Travel Advisory

With the conflict in Iraq looming earlier this year, Vancouver-based travel management firm BTI Canada put its sophisticated IT systems on high alert. Then as the drums of war grew louder, BTI went into action, running a report that showed every client with travelers still in the mid-east region

and where they were.

“”We went through client by client and phoned each one of them,”” explains BTI senior director of e-business Michael Carson. “”We’d say, ‘We see so-and-so is there. Do we need to make arrangements to get them out?'””

From a technological point of view, it was a no-brainer — BTI had CRM systems in place that made it easy to do. But the customer-relations impact was incalculable.

This is exactly the kind of creative use of technology that will be needed to pull the travel industry back from the brink, says industry analyst Henry Harteveldt of Cambridge MA-based Forrester Research Inc.

After years of internal turmoil, some of it the effect of disintermediation by the Internet, the industry today is reeling. Thirty per cent of airliner capacity sits idle. Major agencies and airlines have gone belly up or — like Air Canada recently — sought court protection from creditors.

The companies most afflicted blame 9/11 and the Iraq war. Travel volumes went down — and more surprisingly stayed down — by 15 per cent after 9/11, says Joe Herzog, vice-president and general manager at Sabre Canada, a subsidiary of the U.S.-based global distribution system (GDS) operator. The Iraq war cut out another 15 per cent — although some of that has come back. SARS (severe acute respiratory syndrome) could hit the industry harder and last longer, Herzog warns.

“”It’s like in a boxing match,”” he says. “”9/11 knocked us to our knees. With the Iraq war, we lost consciousness for a moment. Now with SARS, it’s, ‘How much more can we take?'””

But critics like Harteveldt, and he’s not alone, say that at least some of the industry’s wounds are self-inflicted. Not many companies have shown the kind of flare for using IT in their marketing that he believes will be a key to survival. “”In general, this industry couldn’t market its way out of a wet paper bag with a hole in it,”” Harteveldt says.

Before the attack on Iraq, he offered the industry a savvy IT-based prescription for coping with crisis and reviving businesses after the war. The first part involved exploiting existing reservations and CRM systems to segment customers by destination and departure time, and then schedule e-mails to communicate war-related travel advisories, cancellations and delays.

If airlines and agencies had done the recommended initial work of gathering complete, up-to-date contact information, they could even e-mail customers on their cell phones or PDAs while in transit, garnering extra customer-relations brownie points — and presumably firmer customer loyalty.

The second part of the cure was to come after the crisis passed. Focus on your best, most profitable customers. Send personalized e-mails encouraging them to travel. Or send messages with special offers to reward those who continued to travel through the crisis.

“”I haven’t seen anybody go out with any kind of intelligent win-back campaign,”” Harteveldt says. “”That’s a problem in this industry. They suffer from attention deficit disorder. They forget the follow-through.”” And it’s not from lack of funds or technology, he says. “”It’s more bad management.””

A few companies are using CRM and e-mail very well, he concedes – regardless of how well they dealt with the war. Just not very many, and none he’s aware of in Canada. This is despite most airline, hotel and car rental companies having at least basic CRM systems in place. He cites Delta Air Lines as one that does do a good job of being “”e-mail engaged”” with its customers.

CRM and e-mail-driven personalized marketing are no panacea, though, Carson notes. Some Canadian carriers and agencies do it, he says, but others like Calgary-based Westjet don’t, and for good reason. They market primarily through their Web sites and don’t have loyalty programs.

“”Their loyalty is created by price,”” Carson says. “”And by always having friendly crews and on-time departures.””

He also argues that while personalized CRM-based marketing makes good sense in the leisure travel market, it pays fewer dividends in the business market. Most corporate customers are so intent on reducing costs that marketing efforts to encourage more travel are rarely welcome, he says.

Perhaps it’s because more Canadian companies view the market the way Carson does that the industry here generally lags the U.S. in its use of customer-facing technology. “”When was the last time at a Canadian airport that you saw a self-service kiosk where you could walk up and check yourself in,”” Herzog asks? “”In the U.S., they’re everywhere.””

While the industry here “”has done some good work”” in fostering another kind of self service — online corporate self-ticketing services like the ones BTI provides to its clients — the take-up rate in Canada has been markedly lower than in the U.S., Carson concedes.

A contrarian might note that U.S. travel companies, especially airlines, have hardly been immune to the effects of 9/11 and the Iraq war — despite their supposedly more widespread and creative use of technology.

Still, whether you’re a Canadian or American travel company there is a persuasive logic in the notion that IT, while no silver bullet, can make a vital contribution — and not just to creating demand and building customer loyalty.

There are other areas where work is needed. “”The travel industry is still alarmingly reliant on legacy systems, some of them, like reservation systems, dating back 30 to 40 years,”” Harteveldt notes. Not that the airlines, GDSes and hotel chains haven’t upgraded and enhanced systems in that period, he hastens to add.

“”But you can only perfume the pig so much. It’s still going to oink and it’s still got a curly tail. There’s a lot of rebuilding to be done.””

Big hotel chains invested heavily in technology in 1999-2000, Harteveldt notes. More recently many have innovated using wireless networking for both operational and in-room Internet access applications. But too many have yet to fully exploit the technology they have in place, he says.

Harteveldt believes the industry, led by top North American and European airlines and hotel chains, must begin to integrate customer-facing technologies and marketing to create new efficiencies and synergies. Technology standards need to be set and the potential of enabling technologies like Web services explored. The U.S.-based Open Travel Alliance is doing some of this, he notes, but more work is needed.

“”It’s not only an opportunity,”” Harteveldt warns, “”it’s an imperative.””

Technology-based innovations in creating demand are just one part of the imperative, though. IT, as Herzog notes, can also still do what it’s always done well — drive costs out of an operation.

“”There has never,”” Herzog says, “”been a better time to save money. Traffic is down and all these companies have giant infrastructures. If they’re going to survive, they’re going to have to have rock bottom costs. If they can do more with technology to ensure that, this is the time to invest.””

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