Travel firms no longer use back-office technology purely as an accounting tool, but rely on it to integrate and handle a wealth of customer data used throughout the customer journey. David Bicknell reports.
It is three years since Thomas Cook decided to replace all of its reservations systems. Like many tour operators, the company had to contend with more competition than ever before, not just from the online intermediaries, but also from numerous accommodation-only suppliers and holiday brokers.
Project Globe will enable Thomas Cook to distribute traditional package holidays, dynamically packaged and priced holidays and trips made up of individual components. The solution allows any combination of Thomas Cook and third-party inventory via links to external systems, and enables all of the group’s tour operating brands to sell and distribute via multiple channels including websites, television, call-centres and travel agents.
Last July, Thomas Cook’s technology partner, BlueSky, said it had completed the first stage of the implementation of its itour Travel Distribution Suite into Project Globe with the ongoing development and introduction of the reservation system being phased in brand by brand.
Thomas Cook AG chief information officer Reinhard Eschbach says: “We are extremely pleased to have achieved the first stage of the development of our new pan-European reservation system, Project Globe.
“As BlueSky’s itour solution is enhanced further it will enable us to align our production processes more closely to our customers’ evolving booking behaviour. The implementation of itour will allow us to distribute our product how and where we want to and through as many channels as we choose bringing our business into the next generation.”
Thomas Cook’s ongoing development is an example of how travel companies must offer more flexibility to match consumers’ behaviour in how they choose and book their journeys. According to IBM, the rush to pursue a deal puts the squeeze on travel distributors to drive out costs and create low-cost, off-the-shelf packages; focus on customer profiles that fit their core competencies; leverage data to increase accuracy; and notably, improve their back-office technology and performance.
But does the back office really offer travel companies any competitive edge? Alex Bainbridge, managing director of Tour CMS does not believe so.
“Interest in the back office is always lower than in customer relationship management or marketing. You’d stretch your goals and push yourself to get to the next level for marketing, but not for the back end. Reservations systems are not sexy. The IT team is not like the marketing team. If you don’t hear from IT, then things are okay.”
Bainbridge contends that travel systems have become much more commoditised than in the past.
He says: “People used to go to travel systems companies and say what they wanted the software to do. Now it’s much more commoditised. Travel systems suppliers say ‘This is what our software does,’ which means companies have to adapt their business processes to go with the software.
“Back-office systems to most organisations are simply ‘behind the scenes’. It’s a bit like going into a high-street shop and buying a suit. When you go to pay, you don’t care if they have a Barclays or a HBOS terminal to pay with.”
Bainbridge suggests that there are two means by which organisations can compete: through driving innovation, or by commoditisation.
He says: “Ryanair has commoditised flights. Its back-end processing is through Navitaire and it’s simply taken costs out of the business process. In a similar way, we’ve commoditised back-office systems through our web-based technology. Our small tour operator clients pay around £50 a month for our Tour CMS service. Half of our customers are outside the US, and we never speak to them. The alternative to using our web-based back-office service is to pay £10,000-£15,000 for a system.
“The reality though is that people only change their back-office systems because of a change in business circumstances such as a merger or acquisition or if they have a significant change in their business requirements. And most medium to large-sized companies aren’t doing that.”
Bainbridge suggests that there are two approaches taken to the back-end deployment, and they are dependent on the size of the company. Larger companies want automated systems; smaller companies want efficient systems.
He says: “The real difference is that in the larger case, the booking happens online and is concluded with ‘zero touch’. The first time a member of that tour company engages the customer is probably by the pool in the resort. It’s completely different for a smaller tour company because the main point of being a specialist is the added value you give to your customers. I come across smaller companies who say they want a ‘zero touch’ system. No, they don’t. They want to be able to check a booking when it comes in so they can sell them extra services. For them, it’s about workflow and efficiency. The bigger companies try to build all that into the business layer and rules on the website.”
One area that will benefit the larger players is in satisfying the current interest in multicentre bookings. Bainbridge suggests organisations like Comtec will benefit because they have that facility in their systems to satisfy customers whose bookings contain lots of ‘components’.
However, Bainbridge does see an opportunity for organisations to compete through their back-end by making life simpler for customers who pay a deposit for their holiday, and then later, must pay the balance. Because of the demands of the Payment Card Industry Data Security Standard (PCI DSS), credit-card data cannot be retained, meaning that another credit-card payment must subsequently be taken to pay the balance. For some organisations, a cheque must be processed. Both are hardly representative of an efficient system.
“Some forward-looking companies are beginning to offer ‘My Account’ or ‘My Booking’ solutions online for customers to pay the balance for their holiday. Why do that? Because it’s a touchpoint for you and an opportunity for the client to interact with the business,” says Bainbridge.
Another area that organisations will soon have to factor into their back-office procedures, as data transfer takes place in other parts of the customer journey, is managing mobile bookings.
The Handy Group already offers a mobile online booking facility for Hotels4U.com for those who want ease of access while doing things on the move.
Handy Group vice-president of sales Peter Deane says enabling the booking process is simple, but travel organisations may need to update their processing procedures.
“If you look at a booking engine in a fixed line website, it must be able to extract an application programming interface (API). We take that interface and process it for a mobile phone. A large percentage of travel companies have plans to do this over the next six to nine months. But they’ll need to update their back end to be able to access XML APIs and feed them to the mobile phone.”
One company that has done significant back-end development work as part of the recent relaunch of its website is price-comparison site Cheapflights. Its revamp features new deal filters, easier site navigation, and other features to enable greater access to flight deals for those with flexible travel plans.
Cheapflights general manager Francesca Ecsery says deep integration is a critical element of the site.
“Deep integration with content is something I understood from my time at STA Travel. New technology also allows us to tag data and use it more effectively, seeing where the customer goes.”
Chief technology officer Chris Martin says: “Cheapflights has continued its investment in Microsoft’s software architecture and components. We have re-architected and developed our core systems and websites using advanced web 2.0 features and web 3.0 concepts to support improved real-time flight-deal gathering and display, scalable site content management, improved advertiser performance analysis capabilities, and new web interface features for better user experience and customisation.”
For low-cost airlines, the words booking and back end immediately mean outsourcing the problem. That is certainly the case for Colin Lewis, head of sales and marketing at Aer Arran, who believes for organisations like Aer Arran that outsourcing the flight booking engine to companies such as Navitaire make perfect sense.
“Our digital strategy has evolved and we have an online strategy for customer acquisition, conversion and retention. Our back-end booking engine is outsourced like many of our competitors. We’re in the business of flying airlines rather than being technologists.”
The Navitaire Open Skies booking engine on Aer Arann’s website currently manages a 6.9% conversion rate of people visiting the site with 92% of Aer Arann’s bookings completed online, 3% booked through traditional GDSs and 5% through call centres and walk-up customers.
Roberto Da Re, president of Dolphin Dynamics, which develops and sells travel agency automation software to enable travel companies to access information in real-time, says the old definition of the back office has changed.
“The back office is the place where all the data is leveraged for more marketing purposes. Everything has to be integrated, including your CRM data and the key place for that data is the back office. The back office has changed from an accounting function to offering a single container of data for everything that happens within a travel company.
“For a travel company or tour operator, everything needs to be integrated into a site data depository because all that data is used on all parts of the trip. Travel companies must have a place to assimilate what I call ‘Super PNR’ where transaction data is held in multiple systems. Now, only 60%-70% of products are booked in the GDS, so your Super PNR has to account for the GDS, bookings made online, and those made on the phone.”
Although Da Re believes the back office has moved on, the founder of one travel technology consultancy disagrees, arguing that in reality, the travel industry has failed to keep pace with other sectors in developing their back-office functions.
“There are too many travel companies still sending out paper invoices or paper tickets, or worse, taking cheques for payment, instead of thinking how they can gain a competitive edge through their back office.
“They need to take a close look at themselves and contrast their own travel business with the services that are available in the real world, such as paying your TV licence online or booking a coach ticket with National Express. In travel, the back office is really no further developed than it was 20 years ago.”
Solutions for the back-end
- As a tour operator, take a step back and consider what you are delivering to the customer for their journey. Are paper-based itineraries, paper invoices, paper-tickets or clunky credit-card balance payments really the way forward?
- Consider ‘My Account’ solutions as a touch-point with the customer
- Can you use video? Or maps?
- Can you deliver to the customer the travel equivalent of paying your TV or vehicle licence online?
Progress or not?
Humphrey Sheil, chief technology officer at Comtec (Europe), sums up how the back office has changed:
The main difference we see comparing yesteryear with today is that tour operators used to be stuck with systems that could only handle traditional packages. If the tour operator wanted to decouple a flight from accommodation or transfer, it had to be done manually, with all of the effort and opportunities for error that data re-keying causes.
Asking strategic questions like ‘What is my margin?’ or ‘Where is my most popular hotel?’ became very difficult to do. Although tailor-made holidays were desired by customers, very few systems could actually deliver that. That’s what drove Travelink growth in the early days because it turned that paradigm on its head and focused on tailor-made, flexible trips and then rode the crest of the wave as specialist and activities tour operators grew.
The Present and the Future
At present, we are seeing a concerted drive towards a seamless view of the customer across all aspects and facets of a tour operator’s business. What does this mean day to day? It means having a client record with all of the history attached for that client including quotes and bookings so that the tour operator can make fully-informed decisions. Some tour operators are migrating towards a paperless office where all paperwork relating to an individual holiday is scanned into a document management system that is also connected to the reservation system.
In other words, tour operators want to use one joined-up system to load internal or contracted stock, integrate external stock, search, cost and book and do post-booking management. On top of that, they want to be able to mine data using business intelligence tools to identify trends in purchasing patterns, destination popularity etc that helps them make better-informed business decisions.
Recently, we’ve done a lot of work to allow users to retire costing spreadsheets and instead load tour costs into the system. Access to this data opened up our customers’ eyes as to what the real margin and costs are and how those costs are being allocated.
Such a drive to ‘get connected’ doesn’t just simply apply internally to the systems run by the tour operator, such as the customer relationship management system, finance, content management system, but also to getting third-party suppliers connected, including everything from flight and accommodation suppliers to automated requests for visas to embassies.
Self-service is also a driver: for customers and suppliers and for documentation such as invoices, itineraries, and e-tickets. This approach reduces administration overheads for the tour operator and also makes life easier and more flexible for the customer. You pay the balance online or add insurance or a transfer instead of needing to go into a high-street shop. Suppliers, on the other hand, become responsible for ensuring that contracts are loaded exactly as they need them to be and are kept up to date, thus removing a fairly common source of contention.
The advent and growth of e-commerce is a sea change, constantly growing and occupying the thoughts of some of the best minds in the industry. Tour operators and travel agents are gaining in confidence and capability in what they put online and we now see travel websites offering more complex holidays online (tailor-made, multi-city breaks, complex flights etc.) with more intuitive user interfaces to let customers quickly build their holiday journey without needing help from a travel agent or call centre agent.
Winning the search engine battle (optimisation and marketing) and improving rich content – video, maps – all helps to sell the holiday online.
The move to a paperless online environment changed everything. We’ve come a long way from the days of having paper bookings on meat-hooks being moved along a rail.