Big data in online travel industry

Big data in online travel industry

Big data defined

Everyone talks about big data nowadays, but what is Big data? The definition from Wiki is:

“Big data is a broad term for data sets so large or complex that traditional data processing applications are inadequate. Challenges include analysis, capture, curation, search, sharing, storage, transfer, visualization, and information privacy. The term often refers simply to the use of predictive analytics or other certain advanced methods to extract value from data, and seldom to a particular size of data set.”

The mainstream definition of big data as the industry analyst Doug Laney  articulated, contains three Vs: volume, velocity and variety.

• Volume, refers to the enormous volume of data we have now. It used to be a storage issue. However, now it is more about how to determine relevance within large data volumes and how to use analytics to create value from relevant data.
• Velocity. Data is streaming in at unprecedented speed and must be dealt with in a timely manner. Reacting quickly enough to deal with data velocity is a challenge for most organizations.
• Variety. Data today comes in all types of formats, which increase the complexity. Managing, merging and governing different varieties of data is important for many organizations.

To sum up, Big Data Technology can be treated as one of the most innovative technologies and Internet Tourism is also one of the emerging industries of this era. Thus, our question is will there be kind of unprecedented effect take place, if these two emerging issues are superimposed together?

The Impact seen

Nowadays nobody can deny that Big Data Technology as an emerging innovative technology has already facilitated the upgrading revolution of the entire tourism industry in very short time and it has also changed the business operation model of the tourism industry completely.

After the emergence of big data technology, by combining internal and external databases like purchase history or spending habits with publicly available information, the tourism industry, e.g. airlines, restaurants and hotels, etc. can learn a whole lot about their customers’ preferences on a macro level easily.

With the right approach, these airlines, restaurants hotels and travel agencies can use these information and insights to build connections with individual travelers and can be able to offer travelers the right service or products at the right time. Travel is such a fast-paced industry, which really drives the need for speedy data analytics and quick decisions. In tourism, any demands need to be addressed instantly in order to still be relevant for travelers, which makes big data so important.

In general, Big Data Technology has disrupted the old business model of the Tourism industry, and led to new ways of the personalized Internet Tourism.

Industry profile report on online travel and big data

With the development of internet and BIG DATA technology, the tourism industry has been changed a lot, as reported in the media, Chinese market now has 20% of growing annually in the industry mainly because the application of internet technology that make people go traveling much more easy and convenient.

OTA is the main business model in the industry which contribute about 60%-80% of the whole trading volume, other two business participants are online airplane ticket agent and online hotel agent. OTA integrated the whole product chain so it has advantage and agile price space to compete with other two competitors, however, online ticket agent and hotel agent also have advantage to keep the high level customer tightly.

For the industry, internet technology and BIG DATA brings reforming and new blood to the industry, through the new technology the industry can:

1. Integrate

Tourism product is an customer experience which is composed by many single products like transportation, tickets, restaurant, insurance and others, so online technology can integrate all the suppliers together. It is transparent and convenient for customers to choose.

2. Interactive

Before the customer make their buy decision, they can have a review online at what other have experienced, what’s their travel plan and how they feel about any provider in the supply chain, so after glance at the suggestions and tips on some topic, people can make their decision much reasonable. Furthermore, the provider also can put many video and 3d effective introduction online to make the products much clearer.

3. Derivatives

With the customer data the company collected, they can sort them out and analyze what they get. Most important one is the agent can track the consumption by contact with the customer by online or IM to get the hottest feedback of the experience, secondly, the company can provide customized products to its customers according to the preference and consumer power information that they have already tracked, thirdly, the company can also provide other products like online education, online insurance, online loan etc to its customers to enlarge the profit source.

The industry is developing very fast and appears dynamic to its customers, many emerging companies have come out with new technology and ideas to compete with those big giants, nowadays, the industry could be divided into those 3 types:

1. OTA

CTRIP and YILONG could be the typical representative which provide one station service to its customers, they also occupied the most of the market share.

2. PLATFORM FOR COPARING

Qunaer and Qiongyou could be the representative of this business modal which is an emerging segment of the industry to provide many products information online for customers to compare, some of them also focus on search engine for tourism products.

3. Vertical agents

This type of agents have very clear position on niche market and provide very customized products that could keep its customer tightly. Like tuniu, the company can provide unique products to customers.

We can forecast that with the implication of the technology, the competition in the new future will be higher and how to face the coming challenge is the key issue. For the OTA, the big giants have many advantages, how to fully use its customer data and integrate other resources in the product chain to provide more customized products is the most urgent thing for them, with the competition goes deeper, the market will be tailored into small segment, if anyone failed to cover any niche market it will be dangerous. So APP will be a very good tool to adapt the market, it can covered any corner of the market since the market have been become fragments. Ultimately, if the company can provide other services like online education, online loan, online insurance etc products, it will be another advantage for them to become even better.

Big data and Ctrip

In today's era of big data, how to do business flexible and intelligent data analysis and management, is the question many companies must focus on especially for Internet business enterprise. Who can effectively manage and use data, not only to the future of their business whether smooth continuous growth, but also related to the business can dig out more business value from vast amounts of data, which related to the business of life and death. Just like we have mentioned above, OTA can make the best of big data to develop some other businesses including online training or online financing.

Let’s cite one of the biggest OTA Ctrip as example. As one of the biggest leading OTA, Ctrip's business is cross offline, online and mobile platform. Users Behaviors, applications and log data are flushed from all those platforms. As its business grows, Integration of multiple data sources and knowledge pose growing challenge to the scalability of underlying data infrastructure, in which Ctrip captures and mines big data, and draws business insights.

Advanced technology, stress on high quality of service, economies of scale and building a popular brand are Ctrip’s four core competencies, which contribute to Ctrip’s rapid development. Although Ctrip emphasizes a lot on its technology development, it has a unique strategy for innovation. Ctrip is adopting the strategy of “Innovate scientifically and temperately” to develop its technologies. As an online travel agent, Ctrip’s operation heavily relies on rapid data throughput. However, take the rapid evolution of data processing technology into consideration, blindly investing in the data throughput technology innovation will place heavy fiscal burden on the company. While innovation under a scientific tempo could reduce the challenges from upgrading technology as well as control innovation costs effectively. Crtip’s embrace of big data took the same route.

The company recently merged two of its affiliates into a new company, which is setting up a new platform that focuses on big data analysis for the hotel industry.

This will be the first domestic hotel data platform in China. The new company will integrate the hotel industry's big data and cloud computing technology through its three main businesses, including software development, information channels and market intelligence. On the software side, the new company will provide property management systems to hotels. This will in turn help with the data collection and integration for the platform. Data are very important for hotels to understand consumer preferences and upgrade services, however, due to limited technology skills, hotels in China only collected data without analyzing or using them in the past. The new company will also launch a China Hotel Industry Index, which will include hotel satisfaction, hotel brand and hotel customer price intention indexes. The three main indexes will indicate the satisfaction rate, brand impact and consumer demand trends, respectively, in the hotel industry. These methodical inclusion of big data innovation would definitely enhance Ctrip’s leading position in online travel industry as the trend leader and standards setter, and will also reinforce its brand value.

There is a saying, “If you can solve customers’ problems, you can catch business opportunities.” Today, Ctrip is in an unique position to link user behaviors tracked in 3 different data sources and represent the same customer in a consistent, accurate and meaningful fashion. In the information era, consumers are presented with ever-increasing shopping paths to choose among more and more products. That has placed the burden of information processing, before they select which products meet their needs. As a result, the users need to spend more efforts. The need to reduce the effort of finding the right products is stressed from end users. In Ctrip, they are developing a model of measuring their users’ efforts to evaluate the shopping complexity and guide them to improve their products to achieve best user experience.

In Ctrip's daily business, they still have problems which needs tons of human efforts. For example, they need hundreds of operators to confirm millions of transactions with various suppliers every month. Thus they have issues of low efficiency, high cost and risk of losing revenue by human mistakes. But with the various types of collected data(user information, behavioral data, transaction, business data) as feature, they trained powerful GBM(Gradient Boosting machine) model to predict and classify the highly suspicious orders and "safe" orders. In this way, they can significantly improve the efficiency and reduce the cost and loss with Big Data techniques.

Big data technology also helps Ctrip to do several important predictions. For example, before “Chinese Golden Week”, Ctrip uses big data to get access of the booking amount of main scenic spots and accordingly makes some market prediction for the city governments and scenic spots regulators, which can assist them to make transportation, security and other plans beforehand. And also according to Ctrip’s calculation of hits of different tourism lines, it is also able to predict the popularity of them in the next quarter or year. Hence, by predicting function, the disruptive innovation of big data successfully add value to Ctrip.

In the face of fierce competition and complex economic environment, Ctrip needs to know better the needs of customers and market. How quickly identify potential business opportunities from these data which develop in line with users’ needs is a major challenge facing Ctrip.  Ctrip’s technology vice president Jiang Hao undisguised favor of the commercial value of the data to address the challenges faced by Ctrip. And building flexible and intelligent data platform is the only way.  Ctrip’s eyes are locked in Microsoft SQL Server 2012.

Microsoft SQL Server 2012 provides the basis for Ctrip data platform support and enhanced data capabilities, allows them to always quick step in the interpretation of their own needs and market demands in the process Microsoft SQL Server 2012 for Ctrip provides cloud computing for business intelligence and data warehousing platform era, which makes Ctrip more competitive in a highly competitive market environment.

Now is the time to consider how business on the commercial value of these large data is excavated. How to be a reasonable investment in scientific IT, deployment adapt their business development needs of enterprise data platform. Obviously, flexible, intelligent data architecture platform should to be chose to lend a helping hand to the OTA business.

Lessons from the case:

1. Big Data success requires scale and speed.

Hadoop can process a lot of data, but it is a batch process. In many industries and companies, like Ctrip, real-time decision making is no longer optional. Some experts aver that putting SQL on top of Hadoop or other Big Data stores enables organizations to actually use Big Data information in a timely way. As we all know, the competition of current market is extremely fierce. Fast speed means bigger possibility to occupy a favorable position due to the high sensitivity of the market. If an online travel agency can acquire information timely and make the best use of it, there is no doubt that customers are more likely to remember you.

2. Big Data access via mobile devices.

The latest generation of touch-enabled smart phones and tablets are driving a huge change in the way companies operate and communicate internally and with their partners and customers. Ignoring their demand for access to manipulate Big Data information and insights via their mobile device is a career-shortening decision for IT managers. So currently APPs begin to become a main source of business data and also an interaction platform for companies.

3. Matching and commitment are important

  Big Data offers approaches to release value from accumulated data in using innovative new technologies. Smart organizations can apply Big Data methods to solve existing business problems, implement new business models, and drive growth in innovative new ways. However, they have to find a way to move beyond their traditional ways and really match big data with their core competence. This is true especially for traditional companies which information technology is not their core competence. This requires very clear business vision, technical competence, and willingness to experiment in order to succeed. They should learn from Ctrip’s case to take the initiative and make the commitment to adapt big data into their core business model. Do not let the challenge become a real threat instead.

4. To build intelligent tourism

When big data applied in the industry, the company could combine the customer by promotion offlines informations on internet, such as discounts, booking etc, customers could find the offline chanel to get what they buy online. The model have developed very quickly which can help the company find the niche market and provide customized service to their customers by analyzing and utilizing the data. Big companies like Ctrip have the advantage of doing this because the company have already build a strong platform of online business, for other emerging company, they could cooperate with BAIDU, through data that the search company have to find where is the customer, what is they wanted and provide the service.

References:

http://en.wikipedia.org/wiki/Big_data

META Group. "3D Data Management: Controlling Data Volume, Velocity, and Variety." February 2001

Wang,  Huiyao, P.133, Globalizing China: The Influence, Strategies and Successes of Chinese Returnees, Emerald Group Publishing, 2012

http://usa.chinadaily.com.cn/epaper/2015-03/26/content_19918152.htm