Innovation in Online Travel

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.

Mobile Panel at PhoCusWright

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.

How Twitter has changed the conference experience

At the PhoCusWright@ITB Bloggers Summit, Twitter was the hot technology talked about at length as a new window into social networking. Something that has not been covered is the impact of Twitter on the conference experience itself. This was very true the second day of the conference. I sat at the PhoCusWright table behind all the bloggers. Without an exception each had their TweetDeck (or equivalent) on their desktop providing immediate commentary on the show. I participated as well. While Dale Moss spoke on onstage on how Open Skies (BA subsidiary with all BC cabins) will succeed in the market, I questioned his sales pitch with a number of tweets. No longer can a presenter expect to contain the audience feedback to the conference attendees. Twitter has enabled real-time conversation which has changed the rules of a conference and opens up everything said to criticism. Yes there is lot's of hype around Twitter, but one thing is certain, at any public forum a speaker must be sensitive to how his or her presentation is being perceived by the audience which is no longer restricted to attendees but now encompasses all the followers of the twitter user's tweets.

PhoCusWright @ ITB - Day One

I am blogging from the PhoCusWright@ITB. The day began with a BloggerSummit, clearly the leaders in new media from around the world with representatives from Europe, North and South America. We exchanged best practices in blogging and tweeting. This was followed by an early look at the five minute of fame innovators who will present tomorrow. Philip Wolf then addressed the bloggers on his views on major trends for 2009. Philip announced the theme for PhoCusWright Conference 09 - Money, Media Mobile, & Moxey. More on themes as we get closer to the conference in Orlando in November.
After lunch, the first panel of bloggers who were asked the top trends they see in 2009. A lot of discussion about Twitter. The online poll had the 1) Shift in philosophy on social media, 2) hire a social media guy, and 3)PR firms will use social media. Unfortunately the panel missed mobile. That was further evidence that the travel industry still has not recognized the impact of the mobile tidal wave approaching.
The second session first reviewed these three top trends. Then a discussion on ROI of social media was discussed. In my view it is about reputation and identifying who in a social network has that influence. Tools are coming to the market to help easily identify this, such as NodeXL

Full Content

Dennis Schaal, technology editor for Travel Weekly has written some very insightful articles regarding the lack of full content in the GDS (despite the full content agreement signed in 2005) and more recently the termination of the agreement between Farelogix and Sabre. (links requires a subscription). This is a complex problem that is both an issue of technology and business strategy. From the travel agent perspective full content is essential particularly given the transparency of fares triggered by the Web. With the economic conditions worsening suppliers will continue to put downward pressure on segment fees and implement all possible opportunities for ancillary revenue. The GDS are working hard to add capabilities to accommodate new airline add-0n fees as well as continuing to move key processes off the mainframe on to more modern technology. The question is whether these initiatives are moving fast enough and whether 3rd party providers such as Farelogix are a viable alternative. Unlike the other so called "GNEs" (GDS New Entrants), Farelogix never positioned itself as a replacement for the GDS but instead as a new aggregation layer needed in a multi-source world. In that role they have been successful working with major airlines such as American and Emirates. Though understandable from a competitive viewpoint, Sabre's termination of the Farelogix is a bit short sighted. Now that Travelport has embraced a multi-source front-end (developed by G2 Switchworks) the concept of multi-source content will be permanently ingrained as a competitive advantage. I have no doubt the management of Sabre is well aware of this and that their current solution with Agentware (private labeled as NetCheck) is most likely a temporary fix to meet this multi-source reality. Unfortunately with economic pressure on corporate accounts the use of alternative LCCs will likely increase and legacy carriers will continue to implement strategies to drive business directly to their Website. Web-based tools such as Agentware have become a common way for agents to sell inventory not in the GDS, but end up causing additional steps that decrease productivity. The travel industry needs to continue to push the GDS to provide more flexible integrated tools. Projects such as Farelogix's open source POS Hawkeye should be embraced by the industry so we can move beyond issues of bypass and instead have all agents be able to embrace an integrated multi-source point of sale.