Traditional travel companies and the global distribution groups have received a wake up call to upgrade their technology or risk being sidelined. Intermediaries such as Travelocity, Expedia, Priceline, lastminute.com, and ebookers have modelled themselves as the travel brands of the future, nudging the airline and hotel industries to fight back with their own intermediary brands such as airline-backed Orbitz and Opodo.
Most travel reservations processes have been powered by the mainframe systems of the global distribution systems (GDS) - Sabre, Amadeus, Galileo and Worldspan, but in recent years alternative, web-based channels of distribution such as Worldres have emerged.
Meanwhile, some airlines such as Easyjet have developed and managed their own distribution and booking technology while other airlines, travel agents and tour operators have developed their e-business strategy, booking tools and property management systems by working with groups such as Datalex, based in Dublin and UK-based Anite Travel Systems.
A generation of niche suppliers has also been spawned, with some distinctive examples emerging from Australia including Onerail, which offers a reservation system and global distribution solution; Viator, which links suppliers of land content to distribution channels; and World.Net, which powers the online content and booking technology for various international tourism bodies.
Meanwhile, travel agents have been forced to reinvent themselves as traditional commission and transaction fee structures have been broken down by the increasing numbers of online bookings by both corporate and leisure travellers. The GDS groups and the new travel technology vendors are vying to arm travel agents with online tools.
The GDS groups have expanded their activities to acquire or form B2B alliances with mainstream and niche providers of booking solutions, or develop their own web-based booking tools. Their reach extends into the consumer market, most notably in the case of Sabre which already owns 70 per cent of the Travelocity intermediary and wants the rest.
The growth of the online consumer travel market is accelerating, particularly in Europe. From January 2001 to January 2002, audiences visiting travel sites increased by 11 per cent in France to as much as 75 per cent in Spain, reported Jupiter MMXI, which estimates this market will be worth more than E20bn by 2006.
The shape of the market is also changing. Corporate and leisure travellers used to be viewed as different creatures but it is now recognised that they are mostly the same people, says Ian Wheeler, managing director of the newly-formed e-Travel business unit, a re-organisation of the B2B and B2B2C (airlines and travel agencies) online travel management activities of Amadeus, the GDS group. Named after the Boston-based e-Travel company acquired by Amadeus last year, the unit will incorporate its alliances with partners such as SAP, an e-business solution provider and Broadvision, a leading supplier of enterprise self-service technology, to operate corporate, airline and leisure activities from a core technology platform.
But this is only the latest step in the long road of "disintermediation" in the travel industry.
The acquisition last year of Galileo, the third biggest GDS, by Cendant, the lodging and car rental group led to an outcry that the venture would bestow unfair advantages for some of Cendant's own travel products and its GDS subsidiary.
There were similar protests about the Orbitz travel portal in the US, Opodo in Europe and Zuji in Asia that they should not receive preferential treatment from, or accord it to, their airline shareholders.
Opodo is rolling out sites on a country-by-country basis across Europe, starting with Germany in November 2001 and the UK in January 2002. In November, the European Commission gave it clearance, although it made some provisions relating to competition, and stipulated that Amadeus provide its central reservation system (CRS) services to Opodo at market rates and terms and on a non-exclusive basis. Opodo, which claims to have made a huge investment in technology, has nine European airlines shareholders - Air France, BA and Lufthansa each with 22.86 per cent, Iberia, KLM and Alitalia each with 9.14 per cent, Finnair with 1.71 per cent, and Aer Lingus and Austrian Airlines with 1.14 per cent.
"We negotiate great fares from all the airlines and most of those carriers are non-shareholders," says Giovanni Bisignani, Opodo's chief executive. "They are attracted to Opodo by our low cost structure which reduces the costs of distribution," he says. "The market makes the choice."
This could be a year of consolidation and further disintermediation of travel distribution, according to John Davis, chief executive of Pegasus Solutions, a leading provider of hotel reservation technologies which last month announced the launch of Hotel Distribution System to market distressed hotel inventory through multiple online sites.
Mr Davis referred to Cendant which has added online travel companies to its portfolio. This comprises hotel franchisers, car rental groups and the Galileo GDS. Some of the online companies acquired by Cendant had worked through GDS competitors such as Sabre. "The true value of this kind of deal is worth much more than the cost of the deal itself," says Mr Davis. Another one to watch, says Mr Davis, is USA Networks which owns majority shares of Hotel Reservation Network and has a controlling stake in Expedia.
USA Networks could well set its sights on one of the big four GDS groups, according to Mr Davis, but much will depend on whether cash-starved airline companies decide to sell off their significant stakes in these businesses.
How this affects the multitudes of groups offering technology solutions for reservations systems, yield management products, customer relationship management and destination marketing remains to be seen. But it is certain that some will fall by the wayside and others will be swallowed up by the GDS groups.
Why online applications are crucial
Travel operators and technology providers face a difficult task in determining between them how much to invest in technology and how much to ensure that a strategy is in place for upgrading, taking into account that in the future the speed of the internet is likely to be 20 to 40 times faster than at present.
In the meantime, the technology has to address the needs of very well-informed and notoriously fickle customers. If the vendors fail to provide instantly the information or service required, the buyer will move on and may never return.
Technologies such as mobile, internet and wireless applications are offering huge opportunities for the tourism industry. But it will not be possible to harness these new technologies profitably if the industry does not understand the tourist's needs well enough, said several speakers at the Tourism 2001 conference in Nice. "There is increasing demand for interchange-ability and integration between the web, mobile phones and PDAs," says Ian Wheeler of Amadeus.
For the moment, people will book from their PC and may change or check their itinerary from their mobile phone, he says. "Young people who are technologically savvy and are the biggest users of SMS want to book from their mobiles and computers." However, Mr Wheeler believes that a meaningful volume of mobile bookings will not happen until bigger screens are produced or mobile and PDA technologies merge.
Such devices have come into their own in ensuring that travellers can remain in touch, so that they can be notified of any last minute changes to their schedule.
Meanwhile, one the areas in travel technology with the most potential - with a host of solutions on offer from established vendors and new entrants - is that of data mining and customer relationship management, an IT sector with many contenders.
Customer information is vital for servicing today's needs and requirements, says Mike McNamara, vice president for continental Europe global transportation at Unisys. "Personalisation is the most powerful asset when it comes to using that information," he says.