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December 11, 2000

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Travelocity Overcomes Barriers In Its Global Expansion

By Elisabeth Goodridge

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ravelocity. If you're an American, the word kind of rolls off your tongue, doesn't it? But for Britons or Germans who phonetically pronounce it Travel-O-City, the word really loses its allure.

"The 'velocity' just doesn't make much sense in the German and U.K. markets," says Jeff Lavender, Travelocity.com's VP for Europe.

The pronunciation problem and its possible repercussions on the Travelocity brand was just one of many issues the company encountered when it began expanding its operations to the international market last year. Through an intricate mix of partners, globalization software, and existing technology and assets, Travelocity now supports sites in the United States, Canada, the United Kingdom, and Germany, and plans to move into Japan early next year.

The online travel company grasped early on what many are learning the hard way: You can't just put up a Web site and claim you have a global E-business. The first stumbling block is technology. Executives are often surprised to find their technology assets are woefully inadequate for global expansion. "Companies are now discovering they've spent $5 million, $10 million, $15 million on E-commerce infrastructures that aren't and never will be capable for international markets," Forrester Research analyst Eric Schmitt says.

Cultural variations, currency and language differences, and legal barriers are also high on a long list of challenges for global expansion initiatives.

Established in 1996, Travelocity has reservation capabilities for 95% of the world's airline seats, more than 47,000 hotels worldwide, 50 car-rental companies, and 5,000 vacation packages. It boasts more than 23 million registered users and had 1999 revenue of $90.9 million, a 156.1% jump from the year before.

Earlier this year, Travelocity, which is 70% owned by travel-reservation-system company Sabre Inc., merged with Preview Travel, making it the largest online site in the United States.

Travelocity first realized the potential for overseas success in 1997. That year, 20% of its "looker traffic" came from visitors outside the United States. But at that time, the site had no globalization features to help switch overseas lookers into buyers.

In September of that year, Travelocity took its first globalization step: It altered its infrastructure to support global pricing and taxation by leveraging parent company Sabre's back-end systems, which were already equipped to handle international pricing. The move let Travelocity begin offering booking functions to customers in 94 countries.

But the site could be viewed only in English, and very little local content was available. Travelocity also had to rely on Sabre's network of more than 10,000 travel agents around the world so customers could retrieve tickets at local offices.

Travelocity still serves most of its international customers this way. And it's working: Travelocity has had hits from users in the United Arab Emirates, Kuwait, and even the small island nation of Sao Tome, off the coast of Africa.

But to compete with local travel sites in lucrative international markets--those heavy with Internet-savvy populations who spend lots on travel--the system was inadequate. Besides, the pesky Travel-O-City problem remained.

"We immediately realized that in the two countries with the highest travel spending in the world, the United Kingdom and Canada, there were issues we had to resolve to grow the business," says Ned Booth, Travelocity's VP of global market development.

Ned Booth Photo by Steve McAllister In the summer of 1998, Travelocity established a customer-service center in Cardiff, Wales, to support U.K. customers. Sales doubled in the first month.

Travelocity also realized it needed a site designed specifically for the United Kingdom. So it teamed with a local travel agency, EMAP plc, which now provides the site with local content culled from its own online site, Bargainholidays.com.

Travelocity discovered some cultural differences between the United Kingdom and the United States. For example, online travel sites designed for Americans tend to be complex because they enjoy in-depth browsing for vacation and travel ideas. But U.K. shoppers, who tend to be less tech-savvy, prefer a simpler site, says Jupiter Research online travel analyst Heidi Kim.

To compensate, programmers scaled down the site and focused on the most popular functions: the booking engines and holiday package deals. Travelocity also discovered U.K. customers make travel plans quite differently than American counterparts. "Over here, it's piecemeal; we get the car, hotel, and air tickets separately," Kim says. But in the United Kingdom, "the majority go with package deals," she says. So Travelocity built a seamless link to EMAP's site, which already offered package tours.

Travelocity also hired local producers and site managers, as well as U.K. public relations and advertising agencies. The ad agency helped Travelocity address the Travel-O-City problem with local radio spots stressing the correct pronunciation via a play on words.

With lessons learned in the U.K market, it established Travelocity Canada in April 1999. To support Canada's French-and English-speaking customers, Travelocity opened a bilingual customer-service center in Ottawa. Travelocity then focused back across the Atlantic to Germany. Again, challenges surfaced: Travel distances needed to be converted into metrics, content had to be translated, and cultural differences had to be determined.

So, Travelocity decided it was time for software and services. It hit upon Idiom Inc., which presented to Travelocity a global readiness assessment, explaining the people, processes, and technology needed for overseas expansion. Travelocity's first order of business was to open a customer-service center.

Travelocity then purchased Idiom's WorldServer, which relies on business rules that can tag content that needs to be translated on the parent site. Built-in workflow sends the content to human translators via E-mail. Once the text is translated and entered into WorldServer, the workflow process notifies the appropriate person that new content is ready for review. Once approved, the system updates all secondary sites with the correct translations.

Ingo Krauss, Travelocity's managing director for Germany, says the German site has achieved strong success with Idiom. Though there are bugs, they're minimal. For example, WorldServer can't convert miles to kilometers; instead, it can only translate the word "miles" into the German equivalent, "meilen."

The biggest concern for the German site, Krauss says, is that "there's no very good solution for online package tours for the German market." Like U.K customers, Germans prefer to book vacations in packages. "Tours are more complex, and need more description, for these users that are less experienced with the Internet," Krauss says. Travelocity Germany is working with local Sabre-owned E-travel firm Dillon Communication Systems to develop a package-tour search engine next year.

Travelocity is continuing its international expansion. Via partnerships with Japan Airlines and All Nippon Airlines, Travelocity plans to offer bookings for Japan early next year. The Idiom software will be used to manage content on the Asian site. Tackling the Japanese language will present new challenges. That's because certain languages such as Japanese require more bits than traditional software infrastructures such as ASCII can handle. Travelocity will address the more complex Japanese language at the database level using Oracle.

Expansion won't stop with Japan. According to Idiom executives, Travelocity has bought licenses for six additional languages. The international growth bodes well for the online travel site. In an era when many dot-com companies are selling off assets and closing their doors, Travelocity is taking full advantage of the Web and moving its business around the world.