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.

Resort in Pench National Park

The Gondwana or the “Land of Gonds” in central India which includes the Pench Tiger reserve, strectches across Madhya Pradesh and Maharatsra. The common languages here is the Gondi, a spoken language. They depend on forest produce for sustenance and livelihood. The history of Pench is rich and enthralling. The history of Pench discloses fascinating and delightful facets of culture and life cycle of the societies of Pench.

The Pench tiger reserve is spread over two states, the Seoni and Chhindwara districts of Madhya Pradesh and Nagpur district of Maharashtra. Pench M.P.covers around 757 squares Kms and Maharashtra covering an additional covering 741.22 sq kms has also been declared Pench tiger reserve. Together these two are home to breeding tigress which in turn plays an important role in revitalising the meta-population of tiger reserves.

Interestingly, according to local lore a boy named Mowgli was brought up by a heard of wolves and was found in the Sant Bawadi village. A very famous “The Jungle Book” is based on the Mowgli and its land Pench national Park described by Rudyard Kipling’s. Rudyard Kiplings describes Mowgli and its land “Pench national Park” in his very famous “The Jungle Book” which is a collection of stories by him using animals in a manner to give moral lessons. Also mentioning about the Valley of Ben Ganga River near Kanivadi village where Sher khan of the children’s favourite fanciful tale met his end.

During your visit to Pench and opting for a thrilling Pench jungle safari you will notice the traces of the ancient happenings occurred.

The Living forest: Flaura & Fauna- The remarkable landscape of Pench is the hills, the dense forest and open meadows. Pench forest is largely made up of dry deciduous forest where large tracts of Teak, bamboo, Saaja (crocodile tree), Ghost tree, Mahua, and many more fruit trees. The region has dense red soil rich in lime, magnesia, iron in which dry crops and cotton flourish.

The Iconic the king “Tiger”- The tallest living species in the cat family. The leopard is an intelligent elusive carnivore that manages to sustain itself even in forest dominated by tigers. The other carnivores are dhole (wild dog), jungle cat, small Indian civet, Wolves, Striped hyena, Sloth bear, Jackal, and common palm civet make up the rest of the carnivore fauna of the Pench Tiger Reserve. The pray of these carnivores are Deer, Sambhar, Blue bull, Bison etc are most commonly sighted. Though the flying squirrel, porcupine and Indian pangolin are also resident of the park, spotting any of these is rare.

Bird Watching in Pench: The Pench national park is known as the bird watchers paradise. It has 325 species of birds which includes resident and migratory both. Pench is attaining recognition as one if the India’s premium birding destinations. Bird life is so rich in Pench national park because water birds are attracted to the reservoir situated in the park. Winter migrants includes snipes, sand pipers and wagtails. The cormorants, storks, egrets, fishing eagles and kingfishers have colonised the reserve. The diversity of habitats at Pench is combined with population of predator and prey species make it ideal for vultures. Lots of tourist choose for Pench jungle safaris only to sight vulture which is rare and available in few wild life sanctuaries only.

The Digital Future of the Hotel Industry Starts at Home

During my many years of travel in the service industry and having stayed in hundreds of hotels worldwide, it’s clear that the past five years have brought about enormous change in the hotel industry.

Innovation with architecture, interior design and guest comfort is at an all-time high. Widespread revitalisation has been incredibly successful in meeting guest expectations. Yet, in an increasingly demanding world, there still also remains a huge opportunity to truly create a home from home for the traveler.

Improvement On the Old?… How Much Has Actually Changed in The Hotel Industry?

In so many areas, the revitalisation of hotels continues to occur through the use of innovative products. Yet, if you look closely, you begin to realise that most ideas are limited to enhancing old, existing structures, whilst missing vital customer life cycles.

In a world where customer loyalty is hard-fought and guest expectations are continuing to rise, what’s truly needed is a shift to more dynamic business models: Low risk, digital strategies that are truly in sync with customer’s loves and expectations.

So, What’s Missing from the Guest Experience?

Be it a family, business clients or honeymooning couples, people are now approaching their travel with exceedingly high expectations. In today’s environment, we have access to so much. We have a plethora of choice in our everyday lives and we expect the same standard of availability, ease and access when we enter a hotel.

Modern Expectations

Take my example: At home, my WIFI works seamlessly, without the need for daily passcodes. I can fill my fridge with my favourite food, available for me whenever I want it. I can order it or purchase it on a whim to make my Friday night extra special. I control the temperature of my house, so that when I come home, it’s comfortable. I book massages or entertainment online to consume immediately.

These are all ‘givens’ for me. And I expect them – and more – from my hotel.

I’d love to be able to choose my preferred pillow prior to my arrival. I want to be able to book a reservation at a restaurant or spa with ease and without constant phone calls, or easily choose a city tour without visiting reception. If I have a problem during my stay, I want it fixed fast – not needing to chase a maid or deal with a busy receptionist.

If you, as a hotel, can provide a solution for me to easily manage my needs – through the entire lifecycle of my experience – from booking, staying, right through to months after my stay, then you will earn both my loyalty and my revenue.

Touch and Influence Through Mobile

But how could a hotel achieve this? By adapting pragmatic digital strategies within the guest life cycle. Mobile as our main form of communication and source of information, is one ideal solution.

Located directly on the home screen of the guest’s own device, you have the opportunity to live, literally, in the palm of their hand and be just a touch away from a direct, on- going connection. Your hotel’s physical attributes offer them comfort, whilst your digital presence offers them a 24/7 relationship with you.

A Thriving, Connected Business

The potential for true connection with customers – before, during and after their physical stay – is vast; the opportunities an innovation in this area, endless. Yet, the fact remains that hotels aren’t yet harnessing a personalized digital customer strategy.

Travel to Costa Rica: Hotel Reviews

The Best Western, Costa Rica
Rating: 3.5/5 Stars
It was only 15 minutes away from the airport and right in the middle of the city. I felt as though it was a nice transition from being in the U.S. to being in a different country since it is a big, international hotel chain. Everyone we spoke with spoke perfect English but they were also locals so they were open to sharing any advice you might need. The rooms were pretty average and clean with a great view of the courtyard and pool area at the center of the hotel. We swam in the pool during the day (very clean and well kept) and the hot tub was located to the side, a little more private, with an ‘infinity pool’ kind of feel. Overall, it was a simple hotel that offered just enough for us.

Lomas del Volcan, San Carlos
Rating: 4/5 Stars
To this day, it has been one of the most unique and memorable places I have ever stayed. It might seem sketchy when you have to go off the main road and drive up this dirt trail on an incline for a bit, but then you reach a normal road and it takes you right to the main hotel site to check in. The staff was attentive and welcoming. It was a simple dining center, both indoor and outdoor with a terrific buffet. From there, we had to keep going up the incline and walked with our luggage to our own huts. (unfortunate downside: no one carting you around the resort) Towels shaped into flamingos were propped up on each bed accompanied by rose pedals. The bathroom was very large and open which was nice when sharing with others. We had a little front porch and a back porch opening up to all the beautiful surrounding nature. When we would head out in the mornings there would be monkeys swinging around the trees, right outside our hut!! It is also very close to all the near by activities, right off the Arenal Volcano!

Condovac la Costa, Playa Hermosa
Rating: 4/5 Stars
We stayed at this large resort right off the sandy beaches. There is constant uphill and downhill traveling so you’re in for a good work out but luckily there were golf carts roaming around to help guests get around. The welcome desk was very pleasant, with tons of people around to assist you. The rooms were okay, not completely 4 star worthy, but it was everything else that made me give it this rating. They had a tennis court, game room, pool area, karaoke, infinity pool, zumba lessons, salsa lessons, a great restaurant, gift shop and most importantly: their private beach entrance which only lead you to do more! We barely even stayed in the hotel room the amenities kept us so busy. We had no problems with anything here! Highly recommend.