The age of hybridization does not seem to be confined to airlines. We now have a new form emerging – hybrid intermediaries.

Strictly speaking it really isn’t that new – for the past 15 years, since the first online travel agencies appeared, there has been open warfare between most of the traditional travel agencies and the traditional agency intermediary.

This is a battle that the smaller independent agencies have largely lost.

In the early days of Expedia, a joint venture was formed called AXI – created to provide Expedia Technologies combined with American Express’s back-end and customer services.

It eventually foundered due to widely differing expectations of the two parties, then Microsoft and American Express Travel Services.

In the early part of the new century – the OTAs started to evaluate how they might leverage their expertise in the traditional agency space.

So the major players – Travelocity (who already had purchased a corporate entity and renamed it GetThere), Expedia (who purchased a Seattle based agency amongst several others, now named Egencia) and Orbitz (who started Orbitz for Business from scratch) put down a TMC footprint.

And now the latest incarnation of the tentacles of the OTA is based on the model that the OTAs are offering their services to the traditional agency community.

Expedia has offered for many years a program that allows agencies to make commission on selling some products – such as hospitality – from the Expedia supply chain system.

Orbitz was first out of the box last week with their Orbitz for Agents program launched a few weeks back.

Not to be outdone Expedia has brought to the US market its UK travel agent-friendly offering TAAP (standing for the catchily named Travel Agency Affiliates Program), which of course should not be confused with TARP (which we all now know stands for Troubled Asset Relief Program.

[There is of course no truth to the rumour that internally at Expedia’s offices in Bellevue that the original Expedia project name was to be TARP for Travel Agent Resuscitation Program.]

The programs work on the basis of a fee for the access to the program (£40 or $100). In return for this the programs offer access to the OTAs buying power.

Orbitz is offering for the first 500 agencies who sign up and transact, preferred rates for one year, thus indicating they don’t have lofty goals for the project.

Expedia is waiving the fee to those who sign up and transact before the end of April. The Expedia program is also rolled out worldwide with offers in Asia-Pacific as well as The Americas and Europe.

No word from Travelocity who might feel a tad conflicted on the subject.

Just chalk this one up to more fragmentation and more co-opertition in the intermediary space.

With the big OTAs now offering just about every possible version of an intermediary – is there anything that they do not touch?

And that is just on-point for their strategy – to be the big 800-pound gorillas in the intermediary space.

As we can see from the US based ARC Reporting, the non-mega and non-OTA business is not doing as well as the big guys.

Those signing up for the program might want to ask themselves how these programs can help them differentiate their products and services, or are they becoming just another cog in the giant machine.

Abacus says investments in technology and online space have paid off for agents with more wanting to embrace new channels.

It appears that the year of “Tough Love” certainly may have been good for travel agencies in Asia, putting them in better shape to take on the challenges ahead, particularly in the online space.

According to an Abacus Asia Travel Sentiment Survey of around 200 leading travel agents across the region, 92.3% said that the changes they have adopted during the economic downturn have strengthened the business and put them in better shape for 2010.

The number one change cited by the majority of agents was the sale of ancillary products.

Abacus’ president and CEO Robert Bailey says: “We found that almost 60% of the agents indicated that the sale of ancillary products such as hotels, travel insurance and other non-air products had helped sustain their business revenues.”

The second change ranked by around 40% of the agents was the launch of promotional deals and packages.

The third change was allocating more resources to online channels tied with technology investments with 30% of the travel agents saying that these investments have brought improvements to their businesses.

“We expect to see continuing investments in innovation and technology as agencies start to see the value that these changes have brought to their business models,” explains Bailey.

Abacus ended 2009 with a 1% decline in overall bookings – a “better than expected” result – and is forecasting 3-5% growth in travel bookings for the first half of 2010.

Abacus tips that emerging markets – one of the green shoots seen during the economic crisis – will continue to drive travel bookings up with IndoChina and Central Asia as key growth regions. Several other markets such as Nepal, Bangladesh and South Korea had also contributed to Abacus’ better-than-expected business results.

One bright spot was the online space, says Bailey.

“Abacus’ overall figures for 2009 showed a much higher-than-expected growth of more than 15% and although it was amidst harsh market conditions, we made further in-roads in the online segment of markets such as Indonesia, Philippines, Vietnam and China.

“Higher internet penetration and rising incomes from the emerging markets will bring forth an increased dependence on this channel for travel consumption.”

He adds that initiating or expanding an online plan has become one of the key pillars in a company’s rebuilding efforts as this channel has proven its strength in the face of challenging economic conditions.

“Overall, we are forecasting 20% industry growth in 2010 as technology adoption across the region continues to increase.”

Travel agents across Asia have ranked this channel as one of the top items in their wish list for the year according to the Abacus survey.

Of the travel agencies that have no existing online business component, 71.3% said that they are planning to develop one and more than half said they will have the website ready within the next six months.

In addition, the survey found that online bookings contributed up to 15% of revenue for 42.6% of the agencies last year while another 35.6% said it contributed 15 – 30% of their revenue.

These responses from the ground clearly show the gradual shift that market players are taking in embracing the online platform as one of the core revenue streams in the new decade, says Abacus.

Rang7, a widely talked about online travel startup from India in 2009, has disappeared less than a year on from its launch.

The site was the brainchild of Ram Seethepalli, a former senior Travelport exec, but was dogged throughout its short life by confusion over its ownership.

Touted as a Orbitz-Opodo style online travel agency for India, Rang7 was initially thought to be backed by a trio of major Indian airlines, Kingfisher Airlines, IndiGo Airlines and SpiceJet.

Rang7 was seen by some as a strong alternative to the giants of Indian online travel, Makemytrip, Yatra and Cleartrip, which have dominated the marketplace but marginalised some of the low cost carriers in terms of distribution.

Seethepalli’s pedigree as an ex-Travelport managing director group vice president in its Cendant days was also seen as a strong indicator that the business would challenge some of the existing companies.

However, the launch of Rang7 was eventually overshadowed by speculation amongst other Indian travel firms and industry watchers about its funding and structure as the three airlines never publicly confirmed their support for the site.

Competing with margins as little as $2 on air fares and staying low-key meant that the company was also unable to attract further investment to push its profile into the mainstream.

Rang7 was eventually pulled from the web last week. Seethepalli has been unavailable to comment.

Priceline continued its torrid growth, particularly internationally, in the fourth quarter and increasingly is sharing hotel inventory across its brands.

Here’s the tale of the tape:

• Profits more than doubled — 130% actually — to $78.5 million.

• Gross bookings jumped 53% to $2.3 billion in the fourth quarter, and international revenue, fed by Agoda’s growth in markets like Thailand, for instance, climbed 74.9% to $222.9 million.

• In the U.S., domestic gross bookings rose 21% because of growth in hotel sales — both of the retail and merchant/opaque variety — as well as retail airline tickets and vacation packages. Sales of opaque airline tickets and rental cars were weak.

As Priceline continues the growth of its Booking.com and Agoda units internationally, it is accelerating its leveraging of that inventory across its brands.

Priceline President and CEO Jeffery Boyd told analysts yesterday afternoon that the company has begun experimenting with showing Booking.com North American hotels to Priceline.com customers. Booking.com, he says, already is Priceline.com’s primary source of European hotels.

Booking.com’s hotel portfolio now includes 78,000 hotels dispersed across 76 countries.

In the future, Boyd expects the keyword market to heat up as “international hotels [are] getting more aggressive in competing for keywords” in the hopes of attracting direct sales.

However, Priceline’s companies may avoid that encumbrance to some extent.

He says: “But for small independent hotels that make up the majority of the international markets in which we do business, they just don’t have the resources and the expertise to aggressively market on a lot of different channels … ,” Boyd says. “[It's] very hot for them to get distribution through affiliates, it’s very hard for them to do search marketing in multiple languages. So I think there’s a very significant limit to how aggressive they can be and trying to market directly in online channels.”

Australia-New Zealand online accommodation service Wotif is aiming to unsettle some of the biggest players in the region’s flight search and booking sector with the launch of WotFlight.

The new service launched today and is initially targeting domestic flights in and around Australia, with plans to expand into regional and long-haul flights over time.

Another flight search and booking system wouldn’t ordinarily capture huge amounts of attention, but the pedigree and experience behind the Wotif mothership is likely to make its new rivals in the airfare area take note.

Wotif.com launched in 2000 as an online distressed hotel inventory service, but quickly extended its booking time and global reach to challenge some of the biggest names in the Australasian region.

It is now one very few businesses to dominate a market instead of Expedia-owned TripAdvisor in accommodation rankings on Hitwise, courtesy of its running start and strong brand in Australia.

Wotif is currently almost 2% ahead of TripAdvisor in market share and 4% and 5% ahead of Booking.com and HotelClub respectively.

The new WotFlight brand is being touted as a “natural progression” for the wider group by its CEO Robbie Cookie.

Inevitably the two brands will work closely alongside each other as visitors to the new site will be offered accommodation vouchers on the sister site.

The fighting talk has already started, with brand manager Megan Magill claiming supremacy over content and functionality against its new rival in the flight search sector before the site even launches.

Webjet, Flight Centre and the Australian divisions of Expedia and lastminute.com currently top the Hitwise rankings in the agency categories.

Talking about technology standards can be mind-numbingly boring, and I should know – I talk about them all the time.

It’s my job, and usually I like it; sometimes though I’d rather just talk about the weather.

But talking about standards at the Tnooz #tcamp2 this week in London was not boring; it was, amazingly, fun.

You probably think I’m exaggerating or at least taking a bit of editorial license, but I’m not.

It was great to be surrounded by experts in travel distribution whose opinions were shaped by experience, good and bad, working with XML-based standards and who, with beer in hand, were more than willing to share those opinions.

We started off by agreeing on the general usefulness of standards.

After all, light bulbs work in lamps because the manufacturers agree on standard fittings and wattage, and we can all play music on our various players because of the MP3 standard.  Can’t argue with that.

We moved onto how standards can stimulate innovation, but here opinions diverged a bit.

The argument was put forth that standards could stifle innovation, but a counter-argument was made that standards are usually created for a generally commoditized product (a light bulb) or service (providing information or availability for a tour or a resort or any type of travel product via some electronic means).

Standardizing the commodity and re-using it (in our case, transmitting information via standard XML messages) frees up intellectual and financial capital to innovate the non-commodity – like the lamp and the lampshade, or more to the point, the presentation, servicing and fulfillment of the tour, resort or other travel product.

How much a given company should standardize, especially in a non-regulated industry like travel, is of course a business decision that can only be made by that company, and lots of heads nodded at that statement.

And everyone knows there is no monolithic “travel industry”; adventure travel is very different from cruising, which is very different from renting a car.

Electronic distribution is a continuum, from the most basic online information on one end (hours of operation, for example) to complex transactions on the other.

Travel products land on that continuum based on the type of product, the supplier and the market, and do not have to move toward the transactional end.

Just because the rental car space heavily utilizes standard transactional XML messages doesn’t mean eco-tourism can, or should, to the same degree.

Standards shouldn’t force a company to distribute its product in a way that doesn’t meet its business needs, and an effective standards body should heed that message.

Sounds great, doesn’t it?  Go ahead, admit it – now you wish you’d been there too.

European online travel agency Ebookers says an improvement in its fortunes in recent months may herald a return to its expansion across the mainland continent.

The company, part of the Orbitz Worldwide empire, has stalled in its European expansion programme in recent years having in the past aggressively pushed into new territories either by acquisition or new launches.

But the main markets missing from its current European portfolio – Spain, Portugal and Italy – could be back on the agenda, according to its relatively new managing director Tamer Tamar.

Tamar says improvements to the Ebookers platform (part of a wider Orbitz IT project which ended in late-2008) and a restructuring of the business were contributory factors to the about-turn.

In February 2009, Orbitz Worldwide chief executive Barney Harford said any further international expansion would most likely be under the HotelClub brand rather than Ebookers.

Tamar says that the company is also considering introducing an offline travel agent affiliate scheme similar to the programme he spearheaded and made much of his reputation from when at Expedia.

The scheme normally works by allowing offline retail agents to earn commission from buying products from an OTA’s website or call centre.

Tamar joined Ebookers in the summer of 2009, replacing Alan Josephs who left to become chief executive of TravelIntelligence.

In the six months following his appointment, Tamar says hotel stock has increased to 100,000 properties and dynamically packaged products have grown by 43% in Q3 year-on-year.

Nevertheless, Ebookers (like its early OTA counterpart Opodo) has slipped out of the top ten agency charts (by web traffic share) in recent years at the expense of newer brands such as On The Beach and TravelRepublic.

Many industry figures watched curiously to see what would happen once Cendant completed its acquisition of Ebookers in December 2004, knowing that the technology behind the scenes was almost certainly not going to integrate easily with the wider Cendant brands such as Orbitz, GTA and HotelClub.

Orbitz then spent the best part of two years investing in and overhauling the entire OTA platform across the group so that every brand was a single system. Ebookers was the first of the companies to relaunch on the new system in late-2008

Meanwhile, Tamar Ebookers is gearing up for what is being called “a major upgrade” to the front and back ends of the main site by the end of February 2010.

Tamar says the improvements to the website concern mainly functionality on the consumer side, rather than design work, and follow the success of an online chat tool for users.

Hotelopia and Hotel Reservation Service have joined the HotelsCombined metasearch engine roster of European brands it hopes will spearhead its growth across the continent.

TUI-owned Hotelopia and Germany-based HRS join the likes of lastminute.com and Ebookers on the HotelsCombined programme of accommodation partners.

HotelsCombined claims around 200,000 hotel properties on its system and is marking Europe as a key area in which it can expand after starting the business in its home country of Australia in 2005.

The company was created by former executives from HotelClub, RatesToGo and Stella Hospitality Group.

There’s lots of discussions going round, especially in the consulting circus about the future validity of OTAs.

Will they (we) be around in ten or even five years from now, and what will we look like?

Metasearch websites, Google, Bing Travel and other new intermediaries are slowly paralyzing our industry.

New players are hailed by business strategists and consulting firms. But while the OTAs are asking what sort of value they bring, consumers flock to these so-called new players.

An industry insider and veteran says: “People opt for frozen, processed food (meta) when they can find fresh (OTA) one mouse click away.”

The same OTA executive labelled meta channels of being Mercedes compared to the OTAs being a VW.

This very well pictures a common problem in the OTA circles. We don’t know where we are going, why, and even how we got to where we are.

In the 1990s the industry focus and aim was to challenge trade structures for the better of the consumer, now sadly most have crawled back into caves of defence “working” as outsourced contractors for our suppliers – the GDSs, the airlines, the metas and Google.

We challenged the sugar daddies that were sucking up for suppliers, screaming for industry Viagra, kickbacks and incentive.

And now WE are all there standing in line waiting for handouts. It only took a little more than ten years, and in the process our suppliers got stronger.

It’s all in the volumes. If you don’t have volume your are nobody, or so they say.

BUT, it wasn’t the volume that got us here. It was the Mojo!

Being on the bleeding edge in the evolution of OTAs since it’s inception some 13 years ago, I have seen industry players going from being agile and full of a warrior spirit to become complacent and focusing purely on volume.

The OTA´s have a distinct role and purposes to fill and if we don’t we might as well sell hot dogs. So what is the purpose of the OTAs and what is the calling? Well here’s the five raison d’être for any OTA:

1. Drive innovation – Before the OTA´s there was literally nothing online to talk about. Companies like PC Travel, TISS and others showed how to use technology to present, package and sell flights online. OTAs have also paved the way for ancillary sales, dynamic packaging etc. What was innovation then are standards today. Innovation today, in online travel, comes from small start ups developing gadgets for parts of the travel process with little and no use without context. With the advent of the smart phone the field is again wide open. The browser was the catalyst to change the booking process.  The phone will change the payment, customer services and post booking process. There are many other areas to innovate in; Marketing, social media, supply access you name it. You can shred the OTA business to pieces and find hundreds of areas to innovate in.
2. Customer advocacy – OTAs should set standards for customer service levels. The customer advocacy mandate is not about schmoozing, it’s about being the industry pesticide for bad practise and terrible service. The airlines job is to fly passengers as safe as possible from A to B. Unfortunately they get themselves into trench wars with agents allowing their hotlines to break down every time there’s a major delay, strike or God forbid a terror incident. Somewhere around the globe there’s an airline that defaults almost every month and one of the OTAs jobs is to make sure that airlines with a questionable near future doesn’t get any bookings. The mandate also implies that we make the industry “greener” meaning that we fight for common standards and decency.
3. Create demand – Google, metachannels, affiliates etc drives a lot of traffic to websites. But it doesn’t create any demand. Through presentation, creative marketing, newsletters, social media and so on the OTAs can and should drive demand for new and exotic products that perhaps wouldn’t find the market otherwise. Here’s were the long tails works wonder in travel marketing. Specialized operators can niche destinations or special interest groups and fill up hotels and seats on destinations that otherwise would be unsold. We often talk about the need of creating an iPod for the travel industry, meaning creating a product that no one knew that they need or want. Suppliers and consumers will come rushing to an OTA with a creative mind.
4. Lower fares – A world without OTA would be a dark place with high fares, dodgy rules and bad service. The OTAs job is to lower fares, democratizing travel and bring order and transparency. Fares and bad business practice are brought down through transparency. Nothing brings competitors to their knees more than the truth. And the truth is the transparent UI. Network carriers, benchmark fares through the OTAs. It’s amazing what the power of UI holds. In the old world the airline brands were incredibly strong. In 2010 the UI is everything. Today OTAs have the power to address lack of airlines cooperation by simply cutting them off the UI or price them so high that they will not appear amongst the first search results. The power has truly shifted. And for some markets it’s simply waiting to happen. In many cases, unfortunately, the OTAs are busboys for the airlines.
5. Drive distribution – The OTAs were the first ones to explore the wonderful world of online marketing. Still today OTAs work harder to find their customers online than any supplier, but suppliers are catching up fast. Our business is judged by how good we are at finding (and keeping) customers. Today most OTAs depend heavily on three major traffic sources – large affiliates, Google and metasearch engines. Just like many OTAs lack in innovation I see many fail in finding customers in a clever way, and again fall prey to play the volume game. This is however a dangerous game since the business you “buy” easily can be taken away from one day to the next.

Reason matters more than size, or so it should. Customers are more and more unfaithful, and why shouldn’t they.

A partner who doesn’t go the extra mile to impress is not fun to be around after a while. My five raison d’être can reshape the future of any company and put it back in the lead. I for one believe that the race is always on and you can always change the outcome if you are prepared to change the rules a bit.

But the problem is as always in this industry: who do you work for?

Significant moves in Scandinavian online travel with news that TravelStart has sold its European business to Swedish rival eTRAVELi, a consortium of web-based travel brands.

TravelStart founder Stephan Ekbergh will retain the rights to the global brand, including the South African division of the company, and continue to operate the business in Africa with a view to expanding in other emerging markets such as the Middle East.

The undisclosed deal gives the eTRAVELi group a major presence in the Nordic market through its wide portfolio of consumers brands including TravelStart, FlyBillet, Seat24 and GoToGate.

It is estimated the acquisition will land eTRAVELi a 30% share of the marketplace.

Most importantly for eTRAVELi it will have improved its bargaining hand with the increasingly powerful airlines in the Scandinavian region.

Ekbergh will run the global TravelStart business from Cape Town. He says: “We want to be the undisputed leaders in continental Africa and Middle East. This will also give us a chance to develop next generation travel technology.”

The former-MrJet founder created TravelStart in 1999 and grew the business to establish it in 11 markets including Norway, Sweden, Denmark, South Africa, Holland and Finland.

UPDATE: Ekbergh has posted a personal account of his reason to sell the Nordic elements of the TravelStart business, including this intriguing segment:

“Looking back at old business plans I see that we had set out to have a 10% online market share in the Nordics and we achieved 11%, according to Phocuswright. I am NEVER going to make that kind of stupid plan again. If we can’t have 70% I’m not even going to bother going into a new market.”

Full Disclose: TravelStart founder Stephan Ekbergh is a contributor to Tnooz.

The recent PhoCusWright study examining online travel agencies in the US market revealed some interesting tidbits of information.

However in context with some other sources and developments, we are beginning to see a picture emerge that should have cause for some concern on the part of investors in OTAs.

So let’s start with the PhoCusWright study.

The report states:

“The fee cuts have not eliminated the defection of OTA air shoppers to airline websites.

“Despite the removal of most service fees on airline tickets, OTAs still lose over half of their air shoppers to supplier Web site for booking.

“This signals that there is more to the switching behavior than just the fee element. OTAs lose more bookings to air suppliers than they do car or hotel shoppers.”

Hitwise’s study on online travel shows that for some markets like the UK and the USA, a significant percentage of traffic is search engine sourced.

Therefore both the feed into the OTAs and the abandonment rates are not healthy.

On November 5 2009, Expedia announced the complete elimination of telephone booking fees.

In doing so they have upp’d the ante with regard to their competitors and removed the barriers to the use of an OTA and a supplier.com website.

If we can judge by the behavior of the elimination of online fees – we should see an uptick in call center based bookings and definitely in minutes expended.

The transition to a “fee free” environment is almost complete with Expedia and Priceline now sans fees.

Orbitz and Travelocity still have some fees in place. Note that, in Australia, Webjet seems to be doing just fine with its booking fee based model.

Returning to the PCW report – it also highlights that for the first time ever there will be a decline in online bookings via OTAs in 2009, representing a 3% fall.

This compares favorably with the traditional off line bookings, however the model is clearly under threat. There are several other metrics that have shown declining traffic on the OTA sites.

It would seem that Expedia’s multi-brand strategy is designed to capture the fragmented market.

Thus one could easily interpret the shift by Expedia to be a harbinger of things to come.

If one looks even deeper – it should also be noted that a significant chunk of their revenue also comes from a plethora of white label private branded sites.

While I am not predicting the death of the OTAs – far from it, but I am definitely predicting a decline in the pure traditional OTA model of the mega brands.

They have reached a peak and now need to morph into something else. This is a message that seems to resonate in Bellevue.

Expedia’s strategy is now focused squarely on the TripAdvisor family – is the obvious example.

And where do I think the next wave is coming from?

I will say that we still have a number of behind the scenes factors going on – in particular the changing model for supply chain access away from the traditional GDS model.

Of course the Achilles heel remains in my opinion the poor solutions in search – ie, we don’t have real search available to us.

As long as that issue remains – then we will be challenged as an industry. In my mind some merging of search and social media looks like the genesis of some interesting value propositions.

This is where I will be keeping a careful watch.

One thing I can assure you of dear readers – the lines between pure OTA and pure offline are now well and truly blurred.

And that is a good thing. Cheers!

There is an interesting chart flying around the web today regarding US online travel agencies.

Posted initially on the Business Insider, the chart is from consultancy and investment house Barclays Capital and includes actual and estimated booking numbers for three of the main OTAs in the US from 2005 to 2013.

Many of those commenting on the figures have been drawn to the wholly predictable drop for Orbitz and Expedia (but not Priceline) in 2009. But the interesting figures are those thereafter.

Barclays estimates that Priceline will overtake Orbitz for total gross number of bookings for the first time by 2010.

Although Expedia is forecast to to remain market leader in 2013, Priceline will account for 30% of the trio’s overall pie.

NB: Figures obviously do not include Travelocity.

Airlines, it turns out and contrary to recent statistics, are pretty serious about beefing-up their own websites.

I say that somewhat facetiously because, of course, airline direct-to-consumer distribution has been a priority for years.

But, a new Air France-KLM Group agreement with iSeatz, the New Orleans-based technology company and inventory aggregator, symbolizes a renewed carrier push to, as iSeatz puts it, knock online travel agencies “further out of the food chain.”

Why would a traveler need to visit Opodo, Ebookers or lastminute.com if they can surf over to KLM.com, which is now using the iSeatz OneView platform, to offer consumers the Kempinski Hotels Dukes Palace in Bruges, and a rental car to go along with a Da Vinci Code Walking Tour in Paris?

At least that’s the feeling of many airline execs, who hope they will earn incremental revenue from non-air sales while keeping consumers loyal to their websites.

In using the iSeatz OneView platform, which is also used by Delta, Northwest, Air Canada, Southwest and several financial institutions, klm.com visitors can book or change reservations for this disparate-inventory mix in a single transaction, iSeatz states.

Incidentally, iSeatz is a technology company and aggregator, getting some of its hotel inventory directly and and some from businesses like booking.com, for instance, says founder and CEO Kenneth Purcell.

And, much more of this stuff OTA-like product is on the way for airline websites. Purcell tells me that iSeatz is in the process of implementing similar capabilities on Air France websites, and, also unannounced, is under contract to deliver its dynamic-packaging engine to a major US carrier.

In addition, the new Air France-KLM pact with iSeatz, its first foray into Europe, contains a provision that would enable it potentially to strike agreements with the group’s other airlines, including Martinair, Transavia, Brit Air, Transavia France, Regional Compagnie Aerienne Europeenne, CityJet, Alitalia, VLM Airlines and Kenya Airways, Purcell says.

As travelers know every time they check a bag these days, airlines are very bullish about finding ways to attract new revenue rivers. But, Purcell says, iSeatz faces an obstacle in convincing airlines to come on board.
 
“They are desperate for sources of ancillary revenue, but at the same time they don’t want to introduce anything in the shopping engine that would disrupt passengers from buying airline seats,” Purcell says. “That’s the biggest challenge we face with the airline industry.”

Of course, as you might expect, Purcell says he has the numbers to show that introducing iSeatz hotels, car rentals, airport transfers and destination activities on an airline website “has zero impact on core product sales.”

Meanwhile, airlines increasingly are giving a sympathetic ear to the noise about selling nonair products on their websites.

Much of the destination tour product and some of the other inventory iSeatz aggregates is unavailable in the global distribution systems, which feed travel agencies like Travelocity and Orbitz with inventory. So, airlines hope that their ability to offer these products on their own websites will give consumers another reason to visit the carriers’ websites without bothering with OTAs.

Thus, as airlines continue their uphill drive to knock OTAs off the roadway, I don’t think it was any accident that when Delta Airlines began using iSeatz technology in 2007, iSeatz replaced Expedia in that role.

I may have been caught out in one of my predictions for 2009 and it might be worth me starting with a possible mea culpa.

In January 2009, I kicked off the year with a post that made five (adjusted to six) predictions for 2009.

The most controversial of these was that 2009 would not be year for mobile.

My theory was that in a down economy the bigger players (ie OTAs and suppliers) would be too busy shoring up their business and improving packaging and cross-sell to a “bet” on an investment in mobile.

The counter argument led by Norm Rose was that smart phone penetration was so high and rising so fast (led by Blackberry but with iPhone on the charge) that it was irrefutable that mobile has jumped from a side-bar to a fully fledged distribution channel for travel.

I still think it is clear that booking by mobile is not for 2009 (except in Japan and Korea).

But 2009 is certainly the year that mobile technology got sexy – real sexy.

I am talking about Augmented Reality.

Wikipedia defines Augmented Reality as:

“…a live direct or indirect view of a physical real-world environment whose elements are merged with, or augmented by virtual computer-generated imagery, creating a mixed reality”.

In other words put reality and technology together and stir. 

Mashable has a great page carrying video demos of Top Six Augmented Reality Mobile Apps.

There are two my favourites I want to share with you.

Nearest Tube gives reality based directional guide for Tube stations in London (a similar New York version called Bionic Eye is also very interesting).

The second is Wikitude. It inserts point of interest information and background into the real time experience of a traveller.  Videos for both below.

Nearest Tube

Wikitude

Beyond threatening my prediction, Augmented Reality is an exciting transition technology.

It is part of the shift from input based to search to intuitive and contextual search.

Prior to Augmented Reality a consumer had to type in search boxes the parameters they are interested in searching.

Phrases like “tube stations in W1 London”, “hotels near the Opera House” and “history of the Eiffel Tower” needed to be typed out using fingers or thumbs and answers sorted and sifted through care of Google (or Bing/Yahoo if you are in the minority) if you wanted to get destination specific and (hopefully) timely information.

Now that technology can marry the context (ie the time relevance and your location) with application specific requests to give targeted, specific and unique answers.

The consumer selects the need (tube, point of interest, service need, information) and the context and application will do the rest. 

This changes search and will change marketing.

It is another step in our industry’s ability to development a specific and targeted recommendation of one based on the unique combination of desires, needs and interests of each individual at any moment in time.

The concept I am calling EveryYou over at The Boot.

The combination in the change in technological capability for search and mobile plus the social movement of consumers desire to share information is the great promise of Augmented Reality.