Given all the investment in and attention on mobile itinerary planning and sharing, what are the top five areas still to be explored and exploited?
Indeed, which dark horses could still make a charge, and where are the blue sky opportunities for innovative start-ups to stake their claim in the mobile travel apps gold rush?
This is the third and final instalment in a three part series on mobile travel technology. Part one covered who does what today, part two mainly addressed the pre-departure opportunities, and this part will be related mainly to the at destination  or post-arrival potential for mobile travel applications.
With an emphasis on where real money could be made, and not innovation for its own sake, here are the top five untapped, undiscovered or under-utilized opportunities in mobile travel apps today.
1. New forms of payment
This is the only one on the list that is equally applicable before the passenger gets onto the plane as it is to when they get off. Payment in the ecommerce area is ripe for innovation. Airlines and other travel industry participants sometimes resent the hold that the major card companies have over them, and no surcharge rules from the card schemes in the US leave consumers thinking this form of payment has no associated cost.
PayPal has been trying to years to forge closer relationships with airlines outside of their North Amercian stronghold, and only last week Cybersource was purchased by Visa for $2 billion. The headline in eCredit Daily said it all: Visa Eyes Mobile e-Commerce with CyberSource Buy.
Many people seem focussed on the mobile phone replacing the desktop, but for travel research and then purchase decisions this is getting too far ahead of the curve. It will happen one day, but by then the whole distinction between mobile and non mobile will become largely redundant as intermediate devices like iPads proliferate and virtually everything will be mobile – even some lap top PCs today are getting smaller and have SIM card slots, so what is and isn’t mobile is already getting blurry.
For this analysis I intend to use the terms mobile and smart phone interchangedly, and I won’t focus on larger mobile-like devices. With that in mind, mobile payments for making the initial booking in applications is not the main game (developing countries may differ), but facilitating payment on items purchased after the prime booking is made is far more interesting. Especially payments when the passenger’s phone is much more convenient to use than a desktop computer, or in some cases even cash.
The recently launched PayPal iPhone application that was built with Bump Technology is extremely interesting, and is a sign of different thinking leading to innovative results. PayPal mobile transactions have gone from $25 million in 2008 to $141 million in 2009 and travel is a real opportunity for treating the phone as a form of payment. When you are at the airport and wanting to pay via a kiosk for checked or excess baggage a phone could make more sense than a credit card. In a stopover airport with a unique currency you may not want to withdraw money in advance and the merchants there may not accept credit cards, but something like the PayPal mobile application that is already available in 18 languages would be one extra option. And then at the destination, some countries have a bad reputation for fraudulent credit card transactions, so using the phone should give travellers are greater sense of security.
Thr revenue opportunity here is not only for an innovative mobile non credit card form of payment, but also for the travel industry participants than can sell ancillary services and other goods by making the purchase easier for the traveller. PayPal are not the only game in town when it comes to alternate forms of payment, but with their global reach and their track record in mobile innovation, they should certainly be near the top of anyones watchlist.
2. Rebooking of tickets
Probably the most obvious one on the list. The ones to watch in the category are primarily GDS companies. Amadeus has its Ticket Changer product (disclosure: I’m employed by Amadeus), Travelport has its RapidReprice plus other vendors are also working on products for repricing and reissuing tickets from fares filed using Category 31 and 33 rules. The reason this will move to mobile devices is that servicing a booking has a large cost for the airline or TMC, and it is typically when the traveller is on the road that the rebooking of a ticket is needed most.
Today, Worldmate has a nice feature where the traveller can look up schedules and with minimal user effort send a pre-formatted email request to the TMC containing preferred alternate flights. The TMC will then perform the rebooking and where appropriate will reissue of the ticket. This is the forerunner to what rebooking on the mobile will eventually look like, but the end game products are very complex and involve fares being filed correctly by airlines in order for the automated processed to work correctly.
It is a natural fit for the mobile, and will be a significant cost saver for anyone manually doing rebookings today. Rebooking of one way combinable files fares (those typically used by LCC’s) is usually a more straightforward process, but for those travelling internationally and especially those with complex itineraries across multiple carriers, this type of functionality will make a big difference when on the handset.
3. Segmented advertising based upon PNR data
I covered this one in more length in a previous article written for Tnooz, as well as elsewhere, so without going over old ground again, here is this opportunity in a nutshell. Mobile phone advertising that is tagetted using your GPS identified location can be intrusive, and lacks the context of why you are there and who you are with.
PNR data can plug these gaps, and therefore not only should the mobile app makers be looking at using this to better segment offers delivered within their own programs, but the airlines or TMCs with the PNR data should be looking at unlocking what is an undoubtedly valuable source of consumer information. One company to watch for this prediction is Jetera, but there are so many ways this could pan out that predicting a winner is impossible at this early stage. With mobile ad requests soaring on all major smartphone platforms, the money in this opportunity maybe the bigger than the other four combined.
4. Bookable destination content
PhoCusWright is currently putting together a special report titled When They Get There (and Why They Go), aimed in part at giving a much better understanding of destination content. Not to pre-empt the report, but my mind is already made up that destination content and mobile apps are a perfect fit. The mobile travel app can compete with the hotel conceirge, or the hawker walking along the beach or standing in front of the local travel agent trying to sell day tours to tourists.
In the business travel market, the mobile app is the perfect place to sell to a time poor consumer; one for whom money is often much less of a concern than it is for the leisure traveller. In the business travel space for mobile, especially as it relates to this opportunity around destination content, Rearden Commerce have one of the better products already built.
The recently released Rearden Commerce mobile app is primarily aimed at employees in large companies booking travel through online self booking tools in conjunction with a TMC. But the integration of destination content using a revenue sharing model where Rearden get a cut of the bookings is definitely heading in the right direction. Rearden combine the power of OpenTable, Zagat, Google Maps, Gayot and Rewards Network into one place so a person can search via geo-location, read reviews, see if it is in the preferred network, and then book a dining reservation. Â If the restaurant is part of the OpenTable network the traveller can click-through to book within the app; if not, then they can click-to-call the restaurant to make a reservation.
Worldmate has integrated the push capabilities of BlackBerry nicely into its application so that a traveller gets the weather for their arrival city on the screen of their phone upon arrival, thereby opening up a future possibily for targeted recommendations. Following on from this, it was interesting to see some stats from Readen Commerce showing that when a traveller views their itinerary, they tend to check specific flight details 60 percent of the time. Following this, users check hotel and weather details (18 and 15 percent respectively).
Also from Rearden, 13 % of Mobile Personal Assistant use is to conduct searches (flight or dining). When conducting dining searches, 55 percent of users leverage the geo-location functionality to book a restaurant “near” their current location. Obviously having OpenTable integration which enables the user to complete a booking from within the application makes the restaurant search fuction a powerful driver of adoption, as well as being a revenue earner.
I’m guessing the revenue received today by Rearden just from restaurants is not that large. But given increased adoption of apps, the ability for business users to also use it for personal travel, and then the opportunity to expand into other destination content, this type of functionality will become a minimum expectations for travellers using mobile travel apps in future, and a profitable stream of income for those companies that get it right.
5. Geo-gaming
In some ways I’ve saved the best until last, as geo-gaming is a pure leisure product for mobile phones that does not exist today in the way I will describe it. Other things  I have mentioned above more or less exist, but the opportunity there lies more in getting mass adoption (partly via further product innovation) in order to start seeing the real money from mobile. Geo-gaming is different as it simply does not exist today as a travel specific product. If I was a start up company looking to get into mobile for travel, there is no way I would compete directly with existing players that have already invested scores of man years into existing products – I would pick a small niche nobody is serving, and then run with it like there was no tomorrow – maybe geo-gaming is that opportunity?
Regarding a travel opportunity still wide open for start-ups, I’m thinking something along the lines of Foursquare meets Geocaching meets a Buzz overlay on Google Maps that pulls in content (and revenue) from a DMO, a destination content supplier, and a mobile ad network. Foursquare have been getting an incredible amount of good publicity in the just over a year since they launched. Geocaching.com is taking the scavenger hunt into the 21st century. Someone even made a movie about it. Noticings is trying to make it more of a game and SimpleGeo is making it much easier to add geo-location into your app, but none of them have quite put it together in a way that could really work in travel – some Foursqaure users are even starting to get burnt out.
As a starting point, take a look at the innovative idea from the City of Chicago and their marketing deal with Foursquare, and then push it even further. Taken from the press release:
“Game players are encouraged to discover the Blues through historic sites and iconic clubs, meet up with friends across town while searching for the perfect Chicago-style hot dog, and re-enact their favorite scenes at one of many well-known movie locations throughout the city.”
So DMO’s will definintely pay to be promoted, especially if you can deliver sufficient numbers – clearly this is where the airline will play a big role, as they know everyone they have flown into a city and could therefore promote an app containing geo-gaming. The revenue streams do not stop at the DMO. I’m thinking a game run on one designated day every week where clues would be given to people’s phones, and they would probably race by foot or public transport to see a lot of the city in one day, learning many interesting facts along the way.
Lunch and dinner locations could be pushed to the players by advising this would have something to do with the next clue to be given, and clues could even involve finding a billboard advertising some tourist attraction for another day of their holiday. Vienna Zoo is using bar codes sent to mobile phones for admission, so upselling of activities for future days should definintely be incorporated into the geo-gaming experience.
A really creative approach would even be to open up the game to people who travelled on a different airline and have them represented by different coloured dots on the GPS driven map of players. More social aspects could be incorporated to enable sharing of clues amongst teams (ie. same coloured dots) and the game would end at a designated bar where winners would be announced, driving even more revenue to the company owning the geo-gaming app.
This idea is far from fully formed, and someone would need to invest time in ensuring the cheating aspects of it were addressed, as well as broadening the appeal so maybe a version would also be of interest to families; clearly what I have described above is not going to work for parents on vacation dragging a screaming kid or two in their wake. But it is novel, it is less likely the big players investing in itinerary planning tools will go after it, and it does requires local knowledge and local content. This means more than one player could own this space in different geographies – it is definitely an opportunity whichever way you look at it.
In summary, I’ve picked what I think are five very real opportunities for making money on mobile that are still open to innovators wanting to own each space.
The companies I’ve mentioned may be leading today, but in all categories the title is still very much up for grabs.
NB: #2 pic credit.
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About Martin Collings
Great analysis, Martin. I’m particularly interested in destination applications for, say, resorts, theme parks, and more. Tie-in with an add platform that supports the local businesses has enormous potential for applications like these. One thing to look out for: If such apps are built for iPhone/iPad: Apple will soon mandate that application-sourced ads be served through the iAd network. This will take an enormous cut (40%) off the table for the app developer, resort, and local businesses to share…
We launched the Roadtweets iPhone app last fall (roadtweets.com) as a way to tie mobile to the trip sharing experience and to-date it’s been used in 35 countries (with very high adoption in Korea and Japan). There are no longer significant barriers to get to market and start playing around, The key is to get past the initial inertia and get something out quicky and iterate.
Great overview and list of opportunities to exploit. One big question is, will the players, like DMOs be up to the challenge and move fast in embracing and helping develop some of these local solutions. They could play a significant role in bringing their diverse group of local services providers to the table and facilitate the work of app developers who might need to work with them or play the role of pilot/aggregator. To succeed many of the new solutions need to gain traction and this is where established organizations, like DMOs who are not in acomoetitive situation could play a role. However it plays out, exciting times ahead!
Aaron, I just saw some figures today from adMob claiming Android has just overtaken Apple in US market with 46% v 39%, at least in terms of mobile ad requests, which could be a rough proxy for users; Blackberry will be understated in these stats as most of those phones are less web-browsing friendly and more aimed at business use. So don’t worry, everything is not going in Apple’s favour at the moment.
Joe, thanks for the insight. DMO’s have a role in terms of content and also sponsoring the app, but I’m not sure how they can encourage critical mass which is crucial to get geo-gaming off the ground. It’s not much fun playing that type of game on your own.
Wow – really enjoyed this terrific article. Much to think about, especially the mobile gaming opportunities.
Good overview, Martin. Needless to say – the top four points are either already part of the WorldMate platform or on the horizon.
I have to say though that I completely disagree with Jim’s comments above – barriers to entry are not the fact that something can be developed or deployed to the App Store and device. It’s the massive infrastructure that you need on the back-end, including technology that analyzes all these itineraries and context, and commercial relationships that allow you to do some of these transactions – and gain from them.
I don’t disagree with Nadav’s comment that you can spend a great deal of resources building out infrastructure, but much of the infrastructure is also available for free via APIs as well. With RoadTweets we outsourced all the infrastructure:
Communication: Twitter & Facebook APIs
Photo storage: TwitPic API
Geo-location and mapping: Google maps API
Global distribution and payment platform: iTunes
And there are APIs for itinerary information as well.
This may not be the right approach for everyone, but in terms of speed to market to launch and test out concepts the barriers to entry have indeed fallen considerably.
Excellent series of stories.
I’d caution re the adMob data, as that is only based on Apps that are running ads. Unless you’re talking about an App that is shifting very big numbers, selling it Vs running ads (ignoring other rev streams) will represent a superior return.
I think the one impediment to destination content that rely on an internet connection, is roaming charges. Until that is sorted out — or until unlocked phones become the norm — it remains problematic.
Nevertheless an exciting and interesting field to be involved in.
Frankly Jim, that’s a little naive. Surely people will give you the information feeds so you can build apps to distribute around – but they do it for a reason. They get to test the market for free through you. The questions is – what happens when you realize there is a market. Do you have something you can protect – technology, brand, IP – and build a business model around? If you don’t have a business model – it’s all been a game. If there’s a scalable business model, but you can’t protect it – those same people who provided you with the feeds, now that they see traffic, will use their brand, money and other assets to just build it themselves.
So if it’s a niche business – something that will be a nice little 5-person company – great. But that is not a Vision for an industry. If you’re building something scalable that could seriously affect an industry, either you need deep roots, or the incumbents will uproot you and plant their own orchard as soon as they realize it is indeed a big opportunity.
One service, that is always required when traveling, both before, during and after the trip, is a taxi service. And how do you get a taxi in the city X ?
TaxiPal (also featured on TLabs: http://www.tnooz.com/2010/03/09/tlabs/tlabs-showcase-taxipal/) is a free mobile app (right now for iPhone and Android) that currently covers 1400 European cities (EU + Norway + Switzerland) with its Local Taxis directory service and the coverage is continuously extended. More details, etc. are discussed in the article and on http://www.taxipal.com.
Great to see some good comments being generated. Thanks.
Pete, let me know if you ever hear of anyone doing anything interesting in geo-gaming aimed at travellers and I’ll give them a write-up.
Stuart, I covered roaming charges in the second of this three part series, but you are right – this will really hold back mass adoption, especially for international leisure travellers.
Nadav and Jim, glad my article is generating some healthy debate. I’m enjoying reading both points of view.
Martin- Good points re: Apple not fully dominating the market. They generate great press, and had them on the brain that day, re: mobile ads for local biz. In addition to the big players like Google/Android, there are smaller solutions that keep the economy right with the resort. I talked with Movitas last week, and they have the ability to drop ads right into their applications too…
The data that will come out of solutions like these has great potential. In a fully realized state, local business owners will be able to determine exactly how much revenue is driven by a specific resort and bid for their mobile ad space appropriately… Think micro-AdWords at the local geo/enabled level.