How Cloud Computing Could Transform the Travel and Hospitality Industry

Every now and again a set of technologies comes together that could transform an industry. In terms of profitability, we all know that the airline industry has had more than its fair share of troubles. But the question that may need to be asked is whether these companies actually know what business they are in. Most of them operate under the assumption that they are in the business of flying people around the globe. In reality, they are part of the travel and hospitality industry, so maybe it’s time to rethink their entire business model.

Today, the travel industry is made up of airlines, hotels, car rental companies and a host of other organizations all offering services around the fundamental need to travel. The problem from the consumer’s perspective is that they have to pretty much engage these companies separately to get to where they are going. But what if they could all be engaged as part of the same transaction?

That’s part of the thinking that is going into the development of a new Agilaire Passenger Service Solution that Hewlett-Packard is developing. HP is licensing the RezView NG reservation system developed by Pegasus Systems to create a foundation on top of which the company is building a new scalable cross-company reservation ad billing system that will reside in the cloud.

Built with input from American Airlines, the basic idea is to allow companies in the travel industry to leverage a common transaction processing system built using modern Linux, Java J2EE and service oriented architecture (SOA) technologies wrapped around an easy-to-use interface, as opposed to the IBM mainframe era technologies that anchor the reservation systems primarily used in the airline industry today, says Sean Kenny, senior vice president for worldwide applications and business process outsourcing in HP’s Enterprise Services Group.

Once broadly implemented, Kenny says it should be possible for a customer to book a flight, rent a car and stay in hotel room and have the entire transaction not only handled electronically, but also fed back directly to their company’s accounting systems for payment. The entire transaction would be devoid of any paper, he said.

Where this gets interesting from a business perspective is that if you can break down the transaction barriers between companies in the travel and hospitality industry, how long before it starts to make sense to merge these industries. It’s pretty clear they are already pretty far down this path in terms of alliance programs and other joint offerings. What HP is doing is essentially removing one of the big technology barriers that currently make consolidating these industries problematic.

Obviously, a lot more has to go into an industry consolidation of this scale than just the underlying technology. And there will no doubt be similar approaches to what HP is trying to do with Agilaire. But once you create the opportunity for IT integration, the opportunity to start integrating business processes becomes quickly apparent. And once business processes start to get integrated, mergers and acquisitions are usually not very far behind.