Bill Hannigan Speech to the Dallas Friday Group in Dallas, TX - March 30, 2001

"The Future of Travel"

Sabre Chairman, President and CEO Bill Hannigan addresses members of the Dallas Friday Group, an organization of local business and government leaders who meet to discuss topics of current public interest. Hannigan talked about how the travel industry is evolving and what the trends will mean for travelers.

I appreciate the opportunity to be here with the Dallas Friday Group.
It's always interesting to think about what the future will be like.
And with all that is happening in the world of technology, travel is truly being transformed.
We're seeing exciting developments that will impact consumers, suppliers, and businesses alike.
For example, I'm holding a typical cell phone, which most of us use every day. (No, I don't plan on taking phone calls during my speech, in case you were wondering.)
We at Sabre believe that the cell phone will become an important tool for travel in the near future even within the next year.
With a cell phone like this, you'll be able to:

Check in for your flight whenever and wherever you want to. You'll speak your flight information into your phone. Voiceprint technology will verify your identity. Then the system will transmit an encrypted bar code to your phone which will be your boarding pass.
We think you'll use your cell phone or other wireless device as a travel kiosk. You'll be able to plan and book every aspect of your trip, and receive special services such as promotions, coupons, and event notices.
Once you arrive at your destination city, you'll be able to receive any type of map or directions from a next-generation phone.
And something else I think you'll appreciate you'll automatically be notified by cell phone or PDA when your flight plan is changed or disrupted.
You'll check your bags using electronic bag tags. And then your luggage location will be transmitted to you during your trip. So if your luggage misses any checkpoints along the way, you will know almost immediately.

These are just a few of the innovations that use wireless technology being developed by our Sabre Labs as we speak all of which we expect to be available to airlines over the next 12 months.
Now that I hope I've gotten your attention, and given you a sample of where we think travel is headed.
Let's look at the high-level trends in the travel industry, which are driving this kind of innovation.
And then, I'll talk about the implications for you as a traveler. Mixed throughout, I'll share some examples of things Sabre is doing to enable the transformation of travel.

Industry Evolution

First, what's happening in the travel industry?
Well, the traveler is becoming more empowered. That's because you as travelers have a lot more options about how you will shop for and book your trips. The Internet is playing a major role in this trend, along with other technology developments.
For example, you probably shop for travel using multiple distribution channels. By this, I mean you may often book trips through your travel agent. But you might sometimes book online as well.
Then, for another trip, you might call an airline directly, or simply visit the airline's web site. Finally, you may book your business trips through your company's online travel system.
In the past, you were more likely to book through the same channel consistently. But over the past few years, travelers have become more channel agnostic.
That is, you no longer have an inherent commitment to just one channel
you use the one that makes sense for a particular trip. You, as travelers, have become more savvy.
Another trend is the changing role of travel agents.
Now, conventional wisdom says: traditional travel agents the middlemen are going away as more and more people turn to the Web.
But the truth is: About 60 percent of all travel is still booked through traditional travel agencies. So, while we do expect this market share to decline to 40 percent over the next four years, we don't expect travel agents to disappear.
Most travel agents are deploying new business models and offering customers more services online themselves often using their own customized web sites.
Many travel agents are reducing their reliance on commissions from suppliers by adding new revenue streams, and they are learning to manage their customer relationships to bring more value.
Finally, many are consolidating to reduce costs and gain economies of scale.
We think that smart travel agents will aggressively evolve their value propositions as the marketplace changes, and they will survive and even prosper in some form.
Another trend: online booking is growing exponentially.
In the world of e-commerce, travel is king. Travel outpaced the next four online product categories combined last year that's music, books, software, and electronics.
In 2000, 20 billion dollars worth of travel was sold over the Internet. But online travel still has a lot of room to grow.
There are three online travel distribution channels:

Consumer direct that's web sites like our Travelocity.com or Microsoft's Expedia
Supplier direct that's going to an airline's web site
and corporate travel systems.

All three of these channels combined accounted for only about 11 percent of the total travel sold in 2000.
Yet, we expect online to account for more than 30 percent by 2004.
So, despite the dot.com meltdown of last year, online travel still holds a lot of promise and is flourishing and, at least in our case, it's a sustainable model.
One contributor to this growth will be the phenomenal rise of the online corporate channel.
As you know, corporations are always looking for ways to cut costs. And travel is often a major cost center. According to the market analyst group, Phocus Wright travel is the number-two indirect expense for most companies.
Online corporate travel systems let companies cut travel costs by 20 to 30 percent because they make better use of negotiated rates with suppliers, meaning this is a policy-based tool that insures compliance with corporate travel policies.
Companies can also integrate their online travel with their expense report systems to create even more efficiencies.
That's why online corporate travel systems handled 4.4 billion dollars of travel last year. But by 2005, they are expected to handle 33 billion dollars of travel, according to Jupiter Research.
And it's why we acquired GetThere a corporate online travel company last year and combined it with our own Business Travel Solutions, but I'll talk more about that later.
Another travel trend we're seeing is travel suppliers are changing their business models.
By travel suppliers, we mean airlines, rail and bus lines, hotels, car rental companies, cruise lines, and so on.
We are seeing suppliers forming more alliances and consolidating as witnessed by the recent flurry of pending mergers and acquisitions among airlines.
As always, suppliers need to cut costs and maximize revenues as all corporations do.
As a shopper, that can be good news or bad news for you.
The good news is: suppliers are becoming better at one-to-one marketing making their products and services more tailored to you particularly for their high-yield corporate travelers.
And of course, technology is evolving to enable all of these trends to take place.
We're constantly seeing new innovations emerging in hardware, software, and wireless.
At the same time, the travel industry is gaining the ability to integrate massive, complex systems and to use intelligent agents (advanced navigational software tools) to bring important customer and supplier information to the forefront faster.
More empowered travelers, evolving travel agency models, growth in online and corporate travel systems, changing supplier models, and emerging technologies: these trends provide a backdrop for what's happening and about to happen in the travel industry.
Now, let's talk about what these trends will mean to you.

Implications for Travelers

How will your travel experience be transformed?

In a nutshell, I believe it will become more convenient, offer more options, and be more customized.

More Convenient

On the travel supplier side, we're seeing more control moving to travelers through the development of advanced software and automated processes.
For example, airlines in the future will be able to create flight schedules that better meet the needs of consumers.
Today, flight schedules are developed at least three months in advance. In time through advances in software airlines will be able to create and modify schedules much closer to the day of departure.
So, if there's a high demand for one city at a specific time, airlines will be able to accommodate those needs with more flights. This means you the consumer will be more likely to get the flight of your choice.
However, it's important to note here that there are other constraints beyond the airlines' control in flight scheduling such as airport capacity and air traffic control capability.
That's why Sabre is aggressively lobbying in Washington for the release of federal funding, some of which has already been approved for new airport construction and for upgraded air traffic control capability.
I mentioned earlier that online corporate travel systems are on the rise. I believe they will revolutionize corporate travel as we know it.
They will make booking your business trips faster and easier for you, and they will save your company a great deal of money.
Our own corporate travel system, GetThere, already lets employees book travel through their company's intranet and incorporates negotiated agreements with travel suppliers.
But besides connecting employees with the standard travel suppliers it also lets them book ground transportation, restaurants, meeting sites, even concierge services.
And GetThere can even deliver some information through wireless devices.
These are just a few signs we're seeing that travel is becoming more convenient.

More Options

Second implication: travelers are gaining more options.
Over the last 30 years, airlines have become good at creating optimized schedules that make the best use of their time and resources. But these schedules are based on everything going well.
The problem, of course, is that everything doesn't always go well. Potential problems include weather, labor disputes, and mechanical problems. And then the schedule becomes less effective; or with extreme problems, not effective at all.
Using leading-edge research, we're learning how to build more robustness into airline schedules without incurring the expenses that have made up-to-the-minute scheduling impractical in the past.
The ultimate goal is: when delays and cancellations happen, the airlines will be able to recover more quickly and immediately offer passengers more options for getting to their destination.
Already, airlines are becoming better able to communicate with passengers individually when problems do arise, so they can rebook faster.
You may have seen in the news that some airlines are calling passengers when their flights are cancelled or delayed. Again, they are starting with their high-end business travelers.
In time, there may be video monitors on the back of every seat on your plane so when there's a delay in your flight, you can work with your airline to adjust your entire trip before you land.
Another example of more options specific to the shopping experience: through the use of intelligent agents, it will become easier for you to plan complex trips automatically - either through your travel agent or online.
You'll be able to say things like:

"I want to take a trip to Europe for one week.
I would like to visit London, Paris, and Rome;
Ride on a high-speed train;
and stay in a bed & breakfast.
What's the least expensive, most convenient way to do this?" Or, "Give me the five-star version."

And sophisticated systems will create different itineraries to meet your criteria.
They'll use the least expensive and most efficient channels based on real-time availability.
All flights, cars, rail, hotels, special events, everything will become more accessible and flexible for you.
An early form of this exists today: Sabre's Travelocity.com already offers budget-minded consumers a search tool that shows them how to combine fares from multiple airlines to create their own low-cost flight plans.
A similar feature of Travelocity I think is cool is called Dream Map. You just enter the amount you have to spend, and Dream Map shows you where can go for that price or less.
But these features are just a precursor of what you can expect in the near future as you gain more travel options.

More Customized

Third implication for travelers: you can expect a more customized travel experience with the direction that suppliers, travel agents, and web sites are going.
Every day, new software products are letting massive data bases talk to each other. This creates great opportunities for travel suppliers to offer highly personalized services to their customers through better customer relationship management.
For example, when a top customer begins to book a flight through any channel, systems can now recognize that customer and immediately offer her value-added services - such as preferred seating, upgrades, or even a companion ticket.
If she's a highly valuable customer, it may even be worth the airline offering another passenger 100 dollars or miles to take a different flight so that the best customer isn't turned away. Through new advances, airlines can do this.
Another example: our Virtually There product offers personalized travel options to all travelers who book through a Sabre-supported agency, web site, or participating supplier.
Here's how Virtually There works:

After you book your travel, a special web site is created for you a personal travel domain.
You get an e-mail with a link to it.
The site contains your dynamic itinerary, which includes real-time information on your flights, gate assignments, and even the weather.
The site also provides helpful destination information such as restaurants, sports events, and sightseeing suggestions.

So, for example, if we know you're going to Chicago, and you've chosen to share certain information with us, we can even target special offers to you.
If you've told us you're a baseball fan and you like the opera, you might receive information on the White Sox schedule for the night you're there and a discounted ticket offer to go to the game.
Of course, with that profile, you might also get a promotion for the local production of "Figaro," on the same night, so you would have a tough choice to make.
But you would have options that are personalized.

Closing

Today, I've mentioned several key trends occurring in the travel industry, mainly centered around more empowered travelers, evolving supplier models, and emerging technologies.
And we've talked about the implications for you which include a more convenient, flexible, and customized travel experience.
I began by talking about some ways that even your cell phone will become a more valuable travel tool.
In reality, your cell phone is indicative of where the travel industry is headed. It's a classic case of "high-tech, higher-touch."
The more sophisticated technologies become, the less you should feel like a reservation number and the more you will be treated as a personally valued customer.
In short, it's an interesting time to be in the travel industry.