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Hospitality & Travel: Big Firms Warm To Recycled Apps

Service-oriented architectures let the travel industry eliminate redundant applications.
For many travel companies, 2004 will be the year they see the value of a service-oriented architecture, in which applications are broken into components for reuse in other apps. Service-oriented architecture will likely change travel-distribution channels rapidly--widespread implementation is expected next year.

By mid-2005, for example, travel conglomerate Carlson Companies Inc. plans to have a well-defined framework for how services are delivered, what common hardware platforms to rely on, and the kind of support it needs to manage apps and services. CIO Steve Brown expects the architecture to save Carlson as much as $20 million a year.

Why did Carlson choose this architecture? Look at the minestrone makeup of the company. It owns more than a dozen brands ranging from Radisson Hotels & Resorts to Carlson Wagonlit Travel. A decentralized company, it has seen more than 1,600 apps proliferate across its brands.

Over the past year, Brown's staff created a service-oriented architecture to inventory apps and identify the most valuable features and services in each app. As a result, Carlson is eliminating at least two of its four specialized booking engines; one or two can more efficiently handle the entire company's booking activities, Brown says.

Carlson's CW Government Travel unit will benefit immediately from the service-oriented architecture. It's building a travel-procurement portal for the U.S. Army that's expected to become the de facto channel for the entire federal government. Reusable bits in the architecture would enable the Army to add services--say, booking engines for lodging and events--to the portal on the fly.

Reusability is a big draw for Cendant Travel Distribution Services, too. A unit of Cendant Corp., Cendant TDS consists of 14 business units, including Galileo International Inc., which provides electronic global-distribution services to travel agencies and sites such as Lodging.com and CheapTickets.com. Cendant TDS has prepared to make maximum use of reusable components by standardizing things like app servers and hardware. A recent example is Lodging.com's destination-finder tool, which people use to find accommodations by geography.

Cendant TDS also redistributes content using the service-oriented architecture through E-Agent, which lets travel agencies sell the services of local businesses--for instance, a Mexican horseback-tour company. "We want to become a component factory," says Cendant TDS chief technology officer Robert Wiseman.

But Carlson CIO Brown cautions, "It's one thing to say you're going down the [service-oriented architecture] route. But unless you have a strategy for how you're going to address the issue of redundant applications and the technology supporting those, then you haven't taken the steps you need to take." Wiseman agrees that the strategy must be very broad. "Anything that we pay for twice is a big disservice, to our company and to our customers."

INDUSTRY LEADERS
Company Revenue in millions Income (loss)
in millions
Carlson Companies Inc.
$19,800
--
Aramark Corp.
$9,448
$301
Marriott International Inc.
$9,014
$502
Flying J Inc.
$5,600
--
Carnival Corp.
$5,308
$943
Darden Restaurants Inc.
$5,003
$140
Brunswick Corp.
$4,129
$135
MGM Mirage
$3,909
$244
Hilton Hotels Corp.
$3,819
$164
Royal Caribbean Cruises Ltd.
$3,784
$281
Starwood Hotels & Resorts Inc.
$3,779
$693
Sabre Holdings
$2,045
$166
Galileo International Inc.
$1,700
$460
Wyndham International Inc.
$1,278
($389)
Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Dashes indicate companies requesting financial information not be disclosed.

SNAPSHOT
INSIDE COMPANIES
Average portion of revenue spent on IT 2%
Companies using radio-frequency identification 9%
Companies globally sourcing products and supplies 46%
HOW COMPANIES DIVIDE THEIR I.T. BUDGETS
Hardware purchases 15%
IT Services or outsourcing 15%
Research and development 4%
Salaries and benefits 36%
Applications 19%
Everything else 11%
INDUSTRY FINANCIALS
Average year-over-year revenue change 5%
Average year-over-year net income change 1%
DATA: INFORMATIONWEEK RESEARCH
See year-over-year shifts in business-technology practices for this industry.
Compare and contrast this year's data with last year's.

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