Open Jaw Probe Into ITC Pricing: What's The Real Price?
Open Jaw

By Bruce Parkinson

In an Open Jaw survey of travel agents, nearly 80% expressed frustration with price fluctuations between the ‘shopping’ and ‘booking’ stages of an online ITC transaction. Consumers are complaining too; a recent CTV article highlighted examples of quoted prices for packaged vacations jumping considerably between the original query and the final booking window.

‘The discrepancies in the pricing these days are totally insane. Productivity definitely suffers,’ says Robert Durant, President, WDTravel.com.

Prices displayed during an online search are based on cached data that can be a few hours old. As most agents know, the only way to be sure they’re quoting the correct price is to go to the last screen before the booking is confirmed, where the software accesses live pricing and inventory. Reaching into live inventory for every pricing query would result in unacceptably long wait times.

Air Canada Vacations V.P. Marketing Nino Montagnese tries to put the volume of data that must be searched into perspective: ‘ACV has 65 connector cities in Canada flying into 8 main gateways, to destinations around the world, each one with a number of hotels offering many room categories. Loading the data used to take hours and the systems could only handle it once a day. Things are improving dramatically. For the last 6 months, the pricing gets cached 6 times a day – which means it is much more accurate.’

According to Softvoyage V.P. Dan Langevin, part of the problem is simply the nature of the beast. ‘The ITC model is what it is – a perishable product. Everything is about yield: What’s selling, what’s not and why.’ The result is a vast amount of pricing changes: Langevin says a major operator like Sunwing will make 15,000 price changes in a morning, while Transat, for instance, will make 50,000 price adjustments on a Thursday.

Langevin describes the process of how Softvoyage engines access current pricing: ‘Our automated tools constantly seek out the latest prices and inventory from tour operators, airlines and consolidators and bring it to a centralized database, which we call our ‘shopping’ database,’ Langevin says. ‘It’s not live, but it is updated frequently enough to be ‘virtually live.”

How frequently Softvoyage gets updated information depends on the operator. ‘It could be every 15 minutes or every two hours. We can only go in at certain times of day with some operators, due to bandwidth restrictions,’ Langevin says.

Al Budhwani, Payload Manager for itravel2000, says the more an operator is on the ball with pricing, the more fluctuations will be noticed. ‘We train our staff to go to the last screen, the ‘verify stage’, to make sure they get the real price.’ itravel2000 also tries to make the best of the situation: ‘Ultimately, we leverage the fluctuations as a sales tool. Telling the customer the price may change adds urgency to the sales message,’ Budhwani says.

Communicating the difference between shopping and booking is essential for online retailers, says TripCentral.ca President Richard Vanderlubbe. ‘The fact is, to get the speed that’s necessary for online shoppers you have to use cached data; a real-time inventory search for every query would simply take too long. You need to inform customers that they’re looking at a ‘smart’ brochure, but it is not completely live.’

Alex Handa, Vice President, HandaTravelGroup.com, agrees with Vanderlubbe. ‘The language needs to change on the OTA websites. Consumers need to understand they are in the ‘research phase’ and the price may be different once they book.’

Langevin says the situation is constantly improving, suggesting that pricing gaps between shopping and booking are much better than they were three or four years ago. He also says there have been significant improvements of late for two major operators – Air Canada Vacations and WestJet Vacations.

‘Air Canada Vacations has come a long, long way. They’re feeding us new information now and I think agents will find much more accuracy. The issue with WestJet Vacations stemmed from hiccups with the implementation of the SabreSonic system, and most of those are resolved. The WestJet Vacations database is powered by Softvoyage and we’re now seeing much more frequent and accurate pricing changes. It has been much better in the past 30-45 days,’ Langevin says.

‘The tour ops themselves are upgrading their back-end servers to be faster and more efficient,’ says Handa. ‘Don’t forget, some of these systems were built years ago. So pulling from the database will get easier.’ Handa says the entry of Comtec into Canada will give access to some new choices as well. ‘They are offering more custom applications and very strong architecture to tour ops and retailers.’

There’s no reason to expect operators to make fewer price changes in future. Canadians enjoy some of the lowest packaged holiday prices in the world thanks to a fiercely competitive marketplace where tour operators have shaved margins to the bone – and sometimes further. For operators, an intense focus on revenue management is the only way to survive.

Vanderlubbe says he too has seen improvement of late, but the key remains to be as clear and open as possible about the realities of the online booking process. ‘We have our set of challenges,’ he says. ‘But our approach is to tell our clients as much as possible about what they can expect. They just want to know what the real price is.’

Leave a Reply