After what has been a terrible year for many in the travel, tourism and hospitality industry, will 2010 bring commercial joy to the sector or simply more of the same as companies dig in for further financial pressure?
What are some of the social and mobile trends likely to impact on travel consumers? And is the industry well placed to handle changes in airline and hotel distribution?
Here each member of the Tnooz team has drawn on his or her wisdom and experience so can we offer you the ultimate prediction list for 2010. Enjoy, and feel free to add your own…
- Travel technology companies are in trouble. Many tend to use professional services (training/consultancy/initial setup) to help cover their fixed operational costs. If travel companies merge, go out of business or put off projects for 12 months, the fixed system developments required for operational stability can sometimes not be covered by standard software license fees. Failure for travel technology companies to remain current can lead to their clients losing out to their competitors. It’s a situation that doesn’t make that many headlines, but travel technology companies, the infrastructure behind many travel companies, hurt badly in a downturn.
- 2010 will be the year of the niche tour operator/activity company. Airlines will stop referring to tours/activities as ancillary revenue but realise that these products rather than being an extra to a flight purchase are often the reason people go travelling in the first place. For enlightened airlines this may change how they use the web – eg expect to see many widgets which permit flight availability to be incorporated into small tour operator/activity company websites, even if the transaction isn’t being distributed to that company for commercial/regulatory reasons.
- China will play a much signficant role in the world travel and tourism market as the Chinese goverment is expediting to open the travel market. The government here is considering to deregulate its heavily protected outbound travel market under which the multinational companies will be allowed to step into the outbound travel business. It may take time for the international players to dominate the market, but we should expect more industry conslidation will be happening in the near future. Rumours abound that Travelsky is now in discussions with Sabre to set up a JV to help the Chinese carriers sell overseas. These are all good signs for both the Chinese and international companies.
- Social media will play an increasingly important role in airline’s distribution channel, rather than as a marketing or customer service tool at this moment. The major international carriers will keep investing on their social media initative and we may see more twitter or facebook-only offerings on the market. The airlines may launch the group book implications in partner with the major social media sites, like Facebook, Twitter, etc…
- China is the tourism country of the year. Everybody agrees that China‚Äôs internet community is growing very fast and in the next ten years the Chinese internet will become almost as big as all the rest put together. China still one of the countries with great growth (9.3%) and everybody is looking to attract these lucrative Chinese tourists.
- Travel bloggers make their way at large scale. Marketing departments and public relations companies are looking to deal with travel bloggers. They want access to their authenticity, their communities, and their conversations. Even a network like Travel Guide (ex-Lonely Planet) and others will be looking into it it!
- Google Wave – The latest ‚Äúgame-changer. Google Wave, will be a relative dud in terms of adoption and won‚Äôt change the way the masses communicate. I joined the Wave October 11, 2009, and haven‚Äôt seen anything going on with my Wave-mates. Google has great resources to market Google Wave, but perhaps it will prove in 2010 to be uber-techie for average consumers.
- Merchandising – We ain‚Äôt seen nothing yet in terms of airline merchandising so look for carriers all over the world to introduce a bunch of new, pay-as-you-go services on board and off. And, if the hotel industry starts to come back in 2010, I expect them to begin to get into the merchandising/optional services act, as well.
- Micro-site advertising will proliferate on travel web sites. Why? Because banners work but are hard to measure. Because CPC and CPA ads are more measurable but don’t work well as advertising. Micro-sites allow companies to tell their story within the travel or media site, and creative teams (and agencies) will have a blast making rich media stories.
- Travel guides as ebooks will be the new mashups. What a great long-tail application of part-evergreen (e.g., maps, video tours) and part-dynamic (e.g., pricing, seasonal destination packages) news, information and recommendations that change throughout the seasons. Many creative moths (titles/apps) to big ebook flames (platforms) like Amazon, Google, Barnes & Noble, Apple.
- Outreach/offsite activity will become the domain not just of the niche players, but also the big brands, too. No-one can doubt the value of social media for brand promotion and for increased link equity. Even the big guys now realise they need to engage with people in these spaces. Lots of the big UK tour operators I work with now completely accept that they have to put serious budget towards developing and implementing social media strategies.
- Expect to see the metamorphosis of some PR and marketing companies into ‘social spaces outreach experts’ and be very afraid… there will be some clumsy interventions. And some far more subtle ones… And people will debate this a great deal. Can brands live in social spaces or will people rebel against the thought of a corporation trying to influence them in this way? It will be a fascinating ride.
- IPOs – Rumours abound that Amadeus and Travelport are keen, Kayak is supposedly toying with the idea, and goodness knows who else. As a result we will probably see a ramping up of staffing requirements (even wholesale relocation in the case of Travelport) and the introduction of new features into the business to make them more attractive to wannabe investors. Think Kayak’s move into intermediary-land on the one hand and Travelport’s focus on the UK as its rapidly growing new tech base. And with IPOs come cash – a valuable commodity for any travel tech or media firm to expand, acquire or innovate.
- While mobile is undoubtedly the platform where almost all travel companies are starting to focus their attention, no significant player has emerged that has mobile at its core. Almost all of the apps and mobile-based browsers are based on the original browser functionality – a re-engineering of the core product. Can we expect to see a travel brand emerge in the next 12 months which uses the South Korean approach, develop for the mobile browser and market first and then spin off to a browser? I think we can. This would obviously be an OTA or meta player. There is room to do this, whereas arguably browser-based entrants face far stiffer competition.
- Location, Location, Location – According to Comscore three of the top five US travel sites currently are map-based (Mapquest, Google Maps and Yahoo Maps). Nokia ‚Äď has currently developed their Nokia Maps 2.0 version; iPhone and Android use of maps; and map-based services like AroundMe, Qype and so on. All are exciting and useful. Maps are essential to explore or discover a destination during the travel planning process to provide increases in user experience on travel websites or gain many benefits for local travel information searches.
- Augmented Reality – Augmented Reality means overlaying data on your environment seen through your phone camera. Travellers walking around a city or landscape see their surrounding area coming up with names and heights of peaks around them, Wikipedia entries about the sights they see, reviews about things in their neighborhood. GPS based the aggregation technology in modern phones combines as a mash-up the phone-camera with different data sources that all can provide useful travel data to travellers exploring a destination.
- Mobile Downloadable Apps will continue to grow. Whether it is ordering room services prior to check-in from you mobile phone or buying ancillary services from your favorite airline, mobile apps are becoming a standard platform to deliver more personalized services. After a year of debate around the mobile web versus downloadable mobile apps, it has become clear that downloadable apps can deliver additional location based services that are more highly personalized. I believe all the major travel suppliers and intermediaries who have not yet implemented downloadable mobile apps in 2009 launching these apps in 2010. The main focus will be on iPhone, BlackBerry and Android.
- Airline Merchandizing Efforts will Disrupt the Traditional Distribution Environment ‚Äď Airlines will continue to push the travel distribution players to accommodate more sophisticated ancillary services and fare families. ¬†Given AA‚Äôs stance that all connectivity needs to be via XML (versus EDIFACT), this will likely push alternative distribution methods such as Farelogix. ¬† Every point of sale needs to be updated to accommodate these new fare families, but this will likely not be resolved in 2010. ¬†As a result, OTAs, CBTs, TMCs and traditional travel agencies will struggle with presenting ancillary fees and fare families at the point of sale to the consumer. ¬†The corporate market will struggle to determine the total cost of airfare given the growth of these ancillary fees.
- The C Spot – It will be all about the Customer in 2010. A smarter, value-seeking, online savvy consumer who has emerged from the Year of the Deal and can now be found from emerging markets like Vietnam to matured markets like Singapore. Suppliers will become more direct-facing as those in resort locations try to reduce their dependence on traditional wholesalers. Suppliers will also seek alternate distribution channels, become smarter about analyzing data so they know where their customers are coming from and where the highest yields are. After a year of tough love, suppliers in Asia will turn their attention to hitting the Customer Sweet Spot or ‚ÄúThe C Spot‚ÄĚ focusing on loyalty and retention, by using customer-facing and engaging technologies. Social media and mobile will feature big in this changing landscape.
- LAV of Travel – Low cost, Asia, Value. The three words that will dominate the Asia-Pacific market in 2010. Low cost carriers will dominate the market and continue to drive deals and new destinations and change the way people live, work and play in the region. As a result, intra-Asian travel will boom as they are the quickest markets to rebound ‚Äď longhaul markets such as Europe and US will take a backrow seat. More consumers will move online to look not only for deals but for value. Suppliers will have to rethink their strategies to reach and attract these new LAV travellers with the use of new technologies and platforms ‚Äď from Wego‚Äôs new search paradigm to tools like Google Street View just launched in Singapore in December, for example.
- If you think PCI compliance was tricky for travel e-commerce wait for the new regulations put together with the major business banks and Visa/Mastercard. It will put significant pressure on airlines with dodgy balance sheets (all of them?) and OTAs. It will force some to close down or be acquired by larger groups. It will ¬†block start ups and competiton will become dull. Generally, travel e-commerce will become less vigilant and all business development will be done mobile in the coming years.
- 2010 is a revival year for service, sending people back to travel agents in droves. The major drivers are the airlines unbundling and no service scheme that frustrates travellers which backfires. It’s also the year when some airlines finally start to crack the code on in-flight service differentiation introducing three and three-class service to a greater degree. It’s also the year when conflict between some airlines and OTAs will come out in full bloom, never to be repaired again.
- Google will finally release a phone capable of competing with the iPhone, both in terms of performance and stylishness. This will result in a surge in mobile applications developed for the Android. Although this will initially have little effect on the stronghold that Nokia has on the European and Asian markets, we will see the North American fragment further with Android taking market share from both the iPhone and Blackberry markets. The new Google phone will allow convergence of various Google technologies including more social applications based on Google FriendConnect, maps, latitude, tours, and Street View.
- Alternate distribution will be the name of the game. There will be a surge in the number of micro-distribution channels throughout the accommodations and tour and activity space. Individual hotels and chains will be using new and existing technologies to automate concierge functions and provide their guests with a more inclusive experience. Clever hoteliers will turn their hotels into tourism information and booking hubs for the guests. DMOs, desperate for funds after two years of cuts and reductions, will be looking at new revenue sources. As distribution channels they will want to provide a common interface by promoting standard messaging and connectivity.
- Consolidation in the sector (surely!). This is a left over predictions from 2009. The conditions in the year of the GFC seemed perfect for consolidation. Stock prices were depressed, cost cutting acceptable and appetite for organically funded expansion low. ¬†But we saw virtually nothing that could be called a “big deal”. There was deal activity but was at the lower end such as through regional tuck-ins (ie Travelocity buying Travelguru, and Ctrip buying EZtravel), small local deals (ie Wotif buying GoDo) and constant content site acquisition by TripAdvisor. With bankers chasing bonuses and companies chasing growth in 2010, I expect to see some consolidation in the big end of online travel town.
- Recommendations as the future of online travel: Search – as a means for customers finding what they want in online travel – is no longer as effective in 2009 as it was in 2005. Two causes – the explosion of content through the UGC revolution and consumers desire to seek answers to open ended questions (ie where should I go next) that are not easily answered by a search model based on taking you to one site. 2010 will see even more investment by start ups and established companies on different ways of searching and on methodologies for recommending. The long term future is the ability to generate a recommendation of one based on the individuals unique combination of desires, needs and interests of an individual at a particular point in time (EveryYou). ¬†The 2010 future is increased profiling, increased data collection and even more start up activity around search and discovery.
- Fragmentation and Bilateralism – I believe that these are part of the same trend. We are now so efficient in our businesses that we want to provide more appropriate differentiated ¬†products to our best customers. We are moving from a single holistic multilateral model to multiple bilateral models. This is an umbrella movement of which dealerships and direct connect are one part. The other is the differentiated content/product that will be provided to the end consumer by suppliers and aggregators alike. 2010 marks the return of true consumer choice. It will not be easy. But I believe the trend is inevitable.
- Will the mobile predictions actually take hold in 2010? – Mobile will be the most popular prediction by pundits, commentators and bloggers for 2010 (and 2009 and 2008‚Ä¶), however it remains to be seen if mainstream consumers share this view of the coming mobile messiah. ¬†While anyone can point to a seemingly endless pile of stats and figures‚Ä¶iPhones sold, apps downloaded, mobile usage‚Ä¶one cannot help but feel that while the consumer is now is possession of a smart phone, are they smart enough to understand how to use it? ¬†Sure, your techie friend is all about Foursquare, but does your mom use and understand that fancy Urbanspoon app? ¬†There is no doubt we have entered the age of the mobile computing device, but just like the computer before it, consumers will require time to learn the capabilities of these new magical applications. ¬†My prediction is that we will still be predicting mobile at the close of 2010.
- Can CVBs and DMOs pull it all together? DMOs are good at a lot of things and copying other DMOs is right on the top of that list. By this point, any self-respecting CVB has a Twitter profile, Facebook page and YouTube channel. Heck, they probably have all of those cute icons plastered on every corner of their site and emails. We have started shooting video, contributed to TripAdvisor and Yelp, ran a couple of Twitter only contests‚Ä¶maybe even started and kept up with a blog. That was the easy part. You did it. Kudos on the Twitter icon. Now what does it all mean? How will CVBs and DMOs pull this ever expanding universe of interactive marketing into one cohesive message that not only makes sense to the consumer, but also creates real engagement? Sorry, having ‚Äėfriends‚Äô is not enough. Is your interactive strategy influencing travel and are you showing your executive team results? ¬†2010 is the year to pull it all together, skim off the junk, and really start a conversation with your consumer.
- More niche travel content ‚Äď tours, activities, golf, vacation/villa rentals – will move online in consumer-friendly form, including rich media and content, real-time availability, perhaps even transactions where appropriate. ¬†Consumer demand will grow, which will lead to more funding and more start-ups, which may finally convince the large OTCs and GDS’ that these segments are worth pursuing.
- Declining costs of technology, an increased awareness of the value of messaging standards, and the constant search by distributors for additional electronic inventory, will combine to allow small-to-medium suppliers in all segments to expose their inventory cost-effectively and competitively, increasing their market share and providing consumers with meaningful travel product choices.