Fall 2006 Seminar Series

DATE: Thursday, September 14th
LOCATION: E40-298
TIME: 4:15pm
Reception immediately following in the Philip M. Morse Reading Room, E40-106

SPEAKER:
Barry Smith

TITLE
Helping Travelocity Transition to Travel Retailer

ABSTRACT
With approximately $80 billion of travel products sold worldwide in 2005, Sabre is the world’s largest travel distribution system, connecting consumers, travel agents and travel suppliers (airlines, hotels, etc.). In 1996 Sabre launched Travelocity, an online travel company that leverages Sabre’s travel experience and technology to begin selling travel directly to consumers. The foundation of Travelocity’s original business model depended on earning commissions from selling airline tickets and generating revenues from selling advertising space. Travelocity initially took the lead in Internet airline ticket sales, but as new competitors entered the space, Travelocity’s share of travel bookings steadily eroded. In order to survive in this new environment, Travelocity had to become a sophisticated retailer by negotiating marketing agreements with suppliers, managing access to content, and expanding into more profitable lines of business and thus avoid the death suffered by many Internet companies of the period.

 

In May 2002, then-president of Travelocity, Sam Gilliland, asked the Sabre Research Group to help Travelocity adapt to this evolving, new environment and to increase their sophistication as retailers. The Sabre-Travelocity team developed the Enterprise Network Model (ENM) to improve decision-making in this environment. Since 2002, the ENM has yielded over $54 million of incremental value, with a current annual run-rate of $43 million. In this presentation, we’ll describe our experience helping to transform Travelocity from an Internet company surviving on growth to a sophisticated on-line retailer. We’ll address the following topics: 1) customer data and modeling; 2) supply modeling; 3) marketing modeling; 4) modeling to support retail pricing and Low Fare Search (LFS). Finally we summarize the benefits of the ENM to Travelocity and review the transferability of these concepts and models to other applications.