Sightseeing industry distribution standards – 4 categories to focus on
September 30th, 2019
I seem to have been debating the merits of technology standards for what seems like a very long time. The earliest mention I can find is me speaking in 2010 at an Open Travel conference. In tech terms in this industry, that seems like an eternity. Since then a great deal of debate but very little action.
The topic is bubbling up again and it was featured in Arival’s most recent industry survey (which if you have not completed yet on behalf of your organisation, please do). So perhaps it is timely to document where we are currently at with industry standards.
What is a standard?
A standard is a consensus how, at a cross-industry level, we should solve a problem. It is not necessarily code, it could be a process, a data format or even as simple as agreeing on terminology.
When adopted, standards are generally adopted voluntarily.
Standards are normally agreed at a base technology level – e.g. we all agree how a web page may be built (and therefore browsers can browse pages created by any web designer) however we don’t have standards for what content should be on a web page (beyond grammar & spelling!).
What is the motivation for having standards?
An engineer may spend 4 days connecting a reservation system with an online travel agent so that prices & availability may flow one direction and bookings may flow the other.
The engineer may after this throw their hands in the air and say “if only every online travel agent worked the same way, we could complete this this work in 1 day rather than 4 – lets have some standards”
This is a good reaction, one that we we should continue to have as our initial instinct. We want engineers to spot and fix issues, especially issues that have technology solutions.
However, as this article outlines later, fixing one thing can lead to secondary effects so we have to be careful not to fix every problem we see…. Some problems should be left as problems, purposely creating inefficiencies so that we retain the decentralised market as we know it today.
Top level categories
If sightseeing & experience industry wide standards are going to be adopted at all we should focus on standards that fall into three main categories:
- Cost reduction – our industry just doesn’t have the technology revenue per booking to support complex technology features unlike e.g. the flight or hotel industries. We ALL share the cost reduction motivation at an industry level
- Admin & Operations – handling specific situations where everyone pretty much works the same way
- Sustainability – help make the industry most sustainable / environmentally friendly
(There is a fourth category listed later)
Sightseeing & experiences tech companies pay the same high salaries for developers as hotel and airline industries do. However our product is much less homogenised and the average transaction value is 10% of a hotel booking. i.e. we are collectively solving a more complex problem with lower income potential. We should all be motivated to remove costs from working together as much as we possibly can:
- Get rid of net rates – lets just distribute retail rates and % commission. So much simpler
- Get rid of volume based pricing / quantity based pricing – e.g. 2 people for 200 USD, 3 people for 250 USD, where the per person price varies based on booking size. Its just too messy.
- Get rid of family rates – 2 adults, 1 child at a different price to 2 adults, 1 child totalled. We need a simpler way of solving this than loading a rate named “family rate” that you book 1 of, and have 3 people turn up. At the very least this will help fix discrepancies in booking numbers that companies report. (1 booking on a family rate can be 3 people)
- Supplier reservation systems should be able to push a message to the retail travel agents saying that something has changed – please come and take the latest data for a certain tour. Otherwise what happens is that online travel agents hit supplier systems constantly. When you have 20,000-50,000 tours in your system the supplier reservation systems are spending a fortune on tech just to support this constant checking. Lets get rid of this workload and enable online travel agents to just check when something has actually changed
Some suppliers will shout “But we need these rates”. Yes, but they also need supplier tech platforms to be affordable, to be viable without significant investment and to be independent from the retailers…. something has to give….
Admin & Operations
A few areas where we could collectively agree an approach may be helpful:
- Refund requests or out of contract cancellations – currently a customer wants a refund as their experience was poor in some way. They contact the online travel agent. The online travel agent contacts the supplier. They both wait….. sometimes upto 24 hours is permitted before the supplier has to respond to the retailer (as not all suppliers work 7 days a week, this is how it has to be). During this period the customer jumps on social media and starts to scream about the retailer saying they will never book with them again…… can’t we all, collectively, come up with a better way of doing this so we don’t have this delay and customer social media meltdowns?
- Hotel pickup configuration & handling – hotel pickup strategies are horrendous at a cross-industry level. We have some retailers ignoring hotel pickups completely, others using different hotel names to the hotel name that the suppliers are expecting (hotel retailers are especially bad at that). When I look through customer service requests a good proportion of them are to do with hotel pickups gone wrong. Before we have autonomous vehicles handling hotel pickups (!), can we fix this? Requires change from retailers and supplier reservation systems
- Booking references – I introduced this back in 2012 when Viator permitted us to say what reference we wanted on a supplier ticket…. all booking references should have the retailer incorporated into them – e.g. Viator-111111 rather than 111111. If you have ever done customer service at a supplier and the customer emails saying they have reference 111111, you spend a good few minutes trying to work out whose reference that is – and therefore where to start looking for the cause of the problem…. Lets just put the retailer name at the start of all booking references and the problem is gone.
I admit I am not completely clear what standards would be useful here. However we do need to collectively improve our approach to the climate crisis and cross-industry standards could assist with that. For example:
- What is a captive animal tour? Can we all agree what a captive animal tour is and that they should be delisted. (See previous article about this)
- Overtourism – suppliers know what is likely to be busy, how can we help retailers not push these zones during busy periods
More work to be done here on what exactly would make a difference, and what the industry would as a whole say yes to. Not my field of expertise sadly….
The fourth category
If you want to take a more competitive approach, there is an argument for a fourth category of standard – whatever it takes to increase cross industry innovation
I have talked about this before, in tours (not attractions / activities) there are two industries forming:
- The verticalised – e.g. Airbnb, Klook, GetYourGuide, Huangbaoche – who retail in their own brand, use their own tech, and operate tours in their own brand
- The horizontal – e.g. everyone else – where you have a retailer brand, the reservation system and the supplier trading in their own name
The advantage the vertically structured companies have is speed of innovation. Just like Uber can make any change at any layer of their business that they wish – their app, the drivers, the vertical tour operators can also do this.
Speed of innovation generally will win over time.
The horizontally structured companies have to, if they want to create a new innovation, convince retailers to make the change, the res systems to make the change and the suppliers to make the change. This just won’t happen…… already you can see that cross-industry distribution has ossified to what was announced by retailers in 2012-2015. This ossification will continue.
However, I am not clear how you deliver standards in this category without getting into standardising areas of functionality and API design that will remove so many significant inefficiencies that we end up with “winner takes all” in the market rather than a decentralised industry.
e.g. if we start to create standards around
What could happen is that either:
- Too easy for suppliers to churn between reservation systems – as you could easily build import tools – leading to winner takes all in that market
- The main core of the market becomes too homogenised, enabling innovators to go around the edges, innovate a completely new approach and solution, and be reassured that those companies who have said they will stick to standards won’t react because their hands are tied
Depending upon your perspective, chances are you don’t find this outcome appealing.
How would I solve this conflict
I have a two step plan:
- We should do the admin / operations, cost saving & sustainability standards on a global basis. That I am good with, as long as any group setup to co-ordinate it understands the reasoning for the limited scope of their collaboration. Their terms of reference must state that standards collaboration is limited in scope over the longer term.
- Set one big standard:
Retailers should connect to reservation systems rather than reservation systems connecting to retailers
Retailers generally have more development resources to do code development than reservation systems.
They will scream that they can’t connect to 100 reservation systems all with different formats.
However retailers are taking funding in the tens to hundreds of millions of dollars. Reservation systems do not take this level of funding, and suppliers don’t want reservation systems to be taking large funding rounds as then the supplier becomes the money tree to pay back all the VCs who invested. So retailers have to do this for the sake of the industry.
Enables reservation systems to innovate by adding fields, improving content, creating new approaches, and the innovative retailers can use those capabilities immediately. The less innovative retailers can continue on minimum viable connectivity like they do today.
i.e. we retain innovation potential throughout the stack. Fundamentally, thats the only way to compete with the verticalised platforms – Klook, Airbnb, GetYourGuide, Huangbaoche…….. who otherwise will innovate faster (due to being vertically integrated) and ultimately win.
I did actually suggest this back in 2012 when I was running all the first connectivity projects for the leading retailers (first to connect to Expedia, GetYourGuide, Veltra, HotelBeds, TourRadar….) ….. 3 of those 5 now do connect to supplier systems and one other originally did but then changed their mind after doing their integration and now expects reservation systems to connect to them.
I don’t think the larger players will do this now as everyone is too locked in to the inferior approach. But this is what companies SHOULD do if they believe the future industry winners will be defined by innovation (which it may not be, thats another blog post!).
Finally, we should disregard the view of the companies that want to run verticalised platforms as they have already, effectively, said there is no need for supplier reservation systems as they can provide all the necessary tools. They should not be in any discussions around cross-industry standards until they, in public, are clear on their longer term motivations.
With my business Autoura I have said that if retailers want to sell our autonomous vehicle sightseeing, they can connect to us. We won’t be connecting to them. We already have a fairly mature API with much more to come (now just need the autonomous vehicle part!)
Primarily this decision was made because we believe the retail experience is the start of the real-world experience and we, as a “tour operator”, need to influence the retail experience of our own service rather than just receiving transactions. By mandating that it is our API used at the retail stage that gives us sufficient capability to influence the retail customer experience and to iterate that customer experience over time as we learn more about this nascent product category.
i.e. not really about standards however a real example showing the full stack innovation benefit of the retailer > reservation system connectivity approach.
There is a nuance to this position that my existing partners know, but don’t want to get too deep into it here as this is an article about standards, not about distribution! Besides, can’t explain everything we are doing 😉
Image: Flickr: Kristoffer Trolle
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