Last year I completed a number of intense research projects on mobile travel trends. This includes two reports for Amadeus -Navigating the Airport of Tomorrow and The Always Connected Traveler: How Mobile will Transform the Future of Air Travel. I also was the  lead analyst for the PhoCusWright Special Report Mobile Hits the Mainstream.  These projects involved in-depth interviews with technology and travel companies worldwide. One interesting fact I learned from all this research is that our industry is somewhat turning a deaf ear to the next big shift in mobile travel interactions : voice. (pun intended)

Voice response is not a new concept. Consumers interact with voice response on a daily basis often with less than perfect results. Whether it is your car’s GPS or an automated voice at your favorite airline, today voice technology can be a frustrating experience. Why then do I believe that mobile voice interaction is the next major wave in mobile travel interactions? The answer is simple, improving voice technology is emerging that will enable the capture of speech that lacks fluency. Speech integration is often difficult to implement because of the way people actually talk, with conversations filled with pauses,utterances, slang and sometimes vulgarity.

I am fortunate to be working with a new  Silicon Valley client, a start-up named Fluential. This company has solved the lack of fluency issue. Their innovative mobile voice response technology was initially funded by DARPA and resulted in a mobile application used by soldiers in Iraq and Afghanistan to help with translations. The secret sauce of the application is their inference engine which has the ability to understand the natural lack of fluency that is part of language.  Their commercial product is now used in hospitals (Kaiser Permanente in the Bay Area) for language translation for nurses when an interpreter is not available.  In addition to the translation capabilities of the software, Fluential can create a frontend to any travel application enabling voice response.  Here is the real promise.  It is my belief that mobile bookings will not really take off until we have an easy way to interact with our mobile device. Voice interaction is being embraced in the market with the introduction of Apple’s Siri on the iPhone 4GS and Google Voice. As the consumer becomes accustomed to interacting via voice with their mobile device, their expectations of travel apps doing the same will increase, but expecting Apple and Google to solve this issue for travel is unrealistic. Travel has its own language and thus domain specific voice apps are needed for travel.  The diagram above provides a glimpse of how voice will change every step of the travel process. Fluential is looking for travel partners, so please contact me if you are interested in learning more.

Most agree that an important trend in e-commerce is personalization. This is even more essential in the mobile environment where location, context and personalization form the cornerstone for mobile search and marketing. Disturbing news of late around how mobile devices collect our information has created shockwaves across the Web. This includes the most recent reports on Carrier IQ and how it may be tracking every keystroke and behavior on your mobile phone to the revelation that the new Kindle Fire Silk Browser collects all your online behavior automatically suggesting Web content. Combine this with major efforts in and out of the travel industry to use your social graph to understand your preferences, the balance between privacy and personalization has clearly emerged as a major battleground between protecting your personal information and delivering relevant content.

There are heated debates online with some saying privacy is dead, so get over it, while others looking for government intervention to prevent unwanted spying. Over the last few years a similar uproar arose over the issue of behavioral targeting used to deliver ads. So how much information are travelers willing to disclose to get a more personalized offers? Where is the line drawn between more relevant content and invasion of privacy? From my perspective it is all about control. Consumers and in our industry, travelers, must feel like they are in control of their information. The amount of control may represent a generational divide where Baby Boomers like myself are more reluctant to share personal details online than the Millennial Generation. No matter how personalized the delivery of content, under cover spying is unacceptable and in some cases may simply be illegal. I encourage the industry to balance the need for personalized information by being transparent in the way information is being collected and used to deliver more personalized content.

Travel Tech Consulting provides services that cross all segments of the travel industry (airlines, hotels, OTAs, tour operators, TMCs, government and technology suppliers who support all these segments) with the underlying theme of how emerging technology is changing business practices. A common topic across these speeches and engagements has been the impact of mobile technology and social media on the travel process. Whether addressing audiences in Israel or Amsterdam, I was able to observe first hand the impact mobile technology and social media is having worldwide. Just as much of the traditional travel ecosystem has become accustomed to dealing with online issues, mobile and social are changing the game. As part of various research projects including a comprehensive special report for PhoCusWright entitled “Mobile  Hits the Mainstream”, I have interviewed a wide range of travel and technology companies about the impact of mobile and social media on their strategies. Here are a few observations:

• In many parts of the world mobile is becoming the primary means to connect to the web.
• The emergence of tablets is not only un-tethering the travel planning process, but extending the ability to plan and book travel any place at any time. When I returned I was greeted by my new Amazon Kindle Fire, the first under $200 tablet that represents the fusion of the e-reader and media tablet at a lower cost that the market leading iPad (Amazon Kindle Fire is now the #2 tablet worldwide).
• Audiences and clients all now agree that their customer’s social graph is having a direct influence on travel purchasing and most are struggling to implement an effective social media strategy to target the key influencers while protecting their brand integrity across social media channels.

Now that I am back home in the San Francisco Bay Area and looking out my office window at San Francisco and the Silicon Valley I am amazed how my region which is home to Apple, Google and Facebook is changing the travel industry in every corner of the globe.

The much anticipated  integration between ITA Software and Google arrived today with the launch of Google Flight search. The most visible enhancement in this new interface is the instant loading of fares and schedules when you enter the city pairs. The ability to launch flights from the standard Google box which leads you to the flight page ties general search to flight specific schedules and pricing in a way that we have not seen before. Other features such as using a map to locate flights based on a budget from your specific city and the calendar view to look at when cheap flights are available are also delivered instantaneously.

For the industry the biggest news is not the display but the links associated with the booking of these flights. For now the only booking options are the airline sites. TNOOZ quoted Googe’s take on this issue:

“Like any other partner, Google needs to honor the airlines’ distribution decisions. It has long been known in the industry that the control of pricing data and distribution of the same by airlines is tightly held. That means that we can only show airlines in the booking links.We will be exploring advertising opportunities within the page to showcase the products and services from other relevant partners, including OTA and metasearch partners. We’d also like to give users and advertisers alike the opportunity to provide feedback so that we could iterate.”

Considering the current tension between the airlines and the GDS/OTAs, this statement by Google is significant. Whether the worst fears of the OTAs and Meta-search companies are being realized (as evidenced by their heavy lobbying effort against the deal) or whether this is a temporary negotiation ploy by Google to obtain greater advertising revenue requiring the OTAs to pay for participation on this screen, is unclear. I suggest you may want to re-read my post on the Google / ITA Acquisition from April to see what else may be in the works from this deal. Certainly key to watch is the impact on mobile flight search!

In 2004, I authored and published in conjunction with PhoCusWright a study entitled “Selling Complex Leisure Travel Online- Focus on Dynamic Packaging”. This research described an emerging leisure travel distribution platform based on an N-Tier architecture which blends proprietary content with external connections to deliver dynamic packages that are personalized to a consumer’s needs. I am glad that many of the concepts I described in the study have come to fruition.

Since 2004 I have been involved with a number of technology procurement projects around leisure travel distribution and dynamic packaging. These projects have kept me up to date with offerings from vendors across the globe. The N-Tier architecture I described has now become standard with many vendors also embracing a Software as a Service (SaaS) model for delivery of their solution. Despite these advancements there are a few areas that seem to be lacking in current vendor offerings.  These include:

• Personalization – Packaging based on true customer personalization using historical patterns, implicit and explicit preferences to alter content to meet customers’ specific needs.
•  Connecting into social graphs.  An additional way to make offers more personalized is to tap into the consumer’s social graph. Though the concept has been discussed by many, I have yet to see a solution that identifies a preference through social media; such as being a fan of a specific music group or sports team and then tying that preference into a booking suggestion (e.g. you are planning a trip to NYC and your favorite group will be giving a concert while you are there).
• Connecting to emerging content sources - With the growth of sites such as Home and Away and Airbnb, travelers now have a choice of accommodations beyond the traditional hotel room. Few vendors have actively pursued connections into these emerging platforms. Activities are also a ripe area of connectivity innovation. Activities represent an extremely fragmented market, but simply connecting into Viator is no longer a complete solutions with a range of sites now aggregating activity content.
• Mobile – With every sector becoming a retailer, selling package components or full blown dynamic packages on mobile devices should be a priority. Vendors need to open up their APIs to fully integrate with a customer’s existing Mobile Web or native apps enabling component and package sales on mobile devices. Tablets are un-tethering the planning process and thus specific applications for iPad and Android tablets can take advantage of location and provide the rich media needed for these devices.

One of the most influential and clairvoyant books on mobile trends is Howard Rheingold’s 2002 Smart Mobs. Howard accurately predicted many of the trends we now see as common such as:

• The growth of smartphones
• The intersection between mobile and social media
• The use of mobile devices to mobilize protests (thus the term Smart Mobs). This last point came into clear focus with the Middle East Arab Spring and the recent riots in London triggering the British government’s threat to shut down social networks.

Earlier this year, Amadeus commissioned Travel Tech Consulting to conduct research on airlines mobile trends. The whitepaper “The Always-Connected Traveller: How Mobile Will Transform the Future of Air Travel” combines research from JD Power with interviews of nine airlines from around the world. Augmented with Travel Tech’s ongoing monitoring of mobile airline trends, the report provides a clear picture of the current state of airline mobile technology and what we can expect in the 1-2 year and 3-5 year time frame.

Most airlines have done the basics which include mobile check-in, 2D bar code boarding passes and itinerary management. Many airlines have mobile booking capability today and most will be adding it over the next 12 months. In developing markets such as Africa and India where the primary connection to the Internet is the mobile device, the entire travel booking process may take place on the mobile phone. Over the next two years airlines will be adding key functionality to their mobile offering to expand merchandising opportunities. Key among these efforts is the ability to book ancillary services on mobile devices. Ancillary services are an important revenue source for airlines, but also provide a way to allow the passenger to customise their travel experience.

Advanced airline mobile innovations we can expect in the 3-5 year time frame  fall into two  major categories(1) Functions related to the passenger experience and (2) Capabilities that take advantage of advanced mobile device or software features.   Passenger experience related functions include:

• Location based services – These are services that provide location sensitive advertisements promoting airport or local merchants as well as local information guides (e.g. airport, gates, baggage carousels, etc…)
• Advanced disruption management – This includes the pushing of alternate flights and the offer of personalised compensation and electronic vouchers for hotels when a flight is cancelled.
• Social media – Monitoring social media comments  and targeting the passenger’s physical location to  prioritise  assistance based on the nature of the issue. Also being considered is the integration of peer reviews during the mobile ticket purchasing process.
• Movement tracking – Depending on local cultural and legal restrictions, automatically identifying a passenger’s location in the airport.
• Advanced push notifications – This has two main purposes, providing the passenger with more information about their flight or baggage and selling ancillary services to monetise the mobile channel

Where do tablets fit into the travel process? The tablet un-tethers the traveler from the desktop whether in a hotel room, at the airport, on an airplane or siting on the living room couch. The tablet itself greatly expands a traveler’s ability to dream and plan a vacation, but what about using a tablet while on holiday? Tablets can be used for both long term and near planning, but how about taking the tablet with you while touring a city. I faced this dilemma on my recent European vacation. Granted my tablet is a high end iPad2 which definitely influenced my decision. Overall I found the iPad2 a great traveling accessory that helped us plan out our daily and weekly activities, provided I could pry it out of the hands of my 15 year old daughter, but I was extremely reluctant to take my high end iPad2 it with me when we were out and about. This is where I believe the announcement of the the new tablet from Amazon and the already existing Barnes and Noble color nook will have an impact.

As with any computer device as tablets are more widely adopted prices will come down. The new Amazon tablet and color B & N Nook provide an e-reader combined with the Android OS which essentially brings tablet functionality to the masses on the lower end of the price range (The B & N Color Nook lists at $249). The idea of a young traveler taking their Color Kindle or Nook and putting it in their backpack will soon become common place. All the things that make smartphones great companions for travel will make these low end e-reader tablets ideal for electronic guide books, location based services, social networking, navigation and virtual reality applications. As was the case with the early PC, and smartphone, Apple has paved the way for a new category of device with the iPad, but it will be lower end tablet devices that will have the biggest impact on the travel experience.

Over the last 10 years I have been  a vocal advocate of the growing impact of mobile technology on the travel experience. I have written numerous articles, research reports, and I have given a number of speeches on the subject, including  most recently a keynote address at the Amadeus Airline e-Commerce Conference last month in Cannes (more about that research and presentation in an upcoming post). What I wanted to address in this blog is the gap that still exists between the potential of mobile technology and the reality of using it as a travel resource on a vacation  I experienced this first hand as I my business trip to Cannes was combined with a three week vacation with my wife and daughter in France, Italy and the the UK.

I am still convinced that the combination of location, personalization, and relevance are the three ingredients required to provide value in a mobile experience. The main problem I see today is that the right information is not easily accessible, the networks are not always reliable and the thus the practicality of depending on your smartphone as a travel resource guide is not quite there. When you travel multiple countries and cities is is hard to find the single trusted source for things such as restaurant suggestions and activities.  Navigation can be tricky as well as we actually I had a French taxi driver try to use my iPhone GPS to locate our hotel in Velizy, but as we approached the location it seemed to mysteriously shift.

I am still bullish on the smartphone’s impact on the travel experience, but my first hand frustration on this recent trip (not to mention the expense of data roaming charges) has given me a somber dose of  reality into my otherwise sunny predictions. I am still awaiting the true intelligent mobile travel assistance who can deliver what I want, where I want it, when I want it,  on my preferred device.

The issue has always been around costs. The airlines pay the GDS  (on average) close to $3 per segment from US point of sale and sometimes as high as $7 per segment for non-US originating point of sale bookings. With the average record having about 4 segments that adds up to $12- $28 per itinerary. The GDS then use a portion of these funds for financial assistance payments to the travel agency community.  The travel agents generally do not pay the GDS for their technology. These lawsuits are not only bringing to the surface the fact that GDS market power locks travel agents into agreements, it has brought to attention to the general public this revenue stream for travel agents clearly a target of the airlines for many years. A particular focus of the lawsuit is on the corporate travel industry, where TMCs are very GDS-dependent and where the financial assistance helped many TMCs remain profitable despite the economic recession.

I was hopeful we were seeing an era of emerging détente as more airlines signed agreements with the GDS. For some time I believed that the idea of a major airline pulling out of a GDS, or forcing distribution to pay a fee for acess was simply postoring by the airlines during the negotiation process.I now believe this is not just a negotiiation position, but a clear strategy to disrupt the money flow that has existed for years. Farelogix which provides the direct connection standards and platform for alternative distribution is gaining momentum with Delta now joining the other major US carriers with an agreement this week.  Farelogix does not really offer anything the GDS could not from a technological perspective, in other words the GDS are certainly capable of using XML versus EDIFACT for their direct connections to the airlines, it is really is about price and gaining greater control over customer insight and marketing efforts.

Despite all the vocal protests from various industry groups, the DOT has deferred the issue of forcing the airlines to provide the GDS the ancillary services they are offering customers. Some of the airlines are withholding ancillary fees from the GDS as part of their negotiation leverage to force lower distribution costs through the Farelogix platform.  As I mentioned in an earlier blog, a hybrid solution mixing GDS and Open Axis Group (Farelogix) information for ancillary may be one possible future, but given the seriousness of these lawsuits, I believe we will be entering a period beginning this Fall of 2011, where air content will become fragmented particularly causing problems for TMCs who are tied to the GDS as their main platform for distribution. Corporate self booking tool vendors such as Rearden Commerce are hooking into the Farelogix alternative distribution platform, so independent self-booking tools will likely survive this disruption. It is those TMCs that have resisted self-booking and still process the majority of transactions by ph0ne through the traditional GDS that will feel the most pain. This will come in the form of missing content, added fees and loss of financial incentives.

I do not believe the GDS are destined for extinction, but those who are truly abandoning the traditional TPF mainframe environment are better positioned to compete in this new distribution world, to lower their own internal operating costs, provide greater customer targeting and thus may be better positioned to survive this storm in the long term As Google implements ITA and general search becomes meta-search, we may see even greater presure on the traditional system especially if Google were to opt to connect into the Farelogix platform. The increased use of mobile technology as a marketing platform by the airlines will also act as a catalyst for more direct airline/corporate traveler offers. It should be an interesting next 8-12 months.