travel innovation & technology trends: 2012 & beyond special

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Written by Bob Offutt & Cathy Schetzina

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TRAVEL INNOVATION & TECHNOLOGY TRENDS:2012 & Beyond, Special Report for World Travel Market

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Travel Innovation & Technology Trends: 2012 & Beyond Special Report for World Travel Market November 2012

Travel Innovation & Technology Trends:

2012 & BeyondSpecial Report for

World Travel Market

Written by Bob Offutt & Cathy Schetzina

PhoCusWright's China Online Travel Traffic Overview Whitepaper is published by PhoCusWright Inc. The information contained herein is derived from a variety of sources. While every effort has been made to verify the informa-tion, the publisher assumes neither responsibility for inconsistencies or inaccura-cies in the data nor liability for any damages of any type arising from errors or omissions.

©2012 PhoCusWright Inc. All Rights Reserved.


Contents

©2012PhoCusWrightInc.AllRightsReserved. v

Introduction 1

KeyTrends 1

Trend1 1

Trend2 4

Trend3 6

Trend4 8

Trend5 10

Trend6 12

Trend7 15

Trend8 17

Trend9 19

Trend10 21

Conclusion 22

Figure1 3TravelStoreMaker'sMultimodalPlanner

Figure2 3Travelfusion'sMulti-AirlineDirectConnectAccessPlatform

Figure3 4Travelfusion'sPlansforHotelConnectivity

Figure4 5RestofWebvsFacebook

Figure5 7TheSiriDialog

Figure6 8Ainovo'sLow-CostTablet

Figure7 8OneLaptopperChildinAction

Figure8 8SamsungTabletoftheFuture

Figure9 10BrandKarmaAnalysisofGuestReviews

Figure10 12TwitteratLondonGatwickAirport

Figure11 12LondonGatwick'sGiantBarcodes

Figure12 12FoursquareOfferattheDistriktHotel

Figure13 14NexionContent

Figure14 14ReardenCommerce'sDeemEngine

Figure15 18AReviewProSemanticAnalysis

TableListings

Advances in technology are arguably the most potent driver of change within the global travel industry. Technology innovation has the power to transform consumer expectations, disrupt com-petitive dynamics and reshape the travel distribu-tion chain. But as any longtime industry observer knows, the speed of true innovation is far from constant. While the latest social media craze may seem to spring up overnight, major technological shifts are often hyped for years or decades before they impact the competitive landscape.

The introduction of the iPhone, for example, spurred a dramatic increase in smartphone adop-tion, yet mobile’s impact on the travel marketplace was anticipated for years before mobile travel bookings became a reality. The most innovative companies are those that actively deploy emerg-ing technologies to gain competitive advantage. Would-be innovators must anticipate technology and innovation trends with the potential to trans-form the marketplace – and be prepared to seize opportunities as they arise.

With 2012 drawing to a close, this article out-lines ten key trends that should be on the radar when planning strategy for the coming year – and beyond.

Key Trends

1) Technology compensates for content frag-mentation and a multidimensional supply chain

2) Social media is the cornerstone of marketing strategy

3) The digital divide between technology haves and have-nots narrows, providing greater pur-chasing reach

4) Business intelligence at every level – the new face of successful travel companies

5) Meeting the expectations of the modern con-sumer: Today’s travel companies are living laboratories

6) GDSs extend content sources, walled gardens evolve

7) Capabilities of the mobile platform converge – users achieve true mobile empowerment

8) Semantic technology (finally) becomes rel-evant in the travel value chain

9) Big data, cloud computing and logical data warehouses are a big deal for travel distribu-tion

10) Travelers enjoy technology-enabled service delivery

Trend 1Technology compensates for content fragmentation and a multidimensional supply chain

Introduction


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In 2012, networks are virtually free and pro-vide incredible speeds. Mainframes have been replaced by clouds of virtualized commodity servers and real-time search engines that mini-mize the need for content pre-query aggrega-tion. What once required an intermediary storehouse of data for search across multiple suppliers is being superseded by powerful search capabilities that query multiple suppliers directly and concurrently, providing an accu-rate, real-time response. This search capability can even mix travel modes (e.g., air and rail) and create dynamic packages (e.g., combina-tions of fly, drive and cruise). This trend has given rise to new-generation aggregators that aggregate search tools instead of content.

With both their legacy and these new capabili-ties, travel points of sale (POSs) can easily and quickly search potentially fragmented content from multiple suppliers, new-generation aggre-gators and legacy aggregators.

Technology Overview

A number of contributing technologies enable the multidimensional travel supply chain:

1) Compute power: Fortunately, cloud com-puting (see Trend 9) enables companies to acquire and scale compute power on mas-sive, virtualized server farms without capital investment.

2) New developments in database technol-ogy, moving from the theoretically ideal Structured Query Language (SQL) to the high-performing NoSQL (not SQL) and file systems such as Google File System (GFS) and Yahoo!’s Hadoop (which is in the public domain) have enabled blazingly fast responses to search engine queries (see Trend 9).

3) Standards: While fragmentation will never completely go away, standard data elements and structure will make it easier to access distributed content. Two standards bodies, OpenTravel and Open AXIS, are developing XML standards to support distributed con-tent access and associated e-commerce.

Examples

Google recently bought ITA Software, which had arguably the best air search engine in the market. Two key results emerged from this acquisition:

n Coupled with Google’s technology, the speed of the ITA Software air search went from about 40 seconds/query to virtually real-time response. Google has also developed tools for hotel search and for travelers to find local businesses (including places to eat) based on the travelers’ locations.

n The ITA search engine displayed only search results it received directly from airlines, not those from other intermediaries.

American Airlines is leading the airline indus-try in attempting to move from the legacy-intermediated model to a direct connect, XML-based “query, confirm and buy” model. It has had success attracting other airlines and intermediaries such as Priceline, among others. The airline community sponsors a standards development group, Open AXIS, which has 10 full airline members and 33 allied members.Bulgaria-based TravelStoreMaker has devel-oped software that supports the planning of complex itineraries across multiple modes of travel, with content coming from many sourc-es (see Figure 1). Travelfusion is known for its airline content tools that use XML data trans-fer or screen scraping (see Figure 2).



Figure 1TravelStoreMaker's Multimodal Planner

Figure 2Travelfusion's Multi-Airline Direct Connect Access Platform

Source: TravelStoreMaker

Source: Travelfusion



Travelfusion is taking its approach to the next level, announcing a standard application programming interface (API) that would pro-vide direct connect access to many hotels (see Figure 3).

Rearden Commerce, whose technology pow-ers over 400 travel management companies (TMCs), announced in spring 2011 that it would provide direct connect capability to air-lines. Further, Rearden is an allied member of Open AXIS and is supporting standards devel-opment for direct connect.

Trend 2Social media is the cornerstone of mar-keting strategy

This year, corporate spend on online advertis-ing is expected to exceed spend on advertising on traditional media – an acknowledgement that the digital world has greater effective reach than print, radio and television. This

effectiveness is largely driven by advances in social media technology, along with an under-standing of how best to use these new tools. A recent survey by Wildfire, a social marketing software company, found that 97% of 700 companies polled believe that social media marketing benefits their businesses. Seventy-five percent intend to increase social media spending in 2012.1

As shown in Figure 4, use of social media is growing, while use of the remainder of the web is shrinking. In March 2011, Facebook usage (as a percent of total web usage minutes) had increased year over year by almost 70%, while usage of the remainder of the web dropped by 10%. The Wildfire survey also found that businesses were not rushing to judgment about a measurable return on investment (ROI) for social media marketing, but rather saw these “early days” in the exploration of the social web as an opportunity to grow brand awareness and engage in customer dialog.2

1 “Measuring the Business Impact of Social Media,” Wildfire Social Media Marketing Blog (January 19, 2012), http://blog.wildfireapp.com/2012/01/19/measuring-the-business-impact-of-social-media-infographic/.

2 Ibid.

Figure 3Travelfusion’s Plans for Hotel Connectivity

Source: Travelfusion



The allure of social media marketing is multi-faceted:

n Sheer volume: Facebook has more than 750 million active users. Fifty percent log on in any given day. Overall, Facebook users spend 700 billion minutes online in a month.3

n Viral nature: The goal of marketing on the Internet is to contact consumer influencers (established brand advocates – those aligned with and supportive of a business’s market-ing message) with compelling content. The expectation is that these consumer influenc-ers will forward the message to their friends, who will also – based on the opinion of the consumer influencers – forward it to their friends, and they’ll forward it to their friends, and so on.

n Social indexing: Social indexing goes one step beyond personalization. Targeted content is determined not only by the user’s prefer-ences, but also by the “likes” of the user’s friends (the theory is that friends share likes).

A social index is created and used to refine the presented information. Then that infor-mation undergoes a like/dislike review and is filtered through friends’ social graphs to pro-vide another level of content refinement.

The trajectory for social media marketing will move from brand marketing to conversion and sales. This process will accelerate in 2012 and will take several years to reach critical mass in closing sales.

Technology Overview

According to the Wildfire survey, the most popular social media marketing sites are Facebook (94%), Twitter (74%), blogs (41%), LinkedIn (32%) and YouTube (30%). The remaining social networking sites account for approximately 6% of social media activity. Some companies build their marketing cam-paigns directly on social media platforms such as Facebook or Twitter. Businesses not doing this use third-party tools that provide integrat-ed marketing and campaign management.

3 Ad Age Special Advertising Supplement, Ad Age (September 19, 2011), C14.

Figure 4Rest of Web vs Facebook

Source: Ben Elowitz, Wetpaint/comScore

Facebook

Rest of the WebWhy Media Companies Must Embrace Facebook Consumption in Total Minutes of U.S. Web Use (Indexed)

Ind

exed

(M

arch

201

0 =

100

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180

170

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140

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120

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80Mar '10 Apr '10 May '10 Jun '10 Jul '10 Aug'10 Sep '10 Oct '10 Nov '10 Dec '10 Jan '11 Feb '11 Mar '11



A few representative third-party tool providers:

n Blue Calypso: Blue Calypso connects brands and their brand advocates through a patent-ed campaign management tool and business dashboard.

n Thismoment: Thismoment uses its software as a service (SaaS) platform to build social media presence with simultaneous deploy-ment across both Facebook and Twitter. Thismoment supports the creation, distribu-tion, management and optimization of brand channels.

n Wildfire: Wildfire is a comprehensive, full-service social marketing solution that sup-ports building promotions, developing social content, advertising and business analytics.

Examples

Twitter: Twitter’s typical business model is that a company pays for tweets and the first retweet; all others are free. Normally the engagement rate (the number of users who interact with a tweet, as opposed to ignoring it) is 3-5%, though some notable Twitter campaigns have achieved unheard-of engagement levels, includ-ing VW (52%), Google (38%), Old Spice (36%), and Ford and Papa John’s (both at 34%).4

Carnival Cruise Lines: Carnival partnered with Buddy Media to develop and launch a Facebook page that uses videos to help first-time cruisers become more comfortable with the cruise experience. This page allows poten-tial travelers to interact with Carnival Cruisers, who can post videos, ask questions and interact with crew members.

33Across: 33Across has developed SocialDNATM targeting that enables compa-nies to find and reach out to the social networks that have affinity to their brands. In the retail sector, 33Across claims that SocialDNATM has provided a 56% average lift in purchase versus intent, 240% return on ad spend, and a 53% improvement in cost/acquisition.5

Implications: Success in this social media-dominated world requires travel companies to embrace social media marketing.

Trend 3The digital divide between technology haves and have-nots narrows, provid-ing greater purchasing reach

The digital divide is a twofold problem. In the mature online travel markets of the U.S. and Europe, online growth as a percentage of total bookings has leveled off.6 So, the first challenge is to get those travelers who prefer not to book online to embrace online tools and content. Fortunately, the computer industry is respond-ing with rich interfaces that understand speech, interpret gestures, and associate disparate data (such as air schedules, hotel alternatives and destination events) to integrate planning. Bill Gates, when asked about the “next new gad-get,” opined that this rich [computing device] interaction is the wave of the future.7 If you integrate these rich interfaces with household computing devices (including the television), your home can become a platform for research-ing, planning and purchasing travel.

While one aspect of the digital divide is get-ting those who have access to technology to use it for online booking, the other is to provide access to technology in regions that still show

4 Michael Learmonth, “#Winning on Twitter: The Top 10 Promoted Tweets,” Ad Age Digital (May 9, 2011), http://adage.com/article/digital/winning-twitter-top-10-promoted-tweets/227437/.

5 33Across, http://33across.com/advertisers_categoryinsight.php.

6 PhoCusWright’s U.S. Online Travel Overview Eleventh Edition, PhoCusWright Inc. (November 2011), http://www.phocuswright.com/products/3996.

7 Bill Weir, interview with Bill Gates, “Nightline,” ABC News (January 24, 2012).



substantial room for online growth. Both Asia Pacific and Latin America are experiencing healthy growth in the online channel,8 but this growth – as well as that in the Middle East, Eastern Europe and Africa – has been limited by lack of network capability and access to computing devices. These limitations are being overcome with the growing availability of low-cost computing devices and the development of mobile infrastructure (including mobile payment capability). If increased access can be coupled with the kind of rich interaction dis-cussed above, online travel shopping and book-ing will become attractive in these regions, even to those intimidated by technology.

Technology Overview

The Digital Living Network Alliance (DLNA) has established standards to interconnect devices in the home. Interconnection of smartphones, TVs, laptops, tablets, portable computers and stereo amplifiers will improve home device access and facilitate collaborative travel planning.

Additionally, speech interfaces and gesture con-trols will become much more commonplace; computing devices will continue to become cheaper, smaller, faster and more capable (par-ticularly the basic models); and smartphones will continue to grow in capability (see Trend 7).

Examples

Speech interfaces: Siri, the intelligent personal assistant and the main feature of Apple’s lat-est iPhone, uses a speech recognition interface from Nuance. But just recognizing speech is not enough. Siri’s speech recognition capability is coupled with an advanced natural language processing engine that allows the system to understand both the words and the speaker’s intent. Apple is rumored to be adding travel planning to Siri’s capabilities in 2012. Not to

be outdone, Google is expected to release a Siri competitor, Majel, for the Android market in 1Q12. Majel is expected to feature open APIs and deep integration with the Android phone’s native functions (e.g., SMS messaging).

Gesture interfaces: Microsoft reached out to PrimeSense, an Israeli company, for the gesture recognition technology in MS’s popular Kinect for its Xbox360 gaming platform. Kinect is just the beginning: PrimeSense is working with computer maker ASUS to develop a gestural control for televisions.

Compute devices: A number of low-end com-pute devices are emerging:

n Datawind, a Canadian company, has pro-duced a $60 tablet based on the Android operating system. The Indian government has subsidized this tablet for sale at $35 each and ordered 100,000 units. Datawind expects to sell 6 million units in 2012.

n Ainovo has produced an $89 ($79 in China) tablet called Paladin. The seven-inch device provides network connectivity, long battery life, and for $10 more, a camera.

8 PhoCusWright’s Global Online Travel Overview Second Edition, PhoCusWright Inc. (April 2011), http://www.phocuswright.com/products/2716.

Figure 5The Siri Dialog

Source: http://www.flickr.com/photos/ipodlounger/6243070979/in/set- 72157627891433452



n Netbook PC: Internet prices for netbook PCs are as low as $100.

n The One Laptop per Child initiative: This nonprofit project has delivered low-cost lap-tops to 2.4 million children in 42 countries in 25 languages. Its latest version is a rug-gedized tablet with a target $75/unit price point. The initiative is scheduled to ship more than 75,000 units of the earlier version (see Figure 7) to Uruguay and Nicaragua in March 2012.

n Going upscale: While the actual product has not yet been released, Samsung has distribut-ed an advertisement showing a mobile device that is a transparent, flexible screen contain-ing all the device’s compute components.

Implications

Businesses now face the task of accommodat-ing a growing number of compute devices. At the low end (cheaper devices), the common denominators are the Android operating sys-tem, the browser and HTML5 (see Trend 7), while at the upper end (dominated by business travelers) are high-quality touch interfaces, Windows-based desktops and hybrid inter-faces. Businesses need to determine the range of devices their target audiences are expected to use, and must design applications and browser interfaces accordingly. For high-end devices, travel companies need to develop applications and user interfaces (UIs) that take advantage of the new interface capabilities.

Trend 4Business intelligence at every level – the new face of successful travel companies

Use of business intelligence (BI) tools in travel distribution is on the rise, and these tools are evolving to provide management with timely,

Figure 6Ainovo's Low-Cost Tablet

Source: Ainovo

Figure 8Samsung Tablet of the Future

Source: YouTube

Figure 7One Laptop per Child in Action

Source: One Laptop per Child



comprehensive, integrated views of their busi-nesses. As travel companies expand to new sales and marketing channels (e.g., websites, mobile applications), new technology provides a grow-ing volume of data and data sources to be monitored and analyzed. The wide variety of available travel content, sales processes and ser-vice delivery methods require travel companies to consider their businesses holistically.

At the same time, due to the availability of pervasive telecommunications and online compute capability, the time window for busi-ness decisions is being compressed. The huge amount of information, combined with the pressure to make quick decisions, creates com-plex management issues that – especially in light of the transparency the Internet provides – mean today’s travel companies need BI more than ever.

Technology Overview

Tour operators, cruise companies and other suppliers have also regularly used BI tools to track traditional business metrics. However, changing shopping and purchasing environ-ments require new approaches, including new tools and new data sources. One common use of BI is employing tools that analyze websites and mobile offerings to understand customer behavior. Google Analytics, which provides site statistics and reports about how custom-ers get to target sites, is popular. As with web and mobile site analysis and Google Analytics, almost any tools that relate to Internet shop-ping BI can be adapted to travel distribution.

A growing area in hospitality BI is reputation management. Online reviews have a significant effect on hotel selection, so hoteliers want to actively monitor and respond to reviews and to take corrective action (internally) against unfa-vorable online sentiment. Analysis of online

reviews is now extending to analysis of hand-written guest comments. The detail contained in sentiment analysis also enables hoteliers to spot service delivery issues. Hotel management uses review analysis to determine staff bonuses, and restaurant chains are now using customer feedback about waiting times to influence staff scheduling.

BI can also enable analysis of a hotel’s or air-line’s booking performance, market penetra-tion, and distribution within the GDS and on the Internet in comparison with its competi-tors. Travel companies can then use this data to create forward-looking projections.

Unfortunately, even though BI is a growing area, only a few integrated tools are available for looking at specific travel segments (e.g., air, lodging, car rental) and for understanding and analyzing relevant factors such as commissions, fees, discounted merchandise and packages.

Examples

n Tealeaf has saved Thomas Cook Travel €3 mil-lion by finding errors in its website that caused customers to abandon their shopping paths.9

n Cornerstone Information Systems, which recently licensed its product to Amadeus, provides a reporting suite for TMCs to track and report their performance, as well as tools to measure travel agent productivity.

n Circos, ReviewPro, Revinate and TrustYou provide reputation management and related reports. A sample from Circos (under its product name, Brand Karma) is shown in Figure 9.

n TripAdvisor recently introduced its manage-ment dashboard, a new analytics service that provides a summary of a business’s perfor-mance on TripAdvisor.

9 http://www.tealeaf.com/customer-experience-management/resource-center/videos.php



n TravelClick, a provider of competitive analysis tools, claimed revenue gains of 21-66%10 when using its Hotelligence product. Austria-based Lixto, with its Price Operations, Price Analytics and Price Strategy products, is another player in the competitive intelligence domain.

Implications

Travel companies need to look at multiple aspects of their business – sales, support, ser-vice delivery, guest comments – to establish key performance indicators (KPIs) they can use to determine how to improve effectiveness and margins. Today the tools to do this are largely segmented by silos (e.g., a tool can measure website performance, mobile distribution per-formance, social network effectiveness, adher-ence to business rules, or competitive analysis – but not all of these). Travel companies should define their needs and push suppliers for an integrated solution.

Trend 5Meeting the expectations of the modern consumer: Today’s travel companies are living laboratories

Access to information anywhere, anytime and anyhow – coupled with the growth of the social web – has developed a new breed of con-sumer. These new consumers are open-minded, engaged, demanding, loyal and – very impor-tantly – willing advocates for the brands they love.11 They are looking for deeper and more purposeful engagements with each other and with brands, particularly during the early stages of the travel value chain (discover, learn).12 Today’s consumers want more special offers and rec-ognition that makes them feel like they stand out from the crowd. They also want a quality, engaging online experience,13 and they chal-lenge the status quo of user interfaces that are not intuitive or appealing.

Figure 9Brand Karma Analysis of Guest Reviews

Source: Circos

10 Sara Duggan, “ Business Intelligence: A Strategic Priority,” TravelClick white paper, http://www.travelclick.com/media/docs/knowledge_center/white_papers/Business_Intelligence.pdf.

11 “Variance in the Social Brand Experience,” CMO Council, http://cmocouncil.org/variance-in-social-brand-experience/.

12 “The Customer Web: Content, Context, Mediators and Customer Feedback,” PhoCusWright Inc. (December 2010), http://www.phocuswright.com/products/2690.

13 Ibid.



Because travel is a virtual product (not tied to physical production cycles, warehousing or shipping), travel – along with travel distribution – is an ideal laboratory for testing new ideas to see if they meet consumer expectations.

Travel companies must pursue “relentless learn-ing”: the development of flexible technology platforms, data-driven decision-making, endless experimentation and testing, and an evolving business management culture that is always learning and adapting to changes (in other words, a continuous pivot). This networked world has no endgame.

Travel companies should work toward the fol-lowing goals with new ideas, products and services:

n Improving the customer experience � Delivering relevant information throughout

the travel shopping process � Engaging customers at the brand and prod-

uct levels � Embracing new channels � Providing consistency regardless of channel � Quality service delivery

n Integrating online, offline and social data for a 360-degree view of the customer

n Support of real-time, event-based marketing messages and offers

n Forming strategies to obtain establish and retain customer loyalty (beyond affinity pro-grams)

n An effective BI program (see Trend 4)

n Global branding with local services, languag-es and information

Technology Overview

Just as customer expectations are constantly changing, companies’ associated technology solutions need to change as well. This adapta-tion requires travel companies to constantly monitor innovative emerging technologies and business practices. Doing so will help them understand the implications of the changing environment and make conscious decisions to disregard, modify, or embrace these changes.To be flexible and adaptive technologically, travel companies must shed their fixed IT assets and embrace cloud technologies (see Trend 9). But the ability to stay abreast of emerging trends is not just a technology issue. Management must view continuous change as a necessity. Business leaders need to encourage a culture of innovation that continually chal-lenges the status quo (and is allowed to occa-sionally fail).

Examples

British Airways worked with e-Dialog to use historical customer engagement information to determine whether customers interfaced with email via iPhone, Android, BlackBerry or desktop PC. Once customers were seg-mented, unique email templates tailored to each device were developed to enable Executive Club customers to manage their accounts and bookings, check in and access real-time flight information. Rollout of these email templates far exceeded expectations, with an open rate exceeding 50%.14

The new owners of London’s Gatwick Airport wanted new ways to engage airport customers. So, they established a 24-hour passenger sup-port system based on Twitter, where travelers can tweet issues, concerns and suggestions to a 24-hour support staff that responds in real-time

14 Econsultancy Innovation Awards 2011.



(see Figure 10). The airport is using mobile barcodes at information access points to allow passengers to access more detailed information and pictures relating to ongoing construction (see Figure 11). These barcodes are integrated with location-based networks (Foursquare, Facebook+). The airport has also integrated a location-based review service into its website so that customers can rate airport facilities and vendors.15

A number of hotels, such as the Distrikt Hotel in New York City, the Andaz San Diego and La Concha Renaissance San Juan Resort, use Foursquare check-ins to enable marketing of hotel products and services. At the Distrikt, travelers can earn loyalty points (see Figure 12), while at the Andaz, customers who check in on Foursquare are offered appetizer samples.

Implications

Travel companies must establish management structures and technology foundations that will embrace innovation and excel in the ongoing environment of turbulence and uncertainty. Dealing with an unpredictable future requires analysis of a range of possible scenarios – some global and some tailored to local conditions and circumstances.

Trend 6GDSs extend content sources, walled gar-dens evolve

The GDS “walled garden” approach to travel shopping and booking was state-of-the-art before the Internet – it provided a stable, reli-able, secure environment for travel distribu-tion, and its structure was designed to optimize travel agent productivity.

But the Internet is the antithesis of this walled 15

Ibid.

Figure 10Twitter at London Gatwick Airport

Source: Twitter

Figure 12Foursquare Offer at the Distrikt Hotel

Source: Foursquare

Figure 11London Gatwick's Giant Barcodes

Source: Stuck at the Airport blog: http://stuckattheairport.com/2010/11/05/gatwick-airports-giant-barcodes/



garden. Online, anyone can connect to any content. This freedom of access has whetted customers’ appetites for content – particularly unique local destination content that goes beyond the GDS walled garden, such as inde-pendent hotels, hotels at wholesale rates, local car rentals, meetings and incentive bookings, rail, bus, ground transportation, low-cost air-fares and golf tee times.

Faced with this emerging demand, the three main GDSs – Amadeus, Sabre and Travelport – have each developed approaches that allow connection with and integration of third-party content into the agent workflow and quality control processes. The GDSs hope that interest from POS and suppliers will lead to develop-ment of a wide range of reusable applications (apps) that can be featured in the GDS equiva-lent of an app store and added to any GDS POS system. Such apps would extend GDSs’ content reach without relinquishing their secu-rity and support services.16

Not waiting for the GDSs, suppliers have developed alternative non-GDS content aggre-gation platforms that can also support access to multiple GDSs. These platforms incorporate GDS-like travel agent business processes and functions, providing an efficient and produc-tive environment. Additionally, travel agents have learned work-arounds to book non-GDS content and to integrate bookings with mid- and back-office functions.

The new GDS content capabilities will need to compete head-to-head with third-party aggre-gators and the now entrenched work-arounds. If the new GDS platform can offer comparable or better content and a more efficient agent experience than current external third-party booking systems – and if the GDS app stores can attract sufficient interest from innovative

third-party developers – GDSs will keep their walled gardens intact.

Technology Overview

Metasearch sites have mastered the collection and collation of information and offers. While developing the programming to do this is often tedious, it is not difficult.

A number of platforms are available to support the agency POS with a multisupplier, multi-GDS capability that provides all necessary busi-ness process integration. GDSs’ big technology breakthrough is enabling travel agents to access and book online content as part of their work-flow and business processes. The end goal is to provide the benefits and efficiencies of the walled garden while allowing some external content in. The critical question is whether this strategy will offer enough benefits to bring agents back into the GDS fold and away from their widely used alternative approaches.

Examples

Nexion: Nexion is a consortium platform that aggregates content from multiple sources, including GDSs and direct channels, to pro-vide support for smaller agents. Nexion suppli-ers are shown in Figure 13.

Rearden Commerce, through its Deem prod-uct, provides personalized full-service shopping with interfaces to multiple GDSs and other content providers. Supporting over 7,000 busi-nesses and consumer direct through JPMorgan Chase, Rearden provides access to 160,000 suppliers and includes mid-office services and connectivity to back-office services. Figure 14 is the functional diagram for the Deem engine. Note that Deem takes in unstructured data (left side) from multiple fare sources and pro-cesses it, producing a structured data output.

15 Ibid.

16 Each GDS’s implementation is different. Reusability is only within the GDS.



Figure 13Nexion Content

Figure 14Rearden Commerce's Deem Engine

Source: Nexion

Source: Rearden Commerce



Trend 7Capabilities of the mobile platform converge – users achieve true mobile empowerment

Consumers’ love affair with mobile devices has been fueled by the number of available unique (stand-alone) apps. Apple advertises that over 500,000 apps are available for the iPhone.17 And even better: In 2010, Apple was download-ing apps at a rate of 350/second.18 Not to be outdone, on February 1, 2012, Android had approximately 370,000 available apps19– and between 12,000 and 34,000 are being added every month.20 One of the main reasons for this incredible app explosion is that the apps generally support a single business and/or func-tion: Make a Hilton hotel reservation, find a Marriott near the town center, check the new arrival time for a Delta flight. Apps that are extensions of existing capabilities made it sim-pler to do the requirements analysis and justify the cost of development, testing and updating. Even apps developed by third parties for the most part support single suppliers or functions.

How many people actually download and use these apps? New research indicates that only 35% of U.S. adults have apps on their mobile phones, and just 24% actually used them. Sixty-eight percent used five or fewer each week.21

Based on the above statistics, individual app usage is running out of gas. At the same time, the mobile platform’s capabilities are becom-ing more sophisticated. In the coming years, mobile devices will be controlled by hand gestures, will come equipped with near field communications for payment processing, and will anticipate users’ needs through contextual

awareness, serving up appropriate and person-alized products or services.Key to the future is providing functions that transcend corporate and individual func-tional boundaries. A traveler doesn’t want one room check-in app from Hilton, a dif-ferent one from Marriott and still another from Starwood. The traveler just wants to hit a screen icon and have the hotel room door unlock. Whether this capability comes from contextual awareness, the development of horizontal apps, the assembly of single apps into more complex apps, or some combination of all three, the future will involve travelers engaging in apps based on function, not sup-plier. In this scenario, room check-in is inde-pendent of the hotel, payment is independent of the POS, and trip component rescheduling is independent of the supplier.

But the transition will not come easily. Travel companies enjoy the customer “lock-in” that apps provide. They will fight back with unique bells and whistles, catering to their best cus-tomers to keep them on proprietary apps. On the other side, customers who plan travel based on loyalty programs are very comfort-able using apps from their favorite suppliers.

Technology Overview

With its large global user base and keen com-petition for wallet share, smartphone technolo-gy is evolving rapidly. New features will include near field communications, augmented reality, intelligent agents and wearable, flexible devices.

In the future, new software tools will integrate seamlessly with applications and native mobile phone features so that the user merely needs to invoke a function (the phone will handle the

17 http://www.apple.com/iphone/from-the-app-store/

18 Jesus Diaz, “Apple Now Selling 350 Apps Per Second,” Gizmodo (January 5, 2010), http://gizmodo.com/5440432/apple-now-selling-350-apps-per-second.

19 http://www.appbrain.com/stats/number-of-android-apps

20 Ibid.

21 Kristen Purcell, “Half of Adult Cell Phone Owners Have Apps on Their Phones,” Pew Internet and American Life Project (November 2, 2011), http://pewinternet.org/Reports/2011/Apps-update.aspx.



underlying complexity). For example, a simple query like “nearest restroom” may prompt location-based services and augmented reality to position the traveler and cause local prepack-aged instructions and/or mapping services to provide navigation to the restroom. Finding the nearest restroom is a simple query, but in time, smartphones will be able to do such complex tasks as sensing a major snowfall with airport weather delays and replan an entire trip across many suppliers – and even interact with busi-ness associates to reschedule meetings. The contextual awareness of new smartphones will filter out irrelevant information, maximizing the use of limited real estate to provide appro-priate information. For example, suppose a traveler is looking for a place to eat but has a shellfish allergy. The smartphone does not dis-play any restaurants serving shellfish.

Still, the question remains: App or browser? Fortunately, there is already substantial move-ment towards the newest version of HTML – HTML5 – although vestiges of native apps that run within the browser window are still around. HTML5 provides a quality user experience with the device flexibility a browser UI provides.

Ultimately, a smartphone is only as good as its connectivity, and the capabilities of many smartphones have been hampered by slow network speeds. LTE (Long Term Evolution) technology, a candidate for the global standard 4G, supports speeds of up to 1 gigabit/second (a gigabit is 1,024 megabits). It is now being introduced in key metropolitan areas. By con-trast, household connectivity speeds (based on Verizon’s FIOS specifications) top out in the vicinity of 50 Mbits/s.

Examples

Siri: We discussed Siri and its speech interface

and advanced natural language processing engine in Trend 3. Currently Siri addresses mostly native phone features, although it can retrieve information from Wolfram|Alpha and Yelp. Apple is expected to open Siri’s APIs to third-party developers sometime in the future.

Here are some sample queries Siri can handle today:22

Adding Eventsn Set up a meeting about hiring tomorrow at

9 a.m.n New appointment with Susan Park Friday at

3 p.m.n Schedule a planning meeting at 8:30 today

in the boardroom

Changing eventsn Move my 3 p.m. meeting to 4:30n Reschedule my appointment with Dr.

Manning to next Monday at 9 a.m.n Add Lisa to my meeting with Jasonn Cancel the budget review meeting

Asking about eventsn What does the rest of my day look like?

Majel: Google’s answer to Siri may actually one-up Siri with capabilities. In 2012, the PhoCusWright Innovation Edition will publish an analysis of new interfaces and natural lan-guage recognition applications for travel.

Concur: Concur, a business technology com-pany, has announced plans to serve up “the perfect business trip” via mobile device:23

Some of the features Concur foresees include:

n Booking by voice on a mobile device, including flight, train, hotel, car service, din-

22 Erica Sadun, “IPhone4S: What Can You Say to Siri?,” The Unofficial Apple Weblog (October 5, 2011), http://www.tuaw.com/2011/10/05/iphone-4s-what-can-you-say-to-siri/.

23 Jay Campbell, “Concur’s New Goals: Perfection, Ubiquity,” The Beat (February 2, 2012)



ner reservations or any activity that is part of a normal business trip

n Rebooking flights when canceled or delayed; upgrading seats whenever possible

n Serving as a concierge for ancillary services along the way

n Checking you in to the hotel room of your choice, allowing you to open your hotel room and check you out of it, enabling you to jump into a cab that is already booked and paid for

Trend 8Semantic technology (finally) becomes relevant in the travel value chain

The travel purchase process starts with dis-covery and learning, both of which inherently depend on free-form descriptors (either written text or spoken words). Consequently, semantic technology is likely to have the greatest impact in these two planning phases. Until recently, effective use of semantic technology has seen relatively little progress. Two factors are largely responsible for this stagnation:

1) The discovery and learning phases don’t bring in enough ROI to support significant innovation in the use of semantic technology.

2) Using semantic technology to extract mean-ing from text or speech is extremely difficult.

At one time it was believed that the seman-tic web, sponsored by the W3C (the Internet governing body), would become the global standard and provide semantic-based data interchange. The W3C approach required authors to augment written articles with struc-tured semantic descriptors – data that includes

a subject, predicate and object, such as the hotel (subject) is named (predicate) Grandview (object). These descriptors allow articles to be cross-indexed with other documents. This approach works well in an enterprise where corporate standards can require written docu-ments to be structured according to W3C stan-dards, but in the freewheeling Web 2.0 world (where free-form text dominates), the W3C approach is not viable.

Other approaches to using semantic technol-ogy in travel were really just uses of a broad ontology. For example, when a user searches for “hotels,” the search engine (using the ontology) expands the search to include motels, villas, room rentals, vacation rentals and apartments.

But now that the social web affects just about every business, semantic technology offers pos-sibilities for innovation with products and ser-vices yet to be imagined or defined.

Technology Overview

Using reviews to help select a place to stay has become commonplace – so much so that the sheer number of posted reviews is overwhelm-ing. Widespread use of reviews has led to the development of hotel BI engines that scan sub-jective comments in reviews and use semantics and sentiment algorithms to produce objective scores – not only for the hotel as a whole, but also for components of the hotel’s service (see Figure 15).

In the mass media domain, understanding audience reaction to a TV show or even an advertisement is worth a lot of money. The Media Lab at MIT studied over 230,000 hours of video of a five-year-old child to understand how humans develop word associa-tions.24 Bluefin Labs (www.bluefinlabs.com), using the results of this work, can track social

24 Deb Roy, “New Horizons in the Study of Child Language Acquisition,” Proceedings of Interspeech (2009), http://www.media.mit.edu/cogmac/publications/Roy_interspeech_keynote.pdf.



media response to virtually any TV segment, scene, event or advertisement. Tracking is done by examining the context of words people use to describe events and shows, and then using deep machine learning algorithms to uncover relationships.

After several years of incremental progress, speech recognition has begun to show substan-tial improvement. Siri is just one example. To develop “training” data for its speech recogni-tion system, Google hosted a free 411 tele-phone information service for several years.25 Without today’s cheap, massive processing power (Trend 9), advancements in semantic processing would not have been possible.

Effective use of semantic technology will ben-efit every part of the travel value chain, partic-ularly discovery, search and any man/machine interaction that involves speech.

Examples

Avis Budget Group has embraced semantic technology to provide better, more personalized offers online. The company uses the informa-tion in the air and hotel bookings (which usu-ally precede a car rental booking) to understand as much as possible about the nature of the trip and the travelers. Using this information, Avis Budget fashions the most appropriate offer. The company is working with OpenTravel to develop standards for the process of serving tar-geted offers based on semantic analysis of the reservation history.

Evature was the winner of the DEMO award for the most game-changing innovation at the 2011 PhoCusWright Travel Innovation Summit. The brand’s flagship product, Expert Virtual Agent (EVA), uses semantic technology to parse plain language queries and reconstructs these into que-ries that work against structured databases.

Figure 15A ReviewPro Semantic Analysis

Source: ReviewPro

25 Marti Hearst, “’Natural’ Search User Interfaces,” Communications of the ACM (November 2011), Vol. 54, No. 11, pp. 60-67, http://cacm.acm.org/magazines/2011/11/138216-natural-search-user-interfaces/fulltext.



Siri, as discussed in Trends 3 and 7, uses a rich semantic speech recognition system developed by Nuance.

Rearden Commerce has built a custom hotel ontology in its Deem product that, combined with a broad set of unstructured data sources, makes semantic inferences. For example, say a traveler feels that “good for fitness” is an important criterion when choosing a hotel. The Deem relevance engine semantically infers whether the fitness features at a given hotel match this criterion, differentiating between a weight room with two treadmills in the base-ment and a state-of-the-art workout facility with windows that look out to the ocean, on-site personal trainers, running trails and a lap pool. In the search for “good for fitness” on Deem Travel, hotels with the basement weight room would score lower in the recommenda-tions, while hotels with the more sophisticated center would be scored higher.

Implications

All signs point to the idea that semantic technology will enable the next big round of innovations in the travel industry. The use of semantic technology in travel is largely unex-plored, leaving the door open for all manner of innovation. While the body of science behind this technology is growing, it is up to travel companies to convert this science into business value. Companies should evaluate what role semantic technology could play in their future products and services.

Trend 9Big data, cloud computing and logical data warehouses are a big deal for travel distribution

Big data26 has received a lot of hype in recent years, but its real test will be moving from hype to real-world application and business value. In travel, we have only scratched the surface.

Here are a few areas where big data concepts and analysis could apply to travel distribution:

1) Providing real-time transparency of opera-tional data: enabling companies to see look-to-book ratios, responses to new promo-tions, reaction to new user interfaces, perfor-mance against plan, individual agent conver-sion rates, online abandonment, call center talk time, volume of help calls referred to a higher level, user satisfaction, and response to crisis events.

2) Determining relevant content to be dis-played based on stage of the trip, location, device, psychographic profile, purchase and conversion histories (of a specific traveler or ones with similar profiles), and purpose of the trip.

3) Leveraging location based services (LBSs): LBSs are not just for providing relevant content. They can be used for route opti-mization, understanding traveler behavior, developing new transportation facilities and tourist venues, and reducing gas consump-tion. Overall, McKinsey estimates the global economic value of LBSs at US$600 billion.27

4) Defining the next generation of travel products and services based on behaviors throughout the travel distribution value chain. For example, would including limo transport at a destination make someone more likely to choose a particular air suppli-er? Are post-trip services (like photo sharing) a differentiator?

26 Big data is a term applied to data sets whose size is beyond the ability of commonly used software tools to capture, manage, and process within a tolerable elapsed time. Big data sizes are a constantly moving target, currently ranging from a few dozen terabytes to many petabytes of data in a single data set (source: Wikipedia).

27 James Manyika, et al., Big Data: The Next Frontier for Innovation, Competition and Productivity, McKinsey Global Institute (May 2011), http://www.mckinsey.com/Insights/MGI/Research/Technology_and_Innovation/Big_data_The_next_frontier_for_innovation.



5) Providing current and projected business information that enables travel companies to improve their decision-making. Such decisions might include amusement park expansion, implementation of new call cen-ters, decisions about offshoring, and choices about IT investment.

6) Enabling a “living laboratory” for informa-tion (see Trend 5) — a space where compa-nies can try new things (particularly prod-ucts and services) to get instant, detailed feedback as to whether to fine-tune, con-tinue or cease a certain service.

7) Providing real-time operational traveler sup-port services throughout the integration of the Internet of Things28 – real-time sensors that monitor the environment, transporta-tion facilities, hotel rooms, etc.

8) Improving operations management: correlat-ing service and preventative and restorative maintenance to reduce cost and increase effi-ciency, particularly in aircraft maintenance.

9) Pushing disintermediation – as big data set processing gets faster, the need for aggregators such as GDSs diminishes (see Trends 1 and 6).

Technology Overview

A number of technologies make big data pro-cessing possible (also see Trend 1):

1) Cloud computing — the ability to acquire compute capacity provided by others. Cloud computing provides significant computing scale without huge capital investment. Travel agencies have enjoyed “cloud” services from GDSs for years. Now the cloud infrastruc-ture is available on commodity operating systems running readily available software.

2) Hadoop – a framework for running applica-tions on a large cluster of commodity software.

3) MapReduce – runs on Hadoop and reduces large applications into smaller elements of work.

4) Logical data warehouse – data can be stored in many disparate places; shopping data may be separate from purchasing data. The logical data warehouse would see and treat these data sites as one, making analysis much easier.

5) NoSQL – Structured Query Language (SQL) was developed in in the 70s to pro-vide the ultimate flexibility in data retrieval. Unfortunately, gains in flexibility came at the expense of performance – and when dealing with big data, performance is criti-cal. This compromise led to the develop-ment of Not Only SQL (or NoSQL). NoSQL provides an excellent database struc-ture for big data processing.

6) In-memory databases: To achieve maxi-mum performance, database processing is best done with data already in the com-puter’s memory, which cuts out the time it takes the computer to read data off a disk. In-memory processing speed improvements are application-dependent, but improve-ments of 10X to 45X are not unusual.

Examples

Hopper (still in private beta), a Canadian com-pany, is developing a website for consumer travel discovery. It uses a travel-oriented search engine where users type in keywords to discover des-tinations and products. Hopper (Hopper.com) uses big data techniques, machine learning and NoSQL to turn raw text pages into a structure that enables flexible, fast and more complete searching than current legacy travel sites.

28 Marti Hearst, “’Natural’ Search User Interfaces,” Communications of the ACM (November 2011), Vol. 54, No. 11, pp. 60-67, http://cacm.acm.org/magazines/2011/11/138216-natural-search-user-interfaces/fulltext.



Orbitz generates massive amounts of data: 500GB/day of log data, which is expensive to store and use. To solve this problem, the com-pany turned to big data, Hadoop, and another product called Hive, a data warehousing tool built on top of Hadoop for data query and extraction. Using these tools, Orbitz can dis-cern the best property to promote at the top of its hotel display.29

Implications

Travel companies cannot wait for GDSs to bring big data to them – companies must define how they would best use big data and pursue a strategy to extract the greatest business value from it. One caution, however: Big data is a high-growth area, meaning high demand is placed on a limited talent pool of practitioners. Hiring the right people for your project will be critical.

Trend 10Travelers enjoy technology-enabled ser-vice delivery

Many travelers agree that flying is not fun, par-ticularly after September 11. Fortunately, tech-nology solutions are emerging that will make your airport experience, your flight, your hotel room selection, and your room check-in and checkout experiences better. And these new ser-vices are just the tip of the iceberg.

Many travelers already enjoy the ability to obtain a boarding pass on their mobile devices. Other capabilities expected in the future include tracking and guiding passengers upon airport arrival, directing travelers to available parking, and advising travelers about the short-est check-in and security screening lines. For boarding, the mobile device provides all the information necessary, including passport data

and visas. Travelers who check bags will be able to monitor the location of their luggage.

Airport authorities will be able to moni-tor queues to determine where to redeploy resources, and advise checked-in passengers of gate changes or imminent departure times. Consolidated decision management tools allow all operational components of an airport to col-laborate on significant tactical decisions, help-ing them respond efficiently to weather and other crisis events.

Travelers will be able to get all the information they need about their flight status. They will also be able to get directions to restrooms or other airport services and shops. They will pay for everything using a mobile wallet, eliminat-ing the need for last-minute currency exchange. Duty-free stores will automatically register flight information and allow merchants to distrib-ute coupons electronically. When in a foreign country, travelers will use their mobile devices to translate. On flights, flight attendants can use mobile devices to track special meal requests, track loyalty program members, and locate par-ties not sitting in contiguous seats.

On arrival at the destination airport, a traveler’s taxi can be waiting (no long taxi lines) and her mobile device can open the hotel room door (no check-in queue) of the room whose loca-tion was selected at the time of the booking. At checkout, the traveler just signals his departure on his mobile device and goes to his waiting transportation. If using a rental car, upon arriv-al at the destination airport (or after a suitable delay for collecting checked baggage), the car is pre-started and warmed (or cooled). When the traveler is ready to leave his hotel, he signals the valet before leaving his room and the car is ready when he emerges from the lobby.

On a higher level, airport management can 29

Jonathan Seidman, “Improving Hotel Search: Hadoop @ Orbitz Worldwide,” Cloudera (August 23, 2010), http://www.cloudera.com/blog/2010/08/improving-hotel-search-hadoop-orbitz-worldwide/.



make staffing and facilities decisions based on passenger patterns, queue delays and airline gate usage.

Technology Overview

The technologies to realize these services are already in place:

n Multidimensional, fragmented content must be drawn together using existing enabling technol-ogies to support consolidated decision manage-ment and personalized passenger service.

n Social media marketing is used by airport merchants and to enable traveler “support” groups (e.g., an ad hoc social network of pas-sengers displaced at an airport).

n With the closing digital divide, almost every traveler will have a mobile device and be able to use airport, car rental and hotel electronic services.

n Business intelligence supports all these activities.

n Big data and cloud computing support both tactical passenger queue management and strategic staffing and facilities decisions.

Examples

Bluelon has developed a Bluetooth-based product, iQueue, which monitors and analyzes airport queues, dwell time, access controls and associated services. By understanding passen-ger behavior, airports can reduce bottlenecks and improve the traveler’s overall experience. IQueue is in use or being installed at Heathrow Airport, Stansted Airport, London Luton Airport, Belfast International Airport and Frankfurt am Main Airport.

British Airways has provided long-haul flight cabin crews with iPads that are loaded with

data from multiple sources, including frequent flyer profiles, travel history, previous in-flight experiences, meal preferences, and trip details. This data allows the cabin attendant to provide a personalized flight experience.

Implications

Travel companies supporting travelers need to take a full trip view of traveler needs and enablers and address them accordingly.

ConclusionTravel distribution is in the midst of significant changes. Technology – in many cases using semantic tools – is countering some of the value GDSs provide by aggregating content. In the meantime, GDSs are fighting back by provid-ing tools to easily access nontraditional content. These phenomena are happening against the backdrop of the explosion of social media in travel marketing. The growth of online travel planning and booking will be fueled by the ready availability of low-cost devices for those without access to the Internet. For computer-challenged users, new interfaces will make machines more user-friendly. Sweeping changes in the distribution channel, keen competition for customers, and the effect of online travel reviews mean travel companies must have complete, accurate and timely information about their business operations and customers’ perceptions. At the same time, the mobile web will migrate from company-specific apps to apps that provide value across multiple suppli-ers. Perhaps the most significant opportunity is the possibilities that big data, cloud computing and logical data warehouses bring to the table. And finally, we all want a better trip experience. With new technology, it actually might happen.



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