Brazilian Software Market forTravel and Hospitality Industry Felipe Perlino August 2012
Summary • Travel services distribution is a billionaire market and fraught with intermediaries • Despite selling through indirect distributors is considerably expensive to Service Providers, it is vital to avoid empty inventory • (E.g.: empty seats on airplanes and empty rooms in hotels) • However, small and medium Brazilian Travel Service Providers are still excluded from modern distribution systems • Thus, there are huge opportunities for new businesses capable to include these players in the distribution systems • There are also similar opportunities for ventures capable to promote disintermediation in the Travel distribution chain¹1. In order to reduce distribution costs.
Who the players are Distribution Chain Simplified Services Distribution Customers Providers Channels Wholesalers Retailers Tour Operator Travel Agency Flight On-line Travel Consolidator¹ Agency (OTA’s)1. Peculiarity from Brazil and some other countries. It was born to serve Travel Agents Long Tail, but it have been transforming itself.
Service providers analysis Who are them and what is the opportunity size in Brazil? Served by • Airline CarriersDist. Channels (Level) • Hostels • Bus Carriers • Car Rental Suppliers • Hotels • Travel Insurances • Pousadas (B&B) • Chalets • Restaurants, Bars and Nightlife • Tour Attractions • Non-formal Private Accommodations • Currency Exchange • Shuttles • Motels • Campsites • Train Carriers . Market Size
Distribution chain overview¹ Wholesalers Retailers Services Providers Tour Operator Travel Agency • Air Carriers • Hotels • Pousadas • Bus Carriers • Car Rental Suppliers Flight On-line Travel • Tour Attractions Consolidator Agency • Chalets • Hostels • Restaurants, bars and Nightlife • Non-formal Private Customer Accommodations • Travel Insurances • Currency Exchange • Shuttles Companies • Motels • Campsites • Train Carriers 1st Connection 2nd Connection 3rd Connection1. This is a simplification. The distribution chain can be much more complex, with multiple connections, specially when abroad players are involved.
Group growth tendency Wholesalers Retailers Services Providers Tour Operator Travel Agency• Air Carriers• Hotels• Pousadas• Bus Carriers Flight On-line Travel•• Car Rental Suppliers Tour Attractions Consolidator ? Agency• Chalets• Hostels• Restaurants, bars and Nightlife• Non-formal Private Customer Accommodations• Travel Insurances• Currency Exchange• Shuttles Companies• Motels• Campsites• Train Carriers
Industry’s software solutions There are two main types of systems• 1) Internal control: Every players has its own “back office” system • E.g.: Hotels > Hotel “Property Management System” (PMS)• 2) Connection between players: Systems that empowers digital sales and makes inventory control, among others • E.g.: Central Reservation System (CRS)• Usually these systems pack many modules • PMS uses to pack hotel management, ERP and CRM • CRS uses to bundle Channel Management and Booking Engine, besides the CRS
Diving into industry’s systems Wholesalers Retailers Services Tour Op. WS Providers Travel Ag. WS Tour Operator Travel Agency • Air Carriers • Hotels Tour Op. BO Travel Ag. BO • Pousadas Airline Software • Bus Carriers OTA WS •PMS Rental Suppliers Car Flight On-line Travel Car Tour Attractions Rental Sofware Consolidator Consol. WS Agency • •Other “Back Offices” Chalets Consol. BO OTA BO • Hostels • Restaurants, bars and Nightlife • Non-formal Private Customer Accommodations • Travel Insurances Global Distribution System (GDS) • Currency Exchange Central Reservation System (CRS) • Shuttles Web Service Reservation System¹ Companies • Motels • Campsites Corporate • Train Carriers Travel Software Back Office Connection1. “BO”: Back Office.2. The Booking Engine is a requirement from this kind of system.3. “WS”: Web Service.
Systems that reach travel agencies • Although Physical Travel Agencies have been loosing market share, they are still enormously relevant for tourism distribution Gol WS Factors to be chosen (in order)¹ Tam WS Azul WS 1. Request availability and price for Consumer Airline 2. Commission offered and Operator’s service Carrier WS 3. Credit offered for Travel Agent Amadeus CMNet Sabre GDS CRS Worldspan Cangooroo Travel Agency CVC WS GapNet WS Tour Consolidator Operator WS WS Flytour WS Rextur ReservaFacil1. Despite this is the major tendency, sometimes it may vary.
Top investment opportunities According to previous information, the most prominent targets for an investment in Brazilian travel systems are: What the business should promote Which players should be able to face it Reduce distribution costs for Services Providers, Booking Engine, OTA, CRS* or Consolidator reducing intermediaries Empower Services Providers to participate on Booking Engine, OTA, CRS*, Consolidator or GDS the electronic distribution network Offer BRA Services Providers in electronic OTA, CRS*, Consolidator or GDS distribution network abroad Monetize Non-formal Private Accommodations Airbnb similar: unlikely to happen Approach Restaurants, Bars and Night Clubs OTA, CRS* or Consolidator from tourism distribution channels Offer a single environment for Travel Agencies, Consolidator dismissing the need of multiple systems* Including bundled products.
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