There’s no doubt that the Internet and the online travel world have seen vast changes in the past 10 years. David Bicknell charts some of the technological developments, discusses the key drivers and looks at what the future may hold.
The past 10 years of online travel technology have seen huge changes that have transformed the industry from fledgling net-based ideas into an online powerhouse that has developed and showcased the most advanced web technologies.
In many ways, the online travel industry has mirrored that of other sectors, where a few visionaries took an idea and successfully – and some unsuccessfully – ran with it, against the received wisdom of the naysayers. Then, like other sectors, the established bricks and mortars ‘got’ the technology and attempted to reintroduce the status quo.
That ‘technology’ has included a number of basic, yet critical elements – not just ‘the web’ and its user interface, the early browsers, that make it visible, but also the networking connections that seamlessly make it work. Then there was development of browser technology, without which sites cannot be viewed effectively; search engines to (hopefully) find what you’re looking for; and the early development of the sites themselves, such as Worldspan’s collaboration with Microsoft to create Expedia.
The key issue about the travel industry on the web is that it is the most natural fit for buying online: there is no tangible product, and nothing to wrap up.
What has been achieved over 10 years has required a marriage of technology – that is still developing – with the mechanics of the industry. Without the technology and a resolution of the issues surrounding it – usability, trust and security – there would naturally be a lack of confidence both among users and those companies embracing the web.
Gerry Samuels was a director of the Worldspan global distribution system who saw the possibilities offered by the Internet, and so set up Gradient Solutions in 1997 to enable travel suppliers to distribute via the web.
“I left Worldspan with a laptop, a 10-year old Renault, and a new baby. It was a year of hard work before the calls started coming in.
“We felt there was an opportunity with the technology to enable travel suppliers to distribute directly to their customers. We never sat back and thought ‘what are we doing?’ We initially got it wrong as we thought what we were doing was going to be most relevant for tour operators.
“But when we went out to talk to tour operators, there was little interest. Eventually, it became clear it was airlines and travel agencies who needed the technology to compete with EasyJet, Expedia and other online travel firms who had set down a marker.”
Gradient’s first opportunity came in 1998 when it did some work for Ryanair, building its first information-only website.
“We did that because we hoped it might lead to building a booking site for Ryanair. The trouble was Ryanair’s view then was that the Internet was too slow for bookings. And that was the feeling from several companies: that the web was not suitable for reservations.”
In 1998, Gradient started to do business for Air Tickets Direct, selling airline tickets. And it later did the first flight-booking system for Thomas Cook.
“They’d seen the light. By late 1998, things had changed and we didn’t have to explain what the web was. Expedia was here, and many others had now decided the web was the way to go.”
As Samuels and a few Internet travel pioneers now recount, it was EasyJet’s arrival, creating the “booked online, low-cost airline” market that was the catalyst for others to follow.
“It was the new technology approach it had. From day zero, it ‘forced’ people to book online. It was bolder than the national airlines.”
There was still some reticence about introducing differential pricing for online bookings. But once people started to have an understanding of the technology, a lot of marketing ideas could spin off that.
At that time, most of the GDS customers were traditional travel agents. The GDSs were focused on ensuring that their core mainframe GDS functionality was enhanced to support consumer-facing booking engines with features such as lowest air fare shopping.
GDSs also built ‘off-the-shelf’ booking engines to enable their travel agent customers to get started with the Internet, and others partnered up with mega-online intermediaries, such as Worldspan with Expedia.
“We felt it was an opportunity for us since the traditional players were learning that the environment offered a completely new way of distribution, and smaller companies were better set up to work at the breakneck speeds of the Internet generation.
“We never had any designs on the consumer model. What we wanted to do was provide technology to others such as national airlines, and large travel agencies,” says Samuels, who sold Gradient to Sabre in 2000. He now runs a software development company, Mobile Travel Technologies, whose products and services enable travel suppliers and intermediaries worldwide to distribute their services to travellers through mobile phones and devices.
The thinking behind the setting up of early websites may make some cringe now, but at the time, it was entirely logical.
Andrew Nicholson, founder and managing director of Air Tickets Direct, now working as a travel consultant, says: “We were at the cutting edge. But at the time the web was new, trust was at a premium, and so we put photos of our staff on the site. We wanted people to see there was someone behind it. Now it’s all about a faceless machine. But then, you wanted real people. We didn’t trust the Internet.”
Nicholson was approached one busy day in Air Tickets Direct’s Bishops Stortford offices by a representative of John Hatt who had set up the Cheapflights.co.uk site.
“The company had been to all the big players looking for advertisers and was desperate to find someone. We said ‘yes’. We provided 100 destinations and prices to put on the site, and then it was able to go and get other advertisers.”
Eventually, Air Tickets Direct was bought by Travelocity in August 2001, making it the final part in Travelocity’s European plans.
Of the original 13 staff of Air Tickets Direct, nine were still there, and the company had a brand and new technology, with the prospect of migrating to the Sabre site in due course. It also had a reputation for customer service, with 60% of its business coming from repeat sales.
Then came September 11 2001. “We were flying to a summit meeting in Nice,” says Nicholson. “We were just going through Nice Airport when our phones started to go mad. Some 130 people were on the aircraft and we all managed to find a TV in the airport.”
The next year was one of survival for many web companies, before the big four operators – Thomson, First Choice, MyTravel and Thomas Cook – eventually woke up to e-booking.
“Thomas Cook and Thomson had been market leaders offline, but the success of EasyJet and Ryanair forced them to consider getting an online presence.
“At the time, many thought you had to start up a new online brand – and didn’t see it as just another channel to market as it is now,” says Nicholson.
It soon became clear that effective searching, and especially dynamic pricing, were going to be critical areas if online travel sites were to thrive.
“Dynamic pricing is essential. You want to be able to pay for what you see. Now customers are well-versed. If they see a price of £199, they don’t expect it to go any higher. It’s a given now, but it wasn’t then,” says Nicholson.
“Travel is the most natural fit for buying online – there is no tangible product, and nothing to wrap up,” he adds. “And sites have developed to satisfy consumer demands. Sites were built along the lines of how a business process was used offline, rather than along the lines of thinking ‘How do I change that transaction process to suit a customer’ – the three clicks principle. If you couldn’t get to it in three clicks, people would go elsewhere.”
Ian Champness, who subsequently founded online travel directory and search engine, TravelWhere, was the marketing and e-commerce director of FSS Travel and Leisure Systems, one of the leading travel technology suppliers specialising in online distribution and reservations systems for the operator sector of the UK travel industry.
He believes that although 99.9% of retail travel agents loved viewdata, and as a travel agent you had to have it, in the web the trade had spotted a new channel to market because operators were still paying for viewdata calls. Visionary tour operators could see what benefits the web would bring, especially providing the opportunity for the consumer to come in direct.
What it was already doing was creating ‘disintermediation’, questioning the role of the intermediary. At the time the average commission for agents was a minimum 10%, usually 15%, and for some up to 17%.
“After the big tour operators moved in to viewdata, Prestel lost out because it had a charging model that was too expensive.
“By then, 150 tour operators were online with viewdata, and FSS had done well out of tour operators getting online with viewdata. But you needed an hour on viewdata to make your booking on a screen half the size of a PC screen,” says Champness.
The unstoppable wave of the web began to happen from 1996 onwards. US conferences drove the message that suggested US home web penetration was close to 15% to 20% (though even in 2000, the considered view was that the industry could only see 1%-2% of bookings being made online)
However, according to Champness, the ongoing problem was how to find what you were looking for. “The problem of the Internet was the amount of information out there. It’s like going into the biggest library in the world, and then turning the lights out – you don’t know where to look.”
Neither did you know who to back, with the number of new players in the market.
Worldspan vice-president and general manager EMEA Graham Nichols says: “As a technology provider we found we had a lot of different customers and we decided that as we didn’t know which ones would be successful, we’d sign up as many as possible. We called it ‘kissing a lot of frogs’.”
Another problem was that a number of organisations wanted to create websites for travel and were approaching organisations such as FSS looking for booking engines.
“The new dotcoms wanted an interface to the GDSs,” says Champness.
“They were telling us ‘we want to be an online travel agent’, and they were falling over themselves to pay out from the millions of pounds they had. “But we had to say to them: ‘What are you at the end of the day, but an intermediary, and we already have a network of travel agents who are selling our product. What are you going to do if you don’t get the inventory?’
“At that time, the operators had a policy of starving the dotcoms of inventory. I said to Brent Hoberman in the early days of Lastminute.com, ‘I’ve had a look at your business plan. Which tour operators will give you the inventory?’ But in the end, it did very well out of hotel bookings and flights.”
Fortunately for firms such as Lastminute.com, a remedy was already in place following Pegasus Solutions’ development of the first hotel booking system in 1996. Indeed, many of those founding hotel sites are still around today, such as Hotelbook.com and Travelweb.com.
Pegasus was not only the first to create aggregate hotel booking sites, but also the first to power a chain’s booking interface (InterContinental Hotels) and the first to provide a viable e-commerce interface between hotel computerised reservations systems and a multitude of travel sites.
“Pegasus easily reaches 95% of travel sites. Hotels need rooms to be sold, and websites need to sell hotel rooms, while consumers need to book the other way,” says Pegasus marketing director Peter Gerstle.
Gerstle believes the next major technology development for online travel will see the industry trying to replicate and improve on users’ experience-sharing.
“The past 10 years have been breathtaking in terms of development – but from now everything is evolutionary, rather than revolutionary.
“To be honest, the old days were far more enjoyable and you were seen as a pioneer, or a guru. From now on, the advent of the semantic web, or Web 2.0, will develop people’s experiences, and that includes the idea of peer-to-peer review.
“It’s all about the conversion ratio of look-to-book – that’s the curve metric. Can you turn the huge reach you have into customers? As a consumer, you need to read other people’s views, and if you as a site don’t open yourself up to peer review, then you can’t be trusted. That is why sites such as TripAdvisor and IgoUgo are so popular.”
There is no doubt that such community sites are just the latest iteration in 10 dramatic years of the travel world online. Where in the world might we be in a further 10 years?
A decade of the odd faux pas
Over the past 10 years a number of “lessons learned” and anecdotes have emerged in the way online technology has developed.
Pegasus’ Gerstle says: “In the early days some sites would market themselves by saying they had a number of newsletter subscribers. There were also a few sites that offered free room nights for every room booked worldwide. Ideas like that were naïve and not commercially thought through.”
Another common mistake was to market a site before the technology was in place to support it. One particular victim was Deckchair.com, the Bob Geldof-inspired travel site set up in the late 1990s.
Worldspan’s Nichols says: “They did the marketing through TV. Everyone logged on the next day, and the site fell over. It wasn’t able to meet demand.”
With regard to look-to-book ratios, Nichols adds: “It’s always been a problem for airlines. One well-known European carrier complained about its look-to-book ratio. It told us: ‘We’re getting too many hits. Stop them doing all that looking before they book.’ They asked us to change consumers’ behaviour.”
Another story concerns the role of helpdesks. “When we dealt with online agencies, they would tell us they were okay, because ‘we haven’t had any calls to say there’s a problem’, not understanding that if the user is not happy, they go elsewhere.”TCP/IP, Moore’s Law and search
TUI director of new media Graham Donoghue believes one of the most fundamental developments was the creation of TCP/IP, built by Vint Cerf, which underpins the use of the Internet, allied to the development of browser technology, which had moved from the early days of the Mosaic browser following on from Tim Berners-Lee’s development of World Wide Web at Cern, Geneva.
“The development of the browser, Moore’s Law on increased processing power, and latterly the adoption of broadband were the technology drivers. That, along with the development of websites such as Boo.com, Lastminute.com, and the role of the low-cost airlines, were the things that shaped the industry, as well as the development of search engines inspired by people such as Bill Gross at Idealabs,” says Donoghue.
“The website has moved far beyond just being another channel to market; it is now a key part of the strategy on which a company is based. At Thomson, we’ve had a site for 10 years, though its earliest iteration was for marketing purposes. What the web does is enable us to do things very differently in our business.
“A significant number of projects are based on the web, and the number of people working on them has changed. Now we have eight people looking after web marketing and eCRM.
“If you include developers, sales, and call centres there are thousands of staff, perhaps all 13,000, all using the web at some point in their working day for the company.”
What does the future have in store?
TUI director of new media Graham Donoghue believes one of the key issues of the future will be the development of search engines
“Today, 70% of people use search. In the early days, many pages on the web were looking for ways of attracting people. Now Google’s development has shown that search from early search engines, such as Altavista, was the best at the time, but it was full of spam.
“But search is still at the beginning, and big issue on the web is that data is very volatile. There are billions of pages and is very difficult to update the indexing of it quickly. Even Google, with all of its processing power, takes six weeks to reindex the whole web. There is a need to have a way of indexing the most popular sites, such as travel sites, more quickly. Perhaps we’ll see a development of the ‘thin search’ concept?”
Meanwhile, Worldspan’s Nichols believes one of the key changes will be the development of technology aimed at users who are concerned they are receiving too many hits.
Tens of millions of availability request messages generated by consumers and travel retailers hit airline systems, resulting in the high look-to-book ratios that occur in online shopping environments.
“Worldspan has moved the technology off the mainframe on to server farms and other companies are doing the same, and we have developed Intellicache caching technology that can deliver an average hit reduction rate of more than 20%, and up to 30% to 40% for some carriers,” says Nichols.