It was my pleasure again this year to be co-chair of the PhoCusWright Travel Innovation Summit 2010. The event brought together 33 companies in a fast paced series of 9 minute presentations/demos of innovative travel software. TIS is the brainchild of Bob Offutt (my co-chair) and Philip Wolf, CEO of PhoCusWright. TIS was modeled after the annual Demo Conference where start-ups take the stage for fast pitches to potential investors. TIS does not limit participants to start-ups expanding the field to include established companies.
Rather than comment on individual presenters, (for comprehensive reviews please see USA Today) I thought I provide you some behind the scenes perspective on the event. Our work began in early 2010 when Bob and I began interviewing applicants. By the week before the show we had completed 60 interviews. Though some applicants presented innovative business strategies, those that were rejected generally lacked true travel technology innovation. Those that attended the event know that ever aspect of a PhoCusWright show is timed down to the precise second. To insure a smooth session, each of the 33 presented received a briefing on logistics and advise on content. Bob and I then reviewed the majority of presentations online in the two-three week period before the event providing suggestions on how to improve each presentation.On Monday morning we met with a few of the presenters for some additional coaching and Monday afternoon each presenter went up on stage to iron out any last minute technical glitches On the day of the conference, Bob and I alternated between announcing the presenter and moderating the 2 minute Q & A session after each presenter.To manage audience questions we used an iPad which showed the Ask PhoCus feed managed and edited by two of our analysts. Unfortunately, due to some Wi-Fi connection problems and the short nature of each Q & A period, the majority of our questions were improvised based the TIS presentations.I cannot disclose specific scores, but the four finalists – SilverRail , Kony, and Hipmunk all received the highest audience votes in their category with Goby the wild card with the next highest score. Clearly the sophisticated audience appreciated the innovation each of these presenters with the WOW factor of their presentation being equally important. On Wednesday morning, Bob, Kimberly, Philip and I assembled in the hallway behind the exhibit hall and Philip strapped on a harness and boarded the lift. Once in the exhibit hall lift was raised to ceiling height. Kimberly placed the envelopes in the basket and Philip announced 3 runners up and 4 finalists. Bob, Kimberly, Angela (a PhoCusWright intern from NYU) then met with the finalists followed shortly by briefing for the 12 judges. The last finalist presented their 5 minutes of fame at 1:25PM. The TIS team then picked up the judges ballots and tallied the results finishing 2 minutes before the official announcement by Philip on Center Stage. There we some minor glitches along the way, but overall the entire TIS event went smoothly and I congratulate all the participants, the three runners up- CruiseLabs, GroundLink, and TrustYou and our four finalists and of course the show winner, SilverRail Technologies.
This video talks about the differences between a narrow focus on social media (brand integrity and promotions) versus an understanding of a given brand’s social graph. Please check out this blog post and video I recorded back in March with Marc Smith from Connected Action Consulting Group using NodeXL, an open source social graph mapping tool, which compares the Twitter Feeds from UA versus DL.
Apple has filed a patent for the complete travel process on the iPhone.The patent includes an application called iTravel for planning, searching, reviewing and booking flights, hotels, car rentals, trains and bus trips, as well as technology for identification at airports for baggage handling and boarding passes. The patent relies heavily on Near Field Communications (NFC) to enable the quick exchange of information at all travel check-in points. This patent has triggered a great deal of speculation across the travel industry with many fearing that the iTravel app may indeed compete directly with OTAs, meta-search and itinerary aggregation services such as TripIt and shift the balance of power in the travel industry much as Apple has done for the music industry.
In initial review of the patent, the primary focus seems to be on in-transit services.There is no question that NFC could help the processing at airports as it already does in Japan, but the major US airports and airlines would need to install NFC readers a significant infrastructure investment. In addition to Japan, NFC is being implemented throughout Europe, so rather than leading this trend, the Apple patent seems to building upon existing NFC momentum. In addition to the infrastructure needed to support NFC, the majoirty of owners of the iPhone would need to upgrade to the latest NFC enabled models. All this points to a near horizon reality of at least 5 years, before this capability impacts market. By that time the majority of phones will be NFC enabled.
The most striking aspect of this patent is the itinerary capture and booking capability. Some have speculated that this could spell trouble for the OTAs, but at this stage it is unclear how these reservations will be booked, fulfilled and managed. The patent also clearly positions the iPhone as the repository of key identification information including your drivers license and passport. Combining this with retina scans and fingerprints could usher in a new level of airport security.
Clearly this patent has some novel ideas and can help the travel process, but the immanent competition with OTAs and other travel value chain players seems unlikely. The pace of technology facilitated business practice changes continues to accelerate in the travel industry. It is therefore difficult for a general tech company such as Apple to recognize all the nuances of these changes. For example, the current trend toward merchandising is also forcing changes to all points of sale not reflected in the patent. That being said, Apple is a major catalyst using technology to change business practices for music, video and mobile communications and therefore their potential to alter the travel process should not be underestimated.
As most of you know I was intimately involved with this year’s PhoCusWright’s Travel Innovation Summit. I have been tracking both new media and traditional coverage of the event. I wanted to provide you some feedback from the inside as well as some comments on the overall subject of innovation.
First let me acknowledge the hard work of my colleague Bob Offutt in being the creative force behind TIS and for managing the entire process. Bob and I interviewed over 50 applicants for the TIS. Our criteria was pretty straight forward- we were looking for true technology innovation. Often the applicant offered a business innovation, but lacked the technology component and thus were rejected. We heard from traditional as well as start-up companies. TIS is not a start-up – “get funded” event. It is designed to provide a forum for all industry segments to present their technology innovation.
The underlying themes from the TIS finalists are clear: (1) A better Web air shopping experience is needed (e.g. Amadeus IT), (2) Globalization of the Web is a complex process and requires some advanced technology (Translations.com), (3) Consumers continue to shop multiple Websites for a given trip and a social shopping tool can simplify the information gathering and sharing (Gliider) (4) Mobile technology is changing the way people experience travel (Global Motion). There were also presenters who demonstrated innovation in social media monitoring, leisure travel planning and integration between cable TV and the Web experience.
I have seen a few blog posts which criticizes the event as not being very innovative. Other comments have focused on the fact that the winner of the TIS 2009 event was Amadeus, IT certainly a major existing player, not an innovative start-up. Expressing one’s views is certainly part of the fabric of the Web, but often bloggers or journalists miss the underlying process that goes into building an event such as TIS and are quick to criticize.
Let me comment on two particular articles:
1) Arnie Weissmann- Editor in Chief for Travel Weekly – ” The Travel Technology Gong Show”
Arnie voiced his view that the show lacked true innovation. As I look at my in box at the pile of unread Travel Weeklys (I pretty much only read the online version), I find it ironic that this traditional bastion of status quo thinking would provide such a negative spin on the TIS. Much of the work as a consultant I done over the last 14 years has been with traditional travel players both in the leisure and corporate market. Often these traditional travel companies lack an understanding of online trends and rarely demonstrate true innovation (at least not without our help). In discussions with traditional travel agents as part of various projects, I am always dumbfounded at their lack of Web savviness. Many have poor Web presence and still take the majoirty of reservations offline. Since Web travel took off we’ve lost about 50% of traditional travel agents. Considering the rapid pace of technology innovation whether it it is improved air shopping , globalization, consumer shopping tools or the mobile revolution, traditional travel companies continue to lag. Rather than being critical of the event, Travel Weekly needs to better verbalize the underlying trends demonstrated at the TIS and educate their readers on how to deal with these technological changes.
Contrasting this with UpTake’s Travel Industry Blog ” PhoCusWright 2009 Travel Innovation Summit” . In this blog entry Elliott Ng’s one of the founders of UpTake goes into great detail about many of the presenters highlighting their innovation and value to the industry. Granted UpTake is truly a Travel 2.0 star pioneering semantic search and adding value to the planning process. But both Elliott and Yen Lee the other founder of UpTake have spent many frustrating years at traditional companies trying to drive innovation in their travel offering, and founded UpTake to truly implement their vision of a better travel search approach.
In my career I have worked at large and small companies. Innovation at large companies often require a “skunk” project. This is an initiative not necessarily supported by senior management but driven by individual groups who drive the innovation. This was truly the case with Amadeus IT and thus end product results were very impressive. I do agree that small companies often innovate at a faster pace than traditional players, but often lack the funds and management experience to execute. Innovation is the key in driving improved interfaces and processes in the travel industry. The PhoCusWright Travel Innovation Summit is an essential place to monitor and track this innovation.
I am pleased to be helping my colleagues at PhoCusWright with the launch of the brand new technology tradeshow Travdex, May 5-7 2010 in Atlanta . Some may simply say, why does the travel industry need yet another tradeshow? Each of the segments- airlines, hospitality, corporate, cruise, traditional travel agencies, online travel companies, all have conferences and tradeshows. The question, in these tough times, are these traditional conferences worth the investment for the buyer and the seller? What makes Travdex different is the fact that it is solely an appointment driven buyer/seller marketplacefor every aspect of technologycovering all sectors of the travel industry. No matter the economic climate, businesses still need to sell their products and buyers need to source and select systems.
As part of my consulting practice over the last 14 years, I have led many procurement efforts for new reservation, customer management and infrastructure systems. These efforts have been for many different sectors including: resorts, travel management companies, wholesalers, online travel companies and the US Federal Government. The first step in procuring anything is to source suppliers. Sourcing is now a global exercise as the right solution may be from a company outside your geographic area. Tradeshows can be an important element in the sourcing process, but from a buyer viewpoint trying to get some time at a crowded tradeshow with the right vendor can be a frustrating experience. From a technology supplier perspective a recurrent problem at most tradeshows is sorting through the foot traffic to uncover the real buyer. Technology companies can spend days at tradeshows giving demos, but often have trouble equating the traffic with concrete sales. The goal of Travdex is to change the tradeshow experience. How do I know it will be successful? Travdex is being put on by PhoCusWright, a company that has reinvented the concept of a travel conference. If you ask anyone in the travel industry they will tell you that the PhoCusWright Conference in November, is a must do event bringing together the innovators and leaders in the travel industry. This is why I know Travdex will be like no other tradeshow before it, bringing technology buyers and sellers together for an intense two days where deals will be made. I encourage all travel suppliers to sign up now to take advantage of early bid discounts.
I am working with Bob Offutt this year screening applicants for the PhoCusWright Innovation Summit in November. This effort has triggered some thoughts about how innovation comes to the market as well as the danger to companies that lack innovation.
From 1989-1995 I worked at Sun Microsystems. Part of management training at Sun was reading the book The Paradigm-Shift-Promise-Information-Technology . While I was at Sun I was able to secure funds to implement an early corporate booking tool from a now defunct company called TravelNet. Why not look internally to develop this application? Even though at that time Sun was far ahead of other companies in talking about “the Network is the Computer” foretelling the current hype around Cloud Computing, I could not get any internal IT support for this self-booking effort. I even had a Senior VP of Purchasing tell me that “we do not like to be early adopters of new technology”. Yes this was a Sun VP acting as a Luddite about emerging technology. Despite the paradigm shift training, Sun’s demise can be traced to its slow reaction to open source software. Hopefully, IBM will purchase Sun and put it our of its misery.
Another interesting paradox regarding innovation concerns online travel. Conventional wisdom may make you believe the current online travel heavyweights came from venture funding. Though each of the major OTAs has received venture funding over the years, Microsoft birthed Expedia, Sabre created Travelocity, the major airlines created Orbitz. Only Priceline has true venture capital roots, but was literally reborn under Jeffrey Boyd’s leadership after the company went bust trying to promote “the name your own price” strategy to other non travel segments. Jeffrey successfully transformed Priceline from a opaque distribution channel to a full blown OTA and expanded the company’s global reach with acquisition of Booking.com. The point here is that Venture Capital is often not the source of new innovation.
So where is tomorrow’s innovation in the travel space? We need not look any farther than the emerging mobile platform. Our sponsors for the PhoCusWright Mobile Special Report represented some of the travel industry’s largest companies (Starwood, Hilton, Carlson Hotels, Travelport, Amadeus and Abacus, IBM and Teradata to name just a few), but few showed true mobile innovation. Many sponsors are simply taking their Web content and reformatting for the mobile browser. This strategy misses the value of the new mobile platform and cannot access location a key component of succesful mobile applicaitons.
True innovation in the mobile space is likely to come from small companies such as Intelligent Spacial Technologies who have a unique point and click application that takes advantage of location, context and broadband wireless communication. Last year’s winner of the Innovation Award was another small mobile advertising comany called Interactive Mobile @dvertising,
Can innovation continue in a down economy? Absolutely, though funding is tight, true innovation is a game changer and will continue to emerge from small companies. Even though hugely successful, the four major OTAs may miss the next “paradigm shift”(which I believe is mobile) and a new small entity may emerge with disruptive technology for travel applications on the mobile platform. No company of any size can simply ignore emerging technology trends such as mobile or risk becoming victims of shifts in market dynamics caused by innovation.
I had the pleasure of moderating the panel entitled : Best Practices in Mobile Applications at the PhoCusWright@ITB conference earlier this month. We had a good cross-section of panelists that included Pablo Alvarez, Group Innovation Manager, Lastminute.com, Stefano Galastri, President and CEO SIA Internet, Marina Hegemann, Managing Director, TouristMobile GmBH, Michael Lacy CEO the Handy Group, and Gerry Samuels, Founder and Executive Director Mobile Travel Technologies. We had quite a spirited discussion on a number of topics. The biggest disagreement was around the development strategy and ultimate distribution approach to mobile travel applications. I promoted the vision of multiple app stores (e.g. Apple, Google, Nokia, RIM Blackberry, T-Mobile) and my belief that was voiced in our recent publication “Mobile The Next Platform for Travel” (a summary of our special report “The Future of Mobile Travel“) which recommended downloadable Web-enabled applications (versus solely browser based) as the best strategy going forward. Our panelists voiced different views, from a firm commitment to downloadable applications (Marina Hegemann) to a belief that browser based mobile applications are the future (Michael Lacy). Time will tell whose strategy is correct, but all agreed that mobile travel apps are still in their infancy and that dramatic change is ahead over the next 12 to 18 months.
A major New Years resolution for me this year is to blog at minimum once a week! During the last two months of 2008 I did not blog at all and I am determined not to repeat this long absence. My apologies.
A recent post by Tim Hughes of the BOOT (and VP of Orbitz in Australia) predicted that 2009 will NOT be the year where the travel industry embraces mobile.
I could not disagree more! Having now completed the PhoCuWright “The Future of Mobile Travel” special report, I strongly believe mobile travel applications will flourish in 2009 despite the global economic crisis. The two primary drivers of this mobile trend are the adoption of smartphones and the implementation of next generation networks (3G, LTE & WiMAX). The research clearly showed a correlation between frequent business travelers and smartphone adoption. Take a look at these two slides from our Special Report:
The key statistic here is that as of November 3, 2008 18.9% of consumers are now carrying a smartphone.
Compare that with our research results which found that 71% of Frequent Business Travelers own a smartphone. Additional research showed that 90% of frequent business travelers have owned their smartphones for less than 2 years, showing that smartphone adoption is a recent trend. You combine this with the explosive growth of 3rd party apps stores from not only Apple, but RIM Blackberry, Google and T-Mobile and it is clear that 2009 will see tremendous growth in downloadable travel specific applications.
These applications will be location and contextually relevant. The affinity between emerging mobile technology and frequent travelers will change the business and leisure travel experience 2009.
Two stories from late 2007 and early 2008 signal a shift in the online travel model. In November 2007 at the PhoCusWright conference in Orlando, Expedia announced a new agreement with IHG that included a pay per click (PPC) compensation model. The acquisition of SideStep by Kayak this month is another significant development. How are these two announcements related? The Kayak/Sidestep merger is a clear validation of the referral model, but also demonstrates the need for scale to be an online travel player globally. The Expedia PPC contract element reflects the simple fact that many people shop OTAs and end up buying at supplier sites a phenomenon that has been validated by PhoCusWright and Forrester research. For Expedia, being paid for referrals represents a new and important revenue stream. You then add Travel 2.0 players such as Farecast, Kango and the Nile Guide, and the value of search and travel planning tools represents a major growth area for online travel here in the US and globally. As the economy softens the value of the referral model is likely to increase as suppliers scramble to fill airline seats and hotel beds.
During his closing speech at PhoCusWright, Dara mentioned briefly an effort at Expedia to re-platform their technology infrastructure. So what does re-platform mean? Often the plumbing aspects of travel technology are not a common topic at any show including PhoCusWright, but here the re-platform initiative has a direct bearing on how Expedia works with suppliers. It concerns re-engineering their middleware to better match customer needs with supplier content. In today’s online world, OTAs need to provide more flexibility to all their suppliers to manage the delivery of dynamic pricing based on different customer segments. Dara talked about this in relationship to hotels, but airlines are also are demanding a better way to showcase and target their services to specific travelers. This includes selling premium seat assignment or other amenities that can help differentiate their products. A great example is Virgin Atlantic’s upper class which provides unique seating and amenities at a lower price point. Traditionally Expedia will show Virgin Atlantic the same as other airlines. Expedia’s re-platforming initiative will help suppliers better target customers and use differentiated services to influence the sale at the time of booking.
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