Tnooz Predictions 2012 – The biggest and best list in travel technology
Tnooz is lucky and privileged to have some of the brightest minds in the industry reporting and contributing to its service almost every single day of the year.
For the third year in a row, we have peered into the Tnooz crystal ball, reached into the depths of our knowledge and experience of the industry in order to come up with the biggest, most well-informed list of predictions you will find anywhere on the web.
As well as checking back to see how our oracles have performed in previous editions of the Tnooz Predictions (2010 and 2011), readers can listen to a special edition of TnoozLIVE on Wednesday 21 December for a fireside chat with some of the team.
1. Non-transactional travel startups are going to continue to struggle
Social, trip planning, itinerary sharing and mobile city guide startups and apps are wonderful artistic creations that can be a joy to use and engage with. Sadly business models for these endeavours have not kept pace.
Their less glamorous relations – ie. transactional based startups – are at least handling money, and bookings hence tend to be able to generate a sustainable business from a percentage revenue share.
Consumers may pay to save money, suppliers will pay for receiving bookings they would not otherwise have had. These companies can even make money on the transfer itself. Less exciting, less press coverage but in 2012 much more likely to keep their heads above water.
2. Web tech will improve the overall experience not just the booking experience
Hipmunk has it right with its “agony” metric, but this approach can go so much further.
What stops you from travelling to a tricky country? It can be visas, immunisations, paperwork and bureaucracy. How many websites or services do you see streamlining these consumer burdens?
Too much focus has been on the product and the booking – 2012 will see the rise of the holistic travel website with incorporated 1:1 personal advisors and trip planners. No longer will 1:1 advice be for luxury travel only.
1. The personalization era arrives
After years of acting as catalogs of travel products, online sellers of travel will finally leverage the mountains of data they’ve been sitting on to effectively target and sell to customers based on their preferences.
The emphasis on optimizing travel sites to be the most appealing to everyone will be replaced by an emphasis to make them individually relevant. Expect the trend to begin with OTAs.
2. Travel startups face funding headwinds
After experiencing a flush funding environment the past couple of years, travel startups will find it harder to raise money in 2012 as a glut of seed funding turns into a rush for follow-on funding with much less money generally available.
The economics of operating a travel startup reliant on SEM will become more unrealistic.
1. Three buzz words will shape 2012: convergence, trans-media and television-connected
These trends form the new methods of consulting information: media consumption on many screens (web, billboard, mobile, tablet), at any time of day.
With services from Google TV, Apple TV and the like, market will be on a rush. The digital strategy of tourism stakeholders will need to take more account of the myriad of additional screens in a consumer’s life, and the proper implementation of multimedia storytelling.
In fact, as so often happens, innovation comes from outside the travel industry as large tech players who provide integrated customer experience.
2. China outbound market still growing and evolving rapidly
Chinese travelers are seeking true individual experiences and would love to leave the flock. To capture this lucrative market, we will see more digital marketing from travel brands on the Chinese web and social networks.
This strategy is already being used by organisations in Canada, Australia as well as some luxury hotel hotels.
Epic landgrab to conquer new ecommerce entry points
So far ecommerce was relatively simple: open browser, go to search engine or favourite brand site, search, refine search, buy (or book).
The desktop browser + search engine paradigm is gone.
Users are using alternative search entry points – whether new devices (smartphones, tablets, e-books, car navigation, game consoles, TVs), or new search environments (social search, maps search, voice search).
The giants in this battle are not only Google, Facebook and Apple, but anyone who can control the input/output of end of user interaction: device manufacturers (watch Nokia), large content publishers (watch Amazon), and private platforms (watch Gilt and LivingSocial).
Dennis Schaal (Tnooz)
1. Priceline, Expedia and other big OTAs will get into the vacation rental business in a big way
It’s a natural fit as they expand their hotel businesses globally. This won’t be couch-surfing or peer-to-peer strategies so look for them to skew toward partnerships with distributors of professionally managed properties as TripAdvisor, which is separating from Expedia, already has done.
There will be a variety of models, including listings and commissions. There will be partnerships and, with lots of money lying around, acquisitions, too. There’s a whole new lodging world out there and the OTAs will want in.
2. Rock, paper, scissors
On-demand car services will beat rail in terms of buzz factor in 2012. The proliferation of mobile is a natural fit for on-demand car service, where you can text or use a mobile app to call for a ride, and view your driver’s location en route on an interactive map.
And, of course, these car-service players will be busy in 2012 further developing inroads into the business travel side of the industry.
1. Google’s new products continue to have negligible effect on industry
I said it here first (Google entering travel could be nothing to worry about after all), and I believe it’s true so far and will continue to be true through 2012.
Google Hotel Finder and Google Flight Search emerged on the scene in 2011 to much fanfare and discussion. But at the end of the day, Google does not offer the best solution for either — with overly complex tools that have too much friction to transaction.
Google will remain a trusted source of search results to find OTAs, but OTAs and dedicated travel meta-search sites will not feel too much heat from Google anytime soon. World order will remain.
2. No winner in social travel
We’ve been introduced to scores of social travel start-ups in 2011. Some are well-funded, others bootstrapped experiments. The bootstrapped companies, like many that came before them, will fall by the wayside.
The well capitalized ones will push on, veering and pivoting as fast as they can (but probably not fast enough). But by years end 2012, no single social-travel site will have critical mass, nor will any have a product and business model that’s sustainable into 2013.
Gene Quinn (Tnooz)
1. Here comes Apple
Apple’s iTravel emerges, probably before mid-year. Look for an elegant mash-up of travel aspiration (one with some vision and much better than Google’s Schemer) and Apple’s magic with device design and integration.
iPad will be to iTravel what iPod was to iTunes.
2. New opportunities in mobile
Mobile travel applications explode in number and breadth of services. Look at the mobile games market as a model for the hundreds of thousands of items in the library of how-to, what-to-do and what-people-like-me-recommend-I-do in travel-related stuff.
Real blurring between platform-native mobile apps and platform-agnostic web apps begins to gel. Businesses form around the collection of these applications.
1. Natural language
Travel search will take a massive step forward led by startups such as Evature and Hopper [NB: Disclosure – Tnooz chairman Fred Lalonde is also CEO of Hopper]. Apple will take it to another level using Siri to impact the travel sector more so than the vaunted iTravel patents.
2. Apple impact
If Apple is really going to leverage Siri to be the entry point for travel search for iPhone users, what they are missing is booking data.
Look for Apple to acquire or tie up with Kayak to get access to flight data and provide an amazing travel search experience that will make Google flight search pale in comparison.
Jim Craven (Tnooz)
1. Social media analytics and travel bloggers
Social media influence analysis and metrics will improve significantly and standards and benchmarks will start to be established.
These metrics and benchmarks will help travel suppliers, CVB/DMOs and PR companies give a weighted value to travel bloggers when comparing to travel print journalists. This will provide travel bloggers a quantitative way to gain a seat at the press trip invite table.
Ad dollars will follow, but will be slower to migrate from print travel publications to individually branded travel blogger sites. The migration has started; the analysis tools and metrics will help it gain speed.
2. Airline merchandising
US airlines will hit a wall in unbundled, a la carte ancillary products and will begin to sell re-bundled ancillary package.
Think “fast food”, while a complete menu of a la carte ancillary products will be available, “value meals” and “entrée with two sides” packages will become the popular way for consumers to purchase air, at a discount off of full ala carte pricing.
Typical offers might be: airfare/1 bag/wifi or airfare/2 bags or airfare/1 bag/premium seat or airfare/early boarding/meal, etc.
Kevin May (Tnooz)
1. Social travel comes of age
With a dizzying number of trip planning sites either up and running or in beta, 2012 will be the year that defines the sustainability of the model.
There are simply not enough eyeballs to feed the needs of dozens of trip planning sites littering the web, especially as so many require reviews and recommendations to feed the content that also makes them sticky in search and diverse enough for readers.
A great shake-out will happen during 2012, where those without traction or relevancy will fall by the wayside and a few that have managed to fully understand and leverage the social graph.
And this, of course, is before the mega-brands (which do have eyeballs) finally realise there is some value behind the social graph.
2. Travel startup terror
Investors in the famed startup land of Silicon Valley (and elsewhere) have spent the best part of the last two years throwing money at travel startups.
Some startups breed innovation, all hope to add competition to the marketplace – both elements are obviously good things. But some believe the investment money is now starting running dry.
While this will obviously impact (and no doubt kill) those looking for early stage funding before they even get off the ground, startups needing a second round to fuel the next stage of their growth will be under enormous pressure.
Expect many startups in the latter bracket to rethink their investment strategy, pivot away from marketing spend-heavy services or, simply and unfortunately, fade away.
Linda Fox (Tnooz)
1. User review shake-up
The hotel reviews space is becoming a weekly source of heated debate, mostly from hoteliers who say they have fallen victim to fake or malicious reviews.
The UK Government would seem to be supportive of businesses on the issue and recently backed an initiative from Reevoo to introduce a consumer guarantee.
TripAdvisor has itself taken steps to water down its own promises of trustworthy reviews and a much-awaited ruling from the Advertising Standards Authority could force it to make further changes.
The whole area does little for the credit of the sector and some sort of authentication process to verify consumers posting reviews are genuine guests could solve a lot of problems.
2. Flashy overhaul
A shake-up of the flash deals sector is on the cards in the next 12 months. There are too many companies out there doing the same thing and it’s hard to believe online travel agencies won’t incorporate their own flash deals areas within their websites.
Both Expedia and Priceline have already made moves in that direction. There is also beginning to be some negative feedback about flash sales with complaints to the Advertising Standards Authority in recent weeks.
The whole concept of flash deals is also under the spotlight as consumers grow weary and mistrustful of ongoing discounting.
1. War of the Wallets
2012 will be the year that seemingly every mobile network operator, mobile phone operating system, card scheme, alternative payment form, and even a few major retailers and mass transit operators claim to have THE digital wallet solution that will see us all moving payments to our phones.
The reality is that even though the coming year will be a land grab of sorts, most will find it harder to be genuinely relevant to both consumers and merchants. Towards the end of 2012 we will have a much clearer idea of who is in the digital wallet game for the long haul.
The real impact on the travel industry will take some time to become apparent, but this is undoubtedly a high stakes game worth watching and understanding – the longer term impact will be profound.
2. Strategic view of airline payments
For years the GDS model of authorizing payment for ticket sales has typically used generic acquirer and merchant IDs, thereby not passing in the message an identifier of who will actually settle the transaction.
Despite being against scheme rules this was tolerated for years until recently. But this is just one of many reasons why airlines will be taking a more strategic view of payments in the coming year and relying less on legacy processes.
Whilst the more forward thinking airlines have already separated the card not present gateway decision away from individual market by market acquiring relationships, we will start to see more airlines looking at a co-ordinated approach across fraud management systems (eg. Veuling), alternative forms of payment tightly integrated into booking engines (eg. Lufthansa), consolidated reporting and reconciliation across markets and payment types (eg. Jetstar), and in some cases even on-us acquiring where volume and market conditions permit.
EMV mandates will also help bring airport kiosks into focus as a part of this increased focus on a single payments strategy for the airline.
1. Google Hotel Finder
Google Hotel Finder is stirring things up in the world of hotel distribution. It outmaneuvers metasearch sites such as Kayak, Trivago and HotelsCombined and a lot of smaller OTA and drives business straight back to the top players.
An opportunity for hotels though to get listed through their GDS representation company and regain some control on their distribution.
Hotels have to make sure though their Google Places listing is in perfect shape.
2. Increasing Distribution Cost for Hotels
Hotels will be faced with an increasing cost of distribution in 2012. Quite a few OTAs have raised their commissions from 12% to 15% in major destinations which will come straight out of your bottom line.
Many OTAs have also launched preferred programs for hotels to show up higher in the sort order. Commissions vary from 18% to 20%.
Hotels have to be careful not to simply drive up their costs and at the same time become reliant or even dependent on OTAs. Keep in mind, their only mission is to grow in terms of global revenue, and that is not always in the best interest of your own hotel.
1. Social data clusterflocks
2012 will witness the advent of automated social data disclosure from flocks of travelers sharing their every spatial move by mobile default. These “living sensor networks” will give rise to mountains of new data artifacts as mindless convenience trumps manually optimized privacy.
While the IT poser masses will contribute by elevating “social data architecture” to buzzword bingo status next year, a select few will begin experimenting with structured (spatial) and unstructured (temporal) social data by parsing and combining it with their own, aspiring to 1+1=3.
Intelligent integrations of that data into the travel search experience will produce pockets of context-based conversion increases that will build a case for broader industry investment in 2013.
2. New motion in travel’s ocean
Gesture-based browsing advanced rapidly in traditional retail trend popularity in 2011. Why? The emotional ties gesture-like experiences create between users and products increases conversion, and it’s clear our industry will explore travel-specific applications of similar technology in 2012.
Travel evokes strong emotional ties based on post-trip memories, but rarely do travelers connect those emotions with hotels, cars and planes during the pre-trip booking process. 2012 will entail the analysis of how gesture browsing could be applied in travel, unfortunately resulting in all talk and no technical walk until 2013.
Conversely, that opens the door for at least one motion technology travel startup to launch next year, experiment, hunt for funding, and rest easy knowing the need to improve the online travel experience remains as ever-present as always.
1. Year of the Dragon will be a fiery year for low cost carriers in Asia
Everyone’s now jumping into the fray with names ranging from Scoot to PEACH and Smile. Let’s just say it won’t be peachy for many and there won’t be a lot of smiles either.
2. More local heroes will emerge across the region
Watch Indonesia and South Korea, as entrepreneurs carve out deep, local, mobile niches.
1. Expect location based services to become more ubiquitous
Even though only about 5% of the population uses location based services such as Foursquare, we have seen location awareness become an important part of many travel based mobile and web applications.
I would expect that Facebook will reveal something interesting as a result of its acquisition of Gowalla. Integration of location and local deals may become more mainstream as part of Facebook mobile app.
Since Facebook has discontinued Facebooks Deals, however, I expect to see daily deal sites and potentially even incumbent travel sites advertising on Facebook for access to users in app.
2. RIP Social trip planning. But not quite
Social trip planning is dead long live social trip planning. My prediction has less to do with technology and more to do with consumer behaviour. In the last two years we have seen a flood of social trip planners appear and disappear.
I think some of this technology will be acquired by incumbents and used in their booking flows and that social trip planning will become part of the planning and booking process of existing and emerging content sites rather than destination sites on their own.
Consumers will expect social trip planning to be the norm.
1. Another wave is coming online (good news)
Next year will mark the year that everyone born in 1994 turns 18. Sounds like the dumbest ever prediction made, right? It is significant because 1994 marks the year the world wide web was born, meaning 2012 is the year the first true 100% internet generation comes of age.
By coming of age they become economic entities that get jobs and make their own decisions on where to spend money and when to go on holidays. This generation and those three to five years older than them will fuel another burst of growth in online travel spending.
Combined with the growth of middle classes in China and India, 2012 will see a greater shift in offline to online than we saw in 2011. New products will continue emerge/grow online to catch this wave (ie P2P travel such as Airbnb).
2. It is 2008/2009 all over again (bad news)
2012 will not deliver the economic growth and renewal that has been hoped and predicted. As as a result we will see a general drop in travel demand even as online share increases.
This drop will not be as bad as – but will be a reminder of – the declines in 2008/9. I expect this to drive a drop in travel supply prices (hotel, air, cruise).
Unfortunately I predict that we will see some further announcements by suppliers in the areas of bankruptcy, closing of brands and disbanding of joint ventures.
It will however give deals a big push – both for dedicated deals sites and for the general online travel agent market. Watch the deal market and businesses grow (even if we lose some players along the way)
1. User experience hits home
I predict that the current dissatisfaction with user experience with travel brands on the web will accelerate in 2012. In fact, I believe that we will start using the term “consumer fatigue”.
This will have a massive impact on web search and shopping for other products, but it will hit travel hard as the current processes and widget-based explicit interaction are really rather awful.
2. Cash for cache
The process of availability cache creation will start to cause significant issues. Owners of inventory will effectively start charging for the access to an “approved” state of availability.
This will cause significant problems for the metasearch or search companies in the travel industry.
1. DMOs will stop recreating the wheel
Due to budget restrictions, lack of resources or simply a realization that building a Yelp clone (but it has our logo!) is not a good strategy, DMOs and CVBs will begin to re-focus efforts on core strengths, while looking to partner with existing technology.
Firms such as Foursquare, Foodspotting and Guidefabrik [See TLabs Showcase], offer an enticing opportunity for cutting-edge technology with limited risk. And frankly, a renewed focus on strategy is sorely needed by our destination brethren.
2. Google gets travel
Google loves information. And you know what typically requires a lot of planning, research and information? Yep, travel. So, it is no surprise (and certainly not to our dedicated Tnooz readers), that Google continues to push into the travel space.
Flight Search, mapping, G+ and now Schemer all have connections with the travel planning funnel, which has quietly moved Google from advertising medium to trip planning hub.
Will it be a success? Difficult to say, but if any activity could use some streamlining, it is certainly travel planning. And I, for one, welcome our new travel overlords.
1. Niche and long-tail content will continue to move online
This is my third year including a prediction about the long tail, and it’s always a guaranteed winner because of the ongoing and fast-growing interest in the travel segments that make up the long tail.
Large distributors and suppliers are finally recognizing the logic of extending their value proposition by including information and (sometimes) inventory of tours, activities, golf, vacation rentals, tee-times, ground transportation, bus tours, etc, as part of their offerings.
Technology costs are falling, connectivity is becoming easier, the talent pool is deep, venture capital firms are investing heavily in this segment, and the market is paying attention – a winning combination.
2. Simpler, smaller, scalable, standard
The proliferation of open APIs is a good thing for an industry that has historically been dominated by proprietary (and expensive) connectivity, but bad for an industry is trying to simplify access to data and to support ongoing innovation. As more open but one-off APIs flood the market, connectivity becomes complicated, expensive and time-consuming.
Travel companies should follow technical best practices when writing APIs – discrete but scalable, simple but robust – and contribute to and follow standards whenever available.
2012 will be the year of the open API – and also the year when the travel industry says “enough is enough” and fully recognizes the value of standard connectivity.
NB2: Images via Shutterstock.
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