The approaching wave of mobile OS travel buttons (Apple iTravel, Google Travel, Bing!Travel Mobile) need to be viewed within a historical context of travel distribution. At the heart of these efforts is a new customer interface for travel.

During the pre-Web days, traditional travel agents controlled distribution through their mastery of GDS cryptic formats. A travel agents’ worth (especially in a corporate travel setting) was often gauged by their proficiency on the GDS. The customer often viewed the travel agent’s systems as a black box with almost mystical capabilities. In this environment the only consumer interface to travel was the telephone or face-to-face conversations with a travel agent.

The Web created a new era of transparency for the travel process. Supplier sites, Online Travel Agents (OTAs) and meta-search engines suddenly removed the mystery behind travel pricing providing consumers with instant access to travel prices and schedules. This transparency has reshaped all sectors of the industry. Consumers now can compare a variety of sources and book entire vacations online. Even for those remaining traditional travel agents, would quickly admit that their conversations often include “I was looking at prices online and I found…). The Web also has changed the ground rules for distribution. Though the GDS still dominate offline and much of online distribution, direct channels through supplier direct websites and new alternative distribution platforms such as Farelogix (supported by the OpenAxis Group) are causing tensions in the traditional GDS-centric travel distribution ecosystems both economically and through the holding back of ancillary services from traditional distribution channels.

It is my belief we are at the beginning of a radical change in distribution this time triggered by the mobile revolution. With the mass adoption of smartphones and the growing influence of tablets, mobile devices are un-tethering the planning and booking process from the desktop altering consumer behavior and again changing the ground rules for customer interfaces. All the current Web strategies are carrying over to mobile with most major travel companies optimizing their sites for the mobile Web (if not you are in danger of being left behind!) and many travel companies have created native (downloadable) apps for specific devices. The problem with this natural evolution from the Web to mobile is that it has created a fragmented environment where the traveler has to either engage with multiple mobile Web sites or download multiple apps. Shopping multiple Web sites online is not a big issue, but on mobile devices it can be more challenging.  Even the traditional, one-stop-shops, the  OTAs have fragmented their mobile offering reacting to the need for last minute hotel deals. Meta-search may be best positioned for mobile, but these sites lose the ability for continuous engagement, an important mobile opportunity, as the bookings are still spread across multiple sites. Consumers are hungry for a simple integrated mobile travel solution. This is opening the door for the OS travel buttons. Companies such as Apple, Google and Microsoft are masters at user interfaces. There is ample room to simplify the planning and booking process especially with the proper integration of voice, touch and gestures. This could revolutionize mobile travel interfaces. Travel companies need now to innovate with mobile interfaces by adding voice, simplifying steps through storing of preferences, and exploring other new interface methods. Mobile may act as a catalyst for further direct supplier distribution as airlines sell ancillary services on mobile directly to their best customers. Even when the OS buttons arrive they need to hook up to some existing travel e-commerce infrastructure, but the industry can ill afford to let another layer get between themselves and their customers.

The corporate travel market has always been a bit of a paradox. Non-travel industry observers might assume that the big four Travel Management Firms (TMCs) – American Express, Carlson Wagonlit, BCD Travel and HRG – own 80% of the corporate market (the Pareto principle). Though these four TMCs do dominate the Fortune 500, overall they represent less than 50% of the corporate market volume. This is particularly true when you include the full spectrum of companies from unmanaged to lightly managed to heavily managed programs. There are over 100 regional TMCs through the US and 1,000s throughout the world. Despite the Big Recession, many regional TMCs continue to report strong profits and growth, but is this sustainable?

Most regional TMCs are under economic pressure on the fees they charge for their services and the revenues they receive from suppliers and the GDS. A challenging paradox for all TMCs is the issue of online adoption. As TMCs push greater online adoption through corporate booking tools, the service  fees paid by their corporate accounts shrink. For the past decade, the second and third tier TMC market has been complicated by the growth of the Internet-based TMCs, the corporate versions of the OTAs, who have successfully captured major share in the market by promoting low online fees. Competition is still fierce from not only these iTMCs, but the mega-TMCs and the regional TMC’s direct competitors. There is also the continued effort by the suppliers to drive more business direct.

A major source of revenue for TMCs are the backend payments they receive from the GDS and suppliers. The latest airline/GDS battle is driven both by a desire for the airlines to lower their distribution costs and a goal to create a more personalized airline experience by getting closer to the customer and allowing the traveler to bundle ancillary services that meet their needs. On the cost side, the financial assistance which is derived from airline segment fees that are passed through to TMCs is a major target of the airlines’ renegotiation efforts. Airlines are also becoming tougher on the criteria for backend override (commission) payments. Airlines in Europe have begun passing along the cost of credit card fees to the TMC. The major global airline brands are embracing the OpenAxis Group standards with most working with Farelogix on alternative distribution (GDS bypass) strategies. At the end of the day, does this mean the glory days of the regional TMCs are over?

That depends on how these companies adapt to this changing market. Clearly the old ways of doing business will not be sustainable with all these threats to a TMC’s profitability. Here are some suggestions on what regional TMCs can to today:

• Embrace mobile technology: The business traveler is the early adopter of mobile technology and driving the use of mobile as an essential tool for business travel. Most of the corporate travel industry has been slow to recognize the mobile opportunity. The first step for any TMC is to provide a mobile based itinerary. This can be done by partnering with tools such as TripIt, Tripcase or Worldmate. Integrating these mobile itineraries into the TMC’s overall operation and technology is the key to bring value to these tools. Booking on mobile is still emerging, but a clear trend has already emerged where hotels, cars and ancillary services (restaurants, transfers event tickets, parking) are the first travel items to be sold on mobile. For air tickets, the key is to provide services related to disruption, helping the traveler when something goes wrong (e.g. cancellations, change in trip plans). Partnering with corporate booking tool providers on mobile efforts is a logical path for regional TMCs. The most important opportunity for a TMC’s mobile strategy is the process of continuous engagement. TMCs must execute mobile services that are available throughout the entire trip cycle, providing the right service (personalization) to the right traveler (location) based on the right situation (context).
• Use BI to offer consulting services : The mega-TMCs have successfully operated consulting practices for over 15 years. Regional TMCs generally offer all services through their account management organizations at no additional fees. By deploying more comprehensive business intelligent platforms (BI) regional TMCs can develop consulting services for a fee. These services include evaluating the impact of negotiated programs and creating and measuring Key Performance Indicators (KPIs) that track traveler compliance and measure travel management effectiveness.

The business world has numerous examples of companies that have not altered their strategy when the market changes, often with dismal results. Regional TMCs throughout the globe cannot not be complacent with current fees and revenue sources and must today embark upon new strategies to sustain profitability over the next decade.

It has been nearly 2 years since Apple filed the patent for iTravel, a comprehensive effort to capture the full cycle of travel booking, itinerary management and airport check-in. Last spring, Google completed its acquisition of ITA software and last September Google launched Flight Search while continuing to add features to its Hotel Finder. Also last year, RIM BlackBerry private labeled WorldMate creating BlackBerry Travel. These trends cannot be ignored, but how exactly will native OS travel apps transform the travel process?

The key will be how will these initiatives fit into the current travel ecosystem. Naturally there is some fear that a native OS travel button may lead to the OS provider taking a piece of the distribution pie. With the current airline direct model of the Google Flight Search, the mobile button could lead to more disintermediation. It is essential to recognize that there is an important connection between the emergence of intelligent agents (Siri, Google Assistant) and the OS travel button. My previous post described how I see voice UI impacting every aspect of the travel process. Combining voice assistance and a native OS travel button could transform the mobile travel experience.

It is important to note that all these initiatives are focused on the traveler UI.It is unlikely any OS travel button would provide a complete  m-commerce platform, for travel but rather these buttons would more likely act as a meta-search funnel and hook up into an existing channel (OTA, direct supplier sites). Controlling the front-end funnel for travel does have tremendous  implications for the industry. Apart from the obvious competition this creates for OTAs, Meta-Search, Itinerary aggregators (e.g. TripIt) and even corporate booking platforms (Concur, Rearden Commerce), creating an iTravel button directly challenges the traditional search metaphor promoted by OTAs and Meta-search companies over the last 10 years. There have been numerous articles written over the past few years highlighting the consumer’s unhappiness with the current UI for Web-based travel such as this recent TNOOZ article. A major weakness in the way many travel companies have approached mobile is to simply bring Web functionality to the mobile platform without recognizing that mobile plays a different role in the travel process. Mobile search is about location, relevance and context. Native OS travel buttons will likely take advantage of this triad and deliver a superior experience to the user.

So if OS travel buttons are inevitable, what does the travel industry need to do to prepare for their impact. Rather than spending money on lobbying efforts such as the FairSearch Coalition, the key industry players should be funneling a greater amount of R & D into their mobile platforms.  This includes:

• Focus mobile efforts on location, relevance and context
• Commit R & D dollars to investigate creating your own Siri like functionality for a travel voice UI
• Consolidate functionality so that a single app or mobile Web can do everything the travel needs. For example, including airport navigation, merchandising, itinerary aggregation (for components booked through the site and through other sources), real-time destination information and long tail services.
• Partner with other travel value chain entities on a mash-up of functionality
• Explore new ways to collect personal preferences (opt-in) to deliver more relevant content
• Create a skunk works team to explore next generation mobile capabilities that is separate form your mobile product roadmap group
• Reach out to the big boys – Apple, Google and Microsoft to explore how to support the backend for their travel OS initiatives.

The travel industry cannot afford to have an inward looking view of mobile, but must recognize that the OS trends shape consumer behavior. The sooner your organization starts planning for the OS travel button, the better prepared you will be when it emerges in the market.

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