Correspondence: B. Venkateshwara Rao, Research Group, Sabre Holdings, 3150 Sabre Drive, MD 8203 HDQ, Southlake, TX 76092, USA. Tel: +1 682 605 1721; Fax: +1 682 605 7690; E-mail: beju.rao@sabre.com

¹B. Venkateshwara Rao is a Senior Principal in Research Group at Sabre Holdings. He develops customer behaviour, pricing, marketing, planning, and deal evaluation models for Retail and Airline Revenue Management. His research interests are stochastic modelling and nonlinear optimisation. He publishes in Operations Research and Industrial Engineering journals. He also teaches part time at the Business School of University of Texas at Arlington.

²Barry C. Smith is Chief Scientist and Senior Vice President for research at Sabre Holdings. He developed many of the yield management techniques used throughout the airline industry and in other industries. He is a fellow of the Airline Group of the International Federation of Operational Research Societies (AGIFORS).

Received 7 November 2005; Revised 7 November 2005.

Abstract

Online travel retailing is an e-commerce success story. Different retail models exist to sell travel products over the web. These models include online travel agencies, supplier websites, distressed inventory websites, reverse auction web sites, shopping bots, search engines, and portals. Online travel agencies, such as Expedia and Travelocity, are the most mature business accounting for more than half of online leisure travel sales. Online travel agencies acquire inventory from multiple airlines, hotels, car rental companies, cruise lines, and event organisers. They merchandise this inventory as standalone as well as packaged categories to online shoppers who benefit from a wide variety of products across multiple suppliers. In this paper, a decision support framework for an online travel agency is discussed. The framework includes disaggregate demand estimation, pricing and product display, marketing, revenue planning, and deal evaluation. The underlying Operations Research models is discussed along with challenges associated with data collection and implementation. The authors discuss the impact of online travel retailing on supplier yield management systems. Decision support models discussed are also applicable to online travel retailers other than online travel agencies. The decision support framework should serve as an exposition to the Operations Research opportunities in the emerging field of online travel retailing.