How to choose an Inventory Solution for your Travel Business
As a travel agent when you are supposed to manage your resources effectively and optimally, you often have to take decisions keeping your costs in mind and still make your business grow. One very important decision would be to take your business online and get a travel portal for yourself. If you have already made up your mind to do so then you should ready to come across terms like White labels and XML API Integration.
There are three main sources of inventory you can sell online:
- Own/Directly Contracted Inventory
- Third-party XML API Integration
- White Labels
Below is a brief description of Direct Contracts, White Labels and APIs, along with the advantages and disadvantages of each of them. It will help you choose the best suitable option depending on your requirement and budget.
What is directly contracted inventory?
Also called Direct Connects, this is the most commonly used form of inventory management, used mainly by small agents. Most small travel agents who operate in a certain town/state, have direct contracts with local hotels and bus/rental car providers and procure inventory at negotiated rates based on the number of bookings the agent has promised to sell on behalf of the hotel or the vehicle provider.
In this model, the agent can go for a travel agency system with a Central Reservation System where they can load the inventory for different businesses such as hotels, activities and vehicles into the CRS along with net rates and availability. They can then add their own mark-ups and/or commissions to the net rates and control the price to be shown on the website when somebody makes a search using the booking engine.
They can also set up business rules, policies, promotions and differential pricing based on season, customer class etc as well as stop sell and black out dates(for hotels). If they use a Hotel Extranet, they can allow the hotels to log into the CRS and update the inventory themselves, saving the travel agent time and effort.
Who is it for: It’s ideal for small businesses that want to sell locally(across a city/state) and have strong partnerships with limited hotels and other travel suppliers in a certain region.
What are the advantages of direct contracts?
- It is cost-effective and easy to set up, giving you greater control over the rates and commissions compared to third-party inventory.
- It’s also easier to manage and update directly contracted inventory due to the limited size. You can easily add or modify content such as images and descriptions to improve your look to book ratio, which would be extremely difficult with third-party inventory. This flexibility and convenience also makes it easier for you to target customers in your local region.
What are the disadvantages of direct contracts?
- The size of the inventory is relatively small as it’s limited to the direct partnerships you have with local suppliers. So if you are looking to target a large market, it’s not ideal for you and you should go for either XML APIs or a White Label.
What are White Labels ?
In case of white label integration, your portal has a booking engine of the supplier which you can re-brand to make it look like your own. A number of online travel agents use white labels to enable a successful brand to offer a service without having to invest in creating the technology and infrastructure itself. However, when the customer uses a white label booking engine they are redirected to the supplier’s website and the payment is made directly to supplier and it then pays you a commission.
Who is it for: This solution is ideal for small/mid-sized travel agents with limited budget who want to sell a wide range of third-party party inventory economically.
Advantages of White labels
- You can become a full service online travel agency and sell global inventory economically.
- It is easy to integrate
- You don’t need a technical team to handle technical issues
- No server maintenance is required.
- Quick time-to-market
Disadvantages of White labels
- The rates and margins are decided by the suppliers and you have no role in it.
- When a customer makes his bookings on your website he is automatically directed to your supplier’s website to make the payments. So it is the supplier who gets the payment directly from the customer.
What are APIs?
An API stands for Application Programming Interface. APIs are the defined interfaces through which interactions happen between an company’s travel portal and applications that use its assets.
In layman terms, APIs allow you to integrate third-party GDS/Wholesaler inventory into your own booking engine on your site. So when a customer makes a booking on using your own booking engine, they won’t be redirected to another site to do so. To integrate the API of a third-party supplier, such as Amadeus, Sabre, Hotelbeds or GTA, you need to sign an API contract with them and pay a security deposit. The deposit can vary from supplier to supplier and may also depend on the number of bookings you do.
Who is it for: This is ideal for large/mid-sized travel companies that have a relatively large budget and want to target a wide market.
Advantages of having an API integrated portal
- You can add markups and margins for your customers
- It is you who will receive the payment directly from customers
- Provides highly dynamic information returned from the XML pages
- Less maintenance of content that will allow you to focus on your core tasks like marketing and improving conversion ratios of the targeted traffic
Disadvantages of XML APIs
- It’s the most expensive form of inventory sourcing
- You may get duplicate inventory
- You will need technical support(internally or externally) for the integration and also to handle any connector issues that may arise after integration. So the maintenance cost can be pretty high.
Whether you want a booking engine to sell your your own inventory, or wish to sell third-party inventory using a white label or via XML API, TravelCarma can do it all very easily for you. Just mail us your requirements on firstname.lastname@example.org and we will take care of the rest.
TravelCarma is a leading Travel Technology brand that helps Travel Companies strengthen their online presence with a powerful Travel ERP solution that includes B2C/B2B Online Reservation Systems, Back-Office, Inventory Management and API Integration with 80+ Suppliers including GDSs. Visit our website to know more about our solutions or email us on email@example.com for a demo.