By Geoffrey Lipman � Chairman GTREX, Speech
Delivered at Eye for Travel Conference. Amsterdam. 15 October 2001
I want to make 4 points to underscore my theme �Tomorrow�s systems
- Here Today�.
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The conditions for change are more acute then ever before.
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The Web can provide the great leap forward
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An infinite number of Web Opportunities are emerging
-
The GTREX Open Systems Vision can help realization
Conditions for change are more acute
then ever before.
Post Sept 11th forces a search for cost reduction and new ways of
doing business
-
The confluence of developments � economic, security, market, are hitting
all sectors but ours is in the firing line (literally and metaphorically).
We�ve dealt with them all before � but never together. Overall the impact
will be very negative though� some may be able to take advantage (e.g.
domestic tourism: regional operators)
-
Bottom Line is costs up. Traffic Down. So scramble for savings and
efficiencies.
The uncertainty has no foreseeable end � paradigm change is inevitable
-
We will see big changes quickly � such as airline subsidies, consolidations,
job losses across direct and indirect tourism market. And continuous change/
reduction/efficiency mindset.
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Management will be more susceptible to new ideas which point in this direction
Distribution costs are a huge, growing area of potential savings
-
$20 billion per annum and growing. GDS prices increasing at 5-10%
a year and conditions for both supply and demand becoming more convoluted
to keep market share.
New business systems transcend distribution
-
With the development in IT being focused towards the web, there are endless
applications which are distribution related emerging � either as bolt on�s
to legacy systems (front/back) adaptations and replacements. There
are even more applications which are not directly distribution developed,
but aim at the same ultimate customer / supplier relationship space.
Customer Relationship Management is the obvious example. Inventory control
is another. There are evident potentials for interaction efficiency and
cost saving between these applications � if they can use the same �operating
system�.
The Web can provide the great leap
forward
The ubiquitous framework � its everywhere and expanding exponentially
-
The growth in the power of the web as it expands across the planet is phenomenal.
As networks expand via optics, satellite and broadband connects.
As costs of access and service provision plummet. As remote tie in
via broadband kicks in. As competition to provide the framework escalates.
Alvin Toffler was right � generally
-
The author of Future Shock expounded the idea of the accelerating pace
of change. No better example than the leapfrogging of the web across
traditional physical and national boundaries, coupled with its availability
to an increasing number of households, with easier user interface (Television,
PDA etc) and cheaper hardware.
King Canute was right � absolutely.
-
At same time it is becoming clear that the march towards web based distribution
is inevitable and even the legacy systems have no long term instinct to
try to hold back the tide like the ancient Danish King. (Though they don�t
object to short term regulatory and legal dam building) They are building,
buying and replacing legacy with adaptive web systems.
Adam Smith was right � mostly.
-
The marketplace for cheap effective technology will drive down the price
of access to the web and drive up the quality of systems. The key
question will be can a critical mass of suppliers get to a critical mass
of users via a critical mass of distribution outlets. GDS�s are the
focal point for those masses today. Can they remain so at today�s
cost?
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A major challenge is in emerging markets where the gap is getting bigger
because of the poverty divide. There is not only an absence of in
place software and hardware, all the systems are owned and operated by
first world companies. Even the knowledge that in 2007 the major web language
will be Chinese will not help Africa.
An infinite number of Web Opportunities
are emerging
Suppliers are committed
-
There is not a supplier who isn�t developing some form of xml based web
connecting system. They want to eliminate the GDS charges, keep the pipe
to the distributors and increasingly tap the direct market without onerous
intermediary charges.
Users are in the driving seat
-
As they learn the power of the web and the low cost technology. They will
be increasingly hooking up direct. Of course they will need to find the
web sites of their choice � so the marketers will have a field day � but
once hooked they will return with the press of an on screen button.
It�s a new game for today�s Distributors
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There isn�t an agent or consolidator who isn�t looking for web based direct
connects. They need critical mass of supply and effective easy to operate
applications. They must get commissions from somewhere (supplier or user).
They want to reduce payments for technology hook up and long term tie in.
And they want a way to use the web with at least as much back end functionality
as they currently have. Ideally more.
Tomorrow�s Distributors are everywhere
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There are a mass of new consolidators in the offing, anyone with the capacity
to group sets of suppliers or sets of users and link them with powerful
web booking engines. And a mass of companies supplying enabling front end
and back end applications to help. There is no better example than the
Destination Marketing Organizations, the hotel associations or the tour
operator and travel agent associations.
The GTREX Open Systems Vision can
help realization
The Wright Brothers were right
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The big change lines are clearly coming from the big players. No week goes
by without a new announcement that a GDS has been bought or owners are
divesting or a merger is contemplated. The US airlines start a low fare
direct sale system. The European airlines announce the same. A group of
Asian Hotels forms a web-marketing group. A switch system buys a direct
sale channel or a content provider
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But don�t forget that modern aviation started in a bicycle shed while the
railway companies were saying it couldn�t be done and wasn�t necessary
anyhow. There are a lot of smaller players trying to produce a better web-based
mousetrap � without legacy hang-ups.
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GTREX is one of the latter.
Outside the Goldfish Bowl
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We�ve addressed the 4th generation challenge from outside the traditional
industry goldfish bowl. Built a completely open architecture system
using Java, Soap, XML ...and everything else that Sun, Microsoft and IBM
have agreed should be used to power web based communication over the next
decade. Integrated it with IBM�s next generation development technology
and AT&T�s data transmission and housing systems. We�ve also set up
a NeXgen partnership with specialists in agency and supplier systems integration.
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The result is a platform that sits in the last mile leading to the Internet.
Open to any supplier or distributor with outside or inside connects � with
or without GDS links. Open to any user anywhere with any browser
interface. And because it�s open architecture, linkage is simple,
fast and certain. Inventory is controlled by its owners. Distributors
can bring in their value added. Customer relationships can be managed
directly.
Increasing everybody�s functionality
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We think this platform can increase everybody�s value added from the Internet.
Harnessing its power in a robust, flexible and scalable framework. Seamlessly
handling distribution systems and integrating other back office applications
on the same technology platform.
Reducing everybody�s costs
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Most importantly. We can cut a huge swath of costs out of the distribution
chain - administrative, costs, lawyers� costs, and legacy costs. GTREX
will charge a very low transaction fee to suppliers. We will give
access to the system on a nominal basis to agents and other distributors.
We will live on volume transactions and small margins.
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We believe we can create a cost reduction revolution. And help the
industry take billions out of its annual distribution and connectivity
bills.
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