Internet a double-edged sword for travel industry

In the 17 years since I started work in the IT industry, I have seen Internet Protocol (IP) emerge as a myth, develop as a geek-niche, explode onto the business scene and finally become a consumer-friendly shop window open globally, and on a 24/7 basis.

In the travel industry, however, it’s only in the last five years that the Internet has become relevant. The GDS (Global Distribution Systems) that grew up in the US in the 1970s continued to dominate online travel booking. When an airline ticket was purchased, everyone in the distribution chain got a cut.

Now, anyone of the players — airline, credit card company, travel agent or GDS — can go directly to the consumer through a web Site.

When Microsoft Expedia emerged in 1997, the Internet accounted for 1% of the US travel market; by 2002 it had grown to 11% (according to Jupiter) and is climbing.

Here, with the arrival of Virgin Blue and others, Sabre is facing a very different business model.

Today in Australia (according to an AC Neilsen survey) airline tickets bought over the Internet make up 54% of online purchases. The timing is interesting, other industries are past the ‘Internet revolution’ and are moving into an exploitation phase, the travel industry is still exploring the best business models that can take advantage of the Internet.

But the Internet has been a double-edged sword for us, and we have learned to adapt.

In the US, Sabre’s reaction was Travelocity.com — one of the Web’s most successful sites.

Sabre Pacific’s prime focus today is solutions that marry the Internet with those unique Travel Agency strengths: time and expertise.So we are using Internet technology to help our bottom line, and that of our customers.

We recently launched Sabre.res to help our customers build their own Web sites. Five years ago this would have been insane self-cannibalisation, today it is pragmatic strategy!

Last month we launched an advanced IP-based VPN network across our company, our suppliers and customers.

The productivity gains and cost reductions Internet technology brings in IP are a boon at a time when 9/11, SARS and Iraq are all taking their toll on our industry. It is no wonder the Chinese use the same word for threat and opportunity.

Diane Hood is business development manager for Sabre

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