The travel industry has a wealth of information, which is vital for planning and projecting future business. Martin Cowen reports on its uses
TECHNOLOGY IS AS ESSENTIAL to the travel sector as round wheels are to the motor industry - as crucial to innovative start-ups launching nifty new tools as it is to the FTSE- and Dow Jones-listed corporate giants developing vast expense management and VAT reconciliation systems.
One result of all this hi-tech activity is the amount of data generated. In this instance data refers to travel patterns and travel spend, preferred airlines and hotels, which booking channels travellers have gone through, traveller contact details, and so on.
Storing, packaging and selling this information is a big business. It therefore comes as no surprise that global distribution systems (GDSs) Sabre, Travelport and Amadeus are all active players in this arena.
As well as being market leaders in travel technology, they can hold their own when it comes to sitting round the table with the great and the good of the data industry and transaction processing giants, such as the New York Stock Exchange.
Amadeus, for example, has a data-processing centre in Erding, Germany, said to be the largest civil operation of its kind; and Travelport has two main centres, in Atlanta and Denver.
GDSs sell the data on their systems, such as information from travel management companies (TMCs) who have made airline bookings for their clients, to the airlines and other commercial partners. At the same time TMCs collate and analyse the information from their transactions to, among other things, advise their clients on travel patterns and spend.
Nigel Meyer, director of technology and data services for HRG, has been with HRG since 1996. In those days, 64mb floppy discs were bigger than an iPad. "Back then the only data was what appeared on an invoice," he says. "Over the years, the sources for data grew and the business of data management emerged."
Meyer explains that HRG views data in two distinct ways. First, there is historical data. "We use this for analysis of trends and for future planning, and we outsource via a specialist data centre facility," he says. Second, there is current transactional data, which is kept in-house. Meyer says that "the challenge is making the data work for us and our clients, and we have to structure it in the correct way."
HRG's real-time in-house access to its data mirrors the approach of the GDSs, who feel that control over the hardware and software of the data centre is essential.
Gerry Smith, vice president of operations at Amadeus, says: "We strongly believe that ownership of our own data centre and IT infrastructure, and continued in-house management of our IT operations and service management, constitutes a strategic asset for Amadeus. It enables us to ensure that the total cost of ownership of our application portfolio is optimised."
While the data itself is central to the GDSs' bottom line, for TMCs the model is using the data in order to justify charging a service fee.
In its latest annual report, HRG chief executive David Radcliffe says: "Many [clients] have moved away from the simple mantra of cost reduction to balance value adding services with total cost."
Meyer adds: "Fifteen years ago the sector was entirely based on commission. Now TMCs have to add value through service, and the data and technology can provide and deliver that service."
STORAGE MATTERS
A key factor driving the data industry is that the overall cost of storage is falling. David Lauderdale, chief technology officer for Travelport, explains: "Storage is getting cheaper. IBM, Intel, Cisco - they are all shrinking the technology [which makes more room to store more data].
"But it's not just the storage - the latest servers need less power, generate less heat and cost less to run. It's probably 10 times cheaper now than when we consolidated Travelport and Galileo."
The reduced cost and size of storing data mean that there is spare room at Travelport HQ, both on the floor and on the servers.
There is money to be made here, as Lauderdale explains that the 'subletting' of this storage space is currently worth "more than seven digits worth of profit, but there's no reason why it can't be eight or nine".
Hospitality companies, credit card firms and email providers are the types of businesses 'subletting' space.
And while the storage space gets cheaper, the amount of data it can hold gets bigger, something the GDSs are taking advantage of. Amadeus' Smith says: "Our data centre and delivery capabilities compare very favourably with our peers. We look to the IT profile of transaction processing suppliers, such as Visa or the New York Stock Exchange, for comparative metrics."
Sabre, meanwhile, stores 5 petabytes of data globally (Google processes around 24 petabytes per day), has a peak handling capacity of 43 million transactions per second and deals with over 150m requests per day via web services.
Some argue that there is a danger that data is becoming a self-perpetuating monster, creating its own demand and supply. But as storage continues to get cheaper and more efficient, more data will be held.
Travelport's Lauderdale sees the potential in data management elsewhere in the world, too, and lately his profit radar is pointing east. "China has a closed entry to the GDSs," he says. "The data is effectively nationalised, but the business opportunities in that market, if we can get into it, are vast."
USING DATA EFFECTIVELY
An essential part of storing data is making sure it can be accessed quickly. This is especially true for TMCs. HRG's Meyer says: "Situations arise where we need instant access to information so that we can get in touch with travellers."
This information can range from itineraries and mobile phone numbers to even the landline at the reception desk of the hotel the traveller is supposed to be staying at.
"The world has changed, and there is a greater focus on risk and corporate governance," Meyer continues. "We are seeing a bigger demand from clients for this [service] every year."
The world has changed in what we carry with us on our travels, too. Look around you on any train or plane and apart from the obligatory smartphone, iPod and laptop, it is tablets such as the iPad that seem increasingly to be the gadget of choice. Giving data presentations with a tablet is different from on a laptop. The shift from a keyboard and mouse driven interface to touchscreen has become technology's biggest design challenge so far. As a result, any data which needs to be read on one of these devices needs customising so that it can be accessed by touchscreen technology.
As the popularity of tablets really takes off, important changes in data management will inevitably take place. HRG's Meyer believes that "tablets will supersede laptops". He may well be right - at the beginning of May last year, 1 million iPads had been sold worldwide. Just a year later, the figure is about 25m.
So the world of data management, storage and presentation will have to keep up with the demands of new technology, just as new technology will help the world of data grow.
For buyers and bookers of business travel, understanding who has the best data for you and which data is of most use will be an ongoing dialogue.
There's no doubt that data management is big business - it's just a question how you will use it to save money on travel in the future.
Switching over
ANYONE WHO HAS TRIED to switch mobile phone numbers or home broadband provider will know that migrating systems from one provider to another can be difficult. But this is nothing new. Amadeus moved BA's 30-year-old reservation system on to its server in the early noughties. Rather oddly, this ended up as a fairly big news story in the UK. The London Evening Standard led the charge, with the paper claiming the move had been "hellish for customers and agents". Amadeus, BA and the Association of British Travel Agents (ABTA) all issued statements denying the tabloid's accusations.
The facts of the migration were: 2.5 million passenger name records (PNRs) were transferred during the cross-over weekend, of which only around 1,000 were rejected. Of the 6.5m customer profiles transferred, only 166 were rejected.
A decade on and outages are fairly regular news stories, with the generic use of terms in reports giving the impression that 'technology' is inherently flawed and insecure. But often, it is the user at fault - responding to phishing emails for their bank, not changing the default pin and password on the answerphone, not checking accounts regularly and so on.
Having said that, some customer data outages happen and the world needs to know. The "illegal and unauthorised intrusion" of Sony's Playstation network left what has been reported as 77 million people potentially exposed to whatever the hackers plan to do with the data they stole. Clearly the GDSs are in the business of making sure this doesn't happen to its data. However, for every data network hack, there is also a civil servant leaving confidential documents on the train. Technology cannot be blamed for everything.
Google's might
SOMETIMES IT APPEARS that technology writers focus on Google above everything else - but any sector where the internet plays a part (is there anywhere that it doesn't?) should keep a close eye on what Google is doing in its space. Business travel is no exception.
Google's role in the travel industry has always fired the speculative juices of journalists, but time for speculation has gone - the search giant is doing more than enough within the travel vertical for the analysis to start taking place. Two announcements, in particular, are worth looking at.
First, its proposed $700 million takeover of ITA Software (failed new GDS entrant but cutting-edge flight search technology developer) has been approved by the Department of Justice in the US - with conditions.
FairSearch.org, the lobbying group set up to oppose the deal, said that it was a victory for consumers, but will continue to keep an eye on what Google is doing, fearing Google's "abuse of its search dominance".
Corporate buyers are entitled to scratch their heads and wonder what this has to do with them. In a nutshell, Google could have a transactional flight search tool, which might give the GDSs a run for their money, in North America at least. Travelport has declined to comment, and Sabre was involved in FairSearch.org. Only Amadeus lifted its head above the parapet with a vague comment that Google buying up ITA would generate additional interest in flight booking tools and that its own products will stand up to the challenge.
The other development could be the more significant of the two, especially for the hotel sector. Google has announced a change to its Google Places product, which will allow individual hotels to take control of their properties' presence, the first step of which is posting images of the hotel next to natural search results, free of charge.
Even the most ardent Googler would be hard pressed to argue that allowing a hotel to post its own images will make the difference when it comes to corporations choosing their hotel supplier.
However, once Google starts to include real-time pricing and availability information, the link between search and purchase tightens. Trust International has a Google channel tool, which populates a partner's Google Places and Maps page with real-time pricing on a pay-per-click basis. If hotels and technology companies put the prices out there on Google, chances are guests will use that link.