VALUE CHAINS IN THE TOURISM SEGMENT FOR NEW SATELLITE DATA

VALUE CHAINS IN THE TOURISM SEGMENT FOR NEW SATELLITE DATA SALES CHANNELS Oliver Schleider(1), Phil Curtis(2), Ralf Düring(3), Michael Kalt(4), Leo Sayn-Wittgenstein(5), Samuel Widmann(6) Terra Map Server GmbH, Stockholmer Allee 24, 44269 Dortmund, Germany, Email: oliver.schleider@intergraph.com (2) Vega Group plc, 2 Falcon Way, Shire Park, Welwyn Garden City, Hartfordshire AL7 1TW UK, Email: phil.curtis@vega.co.uk (3) Infoterra GmbH, 88039 Friedrichshafen, Germany, Email: ralf.duering@infoterra-global.com (4) Heider Hof Weg 23 c, 52080 Aachen, Germany, Email: mk@traveltainment.de (5) LSW Consultants Inc., Ottawa, Canada, Email: LSW@igs.net (6) Endoxon Inc., Schloessli Schoenegg, Wilhelmshoehe, 6003, Lucerne, Switzerland, Email: samuel.widmann@endoxon.com (1) ABSTRACT/RESUME The tourism industry is one of the potential future markets for earth observation data and services. An ESA funded project within the EOMD program conducted a systematic market research based on market drivers, responses and resulting actions in the short term. The development of touristic EO applications and services and accompanying marketing and teaming issues are discussed being the key for new businesses. It is shown that a demand centred approach is required and also viable. The short-term action plan gives details how to initiate such business development. 1 INTRODUCTION the sales process of a package holiday. In IT based applications of Tour Operators (TO) such as booking engines or travel information systems, EO derived information could strongly help to support the process of selling a touristic product. It is estimated that the European online sales volume in 2006 will be somewhere between 14 and 38.7 billion Euros p.a. This is between 5.6% and 15.4% of the total industry sales volume of an estimated 256 billion Euros in four years time. This development is supported by the growing business activity of the budget airlines. In order to obtain a systematic approach the considered segments within tourism industry have to be defined. Since there are a lot of other industry branches such as real estate, insurance, traffic and transport which bear the potential for EO use but which are only indirectly related to tourism the consideration is limited to the demand of the tourist as the core end customer of all products and services. The needs of the tourist govern all revenues of the market players and subsequent service deliveries. Examples for the mentioned adjacent segments are commented in chapter 4. 2 VALUE CHAIN APPROACH Tourism is a mass market with millions of end customers and a whole set of different service providers along the value chains. Tourism is not a classical industry segment for geo-information, although the spatial affinity is obvious. Two main variants of bringing EO data into tourism have been identified: a) integrate EO data into existing non-EO services Fig. 1. Tourist arrivals b) use existing EO service products This is schematised for the general geo-data value chain in the following figure. Variant a) is seen as actual core tourism issue, whereas b) is seen more as an actual issue for adjacent branches. The results of these relevant EO based and also non-EO based geo-information services are rarely used, neither IT based nor print based. IT based data plays a more important role during 4 4.1 TOURISTIC EO APPLICATIONS SERVICES (TEOPS) EO Data supply AND Commercial EO data suppliers are generally interested in supplying their EO data into innovative information products also and especially over internet applications. Two main blockages exist here: Upstream elements of the EO data supply chain such as retrieval and pre-processing for serving internet based TEOPS over geo-data servers are costly. Satellite data has to be processed into GIS data. Once the data is available on a geo-data server it may be served to any spatial related service based application. Secondly, the coverage especially of archived VHR data is scattered and thus there is only a limited usability. Real-time services are considered too costly. 4.2 Pricing issues Fig. 2. Forms of EO integration EO services are however useful for touristic geoapplications. The market drivers analysis was based on these assumptions. 3 MARKET DRIVERS Several political, economic and technical market drivers exist based on market players’ point of view. In the economic part, TO’s are the main market players relevant also to generate revenue to the EO industry. Due to a general trend, tourist operators have to Economic drivers save costs and at the same time Globalization make their Restructuring of the airline industry products more Economic downslope Alternative distribution channels attractive. This Cost of procurement is achieved by cutting down costs for touristic products and by using alternative distribution channels such as Internet based applications. For example EO data become part of the graphical features of the resulting applications. Political and socio-cultural drivers refer to the general increase in information demand especially when travelling, the awareness of nature and environment of tourists and to Political and Socio-cultural drivers the impact of tourism Development of social ecological expansion in awareness and green tourism and into local Risk management due to environmental degradation and remote areas of the Increasing demands for information world. The latter leads to the need for monitoring systems of touristic areas and also to planning systems for new touristic areas or in detail for planning and monitoring buildings, resorts and touristic places. EO data plays a major role for resulting applications. Depending on the purpose of the application (whether it is an asset or whether it shall enable additional indirect revenue), two generic business model schemes apply: a) The end customer (tourist) pays nothing for geo-data based information (i.e., the application operator is the actual end user of the geo-data). The operator of the application uses the application for generating more bookings than without the application. Pay per click: the application operator pays for each click of the end user Pay per view: the application operator pays for the first click obtaining geo-data, zooming, panning etc. are not charged Flat fee: the use of geo-data by the end user is charged per time - b) The end customer pays on demand for information products, e.g. for location-based display of current environmental conditions around a hotel location. All of these are demand centred from the point of view of the EO data and service providers and show no direct relation to any production or provision cost of the geodata for this application. 4.3 Service and data pooling The set-up of a EO data based supply chain for one product is costly. A key solution to this problem is an adequate design of the supply chain components so that a maximum re-use of existing components can be achieved favouring a product (not project) approach. This requires a technical infrastructure of pooled server platforms, data and services (sometimes also configurable applications) so that with a minimum of modification a service or an application can be used for many customers of one branch or for many branches with similar geo-information demand. Not only concerning the share of software licenses this bears a significant cost saving potential. 4.4 Application examples For the support of TOs being end customers, planning tools for touristic areas are EO (SAR or VHR) based land management tools which could be adapted for TOs. Monitoring touristic areas on environmental issues could be served by EO (SAR) based environmental monitoring, disaster warning and risk management tools. Important for Web based booking engines and mobile applications is that the average user has little knowledge of how to handle and interpret spatial data. This means that the user should have limited functionality available and that all information must have a high degree of aggregation. Web GIS tools for planning and monitoring allow full GIS functionality (analyses etc.) over the internet. This is especially suitable for planning tools where the users have professional knowledge on how to handle spatial information. 5 5.1 RESPONSES OF THE EO INDUSTRY Requirements Package booking: Tour operators (TO) increasingly use the internet for selling their packages, because this is a cost saving alternative making travel agencies obsolete within the booking and travel value chain. The internet based booking engines today use geo-information for making booking and destinations themselves more attractive. This is an opportunity for VHR optical imagery, especially supplementing visualisations of remote areas where other data is not available or made up as a 3D visualization. Critical issues are here the required ground resolution of at least 0.5m. Environmental EO services could here provide climate and water quality information. The user can choose a destination area or travel package considering local average / current air and water temperature. From the point of view of the EO VAC core team the priority 1 requirements for the entire EO service industry in order to promote the use of EO data and services within the tourism industry are focused on the development of applications using EO services and EO data. The participation of EO in the tourism value chains happens via touristic EO products and services (TEOPS). The analysis of the market drivers and the current capabilities of the EO industry lead to a classification of requirements given in the following table. Table 1. EO industry requirements Type Requirement Fig. 3. Existing applications and non-EO use While travelling location-based services inform tourists about their current location and environment where again VHR optical data is most suitable. Mobile applications are principally equal to desktop internet applications. Some limitations concerning the display or bandwidth apply, some advantages like knowing the current position of the device (e.g. by GPS or Galileo) exist. Technological Definition of interfaces to tourism supply chains Establishment of interaction of (off-the-shelf) geo-spatial applications, with geo-information and EO data Marketing Promotion of TEOPS Build up partnerships between EO service industry and: governmental tourism authorities (PPP) tourism industry geo-information industry global navigation VAC (LBS) tourism associations (PPP) Production Establish spin-off products (TEOPS) process Adaptation of production process for multi supply channeling purposes Research Development of TEOPS, based on conventional EO Products and services: POI information Local reporting of environmental conditions Qualification for TEOPS Promotion Virtual tours Allocation of tourism areas Find the nearest facility function Maps Qualification for TEOPS Promotion Define secure TEOPS, to avoid misuse Test plan for implementation of prototype EO responses Access to specific data sets and infrastructure Set up cooperation agreements Implement promotion activities and define required support material Commit a potential customer Agree with EO data providers on value oriented pricing for the project Agree with EO data providers on value oriented pricing for the TEOPS Agree with non-EO data providers on value oriented pricing for the TEOPS Fig. 4. Phase 1 short-term actions 5.2 Action plan The action plan is a schedule for the EO service industry in order to realise the requirements and achieve a rapid integration of their products, and services into touristic information products. The plan is split according to the requirements. - These short-term actions are thus for at least one customer a rapid in-depth version of the above mentioned actions which shall cover the entire industry and potential customers out of entire tourism segment. Conceptual scale-up of the tourism action towards an operative business Agree with ESA on funding of an operative environment for the tourism solution Build up a synergetic company network Define appropriate TEOPS Identify and commit various economic branches first step e.g. funded by ESA call 04.1AE.08 Marketing actions include the build-up of partnerships between the EO service industry and geo-information industry, as well as governmental organisations. Production process actions concern the interfaces between EO and non-EO production (e.g. multisupply channelling for the complementary supply of EO and non-EO data into touristic applications). The R&D action plan comprises the implementation of application systems, if possible out of existing application environments, where necessary as entirely new applications. The economic actions are the penetration of the discussed pricing and entire business models being pre-conditions for an economically feasible business approach. Fig. 5. 6 Phase 2 short-term actions - CONCLUSION - - It must be recognised that a marketable and economically feasible use of (EO based) geoinformation for tourism must be seen within an integrated approach. EO based and non-EO based services together feed EO and non-EO geo-data together into new information products. These products are such that the information which the user needs is a composite of several data types and services. The value chain approach is demand centred. The user needs information which is partly based on geo-data. Pricing models which account for the share of the information value – and which are not based on the cost of the production of the information are most suitable. Means to reduce the cost of each information provision were described. Taking these preconditions under account viable businesses for the EO industry within tourism and also other industry segments are possible and worth support. 7 REFERENCES The time frame for completing all these actions is 2008. In the short-term (i.e., 2005), the actions focus the setup of one TEOPS which is confirmed to be purchased or used commercially by a potential customer. This is in detail: Develop a Portfolio of EO tourism applications Arrange EO briefings/workshops Establish an EO contact point in the tourism industry Identify an appropriate association in the tourism industry appoint a key individual or a committee with responsibility for EO establish an EO-related working group Upgrade existing websites Identify leading tourism-related websites agree on websites upgrade using EO Set up a Memorandum of Understanding with EO VAC, ESA 1. Documentation of the ESA EOMD Project “EO responses to geo-information market drivers – Tourism”, available at the author.