Description
It initially traces the history of Travelocity of it being the online portal to browse airline tickets and be able to book one online. It goes on to describe the business model of the company It then highlights the revenue model and also the scalability of the model. Finally it wounds up with the sustainability and also the limitations of the model.
Project 1: Travelocity
E-business
Travelocity
It was started in 1996 by Terry Jones, as a subsidiary of Sabre Holdings. Terry Jones had joined Sabre Holdings way back in 1971 as a travel agent. In his 25 years of stay at Sabre Holdings he reached the level of chief information officer before moving to Travelocity. Travelocity is headquartered in Southlake, Texas and has offices in San Antonio, San Francisco and New York City. 1 It was the first travel website that allowed users to browse through the airline tickets available and even book one. Today it is the second most popular brand in internet travel reservation model.2 It is able to generate revenue worth $ 10 billion annually through various kinds of bookings. A customer can book flights on any of the six major carriers. They can check the information given for a hotel before booking on any of 20,000 participating hotels.3 Over the years it has moved from a website that allowed the user to book airline tickets by redirecting the user to the respective airline website to directly booking the ticket on its own website. It has even changed the front end looks of the website to make it more user friendly. While booking a flight it requests a customer to enter details of the travel, like cities between which a customer will fly, the date of the travel, number of passengers, etc. It will then give a list of airlines offering lowest prices on that route, at the same time it will offer you to choose a seat with seat map. It also shows a rating that indicates which airlines are generally on time. One can also enable an option Fare Watcher which will indicate when prices on favorite destination drop. 4 As of now it allows one to book airline tickets, hotel rooms, cruises, packaged vacations and even rent a car on its own website.
Business Model
It has presence in both markets that is business to consumer (B2C) as well as business to business (B2C). In B2C, it allows a customer to book airline tickets, hotel rooms, etc. Although it started with booking tickets online its major revenue generator is booking done on hotel rooms and travel packages. 3 To build the trust in customers’ it has posted “Customer Bill of Rights” on
its website to indicate that customers will get what they deserve and Travelocity and its partners work towards it. Whereas in B2B it provides tools for real time bookings for meetings and provide customer with visibility and control over meetings. 5 To provide this service it has tie up with Worktopia and uses its Universal Meeting Solution (UMS) that automates the process of arranging small offsite meetings. The UMS allows Travelocity’s users to compare rates of hotels in one area and do a group booking on one single hotel or across hotels in one area. It also enables users to book halls for functions like conference, party, training, etc. With UMS it will be possible for corporate users to track their expenses and show them reports of their expenditure. This will allow the users to managed their expenditure minutely and plan for cost reductions. Through its subsidiary company Lastminute.com it allows low airfares on flights which were not able to fill all their seats. It also offers discounted accommodations on hotel rooms so that the hotels are able to increase the room occupancy ratio. It’s another subsidiary zuji.com is an online portal dedicated to Asia-Pacific travelers. It is a consortium of regional airlines, hotels and car rental services. Its main objective is to provide and promote tour packages in the Asia-Pacific region so that all the members are able to get business. 6
Revenue Model
All major airlines offer lower rates on tickets booked through Travelocity. Travelocity in-turn adds a certain margin to ticket bought by its customers, thus earning a profit. The airlines are happy to give tickets at discount as it helps them in selling tickets and increasing the number of customers per plane. The same model is applicable for hotels, renting a car and cruises. earns revenue from advertising on its website. 6
7
It also
Scalability
The model is scalable and can be applied to all the countries. Currently it has websites pertaining to countries in the region Latin America, Europe and Asia. It has acquired online
travel company of Europe, lastminute.com and leading Asia-Pacific online travel company ZUJI.
8
In India it has also acquired Travelguru, which is India’s leading hotel distribution and will
continue to operate separately. 9 Thus, by launching different websites for each country Travelocity has been successful in providing customized services (options) to citizens of each country. There is still scope for it to improve its market share in countries it is currently operating in. Also, it can still expect internet users to increase in future and at the same time increase in number of people willing to book tickets online. 10
Sustainability
The biggest advantage Travelocity had while starting its business was that its parent company Sabre Holdings itself was a travel agency in brick and mortar form. Thus, it did not have to form additional partnership with airlines and travel agencies. The tickets booked on its website could be easily sourced from Sabre Holdings. As it grew, it started forming new partnership for itself and the group as a whole. Some of its partners are igougo.com, cheaptotravel.com, holidayautos.com, worldchoicetravel.com. Over the years it has relied more on inorganic form of growth by acquiring companies like Lastminute.com, zuji.com, travelguru.com.11 This partnership or acquisition has helped it either to enter new business or a new market. In the past 15 years it has also launched a different website for countries in America, Europe and Asia by developing new partnership in those regions. It has been able sustain its business model and at the same time grow at a reasonable rate to maintain its position of second most popular brand in the world in online travel space.
Imitation
Travelocity model is imitable, right from the start its main competitor was Expedia and still remains the same. Other companies have also entered this space, like Kayak, CheapOair, Skyscanner, Dohop, etc.1 Looking at the revenue and growth potential of the segment some regional players have also started operating. In India players like makemytrip started operating way back in 2000. Some of the other players in the Indian market are yatra.com, Cleartrip, etc. It also includes sub-portals of indiatimes and rediff. It has been possible for other players to
imitate this business as the entry barriers are very low. The new player just has to establish partnership with airlines, hotels, car rentals, etc. Once, they are able to attain this it is not so difficult to replicate the model of Travelocity.
References
1.http://en.wikipedia.org/wiki/Travelocity 2.http://www.lasr.net/travelarticles.php?Travel+eBusiness+Models+%3F+Travelocity&ID=268 3.http://books.google.co.in/books?id=zb0cItqvLJUC&pg=PT517&lpg=PT517&dq=travelocity+e business&source=bl&ots=InJsDfbwBB&sig=e7x-O8CJiWolBrUp2RavoqD0eo&hl=en&ei=PcBnS8qbCo_KlAfBy9mjCA&sa=X&oi=book_result&ct=result&resnum=11&ve d=0CCsQ6AEwCg#v=onepage&q=&f=false 4.http://svc.travelocity.com 5.http://www.hospitalitynet.org/news/154000320/4042992.html 6. David King, Dennis Viehland, Jae Lee. 2006. Electronic Commerce – A Managerial Perspective. Pearson Prentice Hall 7.http://businesstravel.suite101.com/article.cfm/using_travelocity_to_buy_cheap_airline_tic kets 8.http://www.travelocity.co.in/ 9.http://timesofindia.indiatimes.com/...ty-acquiresTravelguru/articleshow/4912825.cms 10.http://www.lasr.net/travelarticles.php?Travel+eBusiness+Models+%3F+Travelocity&ID=268 11.http://www.travelocity.com/?IgnoreIpRedirect=yes
doc_386423446.docx
It initially traces the history of Travelocity of it being the online portal to browse airline tickets and be able to book one online. It goes on to describe the business model of the company It then highlights the revenue model and also the scalability of the model. Finally it wounds up with the sustainability and also the limitations of the model.
Project 1: Travelocity
E-business
Travelocity
It was started in 1996 by Terry Jones, as a subsidiary of Sabre Holdings. Terry Jones had joined Sabre Holdings way back in 1971 as a travel agent. In his 25 years of stay at Sabre Holdings he reached the level of chief information officer before moving to Travelocity. Travelocity is headquartered in Southlake, Texas and has offices in San Antonio, San Francisco and New York City. 1 It was the first travel website that allowed users to browse through the airline tickets available and even book one. Today it is the second most popular brand in internet travel reservation model.2 It is able to generate revenue worth $ 10 billion annually through various kinds of bookings. A customer can book flights on any of the six major carriers. They can check the information given for a hotel before booking on any of 20,000 participating hotels.3 Over the years it has moved from a website that allowed the user to book airline tickets by redirecting the user to the respective airline website to directly booking the ticket on its own website. It has even changed the front end looks of the website to make it more user friendly. While booking a flight it requests a customer to enter details of the travel, like cities between which a customer will fly, the date of the travel, number of passengers, etc. It will then give a list of airlines offering lowest prices on that route, at the same time it will offer you to choose a seat with seat map. It also shows a rating that indicates which airlines are generally on time. One can also enable an option Fare Watcher which will indicate when prices on favorite destination drop. 4 As of now it allows one to book airline tickets, hotel rooms, cruises, packaged vacations and even rent a car on its own website.
Business Model
It has presence in both markets that is business to consumer (B2C) as well as business to business (B2C). In B2C, it allows a customer to book airline tickets, hotel rooms, etc. Although it started with booking tickets online its major revenue generator is booking done on hotel rooms and travel packages. 3 To build the trust in customers’ it has posted “Customer Bill of Rights” on
its website to indicate that customers will get what they deserve and Travelocity and its partners work towards it. Whereas in B2B it provides tools for real time bookings for meetings and provide customer with visibility and control over meetings. 5 To provide this service it has tie up with Worktopia and uses its Universal Meeting Solution (UMS) that automates the process of arranging small offsite meetings. The UMS allows Travelocity’s users to compare rates of hotels in one area and do a group booking on one single hotel or across hotels in one area. It also enables users to book halls for functions like conference, party, training, etc. With UMS it will be possible for corporate users to track their expenses and show them reports of their expenditure. This will allow the users to managed their expenditure minutely and plan for cost reductions. Through its subsidiary company Lastminute.com it allows low airfares on flights which were not able to fill all their seats. It also offers discounted accommodations on hotel rooms so that the hotels are able to increase the room occupancy ratio. It’s another subsidiary zuji.com is an online portal dedicated to Asia-Pacific travelers. It is a consortium of regional airlines, hotels and car rental services. Its main objective is to provide and promote tour packages in the Asia-Pacific region so that all the members are able to get business. 6
Revenue Model
All major airlines offer lower rates on tickets booked through Travelocity. Travelocity in-turn adds a certain margin to ticket bought by its customers, thus earning a profit. The airlines are happy to give tickets at discount as it helps them in selling tickets and increasing the number of customers per plane. The same model is applicable for hotels, renting a car and cruises. earns revenue from advertising on its website. 6
7
It also
Scalability
The model is scalable and can be applied to all the countries. Currently it has websites pertaining to countries in the region Latin America, Europe and Asia. It has acquired online
travel company of Europe, lastminute.com and leading Asia-Pacific online travel company ZUJI.
8
In India it has also acquired Travelguru, which is India’s leading hotel distribution and will
continue to operate separately. 9 Thus, by launching different websites for each country Travelocity has been successful in providing customized services (options) to citizens of each country. There is still scope for it to improve its market share in countries it is currently operating in. Also, it can still expect internet users to increase in future and at the same time increase in number of people willing to book tickets online. 10
Sustainability
The biggest advantage Travelocity had while starting its business was that its parent company Sabre Holdings itself was a travel agency in brick and mortar form. Thus, it did not have to form additional partnership with airlines and travel agencies. The tickets booked on its website could be easily sourced from Sabre Holdings. As it grew, it started forming new partnership for itself and the group as a whole. Some of its partners are igougo.com, cheaptotravel.com, holidayautos.com, worldchoicetravel.com. Over the years it has relied more on inorganic form of growth by acquiring companies like Lastminute.com, zuji.com, travelguru.com.11 This partnership or acquisition has helped it either to enter new business or a new market. In the past 15 years it has also launched a different website for countries in America, Europe and Asia by developing new partnership in those regions. It has been able sustain its business model and at the same time grow at a reasonable rate to maintain its position of second most popular brand in the world in online travel space.
Imitation
Travelocity model is imitable, right from the start its main competitor was Expedia and still remains the same. Other companies have also entered this space, like Kayak, CheapOair, Skyscanner, Dohop, etc.1 Looking at the revenue and growth potential of the segment some regional players have also started operating. In India players like makemytrip started operating way back in 2000. Some of the other players in the Indian market are yatra.com, Cleartrip, etc. It also includes sub-portals of indiatimes and rediff. It has been possible for other players to
imitate this business as the entry barriers are very low. The new player just has to establish partnership with airlines, hotels, car rentals, etc. Once, they are able to attain this it is not so difficult to replicate the model of Travelocity.
References
1.http://en.wikipedia.org/wiki/Travelocity 2.http://www.lasr.net/travelarticles.php?Travel+eBusiness+Models+%3F+Travelocity&ID=268 3.http://books.google.co.in/books?id=zb0cItqvLJUC&pg=PT517&lpg=PT517&dq=travelocity+e business&source=bl&ots=InJsDfbwBB&sig=e7x-O8CJiWolBrUp2RavoqD0eo&hl=en&ei=PcBnS8qbCo_KlAfBy9mjCA&sa=X&oi=book_result&ct=result&resnum=11&ve d=0CCsQ6AEwCg#v=onepage&q=&f=false 4.http://svc.travelocity.com 5.http://www.hospitalitynet.org/news/154000320/4042992.html 6. David King, Dennis Viehland, Jae Lee. 2006. Electronic Commerce – A Managerial Perspective. Pearson Prentice Hall 7.http://businesstravel.suite101.com/article.cfm/using_travelocity_to_buy_cheap_airline_tic kets 8.http://www.travelocity.co.in/ 9.http://timesofindia.indiatimes.com/...ty-acquiresTravelguru/articleshow/4912825.cms 10.http://www.lasr.net/travelarticles.php?Travel+eBusiness+Models+%3F+Travelocity&ID=268 11.http://www.travelocity.com/?IgnoreIpRedirect=yes
doc_386423446.docx