The engine of the tourism industry

This morning I had a very interesting session with students of tourism. I was listening to their presentations on operation management systems in specific branches of tourism. We had an example from the airline insutry, the hotel industry and the event management sector.

The enterprise resource planning system (erp see http://en.wikipedia.org/wiki/Enterprise_resource_planning) is the engine of the modern corporation. However, when setting up a business we still work in a linear way: we start of with the business and after some time we start thinking how to bring in the IT (information technology). This is simply not enough, because many of present day businesses can not work efficiently without an IT system. Therefore we should design our business around the engine. We should start design from the engine.

Building a business around "the engine" is far more difficult because we first have to understand the potential of "the engine" to change the business i.e. we should ask ourselves how can we change the the rules of the game with our "engine".

When listening to the presentations, I realized that the events management sector is a new emerging sector, where IT is currently reshaping the structures and allowing for new business models to emerge.

The hotel sector on the other hand is an established industry, where hotels are thinking on how they should and could update their present operations systems. These hotels should look beyond the technology and beyond the immediate facilities provided by traditional hotels to emerging customer trends. As an example I showed, how on my mobile device, I open my mobile google, which immediately informs me of my location. I only need to type in "hotel" or "restaurant" etc and it will automatically find the hotels and restaurants in my immediate vicinity. Hence one could argue that the amount of ad hoc customers might also be on the increase and hotel reservations would be made whilst already on the road.

The airline has seen the emergence of low cost airlines and one could argue that these airlines have been very active in searching for a new position in their value network, including switching from high cost major airports to low cost neighboring airports. I would still argue that there remains a huge potential for change using IT systems. Think about the following example concerning the charter airline industry:

I could set up a web site in which I allow groups to make request for trips. For example a group of 25 students could request a flight from Helsinki to somewhere for the price of 400 euro per head on the second week of may. My web site would broker different request and negotiate them with charter airlines. As you might guess many students are making their end of term trips in may and hence the amount of requests might be huge. I would off course want 10% from every transaction made through my web site. Sounds simple, but I am sure you understand that this places some very fundamental requirements on how "the engine" should work. It will also need for the customer to understand that he has to have some ambiguity in his initial request i.e Helsinki to somewhere.