRSs, tour operating systems, distribution systems or basic inventory systems on a SaaS model, which is a stronger value proposition and provides a competitive edge to their offerings.

Business outcomes of using cloud based systems

From the above discussion we can conclude that travel enterprise can achieve business growth by leveraging the power of cloud computing:

  • A cloud-based solution reduces the total cost of IT ownership for the travel enterprises and offers performance, reliability, security, and flexible scalability advantages
  • Travel enterprises are able to increase customer base due to higher availability, low congestion, and additional sales channels
  • Competitive advantage to the small and mid-sized enterprise in the form of lower fixed or upfront capital cost
  • Improved operational efficiency due to low marginal cost
  • Ability to manage risks better by reducing fixed investment on any new initiative

Mobile Development for Travel Industry

Do you know 69% of travelers have smart phones?

With the advent of smart phones and high-end mobile applications, our travel experience has become more comfortable and easier. Earlier, people used to leave their mobile phones before going out for a holiday, because it was their own family time and mobile phone might interrupt their fun time. However, these days, travelers carry their smart phones with them simply because they can access internet through these handsets whenever they want. Mobile development for travel industry offers a wide range of services; from mobile version of travel sites to road map; from traveling tips-giving applications to flight notifications, there is a world you can choose from!

Advantages of travel mobile application development:There are a number of reasons that mobile application developments are gradually embraced by travel industry. Since the whole process is based on open source development and outsourcing, every business can reap profits by trying their hand in this development. Given below are some advantages of mobile development for travel industry:

  • There are custom mobile applications, which can be easily downloaded to your smart phone.
  • These applications can give you various tips for your destination, its sightseeing sites, and drawbacks (political unrest, natural disaster etc).
  • There are many mobile applications, which guide the travelers with route maps and directions in details. This is very useful since it allows travelers to decide their own do’s and don’ts.
  • Capitalizing on this development, many mobile versions of travel sites are launched. The travelers can access all the information from the site on their smart phone application.
  • Carrying your smart phone, along while traveling can make your trip greener. The travels once used to carry papers, maps, advisors, language translator, phrasebook etc. however, now with their smart phone, they can do all the tasks on their handset.
  • When web 2.0 technologies are concerned, smart phones are powered with social media access. The travelers can share their travel experience, pictures, and videos on the social networking sites.

Travel mobile application- Facts and myths:

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  • Most of the travelers prefer free mobile applications with smart advertisements, while very few users would vote for paid applications.
  • E-accommodation and flight e-booking are the majorly done activities that travelers enjoy on their smart phone application.
  • You can always check your mobile application efficiency with analytics, available online. You will also discover how the application is accepted and feedback from other users.

Drawback of mobile development for travel industry:The main challenge for the mobile application developers for travel industry is that it is still untouched by the mainstream appeal. A 2010 survey on US online users stated that almost 85% of them did not know how to use the location-based mobile applications.