How are we doing so far? Tnooz Predictions 2014 – The biggest and best list in travel technology

Hotels are ready to take the fight to where it matters to increase their profitability.

They will be focused on taking the part of the business which is rightfully theirs, and reducing leakage of potential direct sales to third party websites and wholesalers.

So how can the hotels drive more direct sales in 2014?

Trademark claims on search engines
Search engine PPC advertising on their own name and brand
Managing OTA relationships to avoid brand bidding
Distribution of rates through metaearch channels
Monitoring and managing rate reduction and manipulation by OTA on metaearch travel websites
Reducing rate parity dilution by wholesalers that distribute package rates through B2C channels
More direct marketing with offers targeted at niche client segments
Multi device strategy: mobile, tablet and desktop website

I realize I’m a huge proponent of the tours and activities space, but it’s simply getting too bubble-ish for my liking.

The PhoCusWright reports have spurred all kinds of “innovation” in the sector but this innovation has yet to yield any tangible results.

Look for quiet (or not so quiet) shutterings as the startups realize just what it means to be in the tour and activities vertical. At least in a way that is meaningful and shows solid positioning and growth.

Will there be a “market leader” in tours and activities in 2014? It’s a big market with a lot of room and not a lot of successful players. Those who have been successful will continue to work on… business as usual.

With travel technology moving ahead at such a rapid pace, and significant investment in IT by various players, it is surprising that duty free shopping persists largely with the old model of in-store (at the airport) retail and airline cabin crew handing out product catalogues on board prior to arrival.

A recent personal experience saw six bottles of highly taxed wine scanned at airport duty free stores in two countries and all were more expensive than the tax inclusive price at an Australian high street retailer whose mobile app was used in the experiment.

Other models of retailing have evolved to embrace technology to remain relevant – perhaps duty free shopping be next?

One exciting piece of technology for mobile is Apple’s iBeacon which I expect at least one hotel will try to roll out this technology as a pilot, if not more aggressively.

This technology can be a boon to hoteliers, especially full-service hotels and resorts, as they try to maximize revenue per guest via higher uptake on ancillary services (spa, golf, dining, activities). Airports as well.

iBeacon uses Bluetooth LE (low energy) to let travel providers and retailers sense and communicate (e.g. send offers) with compatible devices within 50 meters.

The good news is that iBeacon and similar devices (PayPal has their own version) are very inexpensive (< $50), can be loaded with all sorts of sensors, positioned almost anywhere in a store, hotel or airport and will operate for two years on a single coin battery. And there are already about 300 million mobile devices that can connect to them today.

And lastly they operate really well indoors where GPS signals are less successful. They also allow for more accuracy than wifi triangulation.

What started in 2013 will come to fruition in 2014: TripAdvisor is the new leader of the industry.

Already #2 in market cap, TripAdvisor’s move down the funnel into meta and transactions, their investment for in-destination products, and their continued significant role in doling out leads to the OTAs give them the upper hand.

Look for TripAdvisor to ramp up development on key products, work to streamline their direct connect and meta-bidding products, and keep a product-focused approach to their evolution.

In 2014 they will officially and unambiguously obtain “darling” status, giving the OTAs more heartburn in an increasingly commoditized business where reviews haven proven to be the silver bullet.

Unmanned aerial vehicles become the newest and hottest mainstream “customer segment” in both the broader technology sector and even more specifically within the travel industry come 2014.

As the looming 2015 deadline US Congress has imposed on the FAA requiring new regulations around the commercialization of drones nears, countless new startups will continue to pop-up along with the 300 already in existence today that both serve the needs of this segment as well as those that are built upon the newest data resources it produces.

And don’t be surprised to hear the term “drone livery” for the first time next year as airlines even begin to contemplate new business models that include licensing the aerial intelligence their fleets of UAVs could capture, as drones become the “cargo” of the next decade for an airline’s 2020 balance sheet.

Mobile has already overtaken the desktop as the primary means of accessing the web in China and leading Chinese giant tech companies want to be banks and are eager to develop online payment systems.

China’s internet revolution drives financial, travel, social and behavioural change on a massive scale, so companies are often becoming increasingly innovative in their approach and some are looking at western markets with strong ambitions.

Outbound tourism is still growing with more FIT and independent Chinese travelers looking for new travel experiences, as a result, many destinations want to catch their piece of the China travel cake.

China Outbound Tourism market competitiveness will continue growing, especially in the luxury market, and the winners will be the players who put into action a to include three main pillars: strategy products, strategy offline and strategy online (internet, social media and mobile).

In previous years, my predictions more closely resembled an optimistic horoscope for destination marketing organizations rather than tactical foreshadowing (DMOs stop re-creating the wheel! Travel becomes smarter!).

And I considered using this space in a similar fashion to implore my fellow DMO peers to either develop a holistic understanding of their consumer or adopt a strategy of co-creation among stakeholders. Instead, my prediction for 2014 is rather simple:

More tourism destinations than ever will attempt to promote their unique brand to an increasingly distracted and disrupted audience, which has a plethora of alternative travel information sources available across a variety of channels.

What I cannot predict is how your DMO will respond to this competition and redevelop relevancy within the tourism ecosystem.

I predict that there will be nothing major during the year. There will be a lot of noise but in reality very little will happen that will be fundamental.

Why? There are 3 basic reasons.

The consumer is already tired and really not happy about the amount of change he has to absorb. We will see the iPhone 6 but it wont change much the way we do things. We will see the next version of the iPad but not much change.
The cost of customer acquisition is so high B2C changes will not be possible without massive expenditure
Google wont let you. Google will prevent fundamental change from occurring because its not in Google’s interests

My predictions therefore are that we should all take the year off. The year will be a year of very little new.

A lot of posturing – underneath the covers there will be a lot of start of change but little will appear in 2014. No NDC will emerge, no new major hotel changes no changes in GDS. It will be the year of gradual.

Low cost takes off in North Asia. Now less than 10% of air seats in the region, low cost carriers will change the landscape in North-east Asia, from Taiwan to Korea to China.

Most of all, watch out for a low cost revolution in China following the recent government liberallsation to allow more privately-owned low cost carriers.

With that, Chinese travel will become mainstream. Is the world ready? I doubt it.

In 1997 the primary messaging structure for the electronic distribution of travel information and inventory was EDIFACT.

As the industry moved inventory to the internet, the industry leaders embraced XML, supported by the formation of OpenTravel in 1999.

Fast forward 15 years to 2014, and here’s my forecast – 2014 will be the year that the travel industry fully embraces light(er)weight schema structures.

Why? Lightweight schema are more developer friendly and the proliferation of mobile apps and non-enterprise inventory require lightweight messaging.

Startups have been advocating for these structures – REST and JSON mostly but the definition extends to any task specific message that only needs a few data elements and not much or no descriptive information about those fields.

And now the enterprise companies out there are talking about it too, so the industry is reaching the tipping point.

Innovative and more intelligent use of content online. Most companies now have a presence on the major social media channels so the next step will be to go beyond the ‘me too’ and do something useful especially as measuring and tracking gets easier.

There have been a number of interesting “firsts” this year such as Four Seasons with its Pin.Pack.Go initiative on Pinterest.

Meanwhile, other companies, such as Secret Escapes, are beginning to put Facebook tools such as Custom Audiences to good use.

Expect to see more campaigns on YouTube via services such as TrueView as well as the use of other techniques for online marketing, such as Expedia’s recent campaign using Shazam.

In Asia Pacific, traffic from PC/laptop for travel websites will decline, and traffic from smartphones and tablets will be on rise. Not only just traffic, but also search, conversion and content creation.

Japan’s Hotel.jp reported that the user generated hotel reviews have crossed 300,000 reviews, and mobile played a significant role. Also, Venture Republic is expecting the traffic via its mobile to overtake desktop.

Travel brands are going to invest heavily on mobile/tablet, and some might even make mobile/tablet as their primary sales and marketing channel.

China’s three major travel brands Qunar (386% growth in mobile revenue), Ctrip (wants to become Mobile Travel Agent), and eLong (allocates $100 million fund for mobile projects) unanimously highlighted mobile as key focus channel.

Mobile-only business models will be on the rise. Thanks to the likes of last-minute hotel reservation companies in APAC.

Increased adoption of mobile/tablet among consumers will force travel brands that aren’t on mobile to be present on traveller hands. Among the total (Google) search queries in India, mobile queries have already overtaken the queries from desktop.

Underneath governments spying on its citizens and friend-and-foe sovereignties, there is a bigger business in Big Data.

Travel is one of the largest purchase decisions for consumers, along with housing, medical services, food and education. And the percentage is higher outside the US where many of those other items are subsidized by governments.

We’re hearing more about consumer fatigue in travel planning, and that means more travelers are waking to the notion their time is valuable to travel sellers.

Look for large travel players to quietly develop business intelligence tools and processes internally. Also, look for a new crop of venture-backed start-ups in this growing consumer travel services space.

Some may come as pivots away from “inspiration” plays with superior technology but so-so business models. And others will come from small M&A deals among struggling start-ups with complementary business intelligence algorithms and customer sentiment data.

Bottom line: data is the new currency, and consumers have more control of their data than they know.

A raft of internet-enabled inanimate objects were crowdfunded in 2013, and we will see shipment of these items throughout 2014, such as smartphone deadbolts and wifi lights.

Add in a taste of iBeacon, and we’re looking at the first year where the applications of the Internet of Things moves from science fiction to reality.

Travel will be impacted significantly, as travelers begin to want smartphone-enabled hotel locks, instant mobile offers depending on location, seamless smartphone payments, automated reminders when an aircraft is boarding and a traveler is not at a gate, and the ability to create a location-enabled profile of traveler preferences.

These are only some of the initial benefits of the IoT; as more items become connected to the web, the fabric of travel will begin to breathe as specific painpoints are loosened by constant connectivity to everything.

Just as metasearch was the star of 2012 and 2013, multi-modal search will dominate talk in 2014, as door-to-door transit comparison tools gain in sophistication and popularity.

Google has already begun incorporating flight search into its driving directions in its Maps tool in some of its markets. Startups like Rome2Rio have added point-to-point price estimates to their tools, while startups like Wanderio (profiled here) and GoEuro (report here) are gaining share in their markets.

The biggest effect may be on managed travel. In 1994, after Delta was the first major airline to slash commissions to travel agents, the spread of do-it-yourself ticketing led to a transformation of business travel departments.

Two decades later, a wave of do-it-yourself multi-modal planning tools may inflict fresh upheaval. Expect a major brand in online travel to either acquire a multi-modal startup or debut their own multi-modal tool.

Mobile ushers in more granular personalization. Expect 2014 to be the year when the personalization era jumps from online to offline in the travel space.

Leveraging new mobile sensor technologies such as iBeacons, travel brands will start personalizing the traveler’s experience the moment he or she enters an airport or hotel.

The collection and volume of data will initially overwhelm and result in some missteps, but in the long run will give brands behavior insight and marketing opportunities that they’ve never had before.

Expect brands that physically interact with consumers (Airlines, Hotels) to lead this trend, but it certainly won’t end with them.

Corporate-backed innovation up, entrepreneur-backed innovation edges towards revolutionary – not evolutionary – projects.

Startups have been the main method to get “new ideas” into the wild of the travel industry. In 2014 the trend of corporate backed innovation will begin to go mainstream.

This approach will come with benefits of having an existing client or travel agent base, business development contacts, HR support and budgets from day 1. The outcome of this will be that startups (funded this way) will evolve rather than revolutionise the industry.

As a result entrepreneurs going alone will be more aggressive in aiming for revolution rather than evolution as this is less likely to be copied by corporate backed innovation teams.

Therefore expect more AirBnb like startups where legal issues are put aside to be dealt with “another day” when the startup has sufficient traction to be able to afford good lawyers and to garner wide public support for their otherwise edge positions.

After (kind of) successfully predicting the appearance of a OTA or metasearch service which has mobile as its foundation (it turned out to be Hotel Tonight) in 2010, perhaps the time is ripe again for a significant new player to emerge with the always connected traveller at its heart.

This isn’t about device-led services bolted onto an existing web platform – an opportunity is there for the taking which combines last-minute (same-day) bookings for hotels with functionality that allows users to search AND book things-to-do in a destination… all from a device.

A full mobile concierge-type service which includes itinerary creation and management and destination information, alongside the ready access to bookable products which travellers want on-the-go. If someone isn’t doing this already in its entirety, then expect a brand like TripAdvisor (all about the “trip”, not just the hotel review, right?) to wade in wearing its ridiculously large boots.