Interoperability in online travel distribution: An investigation of the adoption of Open Travel Alliance (OTA) standards

Having been considerably late in the technology adoption curve, hotels today are left with no option but to ride with the wave of connectivity provided by third parties. Though the Internet has gained prominence as an effective distribution mechanism, the ingrained reactive approach of hotels has resulted in the partial transfer of control over inventory and price to online intermediaries. These intermediaries seek blocks of rooms while simultaneously building brand equity at the customer end leading to upward margins for intermediaries at the cost of lesser control over rates and inventory for hotels. This ensuing battle for control over the distribution of rooms remains a contentious issue today as hotels seek to wrest control over a system that they indirectly helped create.; In the electronic distribution of hotel rooms, hotels have traditionally relied on external sources for gaining connectivity to channel partners like travel agencies, tour operators, online intermediaries etc. (Rao and Mulchandani, 2004). This is largely due to the decades of reliance on Global Distribution Systems (GDSs) initially developed by airlines followed by alternative sources such as switches (from Pegasus). Switches enabled hotels to connect to multiple GDSs without having to define proprietary interfaces to each GDS (O'Connor and Frew, 2001). With the advent of the Internet which is an open system of communication, a larger opportunity is emerging for hotels to make interoperability rather than proprietary interfaces the mainstay of hotel distribution.; Open Travel Alliance (OTA), a consortium of travel, hospitality and leisure players has been developing uniform standards of messaging and communication using extensible mark up language (XML) between channel partners in the travel industry. The larger purpose of this initiative is to improve interoperability between disparate systems across and within organizations using standards that can be integrated into all known types of hospitality systems.; Adopting OTA specifications that use web service protocols enable hotels to reduce costs by providing direct connectivity to channel partners to access availability and rates information. This also helps the hotel chain to have significant control over inventory as separate blocks need not be created for the various distribution partners and even margin discounts can be re-negotiated with the online intermediaries. The use of web services enables the creation of a distribution solution which enables hotels to regain control of their inventory and rates and create a solution architecture that is open and scalable. It also increases operational efficiencies internally due to the seamless interoperability of operations automation systems in the hotel.; Unlike other industries like banking, logistics and manufacturing where extensive research (both by the industry itself and by the academia) has been done on significant factors that lead to adoption of technology standards none has been done in the travel and hospitality space. This study attempts to understand: (1) What are the important factors that determine the adoption of the OTA standards? (2) What are the strategic imperatives underlying the new distribution scenario brought about by OTA messaging standards for suppliers and intermediaries? (3) How the various actors (hotels, online intermediaries, travel agencies, GDS, partners like car rental and airlines, technology product vendors etc) plan to leverage OTA?; The study also tested the following propositions: (1) Perceived usefulness, Feasibility and SDO Governance will be the most significant factor in the adoption of OTA specifications for online travel distribution. (2) Suppliers will seek to enhance interoperability with local operators so as to increase their value proposition from OTA standards. (3) Intermediaries will seek to add value through enhanced dynamic packaging. (4) System integrators and other third party IT vendors will play...