Role of It in Travel and Tourism Industry

IT in travel ROLE OF IT IN TRAVEL AND TOURISM INDUSTRY GROUP – BK Rajnikant Patel- 111 Dr. Sushant Patel- 112 Rachita Patnaik- 113 Yashasvi Patravali- 114 Navjot Singh- 115 Preview IT has touched every aspect of commerce and turned those industries into gold mines. Travel & tourism industry is also one of those which IT has not spared. And how it has brought about transformation and revolution will be seen in the due course of the presentation. Let me first introduce you to the travel and tourism industry at large, and the focus is particularly on the Indian travel and tourism industry as a subset of the global tourism market. India has been ranked 12th in Asia and 68th in the world as per the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum (WEF). Tourism in  India  is the largest service industry, with a contribution of 6. 23% to the  national GDP and 8. 78% of the total employment in India. The tourism industry in India generated foreign exchange of about US $ 136 billion in 2008 and that is expected to increase to US $ 275. 5 billion by 2018 at a 9. 4% annual growth rate. Maharashtra,  Tamil Nadu, Delhi, Uttar Pradesh  and Rajasthan  are the top 5 states to receive inbound tourists. A new growth sector in Indian tourism is Medical  Tourism. Medical tourism is essentially foreign tourist cum patients coming to India and seeking medical treatment. It is currently growing at around 30% per annum. It generated $ 9 Billion in 2010. The reason behind such a rapid growth in medical tourism is the fact that India offers hi tech medical treatments at a very cheap price. Giving you an example, if a bypass surgery here costs around Rs. 2 lac, exactly the same procedure with the same instruments and materials will cost you 30000 dollars in the U. S. , i. e. Rs. 15 lac. The tourism industry in India has also helped growth in other sectors as diverse as horticulture, handicrafts, agriculture and even construction. Coming to IT in tourism, when information technology is used in travel and tourism industry, it leads to the emergence of a whole new parameter called eTourism. eTourism reflects the digitisation of all processes and value chains in the tourism, travel, hospitality & catering industries. eTourism is the leading B2C application, i. e. business to customer application and it comprises of almost 40% of all B2C eCommerce. Gone are the days when you would wait for the customers to come to you. In this era of fierce competition, you have to reach to the customers before someone else does. 60% of all tourists use internet to get information on destinations. So here we realize how essential information and communication technology is in today’s travel and tourism industry. eAirlines Till a few years ago, the basic sources of information in the tourism sector were pamphlets, brochures, directories, guide books, etc. produced and published by different countries. The last few decades witnessed the application of computer and communication technologies in the field of tourism. Two distinct streams of information sources viz, (i) online and (ii) offline came into existence. Core results regarding ICT-related developments in the aviation industry: E-Ticketing: The elimination of traditional paper-based tickets is one of the core elements of the low-cost business model. Yet, e-ticketing is not limited to the so called â€Å"no-frills† airlines. The adoption of e-ticketing is increasingly pursued also by network carriers. The International Air Transport Association (IATA) intends to achieve a 100% penetration of e-ticketing among its members by the end of 2007. Customer self-service: Another measure for cost reduction and the acceleration of passenger flows at airports is to introduce customer self-service check-in solutions. This may be done on the spot by self-service kiosks or in the form of web based check-ins, which may even allow users to check-in from home or their office. Bar-coded boarding passes offer a natural link with e-ticketing and self-service check-in. Most recently, it has become possible not only to print boarding passes at the passenger’s home, but also to place bar codes on the passenger’s cell phone, thus making paper documents obsolete. RFID for luggage handling might replace classical baggage tags in the near future. It might simplify airline luggage management considerably, improve customer service in terms of reductions in mishandled luggage, and provide new security mechanisms. Computer Reservations System (CRS) A computer reservations system (or central reservation system) (CRS) is a computerized system used to store and retrieve information and conduct transactions related to air travel. Originally designed and operated by airlines, CRSes were later extended for the use of travel agencies. Major CRS operations that book and sell tickets for multiple airlines are known as global distribution systems (GDS). Airlines have divested most of their direct holdings to dedicated GDS companies, who make their systems accessible to consumers through Internet gateways. Modern GDSes typically allow users to book hotel rooms and rental cars as well as airline tickets. They also provide access to railway reservations in some markets although these are not always integrated with the main system. Global Distribution Systems (GDS) Major CRS operations that book and sell tickets for multiple airlines are known as global distribution systems (GDS). Modern GDSes typically allow users to book hotel rooms and rental cars as well as airline tickets. GDS distribute more than one CRS to users who are travel agents. GDS require massive investment because they are large computer system that link several airlines and travel principals into complex network of PCs, telecommunications and large mainframe system. Some leading GDS are Amadeus, Sabre, Galileo and WorldSpan are travel agents. eHospitality Hotels use ICTs in order to improve their operations, manage their inventory and maximise their profitability. Their systems facilitate both in-house management and distribution through electronic media. ‘Property management systems (PMSs)’ coordinate front office, sales, planning and operational functions by administrating reservations and managing the hotel inventory. Moreover, PMSs integrate the â€Å"back† and â€Å"front† of the house management and improve general administration functions such as accounting and finance; marketing research and planning; forecasting and yield management; payroll and personnel; and purchasing. Understandably, hotel chains gain more benefits from PMSs, as they can introduce a unified system for planning, budgeting and controlling and coordinating their properties centrally. Hotels also utilise ICTs and the Internet extensively for their distribution and marketing functions. Global presence is essential in order to enable both individual customers and the travel trade to access accurate information on availability and to provide easy, efficient, inexpensive and reliable ways of making and confirming reservations. Although Central Reservation Offices (CROs) introduced central reservations in the 1970s, it was not until the expansion of airline CRSs and the recent ICT developments that forced hotels to develop hotel CRSs in order to expand their distribution, improve efficiency, facilitate control, empower yield management, reduce labour costs and enable rapid response time to both customers and management requests. Following the development of hotel CRSs by most chains, the issue of interconnectivity with other CRSs and the Internet emerged. As a result, ‘switch companies,’ such as THISCO and WIZCOM, emerged to provide an interface between the various systems and enable a certain degree of transparency. This reduces both set-up and reservation costs, whilst facilitates reservations through several distribution channels. eTour Operators Leisure travellers often purchase â€Å"packages,† consisting of charter flights and accommodation, arranged by tour operators. Tour operators tend to pre-book these products and distribute them through brochures displayed in travel agencies. Hence, until recently in northern European countries, where tour operators dominate the leisure market, airline and hotel CRSs were rarely utilised for leisure travel. In the early 1980s, tour operators realised the benefits of ICTs in organising, promoting, distributing and coordinating their packages. Thomson’s Open-line Programme (TOP) was the first real-time computer-based central reservation office in 1976. It introduced direct communication with travel agencies in 1982, and announced that reservations for Thomson Holidays would only be accepted through TOP in 1986. This move was the critical point for altering the communication rocesses between tour operators and travel agencies. Gradually, all major tour operators developed or acquired databases and established electronic links with travel agencies, aiming to reduce their information handling costs and increase the speed of information transfer and retrieval. This improved their productivity and capacity management whil st enhancing their services to agencies and consumers. Tour operators also utilised their CRSs for market intelligence, in order to adjust their supply to demand fluctuations, as well as to monitor the booking progress and productivity of travel agencies. Tour operators have been reluctant to focus on ICTs through their strategic planning. Few realize the major transformation of the marketplace, while the majority regards ICTs exclusively as a facilitator of their current operations, and as a tool to reduce their costs. However, several tour operators in Germany, Scandinavia and the UK have moved towards electronic brochures and developed their online strategies. Successful operators report that up to 25% of their packages are booked directly by consumers online. This enables them to concentrate on niche markets. eTravel Agencies ICTs are irreplaceable tools for travel agencies as they provide information and reservation facilities and support the intermediation between consumers and principals. Travel agencies operate various reservation systems, which mainly enable them to check availability and make reservations for tourism products. Until recently GDSs have been critical for business travel agencies to access information and make reservations on scheduled airlines, hotel chains, car rentals and a variety of ancillary services. However, until recently travel agencies have been reluctant to take full advantage of the ICTs, mainly due to: a limited strategic scope; †¢ deficient ICTs expertise and understanding; †¢ low profit margins which prevents investments; and †¢ focus on human interaction with consumers. There are effectively 5 major groups- 1. Amadus IT group- vacation. com, opodo, travel tainmemt 2. Expedia group- expedia. com, hotels. com, anyway. com 3. Orbitz group- orbitz, cheaptick ets, hotel club 4. Priceline group- priceline. com, booking. com, active hotels 5. Sabre group- travelocity. com, world choice travel CASE STUDY 1: ICT-DEPLOYMENT AT THE LOW-COST CARRIER RYANAIR, IRELAND ABSTRACT The innovative use of information technology for online booking, e-ticketing and internal communications coupled with relentless improvements in cost containment, operating efficiencies, route system expansion and scheduling enables Ryanair to achieve increased passenger traffic and report the best customer service performance in its peer group class. CASE STUDY FACT SHEET Full name of the company: Ryanair Location (HQ/main branches): Dublin, Ireland, with operations in most of Europe Sector (main business activity): Low cost air travel Year of foundation: 1985 Number of employees: about 2,700 Turnover in last financial year: â‚ ¬1. 3 billion Primary customers: Business and Leisure Travelers Most significant geographic market: Europe Focus of case study: e-Ticketing Key words:e-Ticketing, online booking, web check-in, low cost airline OBJECTIVES Ryanair has achieved annual increases in passenger traffic each year since 1995. Projections are for 35 million passengers in 2006, increasing to an estimated 42 million in 2007. Ryanair’s objective is to double passenger volumes and revenue by 2012. It currently (July 2006) operates a fleet of 107 Boeing 737-800’s and will buy 142 more of these aircraft over the next 6 years. This study outlines the currently evolving e-business capabilities in place to address these growth areas and achieve the sought for doubling targets. ONLINE BOOKING Online booking via the internet commenced in earnest after the launch of the www. Ryanair. com website in 2000. Over 98% of the 27. 5 million passenger seats in 2005 were sold via the internet. This percentage figure is consistent year on year, and is expected to continue at this high level. The online booking system gives Ryanair the capability to introduce innovative practices to ensure that the individual customer has greater control over their fare costs. E-TICKETING CHECK’N’GO Officially launched in 2006, Ryanair’s e-Ticketing Check’N’Go service enables passengers to check-in online within three days prior to the proposed flight and up to 4 hours before take-off. Using a pre-printed e-boarding card from their home or office computers, passengers can avoid the airport check-in desk and go directly to the security gates with a maximum of one piece of hand baggage. Encouraging passengers to travel with less checked-in luggage also means faster queues for those who check-in at the airport desk. INTERNAL COMMUNICATIONS As Ryanair expanded across Europe, in addition to their well known customer facing web pages, Ryanair has implemented a web-based internal communications system used by flight crews, maintenance staff and ground staff. For instance, a record is kept of the various components in each aircraft and a tickler schedule for their maintenance and/or replacement. The intranet system has also saved on tangible costs, including paper and printing costs. DYNAMIC PACKAGING AND OTHER ANCILLARY REVENUE SOURCES Ryanair drives more sales and increased revenue via the dynamic packaging of flights with discounted hotel rooms and bottom of the range car rentals. In addition after selecting their flights, all travelers are strongly encouraged via the online payment process to take out travel insurance. Another option provided via Ryanair’s homepage at present is to click through to another supplier’s web site such as activitybreaks. com to buy their products. CONCLUSIONS AND LESSONS LEARNED The adoption of e-ticketing and internal e-business systems has enabled this low cost carrier to keep operational running costs well in-check. For the financial year ended March 31, 2005 their share accounted for 16% of total revenues, compared to 15% for the previous year. Ryanair is consistently the European leader in LCC. In addition, due to the minimal in-house administration costs, Ryanair’s low-cost-flights business marketing model includes frequent â€Å"give-away† flights as well: 23% of its tickets were given away in 2005, and half of all flights are slated to be â€Å"free† within the next 4 years. CASE STUDY 2: E-TICKETING AT SN BRUSSELS AIRLINES, BELGIUM This case study highlights the benefits of e-ticketing. After IATA was commitment to discontinue the distribution and processing of paper tickets by December 2007. SN Brussels decided to focus on e-ticketing in order to cut operating costs and generate extra convenience to passengers. Apart from lower cost and increased operation efficiency, e- ticketing allowed the airline to strengthen its market position by a more intensive use of alliances and reduced dependency on intermediaries. BACKGROUND †¢SN Brussels Airlines is a full-service Belgian airline company founded in 2002 by a group of Belgian investors who acquired some assets of the ankrupt Sabena airline. †¢ SN Brussels Airlines is the only full service airline that operates from Brussels and is the market leader at Brussels Airport. †¢It operates around 285 flights per day to various destinations in USA, Africa & Europe and 3. 5 million passengers carried per year. †¢It has around 2000 employees in Belgium & abroad. OBJECTIVES †¢SN Brussels Airlines has dev eloped an interesting business concept of offering fully serviced flights, as offered traditionally by the established airlines, with the lowest possible fare to compete with the low cost carriers. The airline aims to attract both the demanding business travelers with tight schedules but expecting value for money and economy travelers who are sensitive to prices †¢This lead to high airline occupancy and the airline registered profit for 3 years despite unfavorable conditions. ICT INVESTMENTS †¢Expands its ICT use due to customer expectations which gives travelers more convenience and control from the booking stage to the in-flight service. It invested in passenger technologies like e-ticketing, online check in services to reduce the cost. ICT developments like e-ticketing and own website/booking engine enable the airline to strengthen its brand awareness, get direct access to its customers and, consequently, reduce the dependency on Central Reservation Systems (CRS) and Gl obal Distribution Systems (GDS). E-BUSINESS SERVICES †¢SN Brussels' internet site (www. flySN. com) is a major part of the company’s e-ticketing infrastructure it is user-friendly and allows for an easy search and compilation of travel offers. †¢It also provides self check-in possibilities, hotel bookings, insurance and rent-a-car services online. E-tickets are also available through call centre on all routes in the network and through GDS used by travel agents. BENEFITS †¢Online booking, proved to be an efficient channel for the distribution of e-tickets. In May 2002 only 38% tickets were sold online whereas in September 2006, 63% of own sales were conducted via its own booking engine. †¢The e-ticket uses a database to track the sale and use of tickets. All subsequent ticket transactions, including refunds, exchanges, check-in, void and settlement, involve this holding database this reduces chances of fraud and eliminates the problem of lost ticket. It al so reduced the cost of documentations. SN Brussels Airlines’ e-ticketing solution allows for seamless link up with external partners by forming alliances and developing the so-called â€Å"interlining† system that allows passengers to have one ticket for a complete travel itinerary with different travel segments from several airlines. Passengers have then only one set of tickets for a multi-operator trip and benefit from having their luggage checked right through to their destination LESSON LEARNED This case study illustrated the use of e-ticketing at SN Brussels Airlines. The e-ticketing system did not only enable the airline to reduce operation costs and increase efficiency, but also helped to achieve strategic advantages which have further strengthened its market position. In particular, the applied e-ticketing technology facilitates the creation of alliances with other airlines. This, in turn, allows for a more efficient utilization of transportation capacities and access to a larger number of customers. Furthermore, e- ticketing combined with the development of direct online sales channels reduces the dependency on intermediaries and decreases the payments to CRS/GDS. FUTURE OF E-TOURISM †¢The Internet and mobile communication devices are three most significant ePlatforms that will help change the future of tourism. †¢The Internet will allow more people to access high quality information quickly and with minimum inconvenience. It also gave the possibility to purchase travel products on-line. In addition, it generated great service expectations, as consumers anticipate to be served on a 24hours/365days basis and at their own convenience. †¢Not only does the internet help the traveler but also the tourism suppliers like online travel agents, airlines etc. The trend towards the use of mobile communication devices is mostly determined by the commodification of mobile phones in the past few years, coupled with an increasing need to be able to obtain information while ‘on the move’. For example, business travelers can receive information on arrivals and departures as well as check-in through their mobile phone for a number of airlines. †¢On-line Internet provision is not sufficiently developed for those areas conventional telephone can also be used, a traveler may call a call center to confirm their bookings or ask queries. Importance of GDS and CRS in Travel & Tourism Industry: Computer reservations systems (CRS) have become critical instruments in the marketing and distribution of travel and tourism products and services. New systems have recently been developed in Western Europe, while the Asian and Pacific regions are in the process of establishing their own systems. A central reservation system represents a computerized system used for both storing and distribution of information. We could be talking about a hotel, a hotel chain, a resort or any other type of lodging facilities. The CRS can also be used for checking up different details about flights or seat availability. People may tend to confuse CRS with GDS (Global Distribution System) because of their similar functionality. However, there is one important difference between these two applications. Central reservation systems are web applications exclusive for each company or hotel. On the other hand, a global distribution system is used by various travel agents for booking reasons, as they cannot access CRS. CRS contains important information such as hotel accommodations, activity bookings, flight schedules or even holiday packages. There is almost no need for a travel agent as you could simply arrange your reservations over the Internet. Most hotels and travel agencies have their own websites for presenting their rates and offers. Websites can also be used together with various CRM software in order to strengthen the existent client relationships. Reservations are processed within a centralized location that is also responsible with availability management. Rates retrieval and reservations are made as efficiently as possible. Hotels will benefit from better yield management and will also reduce other costs as web bookings will not be done anymore through third parties.