Tuesday, September 19, 2006

Web 2.0 - Travel 2.0

The buzz about Web 2.0 and as a subset Travel 2.0, continues to get stronger. The flow of investment money into new start-ups in this area has been growing every month. As my readers know, I am always on the look out for emerging technology, not just for the "cool" factor, but with an eye on how it may change the underlying business practices in the travel industry. So apart from all the buzz words (social networking, mash-ups, user generated content) what does Travel 2.0 really mean to the underlying economics of the travel industry?

Any new wave of technology is often misunderstood upon its initial entry into the market, particularly on how it changes the economics of the business. That being said, a common cycle always occurs in respect to new waves of technology driven changes. The now hackney phrase of a "paradigm shift", still has an important underlying lesson that is still often overlooked: No dominant player in any market can simply rest on its laurels ignoring, or bad mouthing new technology driven by Travel 2.0 initiatives, while continuing to march at a snails pace in regards to innovation. For travel planning, the number of choices to shop fares, read travel blogs or search for packages has never been greater. The underlying message of Travel 2.0 should be setting off alarms at any Travel 1.0 company or application. This is true for the online travel market in both the consumer and corporate space. In fact, the corporate travel industry suffers from a long history of ignoring overall travel technology trends, suddenly to be awakened by their economic impact. In this sense the incumbent OTA giants (Expedia, Orbitz, Travelocity and Priceline) as well as the corporate online booking players (GetThere, Cliqbook, eTravel) must embrace new ways of thinking and if not risk being swept away by a new consumer driven trends. The economic impact of these changes is unknown, but the near term effect of an expanding universe of choices is clear: the old model where a single site or application can provide all information and comparative shopping capabilities for users is fading fast (if it every existed at all!). How can these single silo sites and applications embrace this new world? The first step is acknowledging the fact of the limitations of the single source concept, while seeking out partnerships that help bring the company's offering into more of a holistic solution.

Tuesday, September 05, 2006

AA/Sabre Deal, A big sigh of relief?

The last minute agreement reached between AA and Sabre has many in the corporate travel world breathing a sigh of relief. I fear that TMCs and corporate customers will quickly return to a state of complacency regarding the radical underlying changes happening in travel distribution. Yes this agreement avoids the additional imposed fees, but by its nature the new agreement also reduces the amount of "financial assistance" available to TMCs and corporations (provided there was a pass through). Anyone who believes that this announcement means the end of the content issue between suppliers, distributors and customers, is being blind to the fact that a major restructuring is underway in travel distribution. As I have stated in previous blog entries, the issue is one of control over distribution. The desire of airlines to dynamically price their inventory in different channels still exists. The work of companies such as ITA Software and Datalex to change the underlying systems used by airlines is providing a new opportunity for channel management. I encourage all parties in the corporate (and leisure) value chain to be wary of any message like "mission accomplished". The story is not over yet.