Intranets Key To Booking Solutions

<H1> Intranets Key To Booking Solutions</H1><B>I</B>n July, SABRE announced its intent to charge value-added pricing to those who use its Internet booking tools. Northwest/KLM significantly lowered commissions for air segments booked using the Internet; Intercontinental Hotels raised commissions for online bookings; Microsoft indicated it would offer direct hotel bookings at lower rates. American Express and Microsoft announced their strategic Internet alliance. New players like PCTravel, Xtra On-Line and E-Travel have entered the market, and virtually all airlines have announced or are planning to provide Websites-most of which will include booking. On balance, these are all actions taken by smart businesspeople. Yet many, if not all, are in direct conflict. The stability of the travel distribution structure is under attack.

There is little consensus as to the role of the Internet and/or an intranet in travel distribution. About the only thing clear is that the industry is finally beginning to experience the evolution of the travel distribution paradigm that many have long been projecting. Every business entity with an interest in travel or travel distribution is attempting to test its particular theory about the best solution that will meet changing buyer expectations. This mode of "trial and error" will continue through much of 1997 and probably to the end of the century.

Much of this testing is taking place in the new communication medium, the Internet, which represents the first real foray into the era of mass digital communication. It is an element of a whole society in transition, not just the travel industry.

However, as it exists today, the technology of the Internet remains too slow to become a viable commercial medium. This is a technology issue that will, in time, be overcome, but probably not in 1997.

An intranet, on the other hand, has viable potential. It is typically corporate-controlled and has functional uses beyond travel-thus, it gets funded with structure and the speed necessary to make it work. It would appear that intranets will be the vogue of 1997, at the forefront of other alternative booking solutions.

Implicit in corporate intranet structures is not only direct booking but direct settlement. Ticketless is teaching the airlines to match sold seats with electronic revenue received. Thus, corporations seeking price breaks in markets where they influence load factors will concurrently offer direct settlement to airline vendors just as they currently settle direct with other major suppliers.

With direct settlement comes a changed travel distribution structure. Seeing the competitive cost advantage that large companies gain through direct purchasing, smaller firms will use their corporate travel agencies as the vehicle through which they will collectively commit to the same risk as the larger corporations. A few agencies in 1997 will become risk-taking business travel consolidators. Through direct settlement, probably facilitated by the Internet and intranets, the concepts proposed by the Business Travel Contractors Corp. will become a reality.

Also in 1997, interested observers will see the beginning of a new "path dependence" evolving: Small, usually random events, at critical moments, determine choices in technology that become extremely difficult and expensive to change. Unfortunately, "the best" is not always the path chosen. Instead, the weight of numbers-as a function of volume, cost and convenience-drives the choice of one technology path over another. Some well-known examples include the Betamax versus VHS standard, the QWERTY typewriter keyboard, Apple versus Microsoft-or the airline inventory systems' evolution into agent-manned GDSs. Now, the battle is between network data stores (Internet) versus local data storage (the PC and LANs).

In 1997, expect to see the emergence of a new path dependence to replace or supplement the CRS/agent structure. The old system remains controlled by structures tied to what was once; the new buyer-driven era demands the speed of digital solutions. I believe the solution ultimately will involve some version of an intranet environment. This would suggest leased dedicated networks running through telephone and cable or satellite linkages moving data, video and sound. I am watching not the CRSs, not the agencies, not the airlines, but the corporate development arena, where the real R&D money is being spent.

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Richard Eastman is president of The Eastman Group Inc., a travel technology vendor in Newport Beach, Calif.