Tnooz Predictions 2013 – The biggest and best list in travel technology
As the Christmas and New Year break approaches, it’s time for the annual list of predictions from the Tnooz team and contributing Nodes as we ponder where travel tech will take us in 2013.
This is the fourth outing for the Tnooz Predictions and we’re the first to admit that while some of our previous efforts played out pretty much as expected, we are, of course, not modern day, digital forms of Nostradamus and get it wrong or are simply too eager (Apple iTravel is an obvious one!).
Finally, thanks as always to the team and the Nodes for their efforts with the predictions and their brilliant contributions throughout the year. What a great bunch of folk they are.
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1. Mobile only startups are going to be caught up by existing companies launching mobile services
In 2013 incumbents with large customer bases and existing supplier relationships will begin to claw back the advantage currently enjoyed by early movers – for example, when this year Booking.com launched Booking.com Tonight to take on the threat of Hotel Tonight.
To combat this move entrepreneurs need to think more about getting to big scale quickly and less about novel innovations. Would probably help too if conference organisers stopped highlighting innovation as a worthy objective for entrepreneurs to aspire to as it fatally adjusts perspectives of entrepreneurial success.
2) Big battle about who owns the customer ahead
If a customer is at an airport – who should be interacting with them (e.g. on a mobile device) – should it be the airport or the airline? What about when they arrive in destination – should it be the DMO? The airline that flew them there? The OTA that sold the flight? The hotel they are staying at?
2013 will see this battle commence as companies begin to build web / mobile services away from their core in order to build deeper customer relationships around the entire travel experience, not just their part of it.
1. Tours and activities heats up even more
After several big announcements in the fall of this year, the burgeoning tours and activities sector will heat up even more in 2013.
Expect to see big funding rounds, consolidations, and acquisitions – from players you wouldn’t expect. Will the booking numbers match the hype? Watch this space in 2013.
2. Mobile explodes
With the continued proliferation of smartphones and other mobile devices (especially in Asia), expect a non-mobile only brand to announce more than 50% of their bookings coming from mobile devices in 2013.
Additional new models based on the always-connected traveler (a la Hotel Tonight) will emerge and attract immediate clones.
1. China is the key player to the travel mix
As I said in 2010 and 2011, and 2012, Chinese travel market is becoming one of the main travel market, both outbound and inbound. Chinese travelers are seeking true individual experience and look for travel discoveries off the beaten track.
To capture this lucrative market, a digital strategy and smart offline marketing will be needed. Both B2C and B2B strategies with leading Chinese travel agencies is a key to catching this market.
Travel companies serious about China also need to have partnerships and integrate on the technology side with existing in-destination companies to make workflow more efficient.
2. DMOs need to change or they will disappear from the travel ecosystem
We live in a European crisis where public money is hard to come by for DMOs and will probably be a continuing global trend for years to come. Unfortunately DMOs are not agile and adaptable enough in their structure to be reactive in this market.
Some DMOs have dinosaur-esque information systems which are simply not suitable to win tourists in an ultra-competitive travel market. And, in fact, do the travel industry need DMOs to create business? So, if DMOs do not change their behavior and business process, they will be out of the travel game.
1. Social meltdown (or the return of privacy)
With Facebook reaching a high point in user growth and under fire for a variety of reasons, alternative networks will emerge and will capture more audience – closed networks, social TVs, mobile networks and social sharing platforms.
Facebook will remain in place as the best ever single sign on mechanism, paradoxically facilitating onboarding for everyone else. With signal spreading across multiple networks, users will flock more and more to simple, clear and noise-free sites and apps. Monetization of loyal, captive and targeted audiences will shift accordingly.
2. Acquisitions rollercoaster
With lots of successful startups entering maturity and the economy being what it is, the time is ripe for big players to snatch winners before it’s too late.
Square by Visa (full monty and a rebranding); Pinterest by Facebook; Twitter by Microsoft; LivingSocial by Google; AirBnB by Diller; FourSquare by Yahoo.
1. Google Schmoogle
I said it last year, and I’ll say it again. Google’s travel-search products and content (Frommers, Flight Search, Hotel Finder, et al) will continue to evolve but play a minor / negligible role in the industry at large throughout 2013.
I’ll keep riding this horse until I’m proven wrong by an industry-defining Google travel-product, but I don’t see it happening anytime soon. They just don’t have the ingredients in place (ability, know-how, brand, etc.), or maybe just not the will, to make it happen quite yet.
2. Mobile is multi-player
Come holidays 2013, do not expect HotelTonight to be the only major mobile player in town. I predict one or two more mobile travel products will emerge as early “winners” in the transaction game.
It could be Kayak, if they successfully add in-path transactions in their mobile device. Or perhaps an existing OTA. Or it could be someone yet to emerge.
HotelTonight led the way with transaction-focused UX for mobile and showed the rest of us how you can monetize travel on mobile. But there’s plenty of room for others to emerge, including some dominant mobile players perhaps as yet to be born.
Gene Quinn (Tnooz)
1. Mobile payments and digital wallets go mainstream
As mobile travel applications proliferate, consumer and corporate use of tablets and smartphones push laptops and desktops into the background.
Mobile stored valued apps and other hand-held digital wallet functions (ie. for coffee and food, entertainment, and other small purchases while traveling) edge closer to replacing digging for cash in pockets and purses.
Loyalty program opportunities for apps abound for airlines, hotels, car rental, food chains and more. There is less distinction between home and traveling use of your smart handheld to do commercial things.
2. Big strides in natural language search and voice recognition
Natural language search and voice recognition are each knotty problems. Travel inspiration while shopping and management of the endless and ever-changing details of your trip are both big market opportunities for technology providers.
Google is continually refining its search mechanism, and Expedia has revealed some smart work in natural language search within its own services. Look for more needle-moving developments from both and others. Which mobile platform will best connect the dots through voice recognition?
1. Consumerization of IT accelerates the evolution of business travel apps
The consumerization of IT is a well-known trend, but for the longest time business travelers have had to live in the stone age or go outside of TMC tools to manage their travel plans on the go.
But with the acquisition of Worldmate by Carlson Wagonlit Travel, and in light of Concur’s 2011 acquisition of TripIt, expect other TMCs to accelerate their plans to deliver mobile apps that their customers actually want to use.
2. Apple acquires Foursquare
The struggles of Apple Maps has been well chronicled, highlighting the challenge of building services over hardware for Apple, and contributed at least in part to the firing of Scott Forstall.
Apple needs both better POI data as well as more user data to enhance the accuracy of Maps and Foursquare provides both in spades with 25 million (very) active users and 5 million check-ins per day.
As a side benefit, Foursquare could also enhance Siri. While Foursquare would be a very expensive acquisition, what’s a billion or two to a company with over $120 billion in cash?
Jim Craven (Tnooz)
1. Google lights the fires and kicks the tyres
The pieces of the Google Travel ecosystem have been quietly assembled, from search to maps, to products for flights and hotels, to Google Plus and others, meaning the search giant now touches all aspects of the travel process.
2013 will be the year that Google Travel products gain traction, exposure and integrated relevance, all on its mobile Android platform.
2. Hospitality and rental shake-out
As AirBnB and vacation rental companies gain share against traditional hotels and motels, lodging companies will make a big effort to push back on legislation and local government on taxes, security, health and fire etc.
1. Social signals will be incorporated into strategic revenue management decisions
Melia Hotels was one of the first hotel groups to pioneer the use of online guest satisfaction indexes in their strategic pricing decisions over the past year.
In the coming year, more and more hotels will optimize RevPAR by using online guest satisfaction reports to focus their internal guest experience improvement activities, and then make smarter strategic distribution decisions.
The opportunity to drive financial performance through improving guest satisfaction was confirmed in a recent study by Cornell University’s Center for Hospitality Research, which demonstrated a link between a hotel’s Global Review Index and RevPAR, occupancy, and average daily rates.
2. Social media and review analytics will play a key role in hotel investment and transactions
Traditionally, the value of a hotel asset was based on the location, the building, and the expectation of future revenue. Today, savvy investors realize that a hotel’s ability to meet or exceed guest satisfaction has a direct and ongoing impact on the expectation for future revenue.
We’re working with more and more hotel investors and transactional advisors as they look to unlock asset value and increase financial returns.
Kevin May (Tnooz)
1. Everyone else catching up
It won’t be an apocalypse, but startups will no longer have the monopoly on the supposed funky and innovative ideas in travel as larger players realise that there is a lot to be gained from unleashing their own developers (and creativity) on R&D.
Or, (massively increased level of) acquiring or funding startups of interest.
Everyone wins, apparently. Startups without traction but with neat technology get some kind of exit, established brands get some new kit and the brains behind it. While this is nothing new, exits will be needed for many startups in 2013 as the investment funds continue to either dry up or become far fussier than they were, say, two or three years ago.
2. RIP the travel industry’s obsession with fans and followers
It’s taken quite a while but 2013 will see marketing departments finally realise that there’s more to life than desperately seeking attention in social media (cue fewer “how to use social media” seminars and more “how to find value in social media” seminars around the world).
Apart from the occasional (genuine) viral campaign, travel promotions aimed primarily at attracting more people to like a Facebook page or follow a Twitter account are largely ineffective.
Travel companies will move toward making use of the fans they already have through more discounting, clever CRM and competitions. A by-product of this will be increased collaboration (merging, even) of the customer service/PR and marketing disciplines in consumer-facing brands.
Linda Fox (Tnooz)
1. Google eyes other parts of the trip
Google has spent much of 2012 reaching further into airlines and hotels to the extent that distribution conversations no longer take place without mention (positive or negative) of the G word.
Its moves are, err, undoubtedly improving the user search experience while also finding new ways of increasing its revenue from the travel vertical. So, where next? It has got to be tours and activities. Expedia has already stated its intentions in that direction and Airbnb could be next.
2. Startup life will not be pretty
The end is nigh for many travel startups, even some of the funded ones. There has been a lot of “me too” during 2012 and it’s unsustainable in an industry which is tight on margins and finding it difficult to lift itself out of the crisis.
2013 will not be pretty and what innovation we see is likely to come in the mobile space and perhaps from those with B2B business models.
1. Car parking enters the travel technology mainstream
If taxi apps were the surprise trend of 2012 that bought the previously largely ignored topic of technology in the ground transport sector to the forefront of travel tech consciousness, there is a compelling case as to why the car parking industry could well be the surprise topic in 2013.
The recent 13th Australian Parking Convention in Sydney saw a surprisingly high number of vendors setting up stands displaying online reservation systems and mobile apps aimed at car park operators, but the maturity of this sector is embryonic when compared to current airline reservation systems or the online booking engines and mobile apps of online travel agencies.
And topics like revenue management are seeing cautious toes dipped into a pond that airlines have been up their necks in for well over ten years – or in the case of American, closer to 30 years.
Aer Lingus integrating Dublin Airport car park availability into their booking flow in an integrated manner is something that will become much more common with other airlines and OTAs in 2013, but the opportunity for the car parking industry from technology adoption is much much bigger than this one isolated example.
2. Airports get much more serious about mobile
Airports have the unenviable challenge of being last in line in the quest to “own the passenger”. It seems like every other player in travel knows about the passenger’s journey before the airport finds out, yet airports around the world have tried to develop mobile apps in their quest to compete with the site that made the booking, the airline being flown and virtually every other company taking up a segment line in a PNR that thinks it is they that “own” the customer.
Just as the best airports globally have significantly increased profits by reworking the retail model, airports at the forefront of technology will realize that the real gains are to be had not in duplicating services offered by others.
Profitable innovation will come from adding value to passengers through an omni-channel checkout-bypass and pre-ordering retail experience, adding value to airlines through lower cost models of compensation vouchers, adding value to retailers by, for example, turning the duty free model upside down and moving the purchase decision closer to the gate, and adding value to advertisers by making better use of traveller downtime though increased advertising engagement.
All of these opportunities are ripe for airports in mobile, and they are areas where other travel industry participants are not the natural owners. That said, airports may yet see others execute better in 2013 and steal what should have been theirs to own.
Nick Vivion (Tnooz)
For Nick’s predictions, and a round-up of predictions for 2013 from travel industry executives, please click over to “More on 2013: Seamless integration, share-of-wallet and the single truth.”
Hotel distribution takes a series of twists and turns
In 2013 hotels will be confronted by the shortcomings of rate parity strategies. The official launch of Google Hotel Finder shows how OTA powerhouses play with VAT and service charges to have rates just a euro, pound or dollar cheaper than on the hotel website.
As a result, hotel websites will be pushed down on the Google Hotel Finder price advertising display, and eventually not show at all.
So, hotels will lose out on significant direct sales if they do not monitor, manage and control this. There is only one thing hotels can do. Slap the OTAs on the hands, and if they refuse to comply, give them a taste of their own medicine, break parity and raise the price for them.
Make them feel it if they do not listen! 2013 will be the year of the Google Hotel Finder war games.
1. Bringin’ startup sexy back
Since Hipmunk rushed onto the travel tech startup scene in late 2010 (bringing with it a rush of new energy and hope into the travel industry for the many disruptions yet to come), we’ve been left feeling like a youth group who witnessed a revival at a one-week summer camp and hasn’t found that same feeling again since the day camp ended.
The last few years have given us little more – with a just a few exceptions – than round after round of lackluster travel startups filled mostly with those either trying to solve problems that didn’t really exist, or those solving real problems with mediocre execution.
The recent surge of corporate venture funds from the likes of Priceline and many others means smarter money is beginning to flow into the next round of disruptive entrepreneurial thinking across multiple parts of the travel ecosystem.
Thus, the foundation has been laid for us to finally walk away from the 2013 PhoCusWright Innovation Summit with that “Holy hell, that was impressive” feeling of hope for our industry’s future we once caught a glimpse of many startup moons ago.
2. Bio-metrics get electric
As companies like CLEAR continue to pick up steam growing the popularity of models that involve travelers paying a fee to hand over data in exchange for increased convenience, 2013 will bring the bio-metric data debate to the forefront related to private sector vs. government access and management of this data and, even more interestingly, investor focus on companies focusing on this challenge in travel.
As travel companies that focus on capturing & aggregating incredibly personal data about some of the most frequent, and thus arguably valuable travelers on the planet, get greater visibility next year, new opportunities for those in control of the data to secure creative partnerships will emerge providing incremental value to travelers on the other side of security by increasingly personalizing their experience.
This will all also result in a likely increase in acquisition activity of those companies in 2013 and beyond focused on aggregating unique traveler data such as bio-metrics, traveler step-by-step behavior, in-transit purchase data and more.
Sean O’Neill (Tnooz)
1. Expect venture capitalists to crush on enterprise businesses
Kiss goodbye to the boom in B2C travel startups. Say hello to investors trumpeting B2B startups that tout clear paths to profit, such as the ones General Catalyst has invested in already.
But, before you can say “bubble”, valuations for B2B startups will inflate to absurd levels. The reason? Too many over-confident investors will try to ride the bubble for short-term profit, given the lack of other investment options due to the current global turbulence.
Investors should be especially wary of the startups that claim to be consumer/enterprise hybrids, re-skinning B2Cs as B2Bs. Pivots are difficult to execute. In the meantime, go to the parties and drink as much of the free Champagne as you can.
2. The Facebook-TripAdvisor deal?
Social media companies, like the rich, protect their own, and an acquisition by Facebook of the most Facebook-ified of travel websites, TripAdvisor, seems plausible. In 2013, Facebook will be sitting on a lot of cash and its executive team will feel pressure to make a large purchase to meet its projected top- and bottom- line numbers for ad sales by providing more inventory and deeper data on user purchasing habits.
TripAdvisor has already done as much as possible to integrate with Facebook, such as with its TripFriends tool and its frictionless sharing app on Facebook. Surveys show that one of the leading “life events” that people like to talk about on Facebook is travel, and a person’s choice of travel destination can reveal a lot of demographic information about them, the same way a user’s Instagram photos can be a goldmine for marketers who can use it to infer other demographic characteristics to sell better targeted advertisements.
1. SoLoMo in activites will be all the rage
Thanks to advancements in distribution and connectivity of activity and excursion providers, we will see new mobile apps coming on stream that combine location and date context with social recommendations and the ability to book in real-time.
Expect this to be spearheaded by an OTA or large aggregator. Could a mobile app focused on experiences be as popular as a Hotel Tonight?
2. P2P activity marketplaces will fade away
After the initial flourish of new P2P activity marketplaces thanks to the release of the PhoCusWright report in 2011, expect to see many of these marketplaces start to shutdown or get acquired.
P2P activities, unlike P2P accommodations require hosts to trade their time and experience for cash rather than just an unused asset like a spare room.
Scale and consumer traction are the two biggest issues resulting in the decline.
1. It is the purchase path not the sale
I believe that the line between the process of purchase and the traditional moment of contract/sale will become unbundled and blurred. Priceline through its purchase of Kayak already laid down the gauntlet to the traditional OTAs.
Many players will emerge who don’t want to care about taking the money. Suppliers will want the actual “BUY” button to be on their site(s).
This is going to be a subtle and long term trend. Look too for electronic wallets to impact the process of purchase. Scary for traditional OTAs and risk for Expedia et al.
2. Boomers exit and are not as important to the world of travel as they used to be
This is so self evident that it will have some impact across the spectrum of travel. Corporate travel is seeing a new pragmatism emerge with travelers disobeying corporate edits in favor of budget value.
Leisure travel is more adventurous and less conformative. Service providers are wrestling with the demands of a totally different traveling public. The replacement millenials are a different breed. Not addressing them is a crime.
1. Startup offerings specific to the travel industry will mature, and not a second too soon
We’ve been inundated with travel-specific inspiration and sharing sites, P2P activity sites, and seemingly endless sites that capitalize on supposedly under-socialized travelers.
We’ll see more sites and apps that solve true business problems (and could actually make money), not just scratch some annoying travel planning itch, and that aren’t the nTH solution-to-market.
The initiatives started by Concur and Priceline to fund startups won’t be the last, and will bring some welcome shape and rigor to the market.
2. Re-thinking data and connections
XML as a connectivity language in the travel industry will mature from message centric to data centric, utilizing data models to generate lightweight and functionally specific message structures that make interoperability easier, cheaper and faster.
Boring? Hardly. Putting function (data) before form (message) supports consumer-centric business models, enabling easier integration management of profile, loyalty and historical information into the travel experience. Data model driven messaging will also support APIs, which are the foundation of direct connect.
The right data model supports not only XML but other modern messaging options like JSON, bringing the travel industry into the 21st century (finally).
Kevin May is a senior editor and one of the co-founders at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.
He has worked in regional newspapers (Essex Enquirer) and started his career in journalism at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and will be publishing his first book - a biography about electronic band, Depeche Mode - soon.