Impact of Cloud Computing on Travel Industry


The last decade has seen major changes in the travel distribution landscape. First, it was the Internet that started a revolution and forever changed how the travel industry operates. This online boom followed by subsequent economic slowdown has created new dynamics in travel distribution. The proliferation of smart phones and social media has resulted in further creating both chaos as well as new opportunities. While opening up new avenues for growth, these developments have also created new operational challenges.

Challenges faced by travel distribution industry

Dynamic Demand

One key nature of the travel industry is that the demand for travel is highly seasonal and cyclic. This creates a challenge for any operations manager in terms of capacity planning and right sizing of the IT support infrastructure. Planning for peak size can result in underutilization and lead to higher marginal cost. On the other hand, not planning for peak load runs the risk of lost transaction opportunities, unsatisfied customers and finally business losses. This is one of the primary reasons why most travel distribution players end up having higher IT infrastructure cost and lower operating margins.

Increased Search Volume

Increased number of travel portals along with a changing pattern of travel booking behavior of the travelers, has resulted in a huge surge in ‘look to book’ ratio. This increased number of availability request per booking now runs into thousands from a mere single digit number few years back, putting an enormous pressure on existing IT infrastructure. According to Pegasus Solutions, global processor of hotel transactions through the GDS and ADS channels, the look-to-book ratio soared to around +60% over 2009 levels and is expected to rise further. Today’s common look-to-book ratio is almost at a 2,500 -3,000 to 1, -primarily due to growth of online reservation and the changing consumer behavior who is now looking ‘value for money’ deals. For this, travel shoppers use multiple avenues such as search engines, referral sites, websites, mobile applications, and social media.

Business Disruptions

Just prior to the recession, online travel booking soared to all time highs attracting further investments in IT infrastructure in demand anticipation. However, discretionary travel was one of the first spends that was cut down during the slowdown. This caused a severe strain on financials and travel companies had to rethink their models yet again.

Increase in number of sales channels

Popularity of smart phones has persuaded travel players to embrace mobility as a medium to manage bookings and provide other experiences to increase customer stickiness. At the same time, social media sites have also become very popular and travel portals are trying to utilize this trend by integrating different social media components with their sites. Of course, more number of channels also increases complexities in product management.

Cloud computing from a travel distribution perspective

The Cloud helps enterprises to have a dynamically scalable abstracted computing infrastructure that is available on-demand and on a pay-per-use basis. This model not only saves the IT teams from investing heavily on infrastructure, but also shields them from the intricacies involved in infrastructure setup and management. Presently, apart from providing the on-demand IT infrastructure, cloud service providers typically provide interfaces for other related IT management services. To understand the application of Cloud computing to the travel industry, availability searching or shopping is probably the best example; it is by and large the biggest resource consumer in a typical travel process. In today’s circumstances, travel enterprises who run their entire travel application on a single infrastructure platform put unnecessary stress on operational budgets. One of the probable solutions to this problem is to decouple the availability search functionality from the traditional CRS system transfer it on an infrastructure that can support flexible demand. At the onset, it seems to be a complex and upheaval task, as it creates operational challenges such as latency. However, these challenges can be handled through a cloud based solution which offers higher scalability by using modern architecture patterns. On the other hand, mobility is witnessing an unprecedented growth in demand – this is another area where a cloud strategy can bring in competitive advantages for travel organizations. The key challenges that travel enterprises are facing today regarding mobile and social media channels are manifold, viz.,

With the advancements of mobile devices such as iPhone, iPad, Android, Symbian, and Blackberry, travel enterprises need to invest in leveraging these to further their distribution and fulfillment channels.
Mobility, being a rapidly evolving technology, is difficult to predict in terms of short term as well as long term demand. Due to this, travel enterprises are facing a challenge in scoping the required infrastructure for supporting mobility channel.
Travel enterprises need to create a business model to measure increase in revenue and profit against the costs incurred on mobility & social media investments.

Cloud based flexible and on-demand infrastructure enables a travel enterprise to offer mobility and social media channels without incurring any fixed cost. Using a cloud infrastructure, a travel enterprise can start in a small way and grow into these evolving markets with a lower risk and financial strain.

Key concerns in adopting cloud based system

Availability of a Service

Organizations worry about whether utility computing services will have adequate availability, and this makes them wary of Cloud Computing. But in reality, cloud infrastructure providers such as Amazon and Google have much lower outage compared to any internal IT system.

Data lock-in

The primary way to access the cloud platforms is through proprietary APIs. Thus, enterprises feel that they cannot easily extract their data and programs from one site to run on another. But in reality, all major service providers have an obligation in their contract to return the data to the enterprise. These service providers also have data access APIs that can be used to extract data in standard formats.

Data Confidentiality and Statutory Requirements

Many enterprises believe that their data will not be secure in the cloud, since current cloud offerings are essentially public networks. However in reality most of these cloud service providers have better data protection and security mechanism than most IT organizations. They achieve this through the usage of audit trail, encrypted storage, and network middle-boxes. Service providers also comply with various statutory and audit requirements related to enterprise and personal data security and usage.

Integration with external systems

Since travel distribution systems interact with multiple external applications, travel enterprises always have a concern about integrating the cloud based system with other external systems. However, all major cloud service providers have web service interfaces that can be utilized to integrate the cloud based system with other external systems.

Solution for the ‘long tail’

As we know, the travel industry comprises of many small to mid-sized companies. A large majority of which are very entrepreneurial and niche in terms of the products and services they offer. Companies in this ‘long tail’ have little or limited IT knowledge or support and rely on numerous third parties for IT. Such companies always find it difficult to balance their IT spending between IT upgrades and innovating on their solutions, and this tends to become a barrier for business growth. Even today, many small time travel enterprises do not even have an IT system, because they cannot afford to setup an IT operation in-house. Economics of Cloud environment can change this basic premise and make it both affordable and beneficial for travel enterprises of any size who can use this service to derive a competitive advantage. Such an environment brings tremendous advantages to such companies because it also helps them to manage their cash flow better. At the other end of the horizon, start-ups are finding it easier to build and offer products like CRSs, tour operating systems, distribution systems or basic inventory systems on a SaaS model, which is a stronger value proposition and provides a competitive edge to their offerings.

Business outcomes of using cloud based systems

From the above discussion we can conclude that travel enterprise can achieve business growth by leveraging the power of cloud computing:

A cloud-based solution reduces the total cost of IT ownership for the travel enterprises and offers performance, reliability, security, and flexible scalability advantages
Travel enterprises are able to increase customer base due to higher availability, low congestion, and additional sales channels
Competitive advantage to the small and mid-sized enterprise in the form of lower fixed or upfront capital cost
Improved operational efficiency due to low marginal cost
Ability to manage risks better by reducing fixed investment on any new initiative

About the Author

As the Director – Business Development & Marketing in Calsoftlabs, Somenath is responsible for growing Calsoftlabs’ ISV business in North Ameica Region. Somenath has extensive experience in Outsourced Product Development space and helped Tier 1 ISVs & Startups in setting up Offshore Product Engineering labs and Program Management Offices. He has been involved in managing multiple key strategic programs in the area of Healthcare, Mobile Communication, Digital Imaging and Product Engineering. Somenath, a Certified Scrum Master, has special interest in areas like strategic management, e-marketing, Agile Development Methodologies, Software Testing, and Enterprise Mobility.

The Main Reasons Why People Travel

There are two levels of answers to the question of why people travel. The first is the obvious one, and probably the reason we give ourselves and quote to others. We travel so that we can see sights, experience other cultures, attend events and learn more about the world.

These are exciting reasons. But there are deeper reasons for traveling that have less to do with what we do when we travel, and more to do with what traveling does to us. These five sets of changes to ourselves are at the heart of what makes travel so compelling.

Travel Enriches You, Before, During & After

The anticipation of a trip is almost as stimulating as the trip itself and the memories afterwards. Knowing what you have ahead, and imagining it in detail, lends excitement to life, and relieves the tendency to fall into a workaday rut. The more detailed the image of the trip, the more a future trip will excite you in advance.

During the trip itself, daily life can be intense. Living in these moments fully, and noting everything around you, makes for heightened living. Clearly, this kind of intensified experience is a quality of a style of travel that takes you beyond the bus and out into the streets and squares, landscapes and waterways, of the places you are visiting. Independent travel is a world apart from “contained” travel.

Travel Broadens Your View of the World

Through travel you gain a framework for the history and significant touchstones that brought you to your current life and point in time. Now you are standing in the evil Borgia pope’s office, surrounded by the very walls that contained the man with sufficient power to write a Papal Bull-a mandate-that claimed all the wealth of the Western Hemisphere for Spain and Portugal, and secured it for the next 200 years. As you pause in the spot where that happened, the events and significance come alive with new meaning.

Now you are looking down at the stairs that lead to a tunnel connecting the home of Leonardo da Vinci with the royal palace across street. It was through this tunnel that King Fran├žoise traveled to sit and talk with his genius friend. And now you are in Bayeux, where the French William the Conqueror built his naval vessels to cross the English Channel and claim the throne of England.

Each of these experiences broadens your view of the world and your firsthand sense of time and place.

Travel Makes You More Vibrant and Interesting

Travel gives you something to look forward to… to prepare for… to study for… and later to share. You will bring home stories. Life can get somewhat monotonous if you let it, particularly after you retire and your work life ends. Anticipation is worth at least as much as the trip itself and the memories that follow the trip.

How much better to have travel stories and observations to share then to have your conversation limited to your latest doctor visits and your frustrations with the weeds in your lawn.

Travel Re-Energizes You

Travel, and the anticipation of travel, recaptures your enthusiasm. You look ahead with excitement instead of experiencing the dulled-over feeling that comes from repetition and routine.

Travel challenges you to be at your most effective and focused level. Comfort zones may be comfortable. But it is good for you to be taken out of your comfort zones regularly. Otherwise, your social skills can begin to atrophy, and your ability to think on your feet and solve problems may decrease due to disuse.

Travel Improves Your Health and Well-Being

Travel gives you a reason to stay healthy. And it keeps you sharp longer! The challenges of travel test your acuity on a daily basis. Travel can be demanding, especially if you are not being “led around by the nose” on a group trip. You know you will need to be on your toes – to be situationally aware – to pay close attention. You will need to walk extensively, including up and down hills and stairs.

Generally by the time you return home from a trip, you will be in better shape than you have been for months, or even years. And if you begin immediately to anticipate another trip ahead, you will have a genuine incentive to keep up these improvements and be ready for the next time.

Changes and Benefits

These changes and benefits to you from travel can become permanent ones. Your life will become punctuated with enrichment, you will think more broadly. You will find yourself incorporating deliberate lifestyle changes learned during travel. You will be more vibrant and interesting as you are periodically re-energized. And you will experience enhanced health and well-being.

Best Traveling Experience at Affordable Cost

We like to freshen after long days of work, sometimes we fed up with our daily life. Busy and hectic life is not always good, our mind and soul needs some refreshments. Sometime, we need to break free and go for some refreshing travel.

Traveling to the new places and within different people and culture gets your body and mind re-energized. There are several time for travel You can go for weekend travel, a week travel or a months long travel. Some might like adventure travel and some like to explore new culture, food and traditions. One can choose nature of their travel according to time frame and interest.

For instance, we can categorize travel into two different segments, one is inbound traveling and other is outbound traveling. In bound travel refers to traveling inside one’s country, where outbound travel is traveling to another country. People do not only travel for fun, they travel sometime for business purpose too. For instance, meeting new corporate parties or to explore new business ventures, for this one needs everything that business class service has to offer. You are recommended to choose a dependable travel company or travel tour operators, who have a long experience of organizing, otherwise your time and money can go waste. You can also get advice from family members or friends who already have an experience of traveling that place in which you are going to.

Before deciding, you need to keep in mind many things such as booking a flight, train ticket to go to another country or city, booking a hotel or suite where you are It is a wise decision to book all these from a certified travel company or tour operators, they will manage all your traveling needs according to your requirements including hotel booking, flight, train ticket reservation, excursion or tour packages. You have to plan or book your travel in advance otherwise it can be problematic to get tickets and everything gets high-priced in the last minutes, as you know.

Before going for a vacation to another country there are few things you must ensure to check first-hand, about passport and visas, travel insurance, custom rules and regulations of visiting country and also the weather conditions. You must bring appropriate clothes according to the weather condition of the new place, if you gather information about customs, religions and society of visiting new place or country it will be very easy to travel as you are well aware of the situations.

Choosing a responsible and experienced travel company which provides the lowest ticket pricing and lowest travel package cost makes your travel pleasant and memorable.