Category: Online Travel Agencies

Introduction of Dynamic Packaging Technology

Expedia, the first online service provider, was founded in the U.S. in 1996; and started to offer flight, hotel and transfer service over internet. However, the sales boom was reached upon the introduction of dynamic packaging technology. The company, today, continue its operations over 30 countries.

Dynamic packaging helps online tour operators, travel management companies and other traditional travel companies to sell online. Airlines, hotels and tour operators benefit greatly from dynamic packaging technology.

In our contemporary world, internet has been an essential part of our daily life. Internet has also proven itself within the tourism industry recently. The latest development of the internet application in the tourism industry is dynamic packaging applications. The dynamic packaging application which presents opportunity to travel agencies to supply various holiday packages to the consumers in real time provides a competitive advantage. Today, consumers’ demand have changed.

They prefer preparing their own holiday packages to purchasing predetermined holiday packages because they want more personal holidays and think that current pre-determined packages are not flexible enough .More consumers require more individualized, flexible and selectable holiday programs and discover travel products of the online world. One of the arms of the semantic web can be found in the tourism industry as dynamic packaging applications.

Dynamic packaging is one of the most important innovations of online travel agencies. The application was first started by the Expedia; and today it is adopted and applied by many online travel agencies. Dynamic packaging provides consumers to reach multiple services with a single search. Thus, consumers can get lower price than they purchase each independent component individually. At the same time dynamic packaging provides suppliers to hide their discount rates. When we look at the customization feature, there are some customization options in three web sites.

Customers can determine destination or multiple destinations, departure and return dates, departure and return times, non-stop or refundable flights, round trip or one way trip in Expedia. In Travelocity, customers can determine destination, round trip or one way trip, departure and return dates, departure and return times, class of flight and airline alternatives. Customers can also determine destination, departure and return dates, departure and return times, non-stop flights and hotel name in Orbitz.com In today’s world where consumers are far more educated than they were several years ago, the travel industry’s future lies in a customer-driven mix of packages, individual products and self-organized travel. In the last few years, the travel industry has been buzzing with a sizzling new phrase “Dynamic Packaging”. Dynamic packaging helps provide a single, fully priced travel package that hides the price of the individual travel components.

It helps airlines, online travel agencies and tour operators to tap into different supplier systems in real time and bundle travel components (air, hotel, car, entertainment) into a single reservation. This is a seamless process which allows the user to choose from a huge range of travel and associated products from multiple vendors. A rules engine is used to configure and manage the different travel products that can be bundled and priced. These technological developments and changing consumer demands have brought several innovations in the travel industry.

One of these innovations is dynamic packaging application. By means of dynamic packaging application, travel agencies can offer real-time, customized, flexible and secure travel alternatives. On the other side,  consumers are able to plan their travels and to make reservation through dynamic packaging applications. Heterogonous data regarding holiday can be gathered through dynamic packaging application so the consumers’ private needs can be meet. Worldwide, it is possible to talk about existence of travel agencies which apply dynamic packaging system. In this Article, Expedia.com, Travelocity.com and Orbitz.com travel agencies’ dynamic packaging applications were investigated. In dynamic packaging applications, choice, customization, flexibility, security and real time features must be found. These characteristics are the main specifications of the dynamic packaging applications distinct from traditional travel packages. As tour operators and vacation packagers continue to understand the value of implementing dynamic packaging technology, travel consumers are reaping the benefits. Travel consumers can now opt to customize vacations rather than accepting pre-packaged alternatives. Empowered travel consumers are exercising more control over their vacations. Dynamic packaging is thus, the most cost effective way for travel distributors to package, distribute and sell vacation products today.

A magical and revolutionary device – Which has created a boom in the world of Travel

(CRS) Central Reservation System & (GDS) Global Distribution System created a boom in the world of travel

Internet technology and web based commerce have dramatically transformed the airline industry in the last ten years. As travelers embraced the Internet, this enabled airlines to bypass the traditional distribution pattern through travel agencies and sell direct to end consumers. Web distribution combined with cheaper and more flexible technologies allowed new players on the market, low cost airlines (LCCs), to implement effective low-cost direct distribution strategies and intensify competition in the sector. Airline distribution has for many years been synonymous to Central Reservation Systems (CRSs), later termed Global Distribution Systems (GDSs). GDSs have served as the concern of electronic commerce in travel for decades, providing virtual real-time connectivity between thousands of suppliers of travel inventory (airlines, hotels, car rental, tour operators, cruise lines, etc.) and hundreds of thousands of retail sellers of travel products.

GDSs progressively consolidated their position to only four major systems, namely Sabre, Amadeus, Galileo and Wordspan.

Sabre offered its first passenger reservations systems in 1960. Since then, Sabre made continuous technological advances for electronic commerce for the travel and transportation industry. The company operates through four segments: (1) Sabre Travel Network is used by more than 350,000 travel professionals; (2) Travelocity.com allows individuals to make their own travel arrangements; (3) Sabre Airline Solutions provides software, e-business tools, and consulting services to improve the operations of some 400 air carriers and airports; and (4) Sabre Hospitality Solutions does the same for hotels. Amadeus is another major player in the industry, providing travel reservation and ticketing systems. More than 100,000 travel agencies and 35,000 airline sales offices use Amadeus’ global distribution system (the world’s largest), which books flights on about 460 airlines. It also makes reservations at some 85,000 hotel properties and about 25 car rental agencies, as well as rail, cruise, tour, and ferry operators.

Airline fares were deregulated in 1983 and airlines have been able to charge whatever price they wanted since then. The procedure has been to provide the global distribution systems (GDSs) with fares that would be sold to the public. Negotiated fares, for consolidators, corporations and tour operators would be distributed privately. In EARLY 1990’s, web fares were made available. Individuals who signed up with an airline were emailed information on deeply discounted fares would be announced weekly. These fares were designed to unload seats on routes that had low load factors. Over time, carriers also began offering reservations capability on the Internet and offered lower fares or other inducements such as bonus frequent flyer miles in order to get passengers to book online. When a passenger books online, there are no travel agent commissions or CRS fees. GDS platforms evolved from the original airline central reservation systems (CRSs), which were first introduced decades ago. Up to the 1970s, travel agencies had to locate the best routes and fares for their customers in airline manuals and then call the carrier for availability and reservation. The Internet also brought about the appearance of online travel agencies on the marketplace such as Travelocity and Expedia. Online travel agencies, consumer success and high ambitions made airlines react by setting up Orbitz, an online Web site with direct connect technology to airlines, bypassing GDSs and their booking fees. This entity became a powerful competitor to online travel agencies, and it enabled carriers to connect directly via its technology and avoid GDS booking fees.

The leisure travel segment is the one where airlines have the most leverage, yet these are the products which have the highest relative cost of distribution. Travel agents provide their customers with information and advice, make reservations, provide tickets, and other ancillary services. Their services include making reservations on airlines, hotels, car rentals, cruises, tours and other events. The rapid growth of publicly available global distribution systems (GDS) and central reservation systems (CRS) for air passenger bookings has generated a dramatic shift in India. GDS/CRS data for domestic airfares are widely available through consumer portals such as Expedia , Travelocity and Orbitz. Basic travel queries to these portals reveal the real-time airline and fare information for a variety of competing carriers. Information regarding flight routes, departure times, duration and connections are also presented by the GDS. The purpose of this Article is to present a method for acquiring and utilizing GDS data for transportation analysis. Finally, to provide an example of how this GDS data can be used a gravity-based accessibility model, which utilizes network information and itinerary pricing mined from the GDS engines is presented. The reasonable outcome would be to have the airlines offer their web fares at two levels: their site price and their marked up price, depending on the channel of distribution. This would allow them to avoid the costs of the GDSs and it will give them broader market exposure. Their marked up price could include other charges such as credit card fees. Their pricing structure should be made public so that it is understandable to all.

 In this Article I examined the latest developments and transformations in airline distribution, triggered mainly by the emergence and growth of the Internet and open architecture technologies. I have presented the key changes affecting the GDS industry as identified and described by airline distribution research analysts.

Role of Global Distribution Systems and Online Travel Agencies (OTAs).

Distribution is an important part of the marketing function of firms and industries for both goods and services. Distribution can be viewed as part of a system. As a marketing function, it must interact with the other parts of the marketing system. Distribution considerations affect pricing strategy. Product and service strategy can be heavily dependent upon the form, efficiency and cost of distribution services. GDSs are extensive private electronic networks that connect airlines, hotels, travel agents and other participants in the travel, tourism and hospitality industry. They reportedly account for in excess of 16% of total reservations worldwide. In many ways, the Indian online travel market is qualitatively different from what it was like just a few years ago. Travel suppliers especially airlines  are boosting their efforts to connect directly with their customers, threatening the traditional role of global distribution systems (GDSs) and OTAs. Acquisitions and consolidation continue to tighten the online space, and companies all along the travel value chain are evaluating and testing the potential of social media and mobile technologies. Meanwhile, travelers themselves are more demanding cost-conscious than ever.  Many online travel agencies (OTAs) in India are struggling to stay profitable, and one of the key challenges has been how to make loyal customers. At the moment travelers are just browsing for the cheapest price, and as the profit margins of many OTAs are already low, there is a need to find ways to make the buyer to book from an OTA even though they do not necessarily offer the lowest price. Now, in the second decade of 21st century, you can shop for nearly everything you want online. One business model was to transfer the traditional travel agency solely online and still offer the same services as the traditional agencies, without human contact. This allowed these newly formed online travel agencies (OTAs) to save money in personnel and hence made them able to offer better deals for the buyers than the traditional offline agency. Throughout the years, the increasing online growth gave rise to a new business model of online travel agencies which threaten traditional tour operators nowadays. Tourism companies are exposed to a variety of external and internal factors, which stimulate a continuous need for business model innovations. The most important forces can be identified as social and technological. A key input of developing the yield strategy and forecasting is the acquisition of information from the online booking engine (operator website), call centre (voice) and GDS. Furthermore, tracking the origination of business to the website requires referral analytic reporting. This Article represents the referring traffic to the website to determine which search engines heavily contribute to traffic. Traditional travel agents are today sometimes referred to as “bricks and mortar” agencies. They are under intense pressure to transform themselves to adopt new, more effective, and lower cost business models. Airlines, which at one point were travel agent’s main source of income, have been reducing or eliminating commissions. In response to this direct threat to their viability that has occurred over the past decade, the travel agency industry has seen the introduction of new business models where agencies charge fees for managing an organization’s total travel budget. One of the most important considerations an online travel agency must grapple with is the extent to which it should include and focus on specific products – air, accommodations, car rental, rail, vacation packages, etc. Striking the correct product balance is critical, and must take into account geographical factors, market conditions and traveler profiles. OTAs have a wide range of plans regarding the next wave of growth. Most OTAs consider dynamic packaging a substantial source of growth potential. Non-core travel products such as destination activities and insurance are also considered opportunities to enhance revenue. But beyond the standard product enhancements, OTAs expect to continue to drive business via special offers, including daily deals, limited time offers and other exclusive offers. The success of Traveler is just one example of how the OTA business model can learn new tricks. While OTAs are well aware of airlines’ direct connect strategies, they express confidence that their GDS partners will solve the technical challenges required to aggregate and distribute air content. While many remain open-minded about the possibilities, they are not convinced of the value of wide-scale direct connect airline initiatives.

Major distribution channel includes:

Domestic and international airlines.

Accommodation properties, including:

Guest houses, motels, backpacker hostels,

Hotels and resorts.

Car rental companies.

Cruise ship lines.

Railway companies.

Tourist attractions, such as museums, sightseeing facilities at natural attractions, restaurants, theatres,sporting grounds.

Tour coach companies.

Shipping lines and cruise companies.


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