Op-Ed: GDS Tech Must Evolve To Avoid Buggy-Whip Fate

You would have to be quite a scholar of the early 20th century to know the name of the last great magnate of the buggy whip industry, yet virtually everyone in the United States and much of the world knows of Henry Ford and his legacy. Why? Because the automobile transformed the transportation industry in such a way as to make the horse and carriage, and consequently the buggy whip, obsolete virtually overnight, less than a decade after having been an appliance for several hundred years.

Global distribution systems face the same paradigm shift relative to their place and value in the rapidly evolving travel industry. Largely airline customer reservation systems that have had functionality attached to them over the past 30 years, GDSs must transform to remain relevant to the 21st-century travel market.

I don't mean to malign the GDSs, merely to prod them beyond the incrementalism in which they are currently engaged, so that they will provide leadership in what will become "Travel 3.0" by 2015—a transformation which will occur with or without the cooperation of the GDSs.

By incrementalism, I mean focusing on enabling existing processes in the industry rather than changing them outright. I would put "back office systems," "shopping," "faring" and even to some degree the purported nirvana of "browser-based agent desktops" in the category of incremental thinking.

My challenge to my company and to my competitors is to look beyond this "product development as a form of marketing" and truly engage in next-generation thinking. Below I pose three challenges to the GDS status quo:

First, lower the drawbridge

Sun Microsystems co-founder Bill Joy said the law of innovation is that "innovation will occur"—you can't be everywhere or control all the assets so that you own the innovation, so you must have a business structure that can identify, access and capitalize upon innovation as it occurs. Through no real fault of their own, global distribution systems are highly proprietary technologies that are significantly different from one another in terms of architecture and code base. One of the first things the GDSs should do is to collaborate (note: not collude) to publish a common set of standards by which to develop new features, functions and full-scale applications that leverage the GDS in its current form. Think open source for GDS.

The network architectures of the GDSs should be opened so that new networking protocols can run over them and facilitate new types of interconnections. Travel is a large enough industry (nearly $1 trillion globally) to attract the same developers who are creating the next Oracles, Googles and YouTubes of the world.



Second, Enable The Customer

There are several dimensions to customer enablement. One is to recognize the power and ubiquity of "thin memory" or "edge" devices like cell phones, PDAs and the like. Travel consumers will increasingly depend upon these devices to help them make decisions, to transact, to find their way and, of course, to communicate. Any credible next-generation travel technology strategy must embrace this reality.

Second, the arrival of Web 2.0, which includes the phenomena of personalization, blogging and dynamic community formation, will enable travel consumers to obtain huge amounts of highly refined information—from pricing to availability to user-generated reviews. A community of credentialed reviewers will have more power in the recommendation of a destination or travel asset than any travel agent—thereby largely offsetting or eliminating paid-for bias.

Third, contextualization is the ability of an application to understand who you are (your personal identity, proclivities, memberships, alliances), where you are (or want to go), how you are (weather, tight schedule), what you are (adventure traveler, executive, cold and wet, lost), when you are (time of day, season) and make predictions about what you will need to begin, complete or manage your journey. Global distribution systems should be more focused on how to harness these phenomena than on the development of incremental features and functions.



Third, create an efficient marketplace

Global distribution systems possess massive telecommunications and transaction-processing infrastructures, rivaled only by electric power and banking networks. Today's GDS infrastructure, however, is more focused on point-to-point than peer-to-peer communications. By that, I mean agents talk to the GDS and the GDS talks to the suppliers in a very linear way. Peer-to-peer communications and transactions enable a world wherein the merchandising of travel becomes a large, real-time, dynamically priced auction environment and where the providers of travel content (and by content, in this instance, I mean everything from an umbrella at Brookstone on a rainy day to a hotel room upgrade to tickets to The Rolling Stones) vie with one another to be sold. For instance, you may indicate (via a robotic avatar or "bot") to the "travel grid" (via the calendaring event I discuss below) your interest in traveling from Chicago to San Diego. The grid picks up on the contextual data it can gather about your trip and begins to hold an auction with travel asset providers (again, not just air/car/hotel but also restaurant reservations, entertainment venues, etc.).

As you near your departure date, the bidding becomes more intense. If your needs change, your personal travel bot arbitrates with new travel content providers that may be brought into the mix. In the end, all your travel needs have been accommodated and priced in an incredibly efficient manner. And this has been largely, if not entirely, without your or your travel counselor's intervention.

A scenario

Imagine a business traveler who has traveled from Chicago to San Diego. Her trip was automatically booked via the travel grid because her calendar event in Outlook recognized that her appointment was out of town. Her reservations at various restaurants have already been made based upon her preferences and the nature (status) of her guests. Likewise, her calendaring indicated an additional overnight stay for which she has no commitments.

Based upon her travel bot knowledge of her personal interests, it has purchased a will-call ticket for "Wicked" (although the shows "Chicago" and "Spamalot" both vied for the opportunity, "Wicked" won out as it most suited her tastes and the hotel has a marketing relationship with the theater, so she is getting a discount on her second night).

As she walks down the street, her GPS-enabled phone is notified of a Starbucks nearby, which offers her a coupon for a latte. Meanwhile, a Caribou Coffee in the vicinity has also text messaged an incentive on a coffee drink. All this is happening as she is being guided by a virtual docent who is notifying her of landmarks and their significance to San Diego as she passes them. I could go on.



Where does the travel agent fit in a world like this?

This is a tricky subject. While I think that travel agents will survive, if not thrive in this new environment, I am unsure as to whether travel agencies will have relevance. If we look at the reasons for the original formation of agencies, they were largely about the cost of being in the business (think 50 years ago about telephone networks, even 30 years ago about computing, photocopying, printing, fax technology didn't exist, etc.).

Today, access has increased to all the above-mentioned enabling technologies and the cost has dropped precipitously. They are generally affordable to an individual agent working from home as much as to an agency. Likewise, agencies provided for training and management of human capital, as a large part of agents' skills and value was as navigators of highly proprietary and cryptic systems. As the rise of Internet travel has created online self-booking environments and price transparency, the value of agents as "systems specialists" has been largely undermined.

Finally, agencies represented aggregated buying power and leverage to the suppliers. With each individual agent able to access a merchandising environment like the travel grid, it is conceivable that each agent could join a buying consortium which assembles virtually and exists for perhaps only days or hours—thereby providing the pricing power that the agency previously provided. So I can envision a decline in the relevancy for agencies even as I see an increase in demand for the services of travel agents.

Travel agents of the not too distant future will be domain experts. There will be fewer agents because of the automation I reference elsewhere, but they will be highly sought after by those travel consumers who realize that just because they can book all their own travel, they may nonetheless fail to create a great experience. They will be less expert in the manipulation of travel automation and more expert in destinations and the creation of experiences. Travel agents will provide considerable value to travelers who want to put the responsibility for a great travel experience in hands other than their own.

Back to the buggy whip

Global distribution systems are at a crossroads, much like electronic data interchange vendors were with the advent of XML. Many pundits predicted the rapid demise of EDI because of the promise and power of XML, yet the EDI vendors figured out how to leverage their substantial assets (networks, customers and content) and instead XML has become a protocol that has greatly enhanced, if not fundamentally changed EDI.

With global distribution system economics steadily under compression by suppliers and new GDS alternatives, direct connects and supplier.com Web sites, the end of the GDS is predictable if as an industry we fail to be bold, leverage the considerable assets at our disposal and define an entirely new metaphor for travel distribution and merchandising—and once again become the defining standard for travel automation.