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Questions Startups Ask...
August 8, 2012
This article was originally posted by Tnooz
As a neutral and independent standards body that serves the travel industry, we at OpenTravel get questions, and lots of them, about the travel industry. Topics range from connectivity and distribution technology to segment-specific questions (airline pricing and scheduling, hotel ownership structures, etc.) to how to work with the GDS’ and OTAs to asking for contacts to advice on which graduate program to attend (seriously).
At least people are finding their way to us, which is great, but what it really shows us is that the technical and commercial machinations of the travel industry are opaque to new entrants, and that opacity can make it difficult to break.
So what are the top five questions we get from startups and new entrants to travel?
How do I get access to travel industry information and inventory?
Let’s dispense with the basics first – to get access to any travel industry information and/or inventory, you must have a commercial agreement in place to utilize that industry data.
This answer breaks hearts sometimes but let’s get real – there is no pot of aggregated data (information, inventory, availability, pricing, etc.) freely available in this industry. The GDS’ and large OTAs have lots of data, and there are many other pots out there, but you can’t get to any of them without (repeat after me) a commercial agreement in place.
In case it’s not obvious, this means you’ll be paying for data. While this is becoming more commonplace for startups in other verticals, the amount of money required to get access to data can in many cases be a high hurdle to clear for many startups.
The reasons are many and complex, but the main reason is that aggregation of travel information and inventory has taken time and money on the part of the data holder, so why should they give it away? Historically, large holders of travel industry information and inventory have been accused of being gatekeepers, guarding their data jealously. Based on public statements and new initiatives, it’s fair to say that many of these gatekeepers are working to become gateways, to provide a more open model to the industry and those who wish to work in it.
That answer then logically leads to the next question:
What is the best source for [insert segment name here] information and inventory?
I love this question because it’s the best one to ask, but I usually have to ask a few questions before I can answer. Do you want, for example, access to every hotel in the world or just certain categories of properties or certain brands or certain regions? And do you want information and inventory, or just one or the other?
The answer could be Pegasus, a GDS or OTA, one of the new entrants like Room Key or Global Hotel Exchange, or even a specific hotel group or brand or representation company. Ownership and management structures in the hotel industry are layered and can be totally confusing to someone from the outside looking in.
If we’re talking about airlines, the answer is a bit more straightforward – the GDS or one of the technology providers is probably the answer. Direct connects are available to some airlines, but that means getting on multiple development calendars, and most use a third party technology provider for their direct connect platform anyway.
If the question is about access to long tail segments (tours and activities, vacation rental, golf, hostels, ground transport, etc.) then the answer is a bit more complicated, as the information and inventory in these segments aren’t as widely aggregated and distributed as airlines, car rental and hotel. Some segments are dominated by a few large players that aggregate large amounts of data; other segments are still fragmented enough that there isn’t even much data available.
It just depends on what information and inventory you’re looking for to support your business.
This is all great information! Now whom can I talk to at [insert company name here] to get started?
Another great question, but I hate it because it’s almost impossible for me to answer. Like all large companies everywhere, large travel companies can be siloed, bureaucratic, hierarchical, and suffer from turnover and internal reorganizations (or some combination thereof). The person I might have referred you to last week may not be there any longer, may be doing something else or may have had someone else’s job unloaded onto her so she’s now doing two jobs and has yet to see the light of day. Or I might not have a clue. After a career in travel, I have a long list of contacts but I do have to update and purge it on a regular basis to keep up with the changes.
It doesn’t help that the travel industry can be less than welcoming to new entrants, and it’s not always easy to find business development professionals listed on the contact us page on web sites. Skinny margins and keeping up with fast-changing consumer demand can make companies less interested in talking to potential partners and more interested in keeping the business afloat. In most cases, the burden is on you the new entrant to make a case for why the travel company should talk to you, and remember to have a well-formulated pitch and, more importantly, ROI for the travel company to consider.
To an established travel company, your startup represents a fair amount of risk. The ROI needs to be clear and easy to understand across a large organization for them to take that risk because there are frequently many departments involved, each with their own risk profiles.
To have a well-formulated pitch for a travel company, you have to educate yourself, which leads to the next question:
Where can I go for more information?
Some segments are rich in research and documentation, especially the hotel industry with research published by the Cornell School of Hospitality, Smith Travel Research, the HSMAI Foundation and others. The US Travel Association and PhoCusWright have published research covering a wide variety of segments over the years, and there are other many other commercial and association resources (Google “travel industry research” and you’ll see what I mean).
There are also industry associations geared toward education, including HEDNA in the hotel industry, CASMA in the airline industry, the Adventure Travel Trade Association, the NGCOA in golf, VRMA in vacation rental, and several more. Most have events and meetings on a regular basis, and some have white papers and other artifacts available to the public. All of them have contact information published on their websites.
There are multiple B2B and B2C sites and publications serving all aspects of the travel industry, more than you could possibly read. One of my favorite places for industry research is the press room pages of company sites because you can see what that company thinks is important, and of course public filings always make interesting reading because you can see how companies are allocating resources and which divisions are making money.
And I can’t forget conferences, of which there are many in the travel industry. So many that it’s hard to tell which will give you your money’s worth (that’s probably worth another post on its own), so ask around for recommendations then GO! Nothing beats face-to-face networking in this industry, and most conferences provide a decent educational experience and plenty of time to make new friends.
Finally, this is the question I get the most often:
Why is travel data so difficult to understand?
And it’s hard for me to answer because the answers I could give sound so lame:
- It’s just evolved that way
- It’s because of the legacy structure of the underlying databases
- It’s worked for this long
But the fact is that travel data structures are labyrinth and complex because there are so many inputs – some regulations, some supplier-mandated, some intermediary-mandated and some technically mandated. Technology and platforms had to be scalable to process millions of transactions in a short period of time and stand up to it, and the technology was first built in the 1940s and had stuff bolted onto it over the last sixty years. And frankly it worked well for a good long time.
As a whole, the travel industry seems to recognize that the need to ‘open up’ is critical for the industry to innovate and thrive. All three of the GDS’ have recently announced initiatives of varying types to allow developers access to data and/or services, something that would have been unthinkable five years ago, and many other large travel companies are doing the same.
Our job at OpenTravel is to work with companies to create more modern and usable methods of interoperability as they open up, and forward-thinking companies work with us every day to make connectivity easier.
So those are the questions I hear all the time, but I know there are a ton of other issues plaguing startups in the travel industry. What have you encountered? How can the industry change to make things easier?
To hear answers to these questions, be sure to attend Travel Traction in Las Vegas on September 20 2012, an OpenTravel event just for startups and new entrants to travel. Click here for more information.