Tnooz Predictions 2011 – the biggest and best list in travel tech
It’s the moment readers have waited for: the annual Tnooz Predictions for the next 12 months, our look into the future and what it might hold for the travel, tourism and hospitality industry.
Our collection of Nodes, stretching all around the world, have peered into the depths of their knowledge and experience of the industry to come up with the biggest, most well-informed list of predictions you will find anywhere on the web.
Enjoy[NB: Over the next few weeks, some will be reflecting on their Predictions 2010 and their favourite articles of the year]
Within the hotel technology space, there will be a substantial amount of consolidation this year. An over abundance of small entry level tech players will be snapped up by their larger counterparts.
The use of standard development tools and architecture have made it easier for companies to develop and sell technology into the hotel space however they will underestimate the complexities of delivering strong, pertinent solutions to the industry. This will make smaller players easy and cheap acquisition targets.
2. Recruitment not easy
The hiring of qualified resources in the hotel technology space is going to get to be extremely difficult. As the market continues its modest growth, trying to find the right people with the existing domain knowledge to help companies develop and deliver software solutions will become a challenge.
Also, the downward pressure on salaries will no longer be the norm. Companies are going to have to start to pay for the best available talent once again. Make sure to modify your budgets.
1. More humans
The travel industry is stereotyped as being divided between technologists who want to create a travel booking experience devoid of humans and travel agents who fear the web and prefer to retain their direct relationships with their customers.
Neither stereotype is right and in 2011 we will see more web projects that merge both the efficiencies that web based research can generate for consumers joined up with the insight and requirement empathy that an experienced human agent can provide.
2. The rise of the supplier
2011 will be the year that airlines, hotels and incoming tour operators will begin to reclaim the web as theirs. Leading the charge will be companies like Google who will take consumers straight from product research through to the supplier website for booking.
Suppliers are also in a much better position to take advantage of the rise in social media as they can easily be knowledgeable and passionate about their own products.
Regulatory bodies will have to catch up as the rise of the supplier will mean more cross-border transactions and affiliate marketing will begin to dominate vs balance collecting agent bookings.
1. Service continues to be the new advertising
Ads in any digital media from OTAs (apps, display, partnerships, desktops widgets, social, mobile, etc) will change to ensure they deliver value not just “messages” for users and this will shift where travel companies spend marketing dollars.
Contextual and behavioural ads will not be enough to drive ROI or engage consumers. Travel companies will be investing more in providing useful tools instead of merely pushing messaging through online media.
This will also change the way online marketers feels about attribution and the way online marketers evaluate timelines for ROI
2. Business travel resurgence changes the dynamic of travel merchandising
As business travel sees a resurgence, the increase in prices and reduction of cheap travel inventory will slow down the amount of sales and promotional messages available to online retailers. As such, we will see really innovative and creative retailing online driven by targeted discounting, value adds and creative loyalty programs.
3. Mixed for mobile
Travel sales through mobile will grow but will fail to turn heads. Successful investment in mobile will be content based but substantial transaction volumes through mobile is still a way off. That said, the new content mobile apps will be “awesome” but tough to monetise.
1. The mobile opportunity
The continuing innovations on mobile applications will open the door for new business models to emerge and thrive in travel industry; this also creates significant opportunities for small travel companies to compete with global players by offering unique apps and travel experience to the global travelers.
2. The Chinese opportunity
China will remain as the hotspot of the world travel market with the pending deregulation of China’s outbound and GDS market. We will witness more consolidation as the global travel companies are tapping into to the largest domestic travel market in the world. The market will continue to grow at an amazing pace over the next 10 years, not just the next 12 months.
1. Continued lack of integration
Seems the “digital divide” will be here to stay. Even with all evangelism, training, workshops, an important part of small tourism operators remain out of the internet and etourism opportunity.
And this “digital divide” exists even in main tourism countries, as France where I live!
2. China is the place
China is on the way to become a significant player in the global online travel market. With 420 million internet users, a strong Chinese social media landscape, a big outbound market (54 million) and great GDP growth, China is definitely the tourism country to watch.
Dennis Schaal (Tnooz)
1. The US Department of Justice approves the Google-ITA Software deal
Although given the thumbs-up, there will be strings attached. Expect some parameters imposed on airfare displays as well as software upgrades for ITA’s QPX partners, few of whom will be satisfied with the restrictions. DOJ approval of the deal does not bode well for Kayak’s IPO hopes.
2. FourSquare will begin to lose a bit of luster for power users
Many of your friends who were using the service will drop out, collectively saying, “What’s the point?” The exodus will continue until users can see concrete value for check-ins beyond badges and mayorships.
Gene Quinn (Tnooz)
1. Suppliers, especially airlines, continue to take back control of product merchandising
American Airlines’ push for more control of its product definition and description is more fundamental than a business negotiation with GDSs and OTAs. It is what any brand SHOULD be doing — creating a product for its customers and building or burnishing its brand.
Hey, Apple created a branded music-owning experience for consumers with iTunes and iPods. They provided value to consumers, created a new model that pays musicians a new way, and turned around Apple as a company to boot … and they don’t even own the music they distribute.
The airlines own the planes they fly and they own huge chunks of face (and fanny) time of the customers they fly. GDSs, travel agents, and non-human OTAs and booking systems have yet to provide the joyful searching, buying or customer service experience that taps into the joyfulness of travel. Some say airlines are commodities; American and others intend to prove them wrong. And that spells a real change in marketing and distribution models.
2. Google-ITA Software deal will go through
Everybody just get over it and compete. Travel is a global market, a young market (especially in India and China) and a huge market. Google-ITA Software is a bogeyman for a lot of companies that now need to learn how to compete up the ladder and not just lead the wannabes down the ladder in this new Web 3.0.
The “new” stovepipes of distribution (OTAs), advice and content (TripAdvisor, et al), metasearch (Kayak, et al), and airline fare/ information databases (ITA Software, et al) are being disrupted. Time to innovate.
1. Mobile bookings and payments on the rise
2010 saw a nice across the board increase in mobile purchases, as evidenced by eBay/PayPal results from Black Friday and overall increases in mobile device usage. Add to that the potential of NFC on mobile devices (currently on the some Nokia phones and the Android-based Nexus S, but destined for the iPhone5) and the infrastructure for broader adoption is in place.
Now marry that potential energy with the maturation of apps and mobile web (i.e. second generation apps), the integration of booking capability, growth of ancillary purchases and the ability to provide context-sensitive offers to travelers (since we know so much about where they are and what part of the journey they’re on) and I think the stage is set for major growth.
My guess is that we’ll see higher adoption in business travelers than with leisure travelers.
2. Travel gets serious about social
Yes, there’s a lot of talk about social today. Many companies have Facebook pages, Twitter accounts and mobile apps, but few are truly engaging in SocialCRM initiatives or really leveraging their customer’s social graph using platforms like Facebook Connect.
Having a booking widget on FB is nice, but it’s not really leveraging social. Perhaps the activity will be spurred by a new entrant with a social recommendation engine, rather than the existing players.
Altimeter Group’s Jeremiah Owyang and Ray Wang (now CEO of Constellation Research Group) laid out 18 Use Cases for Social CRM and I expect some companies in the travel space to start down this road. A good read.
3. The Google-ITA deal goes through
For all the sturm und drang, there is no real reason on the surface to stop it. However, Google is maaaad and takes its revenge in some interesting (read punitive) ways. Actually, they have already started.
1. Bing and Facebook on another level
Observers from outside the travel industry predict that Bing will eventually take a more prominent role in its partnership with Facebook. As the social networks search provider, Bing will be poised to push it’s already highly developed travel products to further heights.
Integration of “likes” and Facebook questions with Bing search and travel will create a new breed of SEO (SNO – Social Network Optimization) that will put even further pressure on brands that are not part of either Google or Bing’s metasearch offerings.
2. Social customization
Until recently, OTAs have had to depend on A/B testing, focus groups and various other forms of user data gathering techniques to try to customize the very generic booking process.
With the proliferation of social networks, mainly Facebook and “Facebook connect”, users are now offering up their data on a silver platter. Their locations, check-ins, likes, friends and much more are all waiting to be accessed, and for free.
In 2011 we will see the first of the major OTAs tap in to this data in a big way, giving their users a personalized experience every time they access the site.
Although this may sound like a privacy nightmare, it’s always an opt-in process and from my experience, the younger generations are willing to do this without hesitation.
Kevin May (Tnooz)
1. Apple finally plays its hand with iTravel
After months of filing patents and selling more mobile devices and tablets (remember, no-one thought they needed an iPad just 12 month agos), Apple will introduce iTravel as a core piece of functionality on both products.
Expect some dismay from existing application providers but a land-grab for contracts to supply product and services within iTravel, probably on a regional basis rather than a global deal.
2. Google wins in the US but find life tougher in Europe
The acquisition of ITA Software will be approved – probably with some form of conditions attached – by the US authorities, but Google will face a bigger issue with European regulators.
The recently launched investigation by the European Commission into placing of search results will come to a head, with no firm resolution, but a threat of regulation around its activities in the distribution of travel will lead to one of three things: Google coming under the same regulatory auspices as the GDSs; regulators loosening their grip on the GDSs; or Google and other “media” players in travel coming under scrutiny within a new framework around online travel search.
1. The booking path goes non linear
There are so many different and seemingly unrelated changes happening in the world of online travel, but many of these converge at the point of reinventing the way a person searches for, buys, and then consumes the travel experience.
In future, this path moves from linear to seemingly haphazard – steps are skipped whilst others occur in an order that may appear incomprehensible today.
Some of the individual impacts feeding into this tectonic trend are campaign management, content management, inspiration, mobile proliferation,personalization, intelligent caching and the merging of pre-shopping and shopping. This prediction will take a number of years to play out fully, but the first real signs will be visible during 2011.
2. Mobile apps and airport kiosks begin their decline
It is always difficult to predict exactly the high water mark during a flood, or the top of the stock market bull run prior to a correction; likewise it is difficult to say that a current hot technology will not get any hotter.
This is not to say people won’t be making good money for years to come, but reverting to the old BCG Growth-Share Matrix, 2011 is the start of the cash cow period. App fatigue is rearing its head,ad spend is elsewhere, and HTML 5 is gaining momentum.
Games via mobile and other certain segments may still favor native apps, but I remember 10 years ago when I had to download a web app to use online banking – today doing this outside the PC browser would be laughable.
Travel will follow the same path, and one impact of everything becoming mobile is that airport kiosks will play a smaller and smaller role over time in the airport as space is freed up for more productive uses.
In order to provide valuable content as POIs to travellers travelling through a destination, many DMOs are thinking about how to provide potential travellers more trip planning facilities via white label solutions (eg Voyano, Yourtour, et al).
So DMOs will try to collect relevant POIs in their destination to spread them digitally via own apps, innovative travel guides and tools (timetables, augmented reality tour guides) or via syndication through larger distribution channels like Google, Qype, airlines and tour operators.
2. Decline or only little increase of social media marketing spend in travel
DMOs realize that social media marketing in travel simply doesn’t work. DMOs will reduce spend and invest more in PR and social media agencies for “social media seeding” and “online PR” activities for destinations.
1. Rise of the tablets
Tablets will have a major impact on the travel experience providing interactive, immersive guides integrated with social media. Travel companies will be required to create tablet-specific versions of their native apps.
The chaos caused by the 2011 tablet wars will have travel companies scramble to develop specific apps that take advantage of the tablet platform functionality. This will include expanded use of augmented reality on the larger tablet surface and new apps that combine video, social media, gaming, destination content and booking.
2. Near Field Communication grows
NFC will become more standard as a way to facilitate mobile payments, airport processing and interactive advertising. This is a gradual evolution (due to the high cost of infrastructure required for NFC), but will become the norm for payments and processing over the next 5 years.
2011 will see the first signs of this trend taking hold globally. NFC will improve traveler efficiency through check-in and payment and deliver a new personalized communication path to the travel supplier and intermediary.
1. From socially loud to anti-crowd
In 2011, travelers begin to shift from “always-on” travel experiences to “digitally-disconnected” preferences. Technology companies start to support this shift through integration of unique data in the shopping process. Check-ins, social shares and real-time supplier inventory will be used in aggregate to inform travelers of the most likely recommended destinations featuring short lines and low occupancy bliss.
Today, we use this data to see where our network is now/who’s nearby, as well as where, when and with whom friends have future travel plans. But in 2011, this data will be used to optimize preferences and inform travelers of destinations people aren’t visiting and which beach or ski mountain the crowdswon’t be occupying on specific dates.
2. Gen-Z virtual 3D travel concept legitimized
As virtual reality becomes less dependent on bulky technology, and 3D design software enables greater speed, flexibility and overwhelmingly realistic virtual experiences than ever before, 2011 is the year when the concept of Virtual 3D Travel is legitimized.
Gen Z’s technology use patterns have revealed virtual travel could be the future norm – one of two travel experience options including “traditional travel” as we know it today, along with the “digital travel” multi-sensory 3D virtual experience.
1. Online goes mainstream in Asia
More traditional travel agents and small to medium-sized travel service providers will make their moves in the online channel. This will cover everything from own branded websites to social media and mobile, and what devices and platforms to invest in.
People will have to pick their bets carefully because they won’t have the resources to cover everything. The winners will be those who choose well, invest wisely, execute consistently and put customers first.
Companies that still operate in silos – online vs offline, marketing vs public relations, social media vs public relations – will lose ground.
2. Almighty battle for talent breaks out in Asia
Not enough has been invested in education in schools and training in industry for the right mindset and skills and now that a new era dawns in marketing as well as customer expectations in travel and tourism, everyone will scramble for people to execute.
The strong economy in Asia will also mean more competition for talent from other industries – so expect a bloodbath where only the ones who are committed to investing in people will win. More power to individuals who know how to find their groove in this rich, fertile, fast-changing landscape.
1. Year of the QR Code
From reviews to wrapping paper, I think we’re going to see some really interesting and innovative uses for QR Codes this year. Even though QR Codes have been around in Japan for over a decade, I think we will finally see mainstream use of QR Codes in North America.
Look for destinations using QR Codes to enhance the visitor experience by loading mobile web addresses into codes placed around a destination.
2. Facebook Places, local business, and the new review behemoth
No one will argue that TripAdvisor is the biggest travel review website out there, but has anyone recognized that Facebook places, in combination with the “Review” tab could become the largest source of hotel and attraction reviews on the web.
Smart businesses will start to drive customers to Facebook to leave reviews on their profile pages and share their experiences with friends and family in an environment where they already congregate. Even smarter business will find ways to better engage with their customers in Facebook driving more value for the relationships they already have with them.
3. Some smart cookie will finally crack the location-based services
Sooner or later an organisation will figure out how to make it interesting for the mass (ie. generally non-technical) market as well as beneficial for businesses to participate.
Businesses are the missing key in the LBS market and without their mass engagement, consumers are not going to derive much value from becoming the mayor of their local coffee shop or bakery.
4. Trip Planning site consolidation
We have seen investments in Nileguide, the purchase of Travelmuse, and the purchase of RealTravel by Uptake. I think we’ll see fewer trip planning sites as many of them begin to merge into larger communities. Expect to see more recognized brands snapping up content sites to augment and add value to service or product offerings.
I don’t plan to see many of the social planning sites that were presented at PhoCusWright to do particularly well in the long run unless they can establish brand recognition along with a strong travel partner.
I think consumers are going to be looking for ways to reduce the noise in the marketplace.
1. Search has changed for ever especially the measure of authority
The display changes we have seen in Google and Bing in 2010 are a precusor to the profound changes I expect to see in the measure of authority for content/sites in search.
The old measure of inbound links will be enhanced with input from social networks, context and location, expert advice, preference matching and more. Search marketing will have to change to encompass content, social, information syndication and data mining.
2. The mobile/tablet/PC debate will change from building for devices to building for display preferences
Device platform discussions will move from “which product is this built for” to “is this compatible for all displays”.
Much like we now say that a site has to be web ready rather than differentiating between its readiness on FireFox, Chrome, Safari, opera and IE.
The type of the device and whether or not it is mobile is now irrelevant. Mobile/PC/Tablet will be the different “browers” of 2011. All code will need to be written in preparation for this.
1. One big move to Value Finding
“Value finding” will become a new art form, not just pure price determined results, but driven by many more factors which are more subjective and personal. There will be an emerging market for better “finding” in a more natural manner as opposed to explicit search tools IE new and better ways for matching consumers’ value requirements with product attributes.
This will be a generational shift not just new lipstick on old and tired search tools particularly those which are GDS based. A movement to higher quality results will get underway in 2011.
Indeed we will start to see many more differentiated product attributes emerging as suppliers move to differentiate their products even further than the simple product un-bundling we have seen today. This is going to create different ways to sell one company’s product (e.g. airline) over another. In turn this will alter search.
However Google’s approach to search and personalization only using their (Big G’s) attributes and rules will become a new battlefield. A strong anti Google sentiment will come from the supply side – particularly after the ITA acquisition is approved.
This will result in new ways for customers to search, shop, select, price, buy a travel product. More implicit, more natural, less explicit and controlled. This will not just mean better (meta) search but more personal interaction between the customer and the supplier – and not just supplier direct (e.g.Airline.com) but indirect also.
“Value Finding” requires better quality data. The arbitrary data views provided by legacy players will not be adequate to support this new form. However this is NOT easy.
I believe we will see new investment in technology as forms of “Finding” and direct connect will grow. The tools will be both B2B as well as B2C because consumers demand better access with better tools.
Their itchy little fingers will click over to those sites that provide differentiated product and higher forms of service.
1. Travel becomes smarter
Not necessarily the traveling public, but the devices and systems that are in place as we travel. Starting with the mobile device, which does have more functions than texting and Facebook, applications and developments such as mobile boarding passes, real-time flight status updates and RFID become increasingly utilized by more organizations (British Airways, goHow Airport, etc.) and in-turn more travelers.
Tablets (the iPad) find their place, becoming the PalmPilot of 1999…an indispensable travel companion with more knowledge than any Rhodes scholar, plus a good deal of time-wasting possibilities.
In the end, whether small or slightly larger, the opportunity and value to possess an endless supply of information and tools in one’s pocket will become clear to most travelers as we close out 2011.
2. “Friendformation” will grow
The premise being that consumers will look to information from social connections while planning and experiencing travel. This could take the form of reviews on a site such as TripAdvisor or dynamic content fed by a service like Facebook Connect.
While both exist in the present day, the key will be the interconnectivity of this information and availability to the social friend. Basically, we are going to keep sharing more stuff. Regardless of medium, the knowledge and resources available to the consumer, from their friends, will continue to grow with each click of the accept or like button.
“Friendformation” will be web word of the year.
1. Niche and long-tail content will continue to move online, hopefully in traveller-friendly form
Suppliers and distributors of tours and activities, destination information, golf, holiday rentals, even hostels will expand their offerings, providing information and, in some cases, inventory, to a clamoring traveling public.
The tricks? Keeping the online noise down by providing easy-to-find, easy-to-understand and easy-to-book offerings for consumers, making information and inventory management usable by the hugely fragmented supplier bases in these long-tail segments, and using inexpensive technologies and platforms so technology providers can build affordable distribution solutions for both the suppliers and consumers (and make a bit of money themselves!).
2. Agreement over IT infrastructure
The major air, car and rail suppliers in the transportation segment will all agree today that many of their required IT functions are expensive to maintain, yet no longer provide competitive advantage or differentiation.
In 2011, they will collaborate on (and adopt) an open common services model with a full services layer that integrates web services from multiple providers and supports an event-driven architecture with complex event processing and rules engines.
Transportation suppliers that adopt the common services model will reduce operational costs; improve flexibility and time to market; and benefit from global interoperability of web services.
Similar initiatives will be started in the hospitality and long-tail sectors using common services model as a foundation, but transportation companies will lead the way.
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