NEW YORK (04/27/2000) - Threatened by a possible industry shakeout, several travel reservation systems are scrambling to add a human touch to their online products.
This trend was a prime topic at an investor conference held today by PhoCusWright Inc., a Sherman, Connecticut, online travel research firm.
Yesterday, Fort Worth, Texas-based Sabre Holdings Inc. agreed to provide access to its computerized reservation system through the Lowairfare.com site. In return, Sabre got the right to use and repackage the technology that Lowairfare.com uses to connect live agents to its online customers.
Because the site offers human contact, 20% of its visitors make a purchase, well ahead of the single-digit industry standard, said Peter Sontag, president of Tampa, Florida-based 800 Travel Systems Inc., which operates Lowairfare.com.
An integrated chat box allows agents in a call center to troubleshoot problems a customer is having with an online search or transaction. As a result of this personalized help, Sontag said, 92% of the site's customers complete a purchase once they begin it.
Jim Lubinski, executive vice president of operations at the global reservation system Galileo International Inc., said his company was also looking to combine its Web offering, set for a June launch, with a call center.
"It's almost common sense that bringing actual people into the mix will increase your sales ratios," said Jack Zahran, managing partner at New York-based Interactive Solutions Inc., which developed the chat-box sales system for Lowairfare.com.
"The question is, When will the industry as a whole recognize that?" he said.
Sam Galeotos, president of Cheap Tickets Inc. in Honolulu and a founding member of Worldspan Inc., a global reservation system, said his company's studies show that 60% of travel customers still prefer some level of human contact when making travel plans.
Sabre's announcement came as a variety of speakers described rapid change coming to the travel industry as a result of the Web.
Online travel agencies have traditionally acted as retailers, selling tickets to the public for a commission. In the future, such commissions "are going to go by the wayside completely," Sontag predicted.
Chief Operating Officer Ken Pelowski at Menlo Park, California-based GetThere.com agreed, noting that his company makes its money from flat transaction fees paid by corporate customers who purchase discount tickets using GetThere.com's booking system.
PhoCusWright CEO Philip Wolf predicted that many Web-based travel retailers, such as Expedia.com and Travelocity.com, will begin to buy airline seats and hotel rooms and sell them, for a profit, to end customers at wholesale prices.
Pelowski's company is already offering special negotiated airfares that were once the province of global reservation systems such as Sabre, Galileo, Worldspan and Amadeus. Expedia Inc. Chief Financial Officer Greg Stanger described how his company now controls price and profit margins for its Web sales, rather than just posting the prices given to it by the airlines.
Sabre CFO Jeffrey Jackson said his company is constantly on the lookout for information technology innovations. "We want to be the technology supplier, however the channel shakes out," Jackson said. "In the past four months, we probably invested $15 million in venture capital assets, primarily in companies that are bringing technology to market quicker than we are."
Lubinski talked about how Galileo has diversified into more of a technology supplier that relies on fees for the products and services it provides instead of agency commissions. He didn't hazard a guess as to whether all four major global distribution systems, built around servicing traditional travel agencies, would survive the onset of e-commerce.
"It's clear the next year or so there's going to be a shakeout," Lubinsky said.
"How that happens is anybody's guess."