While travel agencies have to overcome many challenges to remain competitive, there is one challenge in particular that all agencies need to overcome despite their size or target market. They need to excel as intermediaries between tour operators or travel product suppliers and consumers or travelers.
The real question is, how do they do it? How do they source products from multiple suppliers, keep track of the latest rates and availability, and still delight customers? The answer is rather simple – they use an inventory system solution.
Let’s see the benefits inventory systems offer to travel agencies, different types of travel inventory, travel inventory sources, and examples of inventory systems used by travel agencies. But before we start using fancy terms, let’s see what travel inventory exactly is.
What is travel inventory?
Travel inventory refers to a well-organized, searchable, and easily-presentable list of all travel-related products a travel agency can offer to travelers. These products come from distributors and providers. When it comes to the tourism industry, distributors can be transportation companies, tour operators, wholesalers, and other travel agencies.
For example, a travel inventory can include flights, car rentals, the number of lodging options, activities, tours, and cruises. The most common misconception regarding the travel inventory is mixing it up with the inventory of businesses dealing in physical product verticals. A travel agency can have a certain travel product in its inventory, but it doesn’t mean that the agency owns or stores it.
Travel agencies, especially online travel agencies, are close to travel product aggregators. They source products from airlines, car rental companies, and tour operators and list them on their websites. In technical terms, travel agencies source products from a global distribution system (GDS) and use other companies’ systems, such as airline reservation systems, to deliver their services.
The items in the inventory system displayed to travelers are referred to as content. Content can be dynamic or static depending on whether the information changes or doesn’t change often.
Dynamic content, as the name suggests, refers to entries that change regularly, such as rates and availability. Dynamic content is pulled on demand from suppliers’ systems, such as computer reservation systems (CRS), and agencies don’t store it.
Static content on travel-related products in the inventory system doesn’t change as often as dynamic content. It refers to amenities, photos, descriptions, maps, and others.
Now that you understand travel inventory, let’s see the benefits of using inventory systems as a travel agency.
What are the benefits?
Why would you bother adopting an inventory system and changing the methodology of one of the core business processes? Well, travel agencies are not forced to use inventory systems, nor do they need to do it to stay compliant. They do it because it offers many benefits. Below you can find the most noteworthy ones.
Easily keep up with the recent changes
When it comes to the static content in your inventory, you don’t need to have any worries. It doesn’t change too often, and when it does, you can easily update the items in your listings. However, the dynamic content is what makes inventory management challenging. How do you keep up with the recent changes in rates and availability, especially at scale?
Using an inventory system can help you do it no matter the level your travel agency operates on. You can get the most recent updates regarding changes in availability and rate values and display them on your website.
Modern travelers are approaching travel product research much more seriously than their peers did just a few years ago. A whitepaper from 2016 shows that over 80% of travelers plan their vacations based on someone else’s social posts. Meanwhile, 21% of tourists use social media platforms to research travel products and a particular destination before making a reservation.
You can delight travelers by including products when they are at their lowest prices. It can help you build a word of mouth marketing momentum, shares on social media, and positive brand mentions. With a top-notch inventory system, you can easily do it.
Build a trustworthy brand
Travelers can experience a range of inconveniences when interacting with a travel agency. For instance, they can get misinformed regarding the prices and availability. If they use inaccurate data to make travel plans, it can easily lead to frustration finding out they need to pay more or that the lodging is unavailable on the requested dates.
It can negatively affect the brand image you’ve been working so hard to achieve. It is another situation where the inventory system can help you. Thanks to up-to-date and accurate data, you will build a trustworthy brand and attract more travelers.
Simplify complex supply chains
In their efforts to offer attractive travel products, build diverse portfolios, and enable travelers to discover affordable travel options, many travel agencies have started sourcing products from several travel product suppliers. The supply chain can become very complex over time, making inventory management borderline impossible.
Inventory systems can simplify even the most complex supply chains out there. It enables travel agencies to grow, source products from more suppliers, and still stay on top of their inventory management without making any efficiency or productivity sacrifices.
Generate more profits
Travel agencies are always looking to generate more profits and create new revenue streams. If you have a system that enables you to provide accurate information to travelers, build a trustworthy brand, simplify complex supply chains, and delight travelers, the chances are that your financial performance will improve.
The best thing about inventory systems is that they are easy to get used to, which minimizes upfront costs that tend to compound thanks to onboarding and staff training.
Types of travel inventory
All travel inventories can be put into three categories based on which travel-related products they include. Below you can find the most common classification of travel inventory types in the industry.
When browsing travel product offers online, travelers prefer the most convenient way to do it. They want to do everything from one website. They will avoid going to the official websites of airline companies. Instead, they will look for flight offers through a website of a travel agent or OTA.
One of the most common types of travel inventory is flight inventory. Airlines have created popular global distribution systems such as Sabre GDS and Amadeus GDS. These GDS enable airlines to easily distribute flight inventory while travel agencies use them to source flights. Flight travel inventories contain valuable information such as schedule, availability, and rates.
Lodging inventory encompasses all sorts of items, including hotel and vacation rental. However, these inventories also include types of lodging called alternative lodging. The information found in a lodging inventory includes data points such as rates, availability, booking capabilities, and limited static content.
Lodging inventory is usually sourced through GDSs. However, travel agencies can also source lodging travel products from wholesalers such as Hotelbeds, WebBeds, and HPro Travel and channel managers such as SiteMinder, Cloudbeds, RezGain, and eZee. Some agencies and OTAs source products from other big OTAs, such as Booking.com and Expedia.
Miscellaneous types of inventory
To deliver a more complete offer to tourists and attract people who prefer booking everything at once, some travel agencies also use car rental, cruise, rail, bus, tours, attractions, and activities inventories.
There are many sources they use to add these products to their portfolio. While they most commonly use GDSs, travel agencies also depend on aggregators and other OTAs.
Travel inventory sources
To understand the complexity of inventory systems at scale, you must discover travel inventory sources. In other words, how and where travel agencies source travel-related products to operate successfully. Here are the most common travel inventory sources you should know about.
Travel agencies can align with nearby hotels and other accommodation providers. This type of collaboration is often defined by a legally binding contract, as hotels need to provide travel agent access to their channel manager or property management system (PMS).
Travel agencies that use direct sources pull data directly from hotels’ systems, including data such as rats, availability, and description. However, it rarely happens, as building such integrations is costly and not sustainable.
Aggregators are commonly referred to as GDSs, and CRS and wholesalers are among the most commonly used travel inventory sources. These companies specialize in B2B business and enable travel agencies and OTAs to source various travel-related products.
Thanks to these sources, travel agencies can get access to many end suppliers and delight their customers with many products to choose from.
Some of the best booking engines and aggregators are Juniper, WBE, and Qtech, but there are also other good options worth exploring.
Some travel agencies are focused on niche markets. To cater to the preferences and needs of those specific travelers, they need access to particular products. That’s why they usually operate through a contracted inventory.
Contracted inventory means that a travel agency has a direct contract with another travel company or airline to get better rates and exclusive access to some products.
Own inventory is not a common source of travel inventory. It is only available to big travel agencies and OTAs that own car rental companies, hotel chains, and/or airlines. The most common use case of own inventory is with tour operators, as these companies create and source their own travel products and packages.
Finally, we have the Extranet as a travel inventory source – an internal system a big OTA can use to streamline static and dynamic content management for end suppliers.
Top inventory systems used by travel agencies
Not all inventory systems are created equal. The easiest way to see which ones are the best is to discover how many travel agencies and OTAs use them. Let’s go over the best inventory systems most travel agencies use daily, including ARSs, GDSs, and CRSs.
Airline Reservation Systems
Airline Reservation System or ARS is a web-based platform. Airlines use it to enable travel agencies to offer flights at competitive rates directly to their customers. ARS is developed to help travel agencies provide travelers with the most current schedules, ticket rates, and availability.
Thanks to these systems, consumers can purchase entire travel packages, while travel agencies get a chance to delight consumers by allowing them to quickly and easily shop travel products online. Some of the top ARSs are:
- Amadeus Altea Suite
- Crane PAX
Global Distribution Systems
To better understand a GDS, you should look at it as a network connecting travel product and service suppliers with travel agencies. Travel agencies use GDSs daily to create attractive itineraries, compare schedules and prices, and review static and dynamic information.
The pioneer in this field is Sabre, or the Semi-Automated Business Research Environment, by American Airlines and IBM. At first, it was used as a fully automated airline reservation system. Today it’s used for various travel services, including hotels, car rentals, and trains. Some of the best GDSs are:
Computer Reservation Systems
CRS is a web-based software. Its primary purpose is to facilitate data retrieval and transactions. It has a wide range of use cases, as it can include travel products and services related to hotels, car rental, and air travel.
Travel agencies using CRSs often focus on selling a specific travel service. CRSs can have many built-in functions. Most commonly, their capabilities include:
- Email notifications
- Listings of travel services, including descriptions, rates, and photos
- Easy-to-use reservation
- Reservation management
- Inventory management
- Support for online payments
- Refund management
- Booking cancellation
The most popular CRSs are:
- SynXis Central Reservation by Sabre
- Windsurfer by SHR
An inventory system can help travel agencies track all their travel products throughout the entire supply chain, starting with sourcing the product to selling it to a consumer. While travel agencies most commonly use it to streamline inventory management, it can also help with reservation management, marketing reports, and tracking and optimizing sales across different sales channels.
As you can see, the inventory system brings a lot of benefits, including improved brand reputation, supply chain simplification, and getting accurate and updated travel product data. That’s precisely why travel agencies of all sizes use an inventory system to some extent.