The Travel Industry Has Already Experienced 3 Digital Revolutions

William El-Kaim, Skift

May 04, 2015 11:00 am

Editor’s Note: Skift recently started a three-part series on the digital and mobile transformation of transportation, the changing face of cities, and how they both have the potential to upend everything we know about travel.

The first article in this series introduced the mobility era and how mobility providers and aggregators have created new transportation products and services in cities all over the world. The second part introduced us to the technology innovations that are making the new mobility era possible.

The third and last part, along with a 90-slide presentation by the author, is below, and well worth a deep read. You will find all articles in this series here.

The fourth generation revolution in the travel industry has already started. In 2015, the disruptive forces will join to form a nexus, resonate and shake the whole travel ecosystem, again. This last article in a series of three presents some of the key forces of this transformation and how it could disrupt the existing travel ecosystem.

The Travel Industry Has Already Experienced 3 Digital Revolutions

The first revolution started in the 1960’s, fueled by the commercial development of air transportation under the IATA umbrella, which led to the creation of Computerized Reservation Systems (CRS).

CRS were a huge leap forward enabling the airlines to instantly look up availability throughout their network. But airlines soon realized that their core business was not to create and manage such systems. Their main needs were to make their inventory visible everywhere at the lowest cost and to ensure some fairness in the process, assuming information will be the same everywhere.

Read MoreThe End of Travel, Part 2: Tech Innovations Behind the Rise of Smart Mobility

It lead to the birth of Global Distribution System (GDS) and heralded the golden age of travel agency industry. It grew agencies revenues by up to 400 percent, while requiring employment growth of only 20 percent, according to estimates by Phocuswright.

The second travel industry revolution started with the rise of the World Wide Web on top of the growing Internet network. The Online Travel Agency (OTA) phenomenon shook up the whole ecosystem by offering to the traveler the capability to compare and book fares online, without having to visit a brick and mortar travel agency.

This revolution of online disintermediation happened in a very short time, from the mid 1990s to the mid 2000s. These companies, focused on the end travelers, understood very quickly that the building up their own supply chain was also key to their offering. They started to offer tools and incentives to hotels, tour operators, car rental companies to fill their inventory: “Content was now king”. They especially targeted the inventory that was not available in the GDS systems.

The third revolution resulted from the expansion of Internet, as it added the capability to access Internet from mobile and add to it the wisdom of crowd. Social, Local, and Mobile (SoLoMo) led to creation of companies like TripAdvisor (user ratings), Hotel Tonight (mobile only, last minute hotel booking) or Timista (personalized and real time information about what’s going on now in London). It was also the beginning of the sharing economy, a major disruption force, which led to companies like AirBnb or Uber.

On the business travel side, the disruption came from corporate online booking tool providers, that started to capture all the benefits on top of GDS, travel management companies (TMCs) and corporate clients. Travel was for these new players, and still is, a trojan horse to help sell their expense solution, in the cloud. Expense and payment solutions are still the “cash cows” of the corporate travel industry. So why bother selling trips after all?

The “Open Booking” movement was born. The motto being: “Book everywhere, but expense and pay with us!” Mobility providers and hotels could then get direct booking and could disintermediate GDS and TMCs.

This revolution has lasted nearly a decade from mid 2000s to 2015.

Дата добавления: 2015-10-28