Travel & Tourism Technology Trends

It seems that the Internet is full of applications that allow tour operators, independent hotel and motel owners and packaged vacation providers with online booking capabilities. Many of these booking engines are extremely expensive and many are not. Some are hosted and some are stand-a-lone. So how do you choose one that is right for your organization? Here are some important things to keep in mind as you begin your research and compare the products.

1. Compare apples to apples
Many booking engines are actually booking portals. This is especially true if you are an Adventure Travel company or an Accommodations provider. Booking portals are generally run by companies that are travel agencies or travel wholesalers who sell your products for you and charge a commission. The traveller who purchases from the booking portal is more likely to go back to the booking portal rather than going back to you. If you choose to stop using the booking portal, your products stop showing up on the booking portal website. Although booking portals can provide you with additional marketing for your products, you don’t have direct control over how the portal markets itself. You need to decide if the portal’s brand is more important than your own.

2. Know your costs
When it comes to paying for a booking engine there are generally two types of payments. Most booking engines are commission based, which means they charge you a “small commission” of between 1% to 5% to process the booking of your products. Some of these engines, especially the larger more well established ones can charge a one time integration fee of $10,000 to $60,000.  Some are flat monthly fee based engines that charge you a flat monthly and transaction fee per booking regardless of your sales revenue.  The difference in the payment structure is often tied closely to the motivation behind the system.  A system that is based on a flat monthly fee needs to have a large number of users to support and grow the system, so the motivation is in acquiring and keeping users.  In a performance based system, the motivation is in increasing the volume and value of transactions in the system, which means generating revenue for users.  A performance based tour operator software system will constantly be improved in order to increase your sales, this is a very important distinction.

3. Eliminate the middleman
Everyone knows that the travel industry is full of middlemen. Every time a product gets touched by someone, it creeps up in price incrementally. The more middlemen, the higher the price. That’s why airlines, major hotels, and large tour operators now sell directly to travelers. In order to be cost competitive many of these providers are looking for ways to reduce their transaction costs. Cutting out the large commission based GDS companies is one way of doing this. Look at adding a booking engine to your own website and drive traffic to your site instead of driving it to a third party booking portal. You’re much better off owning the relationship with your customer.  If for example you pay a concierge a 20% commission when they send you a customer, it makes a lot of sense to spend 5% or less to have the customer come through your website.  When you treat your website as another sales channel, it makes sense that it should perform in a similar manner.

4. Don’t forget about Agents
In your efforts to sell directly to your end customer, don’t forget the selling power of Travel Agents. Travel agencies are looking for alternative providers to satisfy the needs of their clients. Travel agents are sales people looking for the best commission they can find on a unique and interesting product for a customer. Make sure you can control your relationship with the agents and by cutting out the middle man, you can pay the agent a higher commission. You get your products in front of the buying public and the travel agent gets a reasonable commission for their sale, it’s a win win for everyone.

In conclusion, remember that committing to a booking engine provider can be a long term relationship with significant cost implications. Many booking engines or portals require a long term contract, so consider where you plan to be in the future and see if the decision you make today is going to be the right one in a year or two. Finally, any booking engine is only as effective as you make it, so if you plan on using a booking engine, you will need to make a commitment to use it and use it well.