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PhoCusWright White Paper
Travel Innovation and
Technology Trends: 2013
and Beyond (ANZ Edition)
Sponsored by
Written and Researched by
Bob Offutt
PhoCusWright
MARKET RESEARCH • INDUSTRY INTELLIGENCE
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
This PhoCusWright White Paper is made possible by Sabre Pacific
About Sabre Pacific
Sabre Pacific is a leading supplier of technology to the travel industry in
the South Pacific region. With offices in Sydney, Brisbane, Melbourne,
Perth, Adelaide and Auckland, Sabre Pacific is responsible for serving Sa-
bre Travel Network products and content to around 2000 agency locations
in this region.
Sabre Travel Network operates the world’s largest travel marketplace,
connecting travel buyers and sellers through the Sabre global distribution
system (GDS). Its innovative technology connects 350,000 travel agents to
more than 400 airlines, 100,000 hotels, 25 car rental brands, 50 rail providers,
13 cruise lines and other global travel suppliers. More than $100 billion of
travel is purchased through this channel annually.
Sabre Pacific is wholly-owned by Abacus International, Asia-Pacific’s lead-
ing provider of travel solutions and services with more than 20,000 travel
agency locations in 29 markets. With over 23 years of experience in fusing
international best practices and local expertise with global and local part-
nerships, Abacus provides travel information and reservations specifically
tailored to the Asia-Pacific region. Abacus International is jointly owned by
Sabre Holdings (35%) and a consortium of some of Asia’s leading airlines.
For more information please visit: http://www.sabrepacific.com.au/.
For helpful hints, expert advice and travel industry commentary, please visit
the Sabre Pacific QuickNews blog.
Follow Sabre Pacific on Facebook, YouTube and LinkedIn.
©2013 PhoCusWright Inc. All Rights Reserved. Page 2
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
About PhoCusWright
PhoCusWright is the travel industry research authority on how travelers,
suppliers and intermediaries connect. Independent, rigorous and unbiased,
PhoCusWright fosters smart strategic planning, tactical decision-making and
organizational effectiveness.
PhoCusWright delivers qualitative and quantitative research on the evolving
dynamics that influence travel, tourism and hospitality distribution. Our
marketplace intelligence is the industry standard for segmentation, sizing,
forecasting, trends, analysis and consumer travel planning behavior.
Every day around the world, senior executives, marketers, strategists and
research professionals from all segments of the industry value chain use
PhoCusWright research for competitive advantage.
To complement its primary research in North and Latin America, Europe and
Asia, PhoCusWright produces several high-profile conferences in the United
States and Germany, and partners with conferences in China and Singapore.
Industry leaders and company analysts bring this intelligence to life by
debating issues, sharing ideas and defining the ever-evolving reality of travel
commerce.
The company is headquartered in the United States with Asia Pacific opera-
tions based in India and local analysts on five continents.
PhoCusWright is a wholly owned subsidiary of Northstar Travel Media, LLC.
PhoCusWright Inc.
116 West 32nd Street, 14th Floor
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©2013 PhoCusWright Inc. All Rights Reserved. Page 3
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
JANUARY 2013
Contents
Table of Contents Trend 6 Table of Charts Figure 13 21
A cloudy future NIST Cloud Computing
Introduction 5 beats no future at all 20 Figure 1 7 Conceptual Reference
The Personal Cloud Model
Key Trends 5 Technology 20
Examples 22 Figure 14 21
Figure 2 8
Implications 22 Cloud Broker as
Trend 1 Sabre Pacific Travel Extras
Service Aggregator
New patterns of
content challenge Figure 3 10
Trend 7 Figure 15 22
distribution 6 Gravity Personalization
Intermediaries require The Role Cloud Brokers
Technology 6 fresh approaches Figure 4 10 Could Play in a Travel
throughout the Gravity’s Interest Company’s Cloud
Examples 7 travel cycle 23 Graph Engine Architecture
Implications 8 Technology 23
Figure 5 10 Figure 16 24
Examples 24 Tigerair Flight Schedule
Trend 2 The Sojern Data
Too much choice Implications 25 Processing Model
means less is better 8 Figure 17 24
Trend 8 Figure 6 12 Virgin Australia
Technology 9 Travel Agency Usage Flight Schedule
Big Data makes
Examples 11 travel smarter 26 of Social Media,
Implications 11 2011-2012 Figure 18 25
Technology 27 Virgin Australia Choices
Examples 27 Figure 7 14
Trend 3 Nasair’s Extended Figure 19 28
Social technologies Implications 27 Marketing Reach Using Customer Life Cycle
change the shape Social Technologies by Channel
of travel 12 Trend 9
Better travel Figure 8 15 Figure 20 29
Technology 13 Criteria for Comparing
management through Hotel IQ Booking
Examples 13 predictive analysis 28 a Mobile App to a Pace Analysis
Implications 15 Mobile Browser
Technology 29
Figure 21 31
Examples 29 Figure 9 16 Informed Tourist
Trend 4 Implications 30 Virtual Assistant Hologram Information
New efficiencies at Newark Liberty
reenergize the International Airport
customer experience 15 Trend 10
Short-range Figure 10 19
Technology 16
communications links Pebble Bluetooth
Examples 17 improve processes 30 Wristwatch
Implications 17 Technology 31
Examples 31 Figure 11 19
Google Glass
Trend 5 Implications 32
Cross-platform data Figure 12 19
access engages users 18 Conclusion 32 Google Glass Display
Technology 18
Examples 19
Implications 20
©2013 PhoCusWright Inc. All Rights Reserved. Page 4
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
Travel Innovation and
Technology Trends: 2013 and
Beyond (ANZ Edition)
Written and Researched by Bob Offutt
Introduction
If trends were determined simply by volume of buzz in trade magazines, the big
moves in travel innovation and technology for 2013 would be “go mobile,” “use
Big Data with cloud computing,” and “embrace social media.” But tech trends in
the travel industry are much more complex – they involve cutting-edge content
aggregation, distribution, user engagement, intelligent agents, mobile payments
and more. Some new technologies are designed to improve the user experience,
others to contribute to business performance and service delivery. But all innova-
tions must work within the context of a rapidly evolving technology environment in
which consumers are changing the way they interact with devices and suppliers can
deliver new capability faster and cheaper than ever before.
Thanks to its legacy foundation and conservative attitude about the future, with a
few exceptions, travel lags other industries in embracing new trends in technology
that promise to sustain existing business and open the door for new opportunities.
Key Trends
Travel technology trends vary in scope, impact and endurance. Some yearly trends
are fleeting, such as flash sales. Others, such as cloud computing, are in it for the
long haul and will remain on the trends list (albeit in different stages in their life
cycles) year after year.
Taking technology trends into account – and determining how to work with them
– can help business executives make more conscious decisions about applicability,
potential business value and need for investment. As you consider these trends,
remember that they are not independent phenomena, but a set of interdependent
(and often simultaneous) movements.
.
©2013 PhoCusWright Inc. All Rights Reserved. Page 5
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
Trends
1. New patterns of content challenge distribution
2. Too much choice means less is better
3. Social technologies change the shape of travel
4. New efficiencies reenergize the customer experience
5. Cross-platform data access engages users
6. A cloudy future beats no future at all
7. Intermediaries require fresh approaches throughout the travel cycle
8. Big Data makes travel smarter
9. Predictive analysis improves travel management
10. Short-range communications links improve processes
Trend 1: New patterns of content challenge distribution
Travel was an early leader in e-commerce. The intermediaries that eventually
became global distribution systems (GDSs) matched buyers and sellers of travel
products using mainframe technology and global networks. Although the Internet
and low-cost computing have threatened the value of the GDSs, they haven’t yet
supplanted them. Instead, new forms of aggregation are emerging to deliver busi-
ness and customer value. Automation of more and more supplier information has
enabled capabilities like real-time shopping, booking and confirmations. Peer-to-
peer marketplaces for travel products and services are becoming mainstream. The
original travel distribution paradigm – in which intermediaries aggregate content
for shopping and booking – is being challenged by a model that emphasizes shop-
ping, booking and then aggregation.
Technology
Several technologies enable this new model of aggregation and distribution:
1) “Personal clouds” allow users to access information anywhere, anytime, and on
any device. With a personal cloud, each consumer can store and retrieve informa-
tion in a centralized virtual storehouse dedicated just for that person. The user can
then access the information regardless of device (laptop, tablet, smartphone – and
even some automobiles).
2) The Internet of Things enables integration of sensor data with human-generated
content to provide relevant and/or hyperlocal information about factors that can
influence a trip, such as traffic, pollution, weather conditions, social hot spots, bag-
gage location and homeland security advisories.
3) Ubiquitous global communications and cheap devices (like tablets) extend the
©2013 PhoCusWright Inc. All Rights Reserved. Page 6
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
automation of inventory management and the reservations process to small1 travel
suppliers. These suppliers can then distribute through conventional channels (e.g.,
travel agents) or in a peer-to-peer electronic marketplace.
4) Today’s compute power and connectivity make it possible for both individuals and
businesses to collect and integrate itinerary data from multiple sources without a GDS.
Examples
n Personal clouds can be hosted on a third-party server farm such as iCloud (Apple),
Amazon’s cloud service, Google Docs and Dropbox. Some products allow you to con-
figure a computer on your home network to service all of your devices (see Figure 1).
FIGURE 1: The Personal Cloud
Source: ZDNet
© 2013 PhoCusWright Inc. All Rights Reserved.
n Farelogix is attempting to establish itself as a new intermediary with its Airline Com-
merce Gateway. The Airline Commerce Gateway aggregates content from multiple
sources, applies business rules, and delivers custom offers to shoppers at the point
of sale (POS).
n To capture out-of-policy managed traveler bookings, Sabre has developed TruTrip
technology, which depends on email transmission of travel receipts. Travelers email
supplier-direct booking receipts to TruTrip. Sabre’s TripCase technology then aggre-
gates them into an integrated itinerary, which Sabre makes available to TMCs and
travel agents using Sabre Red Workspace. With the integrated itinerary, Sabre can
deliver marketing messages for missing components (e.g., no hotel booked). Provid-
ing the TripCase itinerary to travel agents and TMCs provides the foundation for duty
1)For the purpose of this paper, “small travel suppliers” indicates companies with five or fewer employees.
©2013 PhoCusWright Inc. All Rights Reserved. Page 7
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
of care and trip unbooking/rebooking. Several other companies also
FIGURE 2: Sabre Pacific Travel Extras provide this technology.
n Intel has developed a pollution and weather detection chip that
Travel Extras gathers environmental data from sensors and, through cloud
With more than 1,700 different extras in 150 destinations, a better technology, learns a user’s precise location and delivers infor-
question might be, “What doesn’t Travel Extras offer? Travel Extras mation relevant to that location. Travel service providers can
is one of the best ways to demonstrate your expertise by delivering
that personalized flair and even greater savings. You can book ad- then use this data to predict, for example, weather-related flight
mission or reservations to attractions, shows, special events, tours,
delays, and pass this information on to the traveler.
fine dining, transfers, parking and many other activities.
n Gray Line Tours and Expedia have both announced initiatives
Key Benefits
that enable small travel suppliers to fully automate their inventory
Destination Information management and distribution processes.
Learn about worldwide activities and events to better
serve your travelers. n Sabre’s Travel Extras extends the capability of Sabre travel agents
e-Travel Advisories
to deliver travel experiences beyond traditional air, car and hotel
Stay on top of important, up-to-the-minute health and (see Figure 2).
government travel warnings.
n InnHand is a free online reservation system for properties with up
Gifts by Well Wishers
Arrange to send bon voyage cruise, celebration or to 25 rooms. Cloud-based and accessible from mobile devices,
welcome home gifts.
InnHand’s system can easily be integrated into a property’s web-
GroundRez site and Facebook page.
Make just the right ground travel arrangements for your
client; from limos to taxis.
Shore Excursions
Book shore excursions for Alaska, the Carribean, Europe and
Implications
Hawaii destinations.
n Aggregation and distribution continue to be moving targets.
The Luggage Club Travel companies should keep their eyes peeled for new patterns
Provide door-to-door luggage, sports and mobility-
impaired equipment delivery service.
and methods of distribution to reduce costs and create business
value.
Travel Documents
Assist your customers with their travel documentation
(both passport and visa) needs.
n Merchandising systems will change the mix of travel products
that points of sale will handle.
Travel Extras
Access and book over 1,700 activities in 150 destinations n Points of sale can tap new content sources to broaden their
around the world.
product offerings, providing more value to their customers while
Source: Sabre Travel Network. expanding their sources of commission.
© 2013 PhoCusWright Inc. All Rights Reserved.
n With online, real-time inventory, small suppliers will be able to
expand their product distribution. Sabre Travel Extras is a great
example of how this could work.
n The Internet of Things will enable new products and services.
Trend 2: Too much choice means less is better
The mantra of early online travel agencies (OTAs) was often “more is better,” mean-
ing that the OTA that showed the most flight or hotel options was clearly the best.
This race led to massive investments in new technology in order to transform a travel
©2013 PhoCusWright Inc. All Rights Reserved. Page 8
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
agent’s screen from a limited 19-line display into an interface that would show the
(literally) hundreds of options developed by the GDS (which could be displayed at
any POS). But this mountain of choices frustrated consumers and slowed the reser-
vation process. According to the “paradox of choice,”2 shoppers want a few choices,
but not too many – if they have to make too many decisions, they become irritated
and unhappy. In other words, giving people too many choices tends to lessen their
satisfaction. However, delivering targeted content (and thus fewer choices) based on
personal and behavioral data can improve conversion. While the travel industry suf-
fers from a paucity of data about offers presented versus offers selected, it does have
the capacity to track overall shopping and purchase patterns and data from social
networks, which together can provide a fairly clear view of a shopper. Combine this
information with psychographic and demographic databases, user surveys, “look-
alike modeling,” and environmental factors such as weather and geography, and you
can deliver well-targeted information in advertisements and search results. One key
element in improving targeting is the ability to process large amounts of data (see
Trend 8).
Targeted marketing is not just a travel phenomenon – other industries, particularly
consumer retail – are quite adept at it. For example, consumer research company
Nielsen used microtargeting to help a refrigerated meat manufacturer find out who
its most profitable customers are. Instead of summer grillers, as the manufacturer
believed, the core customers were actually teenage boys and their mothers. The
company refocused its marketing efforts to reach this audience, a move that drove
annual growth of 15-20% for several years in a row.3
Technology
Targeting technology has evolved so that audience segmentation is no longer needs
to be in broad categories (e.g., sports enthusiast, daytime TV watcher, soccer mom).
For example, social advertising targeting company 33Across has defined over 50
social “persona” categories that include social and media consumption behaviors, in-
terests, and demographics that can be used to segment a target audience. 33Across
collects data on 1.25 billion people.
Gravity and 140 Proof target consumers based on the interests they express in their
social graphs (see Figure 3). Both companies use complex algorithms to match a con-
sumer’s interests with certain content and so the consumer will see the most appro-
priate ads (see Figures 3 and 4).
Sojern, another targeting firm, accesses over 100 million anonymous data points about
travelers and uses this data to provide its clients with insights about audience intent
(i.e., when and where travelers are going). The company also tracks travel purchase
patterns, top destinations and destination searches by type of traveler (see Figure 5).
2) Barry Schwartz, The Paradox of Choice: Why More is Less, Harper Perennial (New York, 2004).
3) Jason Green, “Micro-Targeting: It’s Not Just for Niche Brands Anymore,” Nielsen Newswire (Feb. 16,
2010).
©2013 PhoCusWright Inc. All Rights Reserved. Page 9
PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
FIGURE 3: Gravity Personalization
Source: Gravity
© 2013 PhoCusWright Inc. All Rights Reserved.
FIGURE 4: Gravity’s Interest Graph Engine
Source: Gravity
© 2013 PhoCusWright Inc. All Rights Reserved.
FIGURE 5: The Sojern Data Processing Model
Source: Sojern
© 2013 PhoCusWright Inc. All Rights Reserved.
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Travel Innovation and Technology Trends: 2013 and Beyond November 2013
Presenting carefully targeted content becomes more important on a smartphone or
tablet platform, where screen real estate is at a premium. The more closely the con-
tent relates to what the shopper seeks, the more likely the shopper is to complete a
purchase or make a reservation.
Complex algorithms are required to define relationships between different data ele-
ments and the products and services a particular shopper would find most interesting.
Most approaches use discrete, definable user segments to target content (e.g., if you
know a leisure traveler is bound for Maui, show her an ad for a snorkeling adventure).
The more discrete segments, the better. The ultimate goal is to treat each individual
as a segment of one. Gravity’s Social Interest Graph takes this tack.
The next step is delivering targeted content at the right speed – meaning Internet
speed, as retrieving it from a database would be too slow. Fortunately to this end,
in-memory processing has become affordable.
Examples
n At PhoCusWright’s 2012 Travel Innovation Summit,4 Amadeus previewed its
“Amadeus Featured Results,” which uses flight search technology and travel busi-
ness intelligence to present shoppers with a list of the cheapest, fastest and most
relevant booking options.
n Sabre Custom Offers, unveiled in May 2013, enables suppliers to tailor their
offers based on information they have about a traveler and Sabre shopping data.
Custom Offers enables suppliers to differentiate their products and brands with
enhanced merchandising through the the Sabre travel marketplace to increase
revenues and build traveler loyalty. The tool does not change the travel agent’s
workflow, so agents can efficiently shop and book Custom Offers in addition to
published, promotional, qualified discount, and any negotiated rates that may
apply. Corporations and travelers have more confidence when their travel service
provider (agency/TMC) can better serve them with a broader range of content,
including offers targeted to their unique preferences and frequent traveler affilia-
tions. Custom Offers enables travel suppliers to leverage their knowledge of the
traveler in conjunction with shopping criteria and dynamically present targeted of-
fers during the shopping process. Suppliers receive joint analysis and consulting,
which enables them to execute data-driven marketing campaigns to make unique
offers available to targeted travelers. Sabre is also taking advantage of its new
profiles solution to enable suppliers to target guests by using customer loyalty
and value scores based on Sabre booking data. Sabre Custom Offers is one of 30
featured innovators at PhoCusWright’s 2013 Travel Innovation Summit.
Implications
Providing targeted offers is a key capability for travel companies, and it is even more
4) November 13, 2012.
©2013 PhoCusWright Inc. All Rights Reserved. Page 11PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
critical in the mobile arena. Despite mobile’s substantial and continued growth, the
platform is limited by connection speed and screen size, compelling advertisers to
either deliver extremely relevant content or not bother delivering content at all. Any
travel company with a mobile strategy needs a targeted content strategy as well.
Trend 3: Social technologies change the shape of travel
It may seem like a no-brainer to incorporate a social media strategy into your busi-
ness plan. But travel retailers taking their time may soon find themselves losing share
to savvier suppliers. According to a 2012 survey by the American Society of Travel
Agents, just 39% of travel agents employ social media in their business processes.
Among those, 49% use Facebook and 44% use LinkedIn. Of travel agents using social
media, 15% consider these services essential to their business, 29% are still learning
how to use social media, and 20% say social media is still unproven as a marketing
channel (see Figure 6).5
How do
FIGURE you view
6: Travel Agencyparticipation in social
Usage of Social Media, media
2011-2012 websites
like Facebook, Twitter or YouTube?
Essential Nice to be there Still learning how to Unproven Waste of time Not valuable due to
use social media my business model
9% 13% 12% 15%
7%
7%
17% 17%
18% 2011 2012
20%
37% 29%
Source: Travel Weekly and the American Society of Travel Agents
© 2013 PhoCusWright Inc. All Rights Reserved.
These statistics fly in the face of social media’s worldwide groundswell: In July 2012,
Facebook had 834 million unique visitors. In the same month, social media reached
84% of Internet users globally, each of whom spent an average of 337 minutes a
month on their networks of choice.7
6) ComScore (July, 2012).
7) ComScore Media Metrix (July, 2012).
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Travel Innovation and Technology Trends: 2013 and Beyond November 2013
In the meantime, suppliers are aggressively pursuing a social media presence with
high-quality en-route and destination content. These suppliers use social network-
ing tools to track service deficiencies, manage their reputations, improve customer
service, build communities of travelers, and engage customers at various points in the
travel value chain. This proactive supplier behavior – in contrast to slow-moving travel
agents – opens the door for a major change in allegiance. Rather than serving as trust-
ed advisors, travel agents will simply become data suppliers.
Unless travel agents “get the memo,” suppliers’ social media initiatives are likely to
steal share. Still, it is early days, and while social technologies have created substantial
value so far, their real power is still unclear.8
Technology
Social technologies enable people to interact informally online and create, enhance
and exchange new forms of value (e.g., digital money). New products that support
online social interaction are coming to market at an amazing pace.
Social technologies generally have the following characteristics:
1) Open networks and peer-to-peer communications tools
2) Democratization of content: the ability to add, change or comment on content
2) Content that may be centralized or distributed
Examples
n The Cosmopolitan Hotel in Las Vegas makes extensive use of social media to pro-
mote exclusive events, deals, contests and ticket offers for its social media-savvy
guests. In addition to its own promotions, the Cosmopolitan retweets its guests’
tweets.9
n Air New Zealand is active on multiple social media platforms, including Face-
book, Instagram, Twitter and Google+. The carrier even has a website dedicated
solely to social media.
n Taj Hotels is creating a social network for its 26 hotels, including one in Australia.
The plan for this endeavor: Map Taj customer profiles against the social media
footprints of those customers. Then, build customized communications plans
using Facebook, YouTube, Flickr, TripAdvisor, blogs, and other media. These com-
munications plans will be designed to support marketing campaigns for food and
beverage, dining, sports, and other interests.
n Nasair, a low-cost carrier based in Saudi Arabia, has seen a major increase in mar-
keting reach since it began using social technologies aggressively (see Figure 7).10
8) Michael Chui et al., The Social Economy: Unlocking Value and Productivity Through Social Technolo-
gies, McKinsey & Company (July 2012).
9) Shira Lazar, “Hotels That Rock at Social Media,” Entrepreneur (Nov. 2, 2011).
10) SimpliFlying Awards 2012, “Best Airlines Driving Revenue from Social Media” finalist presentations,
SimpliFlying (Sept. 3, 2012).
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Travel Innovation and Technology Trends: 2013 and Beyond November 2013
FIGURE 7: Nasair’s Extended Marketing Reach Using
Social Technologies
Source: Nasair
© 2013 PhoCusWright Inc. All Rights Reserved.
In six months, the airline increased the number of emails it sent as part of mar-
keting campaigns by 243% and the number of tweets that mention its name by
129%. Visits to Nasair’s Facebook page grew 4,526% in seven months in 2012. And
between January 2011 and July 2012, the number of mobile users accessing its
website jumped 345%.
n Hamilton Island sponsored an Instameet social campaign called Return2Paradise.
This campaign reached over 10.8 million people and resulted in A$2 million room
revenue growth.11
n Canadian airline WestJet experienced significant bookings increases and return
on investment (ROI) in the wake of its one-day “Kargo Kids” April Fools’ Day
promotion, which it announced via YouTube, Facebook and Twitter.12,13 The results
(cost data was not available):
• 650,000 YouTube views in 194 countries
• 3,300 video shares in 69 countries
• 1,700 Facebook post shares
• 189,000 visits to WestJet’s April Fools’ landing pages
o 4,000 new bookings
o $1.3 million in new bookings
11) David Cowling, “Hamilton Island Proves Social Media’s Positive Effect on Travel Desires,” Social Media
News (July 26, 2013).
12) SimpliFlying Awards 2012.
13) Calgary-based airline WestJet sponsored “Kargo Kids,” an April Fools promotion that pretended to
offer the child-free flights many frequent fliers have been dreaming of for years. This mock “program”
has kids carted off on a “travel toboggan” to a “special VIP area” of the plane, while adults fly has-
sle-free in the main passenger area. The “travel toboggan” is a blue bin that whisks kids away on the
luggage conveyor, and the “special VIP area” is the cargo hold.
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• Air New Zealand, in its 2012 April Fool’s promotion, announced it was install-
ing handholds in select aircraft (adding capacity for 69 additional passengers)
and that the airline would be serving these passengers unicorn meat. Air New
Zealand provided links for shoppers to share these pranks with others using
social media: Facebook, Google Now and Twitter.
Implications
Intermediaries have been slow to appropriate social media, which has opened the
door for suppliers to garner customer loyalty and shift share to direct channels. It’s not
too late for intermediaries to develop and implement social media strategies, but the
clock is ticking.
Trend 4: New efficiencies reenergize the customer experience
Historically, travel distribution has centered on offering the same product in a variety
of ways through multiple distributors (including suppliers), and each party vied for a
share of the travel purchase. But competition for the traveler dollar is becoming less
about a battle between suppliers and distributors and more about providing the best
customer experience. Suppliers and distributors need to put the channel wars behind
them and focus on competing for customer loyalty. For example, why not show
competing offers and other purchase alternatives, as the insurance industry does?
(Six hotel chains thought this was a good idea, as described below.) Travel executives
need to change their focus from channel share to customer share.
The next generation of travelers will have the expectation that all shopping – includ-
ing travel shopping – should be as efficient as an Amazon experience (see Figure 8).
FIGURE 8: Criteria for Comparing a Mobile App to a Mobile Browser
Source: eDigitalResearch (used with permission)
© 2013 PhoCusWright Inc. All Rights Reserved.
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This kind of quality shopping experience has to be available at all customer touch-
points and provide seamless interaction across all channels: social media, email,
browsers (desktops, laptops, tablets) and mobile (both apps and browsers).14 Key fea-
tures in providing this experience are quality site search, clear branding, consistent
icons, consistent content (especially deals) and simple checkout.
But a quality shopping experience is just part of the equation. The greatest shopping
experience cannot compensate for bad service delivery: Service providers also need
to leverage technology to improve and customize delivery.
A 2011 survey of Australian and New Zealand consumer experiences in seven major
industries – including travel and hospitality – revealed both good and bad news for
tourism.15 The good news: In both countries, consumers were most satisfied with
travel and hospitality experiences (the other industries were telecom, Internet service,
insurance, financial services, utilities, and online retail). The bad news: The percent
of bad experiences among travelers in Australia was 27%, and in New Zealand, 26%.
Across all industries, over half of the consumers who had bad experiences chose to
take their business elsewhere (56% in Australia and 59% in New Zealand).
FIGURE 9: Virtual Assistant Hologram at Technology
Newark Liberty International Airport
Providing a consistent customer experience across touchpoints is
as much an organizational issue (who is responsible?) as it is a de-
sign issue. For instance, travel companies need to accommodate
technology limitations on mobile devices (e.g., size and shape). It’s
no secret that mobile commerce lags general online commerce in
feature functionality, and that mobile applications often lack the
quality searching and purchasing capabilities offered by mobile
browsers.
A variety of technologies make it easier and less expensive for
travel companies to offer quality customer service. Much of the
cost of customer service is in staff salaries and call center opera-
tion. Fortunately, virtual agents, using natural language interfaces
and artificial intelligence, are able to handle a high percentage
of queries. These agents can interface with customers through
Source: PScott Beale, Laughing Squid a kiosk, on a computing device, via phone or through an avatar
© 2013 PhoCusWright Inc. All Rights Reserved. hologram (see Figure 9).
Other Technologies:
n New tools that bring real-time luggage tracking directly to the customer
14) An interaction is considered seamless when the user’s status, purchase history and profile can be
accessed at all points of sale.
15) “2011 Customer Experience Report: Australia and New Zealand,” Oracle white paper (May 2012).
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n Unified communications (UC) that provides infrastructure to meet peak demand,
route the customer to the best service agent, and communicate options to the
customer
n Anticipatory search that alerts travelers of disruptive events such as bad weather,
aircraft delays and traffic delays16
n Tablet computers that enable tailored customer service
Examples
n Virtual assistant technology from Next IT supports customer queries for Alaska
Airlines, Amtrak and United Airlines. On an average day, United’s virtual assistant,
Alex, responds to over 75,000 customer inquiries. During irregular operations
(e.g., storms, volcanos), Alex has exceeded over 100,000 calls in one day.
n In the banking sector, Coastal Federal Credit Union (U.S.) – using personal teller
technology from uGenius (now owned by NCR) – became the first bank to use
only video tellers. The bank cut teller costs significantly and expanded teller
hours. A financial institution (undisclosed) based in Australia is currently test-pi-
loting uGenius’s online video teller technology.
n Using hotel shopping and booking technology developed by Hotelicopter,
Choice Hotels, Hilton, Hyatt, InterContinental, Marriott, and Wyndham have
implemented a hotel shopping service called Room Key that supports all their
properties. Properties can be displayed in a number of ways. The Room Key dis-
play enables travelers to easily see prices, access reviews and compare property
features. Competition is in the value of the stay, not the distribution channel.
n U.K. travel management company Portman Travel is using UC as a key part of its
customer service strategy. Using UC to link 17 sites and 550 users, Portman has
reduced call waiting time to under three seconds and achieved a £30,000 ROI.
The company is now using its communications infrastructure to provide video
conferencing to its clients as an alternative to traveling.
n Delta Air Lines provides real-time luggage tracking to customers on their mobile
devices.
n Several airports in the U.S. and U.K. have introduced projected holograms in the
form of avatars to assist travelers.
n American Airlines provides flight attendants with tablet computers that they use
to recall/record food and drink preferences, customer names, frequent traveler
statuses and special needs. British Airways is experimenting with a similar strategy.
Implications
Demand for customer service will increase, and the cost of providing it will decrease,
thanks to new technologies. Quality customer service, however, is in the eyes of the
16) Bob Offutt, “Search: The Key to Successful Travel Sites,” PhoCusWright Inc. (December 2012).
©2013 PhoCusWright Inc. All Rights Reserved. Page 17PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
beholder. Excessive menu trees or outsourced call centers in foreign countries may
cut monetary costs, but frustrate customers. Each travel company needs to deter-
mine how to use customer service technology in a way that increases customer satis-
faction and reduces costs. On a personal note, using Alaska Airlines’ virtual assistant
was a satisfying experience.
Trend 5: Cross-platform data access engages users
To consumers, the future involves the ability to access desired digital information
regardless of device. To businesses, this same future is a development and support
nightmare.
Businesses once had little to worry about in terms of client-facing applications – just
choose between Java Script, Java and Flash with CSS. But in the wake of the prolif-
eration of various mobile devices – the iPad, iPhone and the many devices running
Android or Windows 8 – interfacing with clients has become much more difficult. Apps
exist for every device, in multiple languages, and on different operating systems. In
addition, custom code must run in each environment to detect screen size aspect and
resolution.
While the world seems addicted to mobile apps, the business cost of developing and
maintaining apps for all the disparate environments means it’s often more practical for
companies to “write once, run anywhere” using HTML 5. Figure 8 (above) shows the
criteria companies can use to judge the effectiveness of using an app versus a browser
on a mobile device.
Supporting all these devices and interfaces may be confusing and cost-intensive, but
the future will only bring more devices. For example, Apple has a smart wristwatch in
the works.17
In addition to smartwatches, devices and systems are in design – or already available,
in some cases – that interpret human gestures, enable touchless interaction with PCs,
recognize and understand speech, and allow users to operate and secure vehicles
using their voices.
Technology
There has been rapid development in technologies that enable users to access their
desired information from any smart device. Such technology frees users from loyalty to,
for example, a specific phone or tablet, as they can get the digital data they need from
whatever device is most convenient at the moment.
One of the most popular of these tools is Siri, the intelligent personal assistant on iP-
hone models 4S and newer. With a solid set of business rules and a speech recognition
17) Nick Bilton, “Disruptions: Where Apple and Dick Tracy May Converge,” New York Times Bits blog
(Feb. 10, 2013).
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Travel Innovation and Technology Trends: 2013 and Beyond November 2013
system, Siri is paving the way for smart devices users can address
FIGURE 10: Pebble Bluetooth Wristwatch with speech commands. Efforts to build the next-generation intel-
ligent personal assistant are underway in the banking, medical and
travel industries.
Also in development are devices that will communicate with hu-
mans via gesture, eye movement detection and 3D interaction. And
portable devices will soon be able to move from the home (or office)
directly to the automobile’s computer and communications system.
Examples
n Using curved glass, Apple is rumored to be developing a wrist-
watch that runs iOS. Several Bluetooth-capable wristwatches are
Source: Getpebble.com
already on the market, including Samsung’s Galaxy Gear, Sony’s
© 2013 PhoCusWright Inc. All Rights Reserved. SmartWatch 2, and Pebble, which came to life via Kickstarter
and can connect to iPhones or Android devices (see Figure 10).
FIGURE 11: Google Glass n Desti, a travel guide for iPads, uses technology similar to Siri’s
to deliver answers to travel-related questions.
n Hertz is building intelligent kiosks that include browser-based
video chat, interactive sharing and co-browsing. The kiosks
improve customer service, reduce costs (the interactive chat
connects to a single national service center), and increase
ancillary sales. They include key safes and readers for myriad ID
documents. With these kiosks, Hertz is expanding into hotels
and repair shops without the overhead of staffing.
n The Crown Towers Hotel in Melbourne, Australia uses UC from
Cisco to create a unique in-room experience. Guests can use
Source: Google
the touchscreen to request room service, call housekeeping,
© 2013 PhoCusWright Inc. All Rights Reserved. check local weather, check flights and look at restaurant and
retail store information.
FIGURE 12: Google Glass Display n GM is incorporating a feature on some 2013 models that allows
drivers to initiate Siri by pushing a button.
n Google Glass is a wearable augmented reality display (see
Figures 11 and 12). It can take pictures and videos, interface with
social networks, retrieve information, advise users of upcoming
events, and match pictures with associated data. For travelers,
it can offer local transportation schedules, display restaurant
menus, show hotel alternatives with rates and ratings in a given
geographical area, advise about flight connections and delays
– and all from a simple, glasses-like device. Google is currently
seeking developers for the Google Glass app store. At the same
time, the company is cultivating 8,000 consumers to be its core
Source: Google
group of customers for the device.
© 2013 PhoCusWright Inc. All Rights Reserved.
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Travel Innovation and Technology Trends: 2013 and Beyond November 2013
Implications
Cross-platform data access requires travel companies to track the changing user
interface patterns of their customers to provide the appropriate level of service. This
will be a continuing process as new technologies evolve and businesses become less
restrictive about the devices their employees can use for particular tasks. The suppliers
and distributors that support the most user-friendly, convenient interfaces will enjoy
increased market share.
Trend 6: A cloudy future beats no future at all
Research from IDC shows that worldwide revenue from public IT cloud services exceed-
ed $21.5 billion in 2010 and will reach $72.9 billion by 2015, representing a compound
annual growth rate of 28%. This growth is over four times the projected gains for the
worldwide IT market as a whole. By 2015, one of every seven dollars spent on pack-
aged software, server, and storage offerings will be through the public cloud model.
However, in an industry poll of IT executives at travel companies, PhoCusWright found
that 55% of respondents spent 4% or less of their total IT budgets on cloud computing.
In contrast, according to a 2012 study by IDG Enterprise, spend for cloud computing
across all business sectors averaged 34% of the total IT budget. More than half (63%) of
the 1,650 IT professionals polled expected to increase spending on cloud computing
solutions in the next 12 months.18
Although the PhoCusWright sample was limited, the difference in the amounts spent
on cloud computing in the travel industry versus in industries as a whole is substantial.
At this rate, travel will significantly trail other verticals in realizing the cost savings and
business value of cloud services.
In the meantime, no less than 15 organizations are currently working on standards for
cloud computing, which will enable its growth and institutionalization as a resource.19
Cloud computing has the potential not only to reduce IT costs and improve time to
market, but, with cloud brokerage services, to define and develop new cloud ser-
vices by combining services. Cloud brokerage is like a web services mashup, where a
developer assembles content and e-commerce capability from different sources into a
cohesive, integrated application. For example, cloud brokerage services could allow a
cloud-based service to combine rail and air content for a multimodal trip planning tool.
Technology
Figure 13 shows a generic, high-level cloud computing conceptual reference model
that was created to explain the requirements, uses, characteristics and standards of
cloud computing.
18) “Research Indicates That Cloud Increases Short-Term Costs for Long-Term Gains,” IDG Enterprise
press release (Apr. 2, 2012).
19) Cloud Standards Wiki.
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Travel Innovation and Technology Trends: 2013 and Beyond November 2013
FIGURE 13: NIST Cloud Computing Conceptual Reference Model
Source: National Institute of Standards and Technology, U.S. Department of Commerce, Special
Publication 500-292
©2013 PhoCusWright Inc. All Rights Reserved.
FIGURE 14: Cloud Broker as Service Aggregator
Source: National Institute of Standards and Technology, U.S. Department of Commerce, Special
Publication 500-292
©2013 PhoCusWright Inc. All Rights Reserved.
A key player in this model – particularly for travel distribution – is the cloud broker
(see Figure 14). Since most travel points of sale use aggregated content from multiple
sources, a cloud-based content aggregator holds significant potential.
The cloud broker manages the use, performance and delivery of cloud services and co-
ordinates the relationships between cloud providers and cloud consumers, including:
1) Service intermediation: Adds value to a given service, such as access to cloud ser-
vices, identity management, security and performance reporting.
2) Service aggregation: Combines and integrates multiple services into one or more
new services. A travel-related example would be a cloud broker integrating airline
direct-connect fares with GDS results.
3) Service arbitrage: Service aggregation without fixed sources. For example, a travel
agent obtaining the lowest rates for a given hotel from five different sources, even
though those sources might change over time.
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Travel Innovation and Technology Trends: 2013 and Beyond November 2013
FIGURE 15: The Role Cloud Brokers Could Play in a Travel
Company’s Cloud Architecture
Source: National Institute of Standards and Technology, U.S. Department of Commerce, Special
Publication 500-292
©2013 PhoCusWright Inc. All Rights Reserved.
Cloud aggregation services are similar to those the GDSs perform today. However, in
the face of new channel pressures such as direct connect, travel companies may need
to look beyond GDSs for aggregation. And given the myriad business management
technologies travel companies need to interact with, they may find other uses for cloud
brokers as well (see Figure 15).
Examples
While no acknowledged cloud broker vendors have entered the travel space, key play-
ers in other industries include:
n IBM’s SmartCloud Aggregator offers tools for a service provider to broker cloud-
based services and aggregate content from both inside and outside the firewall
and deliver the results to a variety of points of sale. SmartCloud Aggregator is
targeted at the telecommunications industry, where provisioning mobile services is
an ideal application for cloud brokerage.
n Jamcracker supports self-service cloud fulfillment and channel enablement. It pro-
vides tools for technology organizations to aggregate content in private and public
clouds for corporate users.
n Liaison Technologies sells tools for integrating systems (either on the businesses
premises or in the cloud), transforms data to meet proprietary needs, and supports
the translation of data into information.
Implications
Cloud computing can provide a substantial reduction in unit cost and increase in
©2013 PhoCusWright Inc. All Rights Reserved. Page 22PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
technical capability. Cloud brokers can potentially expand business capability, and
effective use of cloud computing can provide substantial competitive advantage.
Trend 7: Intermediaries require fresh approaches
throughout the travel cycle
As travel products become more complex and distribution channels increase, the role
of the travel intermediary must advance beyond just offering advice and arranging
travel. Traditional travel agents aren’t the only ones who need to adapt – travel man-
agement companies (TMCs) and OTAs have catching up to do, too.
To retain and expand market share, intermediaries must come up with strategies to
function optimally in an environment – i.e., our everyday lives – dominated by the fol-
lowing technological influences:
n Proliferation of information. At each stage of planning a trip – whether for busi-
ness or pleasure – travelers confront an incredible number of information sources.
The challenge for intermediaries: to cut down on information overload.
n Digital transformation. What used to be on paper is now available digitally.
n Cross-platform data access. Information in digital form is available virtually any-
where on your device(s) of choice.
n Social networking. Social networking permeates everything we do, from shared
trip planning to destination selection. Intermediaries need to leverage the surge in
social media to better assist their customers.
n Changing business models and disintermediation. The pressure for direct
connect for air shopping, along with Concur’s Open Booking and the continued
success of metasearch, is changing the distribution landscape. Travel components
– once commodities – are now differentiated products. This shift puts the burden
on the intermediary to facilitate comparison shopping and pursue up- and cross-
sell opportunities.
n Business analytics. Business analytics give travel companies the tools to under-
stand their businesses, customers, suppliers and competitors on a more complex
level. This knowledge enables companies not only to make improvements right
away, but also to plan for future ones.
Technology
Myriad technologies can help intermediaries refresh their approaches to helping cus-
tomers plan, shop for, and book travel. Particularly hot areas of development include
technology for:
n Content aggregation and distribution
n Customization and personalization
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Travel Innovation and Technology Trends: 2013 and Beyond November 2013
n Enhancing the customer experience
n Cross-platform data access
n Big Data
n Predictive analytics
Examples
One challenge intermediaries face is facilitating comparison shopping. Figure 16 shows
flight options for a trip from Melbourne to Perth on the Tigerair website, featuring
traditional (commodity) flight alternatives.
FIGURE 16: Tigerair Flight Schedule
Source: Tigerair
©2013 PhoCusWright Inc. All Rights Reserved.
In contrast, the Virgin Australia site displays this multitude of offerings for the same route:
FIGURE 17: Virgin Australia Flight Schedule
Source: Virgin Australia
©2013 PhoCusWright Inc. All Rights Reserved.
©2013 PhoCusWright Inc. All Rights Reserved. Page 24PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
Fare options include the following services:
FIGURE 18: Virgin Australia Choices
Fare Conditions Domestic Australian International short-haul International long-
flights flights haul flights
Checked Baggage 1 piece included (23kg) 1 piece included (23kg) Please see Internation-
Additional may be pur- Additional may be purchased al Long-Haul Checked
chased Baggage page for
detailed information
Flight Changes Up to 24 hours before the Up to 24 hours before the Fees and Conditions
flight flight apply
Fees and Conditions apply Fees and Conditions apply
Voluntary Cancel- Up to 24 hours before the Up to 24 hours before the Fees and Conditions
lations flight flight apply
Fees and Conditions apply Fees and Conditions apply
In-Flight Entertain- Included (if offered) Available for purchase (if Included
ment offered)
Food and Beverage Included on services On direct flights between
between Brisbane, Sydney or Australia and Bali or Austra-
Melbourne to Perth. lia and Phuket, all economy
Included on services be- guests receive a compli-
tween Sydney or Melbourne mentary meal and selected
to Canberra. beverages.
Included on all Virgin Austra-
lia Regional Services. All other flights Tea/coffee/
water included
All other flights Tea/coffee/ Food available for purchase
water included
Food available for purchase
Extra Legroom Available for purchase Available for purchase Available for purchase
Advanced Seat Included Included Included
Selection
(V) Priority Check-In No No No
(V) Priority Board- No No No
ing
(V) Lounge Entry Membership available for Membership available for Membership available
purchase purchase for purchase
Source: Virgin Australia
©2013 PhoCusWright Inc. All Rights Reserved.
The dilemma of the intermediary – whether automated or live – is how to simultane-
ously 1) offer the kind of tailored product choices Virgin Australia does, and 2) enable
comparison shopping with dissimilar offerings from multiple airlines.
Implications
The role of the travel intermediary will become substantially more complex in the
next several years. Instead of just selling the best airfare between Point A and Point
©2013 PhoCusWright Inc. All Rights Reserved. Page 25PhoCusWright White Paper:
Travel Innovation and Technology Trends: 2013 and Beyond November 2013
B, intermediaries will have to provide the best (or lowest-cost) travel experience as a
whole. This new imperative requires (sometimes drastic) changes – and investment – in
technology, training, customer service time, and service delivery tools. If intermediaries
can’t make the needed changes, they will cede shopping to suppliers.
Trend 8: Big Data makes travel smarter
Big Data refers to amounts of data so large they cannot be processed with tradition-
al tools and technology (e.g., relational databases and normalized structures).20 How
much data is “Big”? The amount ranges from tens of terabytes all the way up to peta-
bytes.
Only a few Big Data initiatives in travel have been successful so far.21 While companies
can use multiple approaches to create business value with Big Data, many barriers
stand in the way of realizing that value. A few examples:
Value: Detailed transactional data about website performance, call center metrics,
display optimization, conversion cause and effect, and multichannel performance can
assist management in fine-tuning every aspect of the travel product sale.
Barrier: Travel companies historically have focused on transactions, either through
the GDS or with their own technology. Focusing on data represents major changes in
technology and operations.
Value: Big Data allows precise segmentation.
Barrier: Beyond loyalty programs, which vary substantially in their understanding of
customers, the travel industry has focused on the trip itself rather than on specific char-
acteristics of travelers and their friends. Implementing effective segmentation models
requires major reengineering of technology platforms.
Value: Big Data can help companies define new products and services. For example,
by monitoring social media (a key source of Big Data), travel companies can better
understand how to create more relevant – and valuable – offerings for their customers.
Barrier: Many travel companies are highly dependent on GDSs for products, so room
for customization is limited. For travel companies that can develop their own products
and services, social media monitoring provides a major opportunity.
Value: Big Data supports effective business analytics, and business analytics provide
critical positioning capabilities: market intelligence, competitive intelligence, sentiment
analysis, customer attributes, and discovery of trends and patterns.
Barrier: The gap between gathering business intelligence and acting on it is wide. To
bridge this gap, travel companies need to reengineer their approaches to business.
One example of a successful move in this direction is Delta Air Lines, whose social me-
20) Bob Offutt, “Big Data: Redefining Travel Business Decision Making,” PhoCusWright Inc. (July 2012).
21) Evan Konwiser, “Big Data in Travel: Rubber Hitting the Road, But Only for Some,” Tnooz (Jan. 25,
2013).
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