Five emerging trends around convergence in online travel
Ever since the beginning of time, seemingly different technologies have been combined in ways that the original inventors never imagined.
Did the same man who invented the wheel also invent the axle? What seemed like great ideas at the time, then converged with other great ideas and created different business models greater than the sum of the original parts.
In the process they revolutionized the way we live our lives. Maybe the five trends I discuss below won’t quite have the same impact on society as the person who first put the wheel and the axle together, but all share the potential to radically change the way we think about online travel in the years ahead.
1. The convergence of pre-shopping and shopping
I presented on this topic (off the official agenda) during the recent Phocuswright conference to a group of airline executives and e-commerce thought leaders, and one question I received a few days later from one of the attendees was whether I was using the term pre-shopping when instead I should have been using a term like inspiration or search.
Part of the answer to that question lies in a Tnooz piece published back in July titled: Are travel inspiration and the new travel search the same thing?
The truth is that search, inspiration and pre-shopping are all different names for what a person does before they arrive on the site where they will make the first travel purchase for the specific trip they are planning.
If shopping is traditionally the initial steps someone takes before they purchase from that site, then pre-shopping is all the window shopping and tire kicking they do prior to arriving on the actual purchase site.
Here is where the convergence is happening and where we will see some a big impact for everyone in the online travel game.
The Bow Tie Model may not yet be dead, but the linear flow it assumes is becoming much less linear as the old model crumbles.
Pre-shopping sites like Kayak are moving closer to booking, and traditionally transactional sites like Delta with Embark, American Airlines with Search By Destination Ideas and Iberia with Search By Budget are all trying to be more relevant prior to the passenger being ready to commit the cash.
Those examples are the first crack in the model, but when you look at players like e-channel search facilitating Google ads backed by real inventory availability, you begin to question whether the convergence is more than just websites moving beyond their traditional domain, and whether the entire booking flow within a travel website could change completely.
With airline websites (and I suspect it is similar with most other supplier sites) we still think in terms of shop, flight review, passenger details, payment, confirmation page.
But when real time inventory is promoted on third party sites via intelligent and personalized ad placement, is there any reason why the passenger of tomorrow can’t move directly from pre-shop on a generic search site directly to the purchase page on the supplier site?
When this happens, then the convergence of pre-shopping and shopping had become a reality and the linear process we know today is dead.
2. Convergence of Online and Offline throughout the entire travel process
Much of this converging trend came to me during a recent conversation I had with Sean Sutherland, a 17 year veteran of travel agency Flight Centre who currently works as their executive general manager of global web and e-commerce.
If any company has been slammed over the years for not moving their business online, then Flight Centre is the first to come to mind. On the other hand, they keep making good profits whilst many others struggle. So I thought it would be interesting to hear their views on managing the mix between online and offline.
I don’t have any research to back this up, but I can’t agree with Sutherland when he says that for booking offline, “customer satisfaction is higher”.
Fortunately most of what he said after that was much easier to agree with. As mentioned above regarding using inventory availability as an input into Google text ads, Flight Centre are actually generating significant leads into their store fronts through online ads with a strong, time sensitive call to action.
“Getting the price in the ad is pretty key” and Sutherland continued by explaining how they use dynamically generated landing pages, used different campaign phone numbers for tracking purposes, and how “rarely would we direct them to a (landing) page with no conversion tool”.
The conversion tool in this case being an enquiry form intended to get the lead to a Flight Centre travel agent.
The hotel attach rates to flight bookings that Flight Centre can generate offline would be the envy of any airline website ancillary revenue manager responsible for cross-selling hotels, but Sutherland realizes the company needs to move more online, whilst not losing what makes them strong offline.
He spoke about a more seamless blending between the online and offline components for selling and servicing, whilst conceding that at present there is “not a lot of data shared between the brands”. The three key brands being Flight Centre, Escape Travel and Student Flights.
Many travel suppliers and pure online players will be looking at expanding their offer offline in areas where it makes financial sense to do so but to date, apart from some large TMC’s where you pay for the privilege, there is no-one that has really built a strong brand around a converged online-offline experience – time will tell whether or not it will be Flight Centre.
3. The convergence of mobile and desktop
Sometimes I refer to this as points of presence proliferation, and it is probably the most obvious no-brainer of all the topics discussed in this article.
Recently I heard about a major European airline that is seeing almost 1% of internet bookings made via mobile phones, but in future everything is mobile and the only difference is screen size.
Every laptop PC these days has wi-fi and you can plug in a USB 3G device for very reasonable prices, so whilst some people want to talk about phone versus tablet versus PC, the really important thing to understand is that more internet connected devices will keep coming; trying to fit them into the is it or isn’t it mobile check box starts to look like a very redundant conversation.
Travelers will be using these converging connected devices for different purposes and at different stages in the travel searching/buying/consuming process, so the functionality needs to be present when and where they want to use it, and on whatever device they decide makes sense to them.
Stop spending money on a separate mobile strategy, and instead mobile enable your current offering. Converge disparate product roadmaps – the real challenge is not what is mobile; it is more ensuring that the user interface layer works across different devices and the the customer experience is seamless across all these different touch points.
The customer decides what gets done on which device, not the travel supplier.
4. The convergence of commercial and redemption booking flows
Visit the website of almost any travel supplier with a loyalty program these days and it is mandatory to pre-select whether I want to make a booking using points/miles or real money.
Some companies are moving away from this model, such a JetBlue with their toggle display (including one week calendar) between TrueBlue Points and Dollars, but the best example I have seen to date comes from the hotel industry – the recently relaunched SPG.com from Starwood Preferred.
On the one screen I can see hotel availability priced in both points and cash, giving me more options prior to my decision on how I will pay.
Mixing points and cash also obscures the real price making a direct comparison with other hotel websites more difficult – but all of these benefits assume a loyalty program that your customers actually place a value on!
In the battle against OTA’s, that is the battle to encourage customers to book direct, a well run loyalty program is one of the strongest weapons in the direct channel arsenal.
As seen by the JetBlue example, the old chasm of loyalty programs being the exclusive domain of the legacy network carriers is well and truly dead.
The convergence of commercial and redemption started with the early airlines like Finnair and Qantas that used a slider to move the price dynamically between points and cash, but there is still a long way to go before the end game on this one.
5. The convergence of personalization and content management
Forget mobile, inspiration and social – personalization will be THE travel industry buzzword for 2011.
But whereas in the non travel online retail space there are companies such as Rich Relevance, Acxiom, and Sitebrand as established players with software used to personalize many large websites, in the travel industry personalization vendors such a Likecube are in an earlier stage of their growth.
The big question first is, will existing players from online retail be able to play a major role in travel or is travel unique in some way that means the solutions will come from travel specific software?
And then once that question is answered, the conversation moves to content management systems, and whether products from suppliers such as Interwoven with cross industry solutions will be stronger when combined with personalization software from another vendor versus a travel industry IT company with a travel specific content management system and personalization module as one. (NB: disclosure – my employer Amadeus competes in this space)
Personalization in travel has long been promised, and I think back to before I was even working in this sector and the push Broadvision made in the early years of this decade with airline websites.
But my strong view is that the travel industry does has some very unique quirks meaning there is good reason why strong companies with good personalization software in online retail do not play a major role in travel.
The convergence of personalization software and content management software also has major implications for two of the other trends I’ve outlined above. Pre-shopping to shopping because of the importance of campaign management and its connection to live inventory and customizing the subsequent landing page and booking flow.
Secondly, the mobile vs desktop argument. As everything becomes mobile, unless more of the logic moves into the content management system and the pages are built dynamically for the screen size, any travel company that tries to build uniquely for every single point of presence will see their functionality falling behind the competition and the costs of maintaining so many platforms spiraling out of control.
Which of these five trends will come together first is hard to say, but as technology never stands still, it is unlikely their relationship to each other will remain unchanged.
At a minimum, every online travel supplier and retailer should decide where they stand on this these key trends.
Then it is just a matter of which ones to embrace and how.
Martin Collings is a contributing Node to Tnooz and is currently employed as Vice President, Innovation Management & Commercialization at MasterCard Labs, based in Sydney. In this position he manages various mobile payments initiatives with his role covering the region of Asia Pacific, Middle East and Africa.
Prior to MasterCard, Martin Collings spent six years with Amadeus IT Group, based in both Madrid and Chicago in a variety of airline roles, most recently as head of airline e-commerce sales for the Americas.
During his time at Amadeus he also wrote the Shearwater Blog covering various topics of interest for airline selling via direct channels. The views of Martin Collings are his alone, and do not necessarily reflect the views of MasterCard.