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									Customer-Centric Systems for the
  Travel and Tourism Industry

            A report prepared by

                 Accenture

                  For the

       WTTC IT/eCommerce Task Force

                 May 2002




                     1
The Custom-Centric Challenge
The travel and tourism industry can no longer survive as a transaction-oriented
business. The Internet and on-line travel have permanently reshaped customer
interaction. The successful supplier or intermediary will recognize and accommodate
a broader and more complex definition of interaction, one that focuses on having
profitable conversations with customers to meet their travel needs. This paper
explores the barriers to reaching this redefined state of customer-centric systems and
outlines an industry-wide transformational program for achieving it.



Executive Summary
The global travel and tourism industry is approaching $4 trillion in annual revenue
($3.7 trillion in 2000) (Source: WTTC, Credit Suisse First Boston, Accenture Analysis, 2000 data).
The backbone of the travel industry’s growth has been its complex distribution
network of suppliers and intermediaries ranging in size from small mom-and-pop
operations to multi-billion dollar global companies. Much of this growth could not
have occurred without the GDS infrastructure. In the last 30 years, distribution
evolved from primarily airline seats to include the various travel segments we have
today.

The Internet and on-line travel have permanently changed the way the travel and
tourism industry thinks about customer interaction. Future industry growth will be
driven and shaped by on-line travel. By 2003, the global e-commerce market will
reach $86 billion. On-line travel purchases will account for the largest percentage of
the e-commerce market (28%) with over $24 billion in revenue (Source: Jupiter
Communications). Growth will be the most dramatic in the more complex travel
segments like cruise (from 2% in 2000 to 13% in 2005) versus the historical growth in
more commodity-like products such as air and car rental.

However, the industry faces a number of significant barriers to capturing this growth.
These barriers include:

       Transaction-centric systems
       Simple product representation
       Lack of advanced technology
       Non-standard communication channels
       An industry consisting of many independent small-to-medium sized
        enterprises (SMEs).

It is the responsibility of both internal and external stakeholders to transform the
travel and tourism industry to reach this future state. Internal stakeholders include
suppliers and intermediaries who make up the industry’s distribution network.
Independently and jointly, internal stakeholders are responsible for executing a broad
transformation program. The internal stakeholders must build a new infrastructure
that enhances the traveler’s experience, better services their needs, and profitably
grows the industry.


                                                2
This transformation program is comprised of seven major initiatives that suppliers and
intermediaries must jointly and independently execute:

      Intermediary Infrastructure Transformation
      Supplier Integration and Service Transformation
      On-line SystemsTransformation
      Off-line Systems Transformation
      Experience Delivery Transformation
      Revenue Management Transformation
      Distribution Management Transformation.

The external stakeholders include a large number of peripheral entities ranging from
associations and research organizations to consultancies and Information Technology
and Communication (ITC) companies. These external stakeholders must take on a
range of responsibilities from raising awareness of the key issues to providing the
technical products and services that will make up the transformed customer-centric
technology infrastructure. WTTC understands the important role these stakeholders
play and is taking proactive steps to ensure they have an opportunity to participate.




                                          3
Travel and Tourism Global Overview

The global travel and tourism industry is approaching $4 trillion in annual revenue
($3.7 trillion in 2000) (Source: WTTC, Credit Suisse First Boston, Accenture Analysis, 2000
data.).
The backbone of the travel industry’s growth has been its complex distribution
network of suppliers and intermediaries ranging in size from small mom-and-pop
operations to multi-billion dollar global companies. Much of this growth could not
have occurred without the GDS infrastructure. In the last 30 years, distribution
evolved from primarily airline seats to include the six major segments we have today:

             Major, national and regional airlines.
             Owned, managed and franchised lodging businesses.
             Car rental companies.
             Large and secondary cruise operators.
             Passenger rail operators.
             Attractions and resorts.




                                               4
 Evolution of Travel Distribution

                                                                Growth of
                  Early                 Core                    Traditional                  Emergence of Online
                  Stages                Development             Intermediaries               Distribution Channels

 Timeframe        1920’s - 1950’s       1960’s - 1970’s         1980’s - Early 1990’s        Mid 1990’s - Present


 Suppliers        Airlines              Airlines                • Car Rentals                • Airlines         •   Cruise
                                                                • Airlines                   • Lodging          •   Rail
                                                                • Lodging                    • Car Rental       •   Package
                                                                                                                •   Tours

 Industry Needs   • Reduce time and     • Improve speed in      • Increase productivity      • Provide consumers with direct
                    costs necessary       accessing               and capability for           access to suppliers’ inventory
                    to process ticket     passenger records       handling large             • Increase confidence in internet
                  • Increase              (PNR)                   amounts of                   security
                    productivity of     • Improve reservation     information
                                                                                             • Capture and leverage consumer
                    airline               processing time       • Travel agents seek
                                                                                               insight
                    reservation           from three hours to     immediate access to
                    agents                seconds                 airline flight schedules   • Provide complex travel products

                  • Immediately         • Reduce reservation
                                                                  and fares                  • Enable customer self-service
                    determine what        error rate            • Ability to serve new       • Meet needs of small and large
                    flights/seats are                             business travel              industry suppliers, intermediaries,
                                        • Reduce staffing and     marketplace
                    for sale              training cost                                        and consumers
                                                                • Meet the demand of
                  • Modify inventory                              global airline alliances
                  • Automating the                              • Globalization of CRSs
                    recording of                                • Online booking
                    passenger
                    record (PNR)

 System           • Electromagnetic     Sabre                   • Sabre                      • Online agencies
 Capabilities       Systems –           • Two IBM 7090            – easySabre                  – Travelocity.com
                    electronic signal     computers used for        (provides online
                    between agents                                                           • Supplier Websites
                                          data storage and          booking to
                    terminal and          processing                consumers in 1985)         – Delta.com
                    main control                                                             • GDS Web-based booking
                    room                                        • Worldspan
                                                                                               services
                  • Magnetronic                                 • Amadeus
                                                                                               – Planet Sabre
                    Reservisor –                                • Galileo
                    giant aluminum                              • Corporate travel
                    wheel that                                    agencies
                    recorded millions
                    of small electric
                    charges
                  • Data Organizing
                    Translator –
                    machine
                    readable card
                    system

 System           • Still experience    Adequate system         • GDSs are text only,        • Customer data is fragmented
 Deficiencies       time delay in       reliability due to        inflexible and require     • Lack standardized
                    information         thousands of agency       complex commands             communication between
                    processing          locations               • Legacy systems are           suppliers and intermediaries
                  • Unable to                                     outdated, expensive        • Unable to provide complex
                    accurately                                    to maintain, require         products
                    assign PNR                                    significant training       • Unable to tailor info to individual
                    information to a                              time and have limited        needs
                    seat                                          search capability




Figure 1 – Travel distribution infrastructure has evolved over the years to support the changing
needs of the industry




                                                           5
The Emergence of On-line Travel

Online Travel Distribution by Travel Category, 1999-2005E

($ millions)

$60,000                                                                                $55, 614

$50,000

$40,000

$30,000                    30.8% CAGR
                           2000-05E
$20,000

$10,000
   $6,897
       $0
                1999          2000      2001E       2002E       2003E       2004E       2005E


                     Air             Lodging          Car Rental           Cruise/Vacation

               Source: CSFB




Figure 2 – The emergence of on-line travel distribution, the most recent response to industry
needs, is projected to grow at an unparalleled rate



The Internet and on-line travel have permanently changed the way the travel and
tourism industry thinks about customer-interaction. Future industry growth will be
driven and shaped by on-line travel. By 2003, the global e-commerce market will
reach $86 billion. On-line travel purchases will account for the largest percentage of
the e-commerce market (28%) with over $24 billion in revenue (Source: Jupiter
Communications).




                                                6
In 2000, 7.3% of travel bookings were made on-line. In 2003, projected on-line travel
bookings are expected to reach 16.3%. In 2000, most of the on-line travel purchases
were for commodity type products such as air and car rental. By 2005, all sectors of
the travel industry will increase on-line bookings with the most dramatic growth in
the more complex product segments of cruise/package vacations and lodging.
(Source: PhocusWright, Forrester, company data, CIBC World Markets, CSFB)



On-line Booking Segment Growth

                                                                          2000                         2005E
Most of today’s on-line bookings are for more
commodity-like travel products, i.e., air, rental car …
                                                                                 90%   Offline   69%
• Air
                                                                                 10%   Online    31%



                                                                                 93%   Offline   71%
• Car Rental
                                                                                 7%    Online    29%


…although this is changing as more complex and information-
rich products like cruise, package vacation
and amenity-oriented resorts move on-line .

                                                                                 97%   Offline   87%
• Lodging
                                                                                 3%    Online    13%


                                                                                 98%   Offline   87%
• Cruise/Vacation
                                                                                 2%    Online    13%



Source: PhocusWright, Forrester, company data, CIBC World Markets, CSFB

 Figure 3 – The mix of on-line bookings will dramatically shift in the future to include more
complex products.




                                                               7
Barriers To A Customer-Centric Technology
Infrastructure

Today’s Travel Technology Problems

Current Barriers                                   Why It’s A Problem
Transaction-centric Systems                        Preventing the industry from fully exploiting the customer-driven
                                                   aspects of distribution brought on by the internet



Simple Product Representation                      Limiting the effective representation of fast-growing, complex and
                                                   information rich products like cruises, package vacations and
                                                   amenity-oriented resorts


Lack of Advanced Technology                        Limiting the ability to simplify and make seamless critical
                                                   customer-interactions



Non-standard Communication Channels                Adding overhead and complexity to sharing information
                                                   throughout The travel industry



Industry Consisting of Many Independent SMEs       Creating difficulties for suppliers and intermediaries to work in
                                                   “co-opetition” and integrate to establish “one view” from a
                                                   customer’s perspective

Figure 4 – Achieving growth requires that the industry reshape its technology infrastructure by
overcoming five barriers


Moving from Transaction-Centric to Customer-Centric Systems

Of the five barriers, transaction-centric systems are the most critical and the highest
hurdle for the travel and tourism industry to overcome. With the Internet, distribution
is increasingly becoming a customer-driven process that searches for the lowest-cost
alternative from a range of suppliers and options.

Travel distribution will have to evolve from efficiently processing transactions to
carrying out meaningful conversations with customers that are rich in content, address
their service issues and concerns, and finally, efficiently process the customer’s
transaction. The goal will be to carry out ongoing conversations with targeted
customers that produce profitable bookings. The transaction-oriented systems GDSs
and suppliers use today are a barrier to carrying out these profitable on-line and off-
line conversations.




                                               8
Customer-Centric Booking Components



• Information about the                                                                                      • The exchange of required
  product to define and                                                                                        information to complete a
  differentiate it from it’s                                                                                   reservation in a convenient,
  competitors and demonstrate                                                                                  fast and secure fashion
  that it meets a buyer’s
  purchase criteria                                Content                  Transaction                      • Customers want multiple low
                                                                                                               cost alternatives
• Customers want rich,
  accurate, unbiased and
  personalized information


                                                                   Service



                            • The on/off-line interaction between the customer and the
                              supplier/intermediary throughout the booking process and beyond
                            • Customers want a single, intimate, accessible and coordinated
                              contact point independent of booking source


Source: Gartner Group's Online Travel Forecast: Internet users are seeking more travel information and options in booking online
January 6, 2000, Jupiter Consumer Survey, April 2000




Figure 5 – The transformation from transaction-oriented systems is best understood in the
context of the three major customer-centric booking components



Challenges for the GDSs

Several shortcomings with the current GDS architecture make on-line integration
difficult. The GDS systems were ideally created in a programming language called
TPF, which is designed to quickly process large transaction volumes. But the non-
relational nature of the GDS systems make it difficult to respond to the complex
requests of a leisure traveler. By using customized booking engines, GDSs have made
significant progress in terms of making their legacy infrastructure more accessible to
the end consumer.

Growth in on-line distribution is putting increased pressure on the GDSs. Transaction
volumes are up as on-line users spend a significant amount of time ―looking‖ versus
―booking‖. In addition, the fare structure system has steadily become more complex
to accommodate the increased number of prices found on-line. Together, these two
forces are driving up costs for the GDSs, which in turn pass these costs on to suppliers
in the form of higher transaction fees.




                                                                     9
    GDS Rate Increases 1998-2001

                      Storage and processing                                      Exponential increase in the
                      increases to support more than                              number of transactions per
                      1 million airline fare changes                              booking as there are more
                      daily in the current legacy                                 “lookers” than “bookers”
                      pricing environment                                         putting transaction pressure on
                                                                                  the legacy pricing environment

                          GDS booking fees charged to U.S. airlines have risen close to
                          7% per year over the last ten years


                                                                1998            1999             2000             2001E

                        Amadeus                                 3.3%            5.2%             4.5%             6.9%

                        Galileo                                 4.0-7.4%        3.4%             5.4%             6.0%

                        Sabre                                   7.0%            2.9%             3.5%             7.0-10.0%

                        Worldspan                               2.2-7.2%        3.5%             5.9%             4.0%

                        Consumer Price Index                    1.5%            2.2%             3.4%             2.8%


    Source: GAA study for Orbitz, The History and Outlook for Travel Distribution in the PC-Based Internet Environment, 2/2001




Figure 6 – In addition to technical limitations, the GDSs are faced with increases in fare structure
complexity and the average number of transaction per booking–both of which are driving up
costs.



Challenges for Suppliers

The natural response of suppliers has been to lower costs by limiting the number of
transaction through the GDSs. However, the legacy systems of the suppliers
themselves present a number of limitations to achieving customer-centric systems and
capturing more bookings. Industry leaders in the lodging industry generally agree that
their systems’ infrastructure is inadequate. Many suppliers are struggling to integrate
relevant and meaningful content with booking information to differentiate their
product or present it in a more customer-centric way.

In addition, there are broader problems with the systems’ infrastructure. Integration
between their two most critical systems, property management and central
reservations, make inventory management a challenge. Customer information can not
be accessed when and where it is needed to deliver on the tailored or unique customer
experience purchased.

Content, integration, and customer profile-related challenges also exist in the cruise
industry. For example, many cruise companies use a third-party provider to manager
their prospect and past-passenger information, making it difficult to access
operationally. This industry also faces an added challenge as they look to improve


                                                                   10
their reservations systems. Today, many functions related to reservations that would
ideally be loosely coupled and interfaced to create flexibility in their application
architecture are part of a single, large block of reservations system code. As the cruise
industry looks to make their reservations systems more customer-centric, they are
experiencing the incremental cost of uncoupling and repairing this ―collateral
damage‖.


Growth of Complex Products
Simple product representation is limiting the effective sale of fast growing, complex
and information rich products like cruises and package vacations. Amenity-oriented
resorts and lodging properties with a significant amount of convention business have
similar complexity in their transactions, which the current infrastructure cannot
effectively represent.

While the market for cruises and package vacations and tours has been strong in Europe
and will continue to grow, there is a major opportunity for these types of products to
grow in North America. Fueling this growth is increased supply that must be filled,
growing consumer awareness and shifts in the commission structure that will drive
travel agents to more aggressively push these products.

Cruise, package vacation, and tour operators have a much greater incentive to increase
their on-line bookings. Shifting even a small percentage of bookings on-line will save
them the high commissions usually paid to the travel agents. The cruise and tour
industries can reap significant economic benefits by gently switching consumers to
direct channels without alienating travel agents. Today, 95% of all cruise passengers
and 88% of packaged vacationers booked their trips through a travel agent. ( Source:
ASTA, CSFB estimates)




                                           11
 The Economics of Channel Shift
                                                                  Current Mix
  Cost breakdown for $750 package vacation
                                                                  Cruise Revenues                     $5,087
                                                                    % agent booked                      95%
     Flights, ferries, other transportation                 45%     Commission                          15%
     Accommodation including transfers                      33%   Expense                              $725
     Marketing including brochures                          3%
                                                                  Projected Mix
     Distribution including agent’s                         15%
     commission                                                   Cruise Revenues                     $5,087
                                                                    % agent booked                      70%
     Overheads, e.g., admin., IT                            4%
                                                                    Commission                          15%
     infrastructure
                                                                                                       $534
   Total costs as a percentage of                       100%        % direct booked                     20%
   retail value
                                                                    Commission                           0%
   By moving booking systems out of agents premises in favor                                             $0
   of Web based on-line systems of their own, tour operators
   can make a 3-4X improvement in gross margins currently in        % Other Booked                      10%
   the 3% range.
                                                                    Commission                          10%
   In the Cruise industry, a modest shift in channel mix from
                                                                                                        $51
   the travel agent to direct online or inbound call center can
   make a 19% improvement in commission expense.                  Expense                              $585
                                                                  Savings                              $140
                                                                                                      (19%)
   Source: No Turning Back: Tour Operators and E-Commerce         Source:CSFB, Changing the Channel




Figure 7 – While cruise and tour industries will not cut out travel agents, there is significant
profit increase from even a small shift to on-line


While the cruise and tour industries will not cut out travel agents, there is a significant
profit increase from even a small shift to on-line bookings. Tour operators have huge
margin levers that they could affect by moving more and more bookings on-line.
Likewise, just a small shift to more direct bookings has a significant savings impact for
cruise operators.

The challenge for these suppliers is to improve their reservation systems and on-line
booking capabilities so that customers can get the same level of advice and information
about their potential purchase on-line and in the call center as they would by going to
their travel agent. A critical element to improving these systems is content management.
In the reservations system, this means providing the company’s call center agents with
integrated booking and content on the workstation.

On-line capabilities require the same if not more content integration to support the
planning and booking process. These suppliers also have the added challenge of
controlling their content in the emerging and actively growing on-line travel network
that includes GDS powered travel agent booking tools, on-line travel agents, cruise
specialist websites, and cruise line websites.




                                                             12
 Complex Product Content
      Air and car rental are                   Lodging and Resorts use             Cruises and tours are very complex –
      commodity-like products –                content to help differentiate       customers need significant amounts of
      customers need minimal                   products                            qualitative information that meets their
      information, e.g.,                                                           needs:
                                               • Information about the
      • Time of departure and                    surrounding area, e.g.,           • Itinerary and Ports
        arrival                                  restaurants, museums,
                                                                                   • Cabin configuration and location (bunk-
                                                 theaters
      • Window or aisle seat                                                         beds, deck, etc.)
                                               • Details about the property,
      • Full-size or convertible                                                   • Entertainment/Themes
                                                 e.g., pool, gym, business
                                                 center                            • Dining Options
                                               • Convention properties             • Excursions/Activities
                                                 must manage a significant
                                                                                   • Mode of Land transportation for tour
                                                 amount of information
                                                                                     (bus/rail)
                                                 about their facility and
                                                 group event offerings
                                                                                                              Tours
                                                                                              Cruise
                                                                               Resorts
                                                          Lodging
                                   Air and rail
          Car rental
         Low                                              Product Complexity                                           High


 Complex Leisure Products Must Be Sold

    Routine: Customer knows what they want                                 Complex: Customer has idea of what they want

                                    Sells “how to”                                                      Agent sells knowledge


                                                                                            Customer
                     When?
                                                                                            Preferences

                                                                                            Agent Access
                     How Much?
                                                                                            to Product Info
                                                           % commission
                                                                                            Product
                     Carrier?                                                               Knowledge


                     Supplier?                                                              Promotions

                                                    The knowledge
                                                                                            Supplier
                                                    and/or experience                       Differentiation
                                                    of a Travel Agent
                                                    required to
                                                    complete a sale is
                                                    currently difficult to
 Source: Credit Suisse First Boston research
                                                    replicate online.


Figure 8 – Because of the complex nature of cruise and tour products travel agents are heavily
leveraged to inform buyers that may only have an idea of what they want and, therefore, must be
informed to be sold these more complex leisure product.



Advanced Technology


                                                                 13
The travel and tourism industry has only experimented with advanced technology.
Common examples include wireless notification of flight delays and checking availability
through a PDA. As the industry moves to improve its core systems, the adoption and
integration of several key applications of advanced technology could further improve
customer interactions involving service, content delivery and transactions, but at this time,
they are not being widely used. The key applications of advanced technology that offer
benefits for the travel and tourism industry include:

       Silent Commerce is intelligent, interactive objects that use multiple
        technologies, concepts, and platforms to ―silently‖ communicate without
        human interaction.
       Ucommerce is a continuous, seamless stream of communications, content,
        and services—exchanged among consumers, businesses, suppliers and
        systems.
       Mobile Payment is an electronic payment process that enables a consumer to
        execute a payment to a merchant or a person, regardless of the consumer’s
        geographical location.
       Messaging is an efficient and cost effective means of constant connectivity
        between consumers, businesses and suppliers.
 Advanced Technology Benefits

 Technology           Transaction                     Content                       Service
 Silent Commerce      • Real-time inventory                                         • Insight into preferences and
                        tracking and status of                                        behaviors
                        asset to support bookings                                   • Learn where the consumer is
                                                                                      in the experience
                                                                                    • Enhance customer service
                                                                                      and convenience

 uCommerce            • Bookings anywhere at          • Obtain travel information   • Real-time customer
                        anytime                         anywhere at anytime           notification/alert
                                                      • Instantaneous one-to-one    • Enhance customer service
                                                        marketing with consumer       and convenience
                                                                                    • Asset can notify supplier how
                                                                                      it is functioning

 Mobile Payment       • Make payment anytime                                        • Obtain accurate insight to
                        anywhere                                                      customer information
                      • Greater variety of payment                                  • Greater access to account
                        methods                                                       information
                      • Faster lead-through times                                   • Improve payment
                                                                                      convenience

 Messaging            • Communicate at anytime        • Provide content             • Respond to individual
                        from anywhere                   specific data to              consumer requests
                      • Quick and convenient            consumers requests          • Send proactive/interactive
                        communication that                                            consumer alerts
                        produces immediate
                        results



Figure 9 – The travel industry can simplify and make seamless critical customer interactions
through the adoption of advanced technology.




                                                     14
Standardized Communication Channels

Travel industry systems were not initially designed to communicate with each other.
The current approach to standardized communications works for a limited number of
suppliers but quickly becomes a problem as companies connect to a growing number
of business partners.

Adoption of a single, broad communication standard such as the one being developed
by the Open Travel Alliance could unite the travel industry, simplify on-line
transactions, and reduce costs. Since May of 1999, the OTA’s 150 members have
been working on eXtensible Markup Language (XML) based standards that make it
possible to exchange business data seamlessly across different systems, companies,
and industries via the Internet. Working with these XML standards, business partners
would only need one interface to connect with each other. This would create new
opportunities for suppliers, intermediaries, and consumers. Industry adoption of SML
standards would:

     •     Create a wider-spread, lower-cost communications platform.
     •     Facilitate the development of more travel distribution channels and
           choices.
     •     Encourage the creation of new, innovative products at a lower cost.
     •     Display product information in an improved manner.
     •     Enhance the reservations process.
     •     Communicate the critical operational data that is necessary to create a
           seamless travel experience for the consumer.




                                          15
 OTA Approach

 Each industry defines its own                Definitions are interpreted   OTA XML specifications that
 host terms using its own well                and meshed into a common      unite the travel industry,
 established terms                            language                      simplify online transactions,
                                                                            and reduce costs

       Air



       Hotel


                                                                                 Single, consistent
       Car Rental
                                                      Interoperability           standards for the
                                                      Committee                  travel industry

       Other Travel
       Suppliers

        Includes bus, cruise and rail


       Travel
       Integration

        Includes travel agents, ISPs, and other entities
        that do not directly provide travel services




Figure 10 – The OTA has developed an approach to developing new travel industry
communication specifications.




                                                           16
A New Era of Co-opetition Is Needed

The existence of many independent SMEs (Small to Medium Sized Enterprises)
makes it difficult for suppliers and intermediaries to work on behalf of the consumer
in ―co-opetition‖.

Travel and tourism must evolve to a point where suppliers and intermediaries work
together cohesively to create ―one view‖ for the customer of their travel plans,
regardless of how, where, or by whom the travel component is booked. The existence
of a large number of SMEs creates a number of barriers to achieving ―one view‖ for
the consumer.

      Old Way -- a travel agent booked all travel components via GDS and a PNR
       (Passenger Name Record) was generated by the GDS. The customer views the
       travel agent as their single point of contact for service.

      Today’s Way – with an increased number of on-line and off-line channels a
       customer could book air through a supplier website, car through supplier 800
       number, and lodging through a corporate travel desk creating three separate
       records. The customer no longer has a single point of contact for service.

    Better Way -- customer again books air, car, and lodging using three different
       channels but one ―super PNR‖ is created for him. The customer has returned
       to having a single view of customer service.

A ―Super PNR‖ is the critical element to achieving integration and ―one view‖.
While several companies have made significant progress toward creating a ―super
PNR‖, a true ―super PNR‖ will have the ability to create one single record from
totally independent channels, suppliers, GDSs and intermediaries. It will
automatically integrate trip components pulled from multiple sources into a single
PNR.

There are a number of challenges in the way of creating an industry-wide ―super
PNR‖. The economics and attractiveness across the industry varies greatly due to the
size differences of suppliers and intermediaries. The information-based nature of
travel industry products makes it difficult to willingly share the necessary data to
support a ―super PNR‖. There is also the hurdle of overcoming any potential
Government concerns and regulatory action.

Introducing an effective ―super PNR‖ appears to be achievable through several types
of travel industry competitors. Even given all of these potential barriers, there are still
three potential providers of a ―super PNR‖.

      GDSs are well positioned by their current level of connectivity to suppliers,
       intermediaries and existing products and can consolidate booking information
       across them.
      New technology suppliers with capabilities that include searching GDS and
       supplier based websites and internal systems to collect booking information.



                                            17
       Large vertically integrated travel companies with ownership of multiple on-
        line and off-line channels used by their customers.



The Path Forward
Future State of Customer Interaction

Interaction has historically been …                            In the future it will be …
Focused on transaction efficiency                              A series of conversations leading to a
                                                               more profitable booking

Included primarily transaction data                            Transaction data plus product content and
                                                               service information

Involved a single component or self-                           Complex vacation itineraries meeting
defined/predefined vacation                                    personalized entertainment needs

Designed around a general offering to the                      A tailored offering to a target market
masses or a few large segments                                 segment

Supported by uncoordinated tactical                            An enterprise-level strategic decision-
decision-making                                                making function

Enabled by closed, one-off legacy systems                      Enabled by open, enterprise-level
built on outdated, cost-inefficient technology                 solutions that are built with widely
                                                               accepted products and can be cost-
                                                               effectively integrated and maintained

Figure 11 – In the future state, customer interaction is redefined to focus on more than a booking
transaction.


The travel and tourism industry can no longer survive as a transaction-oriented
business. The Internet and on-line travel have permanently reshaped customer
interaction. The successful supplier or intermediary will recognize and accommodate
a broader and more complex definition of interaction, one that focuses on having
profitable conversations with customers to meet their traveling needs.

It is the responsibility of both internal and external stakeholders to transform the
Travel and Tourism Industry to reach this future state. Internal stakeholders include
suppliers and intermediaries who make up the industry’s distribution network.
Independently and jointly, internal stakeholders have responsibility for executing a
broad transformation program to build a new infrastructure that enhances the
traveler’s experience, better services their needs, and profitably grows the industry.

External stakeholders include a large number of peripheral entities ranging from
associations and research organizations to consultancies and Information Technology
Communication (ITC) companies. These external stakeholders take on the responsibility
for:

  • Facilitating standards

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 • Representing constituencies
 • Fostering fair competition
 • Distributing knowledge and insight
 • Creating the technology ―building blocks‖
 • Incorporating cross-industry expertise
 • Developing thought leadership.

Please refer to Dr. Dimitrios Buhalis’s ―Critical Stakeholders for the Future of eTourism‖
report for additional information on external stakeholders for the travel and tourism
industry.

The internal stakeholders must build a new infrastructure that enhances the traveler’s
experience, better services their needs, and profitably grows the industry.




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The Customer-Centric Transformation Framework

 Transformation Layers

                                    Customer-Centric
                                    Decision Support
 More customer-centric
 decision making capabilities
 must be put in place around
 distribution and revenue                                                Distribution
 management for suppliers                                                Management
 to realize the full potential of                                        Transformation
 their improved systems
                                                                         Revenue
                                                                         Management
                                                                         Transformation
 An overhaul of on-line and
 off-line systems by suppliers      Customer-Centric
 including seamless inventory,
                                    Supplier System           On-Line             Off-Line
 operational customer data,
 content management, and                                      Systems             Systems
 campaign management will                                     Transformation      Transformation
 enable more profitable
 customer-centric interactions
                                                        Experience Delivery Transformation
 Fundamental changes to
 the distribution                   Industrywide
                                                        Supplier Integration and Service Transformation
 infrastructure by GDSs             Distribution
 improves their value               Foundation
 proposition to suppliers and
 enables customer-centric                               Intermediary Infrastructure Transformation
 improvements at the
 supplier level to be realized
 across all channels


Figure 12 – Suppliers and intermediaries must independently and jointly execute a number of
broad transformational programs.



Intermediary Infrastructure Transformation

GDSs must revamp their technical architecture to improve the core transaction value
proposition and lay the foundation for a broader set of distribution services. Central to
the transformation is the replacement of the TPF-based architecture and the use of
more effective programming languages for directly interacting with customers.
Beyond lowering the core transaction portion of distribution, this new infrastructure
will enable customer-centric system improvements at the supplier level such as richer
content to pass among other suppliers and intermediaries connected through the
GDSs.




                                                       20
Supplier Integration and Service Transformation

GDSs must lead the way to XML communication standards and develop an
―integration manager‖ that serves as the foundation for a cross-channel customer
service offering. By doing this, GDSs will serve as the ―one face to the customer‖ for
customer service, regardless of the booking source. GDSs would also benefit from
new sources of revenue from operating this integration manager on behalf of the
industry. Suppliers and other intermediaries would benefit from lower integration
costs. And customers would benefit from improved customer service.

Experience Delivery Transformation

Suppliers must better capture and exchange customer insight between sales and
operational touch-points to deliver an enhanced experience. Suppliers should deliver
planning and booking information to operational systems to enhance service execution
and create additional revenue opportunities. Suppliers need to capture customer data
during service execution to improve offerings and generate increased demand. By doing
this, suppliers will benefit from increased customer insight capture and improved
service delivery.

On-line Systems Transformation

Suppliers must manage and distribute content like inventory and build an eCRM
foundation to create more customer-centric and profitable booking conversations on-
line. Transformation centers around two key areas – improving and controlling the
content across channels and synchronizing and controlling marketing interactions
with customers across channels. By doing this, suppliers will benefit from better,
more consistent product representation and lower customer acquisition costs.

Off-line Systems Transformation

Suppliers must establish seamless inventory, improve reservations functionality and
increase self-service to make off-line channels more customer-centric and profitable.
The foundation of all supplier related customer-centric systems improvements,
particularly for off-line channels like the call center, is the replacement and
integration of the CRS and location-based systems (i.e., PMS, counter system). With
an improved view of inventory, suppliers can layer in capabilities to streamline the
booking process and leverage customer insight. A final area of improvement is the
increased use of self-service technologies to handle routine customer interactions. By
doing this, suppliers will benefit from lower costs to sell and serve while increasing
revenue generating opportunities.




                                          21
Revenue Management Transformation

Suppliers must ―close the loop‖ between revenue management and marketing
operations to support the increased profitability goals of the customer-centric
infrastructure and the complexities of marketing to increasingly tailored customer
segments. Central to this transformation is the ability to forecast soft demand periods,
understand and identify target customers to generate demand, and make the necessary
changes to price and inventory availability in reservation systems at a customer level to
create one-to-one revenue management. The net result for suppliers is increased
revenues and higher yields.

Distribution Management Transformation

Suppliers must reposition distribution as an enterprise-level strategic function.
Transformation of this magnitude requires organizational changes, new governance
mechanisms for decision-making, and tools to capture and analyze the profitability of
customer interactions across channels. Beyond increased profitability, this approach
to distribution will result in optimal investment decisions and increased compliance in
partnership agreements.



The Role of WTTC
WTTC is taking proactive steps to ensure that the external stakeholders have an
opportunity to participate in the transformation of the travel industry. These external
stakeholders clearly have a responsibility to support the travel and tourism industry’s
efforts to achieve even greater growth.

WTTC plans to engage key associations and leading industry bodies to distribute their
agendas and work to WTTC members. WTTC will work with these organizations to
reach the wider tourism and travel world. WTTC also intends to work with
governmental and public sector organizations to raise awareness and encourage
funding for programs that involve Information Technology and Communication
companies and tourism.

WTTC will also take the initiative by working with other external stakeholder groups,
drawing on their expertise, and increasing their participation and commitment to
transforming the travel and tourism industry.




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APPENDIX




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