Airline Wireless connectivity

The recent Orbitz for Business survey results regarding the value of Internet connectivity on the plane continues to produce headlines like this " Most Business Travelers Don't Need Wi-Fi On Planes". Conclusions such as this based on this research are very misleading. According to news reports (as I have not had access to the actual survey results) the question asked whether the traveler would take a less convenient or more costly flight to get Wi-Fi. This is obviously a loaded question. Wrapping the issue of in-flight Wi-Fi adoption with flight selection is absurd. Business travelers are on airplanes for one reason only, getting to their destination so they can conduct business. In my view business travelers and the corporations they work for, will embrace in-flight broadband connectivity when it is available. In fact I would go farther to say that connecting to the Internet while on the plane will become as common as connecting in your hotel room is now. Whether the traveler will use the connectivity for business or pleasure is a different issue. Having logged thousands of miles over the years I frequently see business travelers both playing solitaire or watching a movie on their laptop or portable device as well as working on business. Let's not draw any conclusion until wireless ubiquity in the air becomes a reality.

From Cell Phone to Mobile Sensor Platform

No one would disagree that the cell phone is quickly evolving into a personal mobile computing device. Thinking of a cell phone in terms of a mobile sensor platform helps solidify the true nature of the evolution of mobile technology we are witnessing around us. What makes a mobile device a sensor platform? With A-GPS becoming standard, the ability for mobile devices to sense location is obvious, but the device could sense other things as well such as temperature, motion, barometric pressure to just name a few. In addition the ubiquitous nature of broadband wireless connectivity which is on the near horizon (e.g. WiMAX, city wide Wi-Fi coverage) promises to turn the mobile phone into the ultimate thin computing device connecting to the network for information download or upload. Here are some thoughts

• Imagine taking a picture on your cell phone camera and having it automatically uploaded to your Flickr home page.
• How about providing real-time Trip Advisor reviews when you enter your hotel room based on your immediate impressions.
• Barometric and temperature sensing could provide more realistic weather updates
• Motion sensors can track your movements and provide an opportunity to share your "walking tours" with other leisure travelers
• Restaurant reviews could be accessed from an online database triggered by your location
• Applying social networking techniques to idenfity other travelers with similiar interest is another likely way mobile technology could improve the travel experience.

The number of potential applications for the travel industry is only limited by our imagination. The computer in your hand will allow travelers to interact with online content combining feedback, information and advice all based on your location. This vision is rapdily becoming a reality.
It is my pleasure to be the lead analyst for PhoCusWright on a new special report: "The Future of Mobile Travel" Sponsorship is still available. Please contact Bruce Rosard (brosard@phocuwright.com) if you are interested in becoming a sponsor for this timely special report.

Why Corporate Self-Booking continues to be stuck in Travel Management 101

I am listening to a BTN/Concur sponsored Webinar regarding corporate self-booking tools. Perhaps I have a bit of a jaded view on the subject as I have been involved with corporate self-booking since the early 1990s. This presentation contained no new information. The reason the corporate travel industry seems stuck in a loop of discussion of adoption and expense integration, I believe, is due to the very nature of the "corporate buyer". Managing travel at a company is rarely a career (though there are some exceptions). As a result, the person at the company who is tasked with managing travel costs changes every 3-4 years. Often these individuals come from non-travel backgrounds (finance, procurement, admin services). In 2008, it is amazing to listen to a Webinar which so dated and doesn't seem to address current online issues such social networking (blogs, user vendor ratings). The corporate travel industry needs to wake up and recognize how consumer online travel and general tech trends will impact the industry.

Circos debuts at Demo 2008 - a Kango competitor

Demo 2008 is the annual event where start-ups get to do a brief pitch to potential investors. Circos is a new qualitative search engine:

According Tech Crunch:

"Circos most like Kango, which has also taken on the task of categorizing hotels based on user reviews. VibeAgent also has a search engine for its own site that will search hotels based on qualities.

While Kango auto-generates tags after pouring through user reviews, Circo lets users search for any qualities they’re interested in. The engine then grades and ranks the results by each quality on an “A” through “F” scale based on how well the description fits for reviewers. For example, a hotel reviewers feel is spacious would rate highly if searching for openness, but poorly if you’re looking for a tiny room.

As with most search engines, Circos’ real test will be whether its application draws users away from other hotel and restaurant sites with less sophisticated search engines. Currently there are a bunch competing in the space. However, Circos says their technology can easily be extended to other categories since their algorithm does all the tough work of pulling the most relevant qualities from reviews. If hotels and restaurants don’t appeal, another category may hold their home run."

This announcement demonstrates the unfilled market need for more qualitative search results. The key to the success of new start-ups such as Circos or Kango will be measured on their ability to become the first stop for qualitative travel search. This will require not only a great product (producing results that better match a user's search descriptions) but creating enough of a brand buzz to draw traffic from user generated review sites such as Trip Advisor or IgoUgo, not an impossible task, but one that will require both paid promotion as well as successful viral marketing effort. These companies both sit in the planning part of the travel research and buying process and thus can benefit from referral fees paid by OTAs and suppliers. Semantic search is an important area to watch for the online travel industry.

What do the Expedia PPC agreement and the Kayak acquistion of Sidestep have in common?

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.

Conversation with Aircell Senior Management

For some time I have been talking about ubiquitous computing and the always connected traveler. I just received a briefing from the senior management of Aircell about their plans to implement Wi-Fi connectivity on commercial aircraft. Back in 2001 the buzz about this subject concerned the Boeing Connexion roll out with Lufthansa airlines. Last August Boeing announced that it would be discontinuing the Connexion service. So why will Aircell succeed where Boeing failed? It is all about the technology and business model. Boeing's Connexion equipment was expensive and heavy (1,000 lbs) and needed to be installed when the aircraft was taken out of service. Aircell's technology is lighter and can be installed while the plane sites at a gate overnight. Apart from this advantage, Aircell also has a business model where the airlines share in the revenue (the cost for consumers will be equivalent to Wi-Fi connections in hotel rooms). American Airlines and Virgin America are the two launch customers. In the case of Virgin America the technology will be integrated with the seat back screens allowing all customers to browse the Internet even if they don't have a laptop or PDA. This always connected environment fits well with the airlines' need to sell ancillary services on board for additional revenue sources. In addition, the opportunity to communicate with their best travelers on the aircraft provides some unique CRM capabilities which will likely surface as the Aircell connectivity becomes common place.

Backlash from the Facebook Beacon advertising program

Facebook's attempt to exploit its social network for advertising purposes has raised some major concerns from their users. The Beacon advertising platform is designed to broadcast purchases made by users to their social network. The issue has been taken up by the progressive political organization, MoveOn.org claiming the program violates privacy. Over 50,000 Facebook users have signed the MoveOn.org petition complaining about the privacy issue. The primary problem seems to be in the opt-out strategy taken by Facebook. There is no question that social networks are here to stay and they do influence purchases, especially for travel. The "Where I've Been" application (now owned by Trip Advisor) has been one of the most successful applications on Facebook. Behavioural targeting is also becoming a mainstream advertising strategy that is designed to deliver specific content based on the implicit and explicit behavior of the user. Earlier this year one of the largest players in the behavioral targeting space, Tacoda, was purchased by AOL demonstrating the importance of this emerging advertising trend. Mobile advertising is beginning to become major force as well. Whether planning a complex vacation or buying a HDTV, the opinions of my friends and colleagues do make a difference. The key lesson here is that no matter what the platform (social networks, behavioural targeting or mobile advertising) the user must be in control. Opt-in is the key, not opt-out.

Verizon tears down their walled garden

The announcement this week by Verizon that they are opening up their wireless network has significant importance for the development of new mobile travel applications here in the US. Unlike the rest of the word that operates using GSM technology, Verizon's network is based on CDMA technology developed by Qualcomm. This makes cross networks application development problematic. Despite this limitation, the fact that Verizon has recognized that consumers want to be in control of the applications on their phone is a tremendous step towards a more Internet based model for mobile applications. Details of Verizon's plan are still a bit sketchy but the basic thrust of the announcement is to allow third party developers to create applications that work with the Verizon network without the need to work through the Verizon deck (the deck refers to the allowed mobile applications controlled by the Verizon). Frequent travelers are often the first to embrace next generation wireless technology. In an open environment where 3rd party development is no longer tightly controlled by Verizon, travel specific mobile applications can be created that drive personalized, location based services to the mobile traveler.

Mobile Technology

In his classic book, Smart Mobs, Howard Rheingold described two possible futures for mobile technology. The first is a highly personalized smartphone that filters content based on personal preferences. In this vision the smartphone becomes an electronic personal assist that provides specific content that matches the user's situation, preferences and location. The other vision is an advertising platform that delivers unsolicited offers to the user based on behavioral information collected both explicitly and implicitly. The iPhone certainly represents the first real handheld computer with strong emphasis on browser based search. In a way the iPhone is delivering on the Knowledge Navigator video vision first presented at Mac World in 1988 by then Apple CEO John Scully. Google's Android mobile platform is an effort to both open up the traditional walled-garden created by telecommunication companies as well as an obvious mobile advertising play. I am beginning to believe that both the visions outlined by Howard back in 2002 are being driven by these two tech giants. I am hopeful that privacy concerns (such as the recent backlash regarding the Facebook Beacon advertising platform) will help reign in the trend towards unsolicited advertising. For 2008 I will be working with PhoCusWright on a new special report on mobile technology. As I dive into the mobile research for this project, I hope to identify how the travel industry can profit by implementing mobile apps for the leisure and business traveler. If you are interested in becoming a sponsor for the mobile special report please contact me at norm@traveltechnology.com.

PhoCusWright - Expedia CEO part II

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.

PhoCusWright - Expedia CEO

Dara began with a nod to the new media based deal with IHG. He said Expedia's focus is to change the traditional impersonal relationship with consumers to be more individualized. Three areas of focus: (1) email (2) Segmentation (3) Search experience - lodging search experience to the next level.
(1) Email - described Amazon's email follow-up after search. Booking window, length of stay, impacting next visit at Expedia. Email as upsell opportunity. Purchase behavior impacts the type of email message generated. Occasion or event triggers for emails are more effect - 20X as effective. Air search with permission send email - 30X conversion rates
(2) Segmentation - demographic mailings. Unique content based on segmentation - Expedia Elite Group - premium service levels - no cancellation or change fees and other services
(3) Personalization - Optimization of lodging sort. Previously anyone would get the same sort. Built an algorithm sorting hotels with goal sending hotel partners more likely to convert and enjoy that hotel. Personalized predictions based on conversion - 30 attributes - kids, which site, length of stay, adding factors for partners inventory levels. Customer reviews

Summary - Long Tail - world is flat. One to one relationship with every traveler.

My comments - All this is not new, but does show a new level of maturity for Expedia in order to better target customer segments verses a vanilla approach traditionally followed by Expedia.

Second Life Discussion-PhoCusWright Day 2

Cathy Schetzina led a discussion of Second Life with STA, Carnival Cruises and Starwood. The primary benefits of launching a Second Life site was described by the panel are PR and gaining experience in a virtual world. The panel agreed that the initial buzz regarding Second Life has faded somewhat lessening the value of free PR that was prevalent earlier this year. Starwood created a new hotel brand in Second Life. The company gained valuable feedback on design and received lots of press. Starwood was prominently featured in Business Week and other general press outlets providing good PR. Starwood has since shut down their Second Life initiative showing that the value was not sustainable. STA emphasized the importance of sponsoring activities such as concerts or dance parties. With STA's primary market being students the fit with Second Life was a natural as a way to each their core campus audience. When Cathy asked whether Second Life is a passing trend or the sign of something in the future, the panel felt that this was only the beginning of trend toward marketing in the virtual world. The bottom line is that Second Life should be viewed as a game and the true impact of online gaming in a virtual world is just beginning.

Live from PhoCuswright - Michelle Peluso CEO Travelocity

Michelle talked about general travel industry themes such as the need for better customer service, air schedule reform and economic indicators pointing to a downturn in the economy. She admitted that OTA interfaces have been stale for some time. She pointed to Travelocity's Experience Finder as a different way to approach travel verses the traditional linear method. She emphasized the data gained from transactions as a valuable tools for suppliers. Talk backers including Randy Peterson from WebFlyer. Randy asked about fare filing problems such as the $59 Tahiti fare mistake asked. Steve Kafner asked about the role of travel search and touted the new relationship with Travelocity. One theme discussed was relevance verses personalization Michelle emphasized that at each stage of the travel process relevance is the key. Travelocity's experience finder works on this model of relevance. Travelocity research conflicts with PCWI research staying that people stay with an OTA despite the desire to shop multiple sites.

Live from PhoCusWright Private Equity - Karl Peterson TPG

The PhoCuswright conference kicked off with discussion of private equity investment in the travel industry with Karl Peterson. Karl emphasized that PE is in for the long run. He disputed the theme of the recent Business Week article which used the term of "strip and flip" referring to the process where PE buys public company, extract profits and then splits up the company into pieces. Philip's questioned Karl's assertion that they are in it for the long haul, as no doubt many in the audience agreed, as a spin rather than a fact. The Business Week article went on to say that the recent credit crunch due to the collapse of the sub prime market has tightened available financing for PE. I believe we have not yet seen the true impact of PE on our industry. Blackstone now owns two GDS brands and three mainframe reservation systems (Apollo, Galileo, and now Worldspan). Sabre is owned by PE. Though all the GDS have offloaded a lot of their content to more inexpensive server based technology, the primary customer information is still tightly bound to the transaction residing on the mainframe. With PE owners now controlling Travelport and Sabre, the true impact of cutbacks and technology overhaul is still not known.

Kango

Yesterday I had the pleasure of meeting with Yen Lee, president of the new travel search company Kango. For those who do not know Yen, he has an extensive background in online travel most recently as the head of Yahoo! Travel. So what is unique about Kango? The company is building a semantic travel search engine. Rather than simply displaying results of a key word search by PageRank (the method used by Google) , Kango delivers results that are more personalized based on specific attributes entered into the search criteria. Kango is creating an ontology of global travel content that includes ranking of superlatives within review sites. This enables the search engine to rate a given hotel, for example, putting greater value on adjectives such as "This is the best hotel for kids in Monterey California". Kango allows users to search hotels, activities and other travel related content filtered to meet their own specific preferences. In other words, rather than simply searching for a four star hotel in Monterey, Kango users can use specific descriptive words such as "romantic" to identify the most appropriate hotel to meet their needs. Though the idea of segmenting travel search has been introduced by sites such as the Travelocity Experience Finder or Home and Abroad, Kango's backend semantic catalogue represents a different approach. These other experience oriented sites have created a taxonomy of their content enabling an experience oriented search limited to their traditional content. Rather than simply putting content into categories, Kango's ontology defines travel content in terms of superlatives delivering a numeric ranking of search results that integrates mutiple user generated content. This includes review sites such as Trip Advisor and travel blog sites such as Gusto!. This is not simply a repurposing of ratings from these sites. The Kango engine evaluates reviews and blogs of a specific hotel property for example, across multiple sites to deliver a consolidated rating that reflects the descriptive needs of the user. Kango is adding this semantic interperation of travel content not only to traditional hotel information, but also by embracing the Long Tail concept, Kango is including content options such as campgrounds and other disenfranchised elements of travel industry that normally are not included in standard OTA content. Kango's focus is on the planning phase of travel and will refer their users to booking sites for reservations. This is truly an innovative approach to travel planning that has the potential to truly change the way consumers search travel content.

Why Social Networking Matters for the Corporate Travel Market

The BEAT recently covered my NBTA presentation on Web 2.0 and the release of my new study "Corporate Travel Technologies: Today and Tomorrow". In the article Jay projects a somewhat skeptical view on whether social networking apps will ever appear in the corporate travel industry. I understand Jay's skepticism. Throughout my 25 years in the corporate travel industry, I have seen many so-called revolutionary apps announced at trade shows, but never implemented. When it comes to social networking, this trend transcends any specific industry, and thus is a phenomenon that will impact all travel industry segments, even corporate travel! I was talking this morning with the CEO of a new European based social networking platform, Dopplr, that allows individuals to identify other people in their network who are traveling to the same destination. Dopplr's focus is primarily on business travel. With recent PhoCusWright research that shows that 1/2 of all business trips include an extension for leisure activity, identifying other social networking contacts who are at the destination becomes important. Even from a pure business enterprise perspective, identifying other corporate employees who are at the same destination could have additional value for the traveler. Social Networking is here to stay. Still not convinced? Then perhaps it's an age thing! PhoCusWright research also shows that people under 35 are much more familiar with social networking apps than those over 35. This generational gap will be most prominent when the current college age Facebook users enter the workforce.

Why Travel Mash-Ups are Important

As much as the OTAs may position themselves as a one-stop shops for travel planning and booking, the reality is that no single site can make this claim. With the introduction of over 30+ travel sites over the past 2 years, travel content on the Web has never been more fragmented. Sites that provide travel blogs, itinerary sharing and rating systems abound. The future of destination content should include a mash-up of multiple sites such as the recent by American Express regarding their travel mash-up of Travel & Leisure, American Express Publishing and Lonely Planet. In my view consumers would flock to mash-up sites that combine multiple reviews from Trip Advisor, IGOUGO and others, organized around a single hotel search. Obviously copyright issues may be an obstacle, but if the review sites benefit financially through referral income, they may be willing to provide the individual ratings. The same needs to be true for itinerary sharing sites, multiple samples from Realtravel and Gusto! would be beneficial. Mash-ups are here to stay and will continue to play a major role in online travel.

BBC buys Lonely Planet - The Future of Guidbook content

Some may be surprised by the acquisition of Lonely Planet by the BBC. Why would a traditional media giant want travel destination content? What does this mean for the future of guidebooks? There are a number of ways to look at this purchase. Combining Lonely Planet content with BBC video such as Michael Palin's travel series seems an obvious step, but I believe there is more to this transaction. Large media giants such as BBC are challenged by the growth of the Web which is clearly steeling viewers from the traditional broadcast television medium. The BBC is not blind to this trend and has created some interesting user interfaces on the Web. In specific, the BBC has a very creative interactive time line that allows users to drill down to find out information about specific time periods in British History. Rather than offering the user simple historical text, the BBC history time line allows the user to select information that is of particular interest to fit their needs and drill down to the appropriate detail. Applying this approach to Lonely Planet information would be very logical and enable better navigation of the content. With the growth of user generated content and BBC's control over massive libraries of video content, the BBC could use the Lonely Planet acquisition to drive a new model in the market that combines all three of these sources into an interactive display allowing users more flexibility. The integration of multiple sources of content is a natural evolutionary step in destination information and I am hopeful the BBC will use this opportunity to drive a new model in the market.

Corporate Travel Technology: Today and Tomorrow

I am pleased to announce the release of my new study: "Corporate Travel Technology: Today and Tomorrow". The study is now available for immediate download at the Travel Tech Consulting online store: http://traveltechnology.stores.yahoo.net/cotrtetoandt.html

Are Airlines a Commodity?

I am writing from Houston Texas where I attended a consultant's forum sponsored by Continental Airlines. The session was primarily focused on the corporate market , but did include a review of some very impressive stats, including some slides which showed that CO is the best US network carrier for on-time performance and lowest baggage loss.

Part of the session included a meeting with Continental's Chairman & CEO, Larry Kellner and Jeff Smisek, Continental's president. Though I still doubt whether Continental can break the commodity label, these two executives did represent a breath of fresh air. Both gentleman were very open and candid about their plans for expansion, relationship with customers and respect for their employees. I left the meeting wishing Continental had a bigger presence in the San Fransisco Bay Area.

WiMax verses 3G, 4G and Beyond

The Tech industry has been talking about ubiquitous computing for some time. Any observer would agree that it has become common place for business people to multi-task - e.g. listening to a speaker while reading one's email, but the fact is that this only the beginning of our always connected future. An interesting battle has emerged between the traditional telecom players who are offering 3G (Third generation) wireless networks with some now talking about 4G capabilities. An alternative trend is the emergence of WiMax, a broadband technology that could be thought of as Wi-Fi on steroids. With telecom and tech companies such as Sprint and Intel embracing WiMax, many perceive the wireless roadmap as a "fork in the road". Rather than 3G verses WiMax, a blending of the two technologies seems to be more likely. Devices such as the Apple I-Phone with built in WiFi point to a hybrid future where both traditional telecom and WiMax networks co-exist is more likely. The wild card in this game is Google. For many months the blogosphere has been chasing rumors that Google is building their own mobile device that will compete head to head with traditional offerings from Nokia, LG and Motorola as well as the Apple iPhone. No matter which network becomes dominant the days of the always connected traveler are here to stay and all travel companies must develop m-commerce strategies to reflect this fact.

Call Center Point of Sale

Over the last 20 years I have been involved with a number projects involving point of sale UIs for call center agents. Going back to my days with United Airlines when Casto Travel was the first installation on the West Coast for the, at that time new Apollo Focalpoint UI, to recent projects with Alaska.org, Vegas.com and Vail Resorts, I have continued to be disappointed that call center travel technology still lags behind both online UIs and non-travel call center apps. Too often, common wisdom has pushed any call center development effort to the back burner in favor of direct consumer online efforts. The problem with this approach, is a lack of understanding of off-line's role in support of complex online transactions. Another inhibiting factor is the traditional limitations of Web-based interfaces verses robust Windows-based desktop tools. Now that we've seen the formal introduction of AJAX or FLASH in the consumer online travel arena, let's hope similar use of these Web 2.0 tools makes it way to the agent's desktop.

Observations from the NBTA convention

Last week's NBTA's annual convention was billed as the biggest and most successful travel management conference ever. A common question I was asked while roaming the tradeshow floor, "What do you believe was the hot topic at this year's conference?". My response was simplly stated "nothing really new here". In reality I believe more was left unsaid then presented in any particular seminar or general session. For example, Sam Gilliland, CEO of Sabre, presented a panel of ex-airline execs who chatted with Peter Greenberg. I really wanted to know what the private equity buyout of Sabre means to the industry not to mention the Travelport acquition by Blackstone and the recent IPO by Orbitz. Instead the two airline executives talked about the need for high speed rail for the NorthEast corridor (DOH!). A familiar theme in Sam's introduction speech was "you the corporate travel manager, really controls the industry", but is this really true?

Perhaps the problem with this conference is that the position of corporate travel manager is a moving target. This week, I have been updating my NBTA database from 2004 and I immediately noticed about a 70% turnover in names just for the letters A and B! Could it be that the coveted target of the suppliers at the conference is a moving one? Is the position of travel manager a long term career? My apologies to my friends and colleagues who have been in their role for many years, but the reality of the market is that at an average company a new travel manager emerges after about 4-5 years. Why is this? Corporate travel management is not a core competency of any organization (except TMCs that is). There is little room to advance in the position other than adding more commodities to the role if the the CTM is in procurement (as many are moving towards) or moving to other positions in the company. So if I were to conservatively estimate that 50% of all travel managers turnover in a 5 year period, marketing to these individuals becomes a constant re-education effort. No wonder the conference lacks innovation, there are so many newcomers to the position every year, it is nearly impossible to move to start a more forward thinking dialogue.

CorporateTravel Technology Today and Tomorrow

I am pleased to announce that my most recent corporate travel study: Corporate Travel Technology: Today and Tomorrow is now available for a pre-published order with a discount of $100 (purchase price is normally $600, pre-publication price of $499). In addition if you are attending the NBTA show next week you can receive an additional $100 discount if you order the study by August 31, 2007. The study will be released in mid- late August 2007. This research is the result of intensive review of products and services offered in the corporate travel space. You can check out the table of contents here and purchase the study through the TTCI or PhoCusWright stores.

Here is a link to the flyer we are distributing at next week's NBTA conference.

I'm Back....

My apologies to my loyal blog readers. I was on vacation in Israel for most of June and I have been on the run finishing up various projects since I returned. A couple words of advice concerning travel to Israel. My family and I felt extremely safe during our stay. Don't let the US media make you believe otherwise. As the birth place of three of the world's major religions, visiting Israel is like no other experience. That being said we did have a slight mishap while enjoying the Dead Sea. My cousin's rent-a-car was broken into and about 1/2 our luggage (all the luggage we had with us) was stolen. This included our passports. Though Israel is very safe, personal property is not, especially in remote areas where Bedouin's live. I am sorry to report, per the Israeli police, that the Bedouin's main source of income is theft. So if you do travel to Israel and see a Bedouin wearing a Steely Dan t-shirt, wearing my wife's skirt listing to my son's IPOD, let me know! In reality personal possessions can be replaced. BTW if you ever do lose your passport in Israel I would recommend the consulate in Jerusalem rather than the Embassy in Tel Aviv. They were extremely helpful in getting us temporary passports.

I realize a lot has been happening over the last month in both travel and technology. I hope to make up for lost time this week with a number of entries.

Working with 3rd party software developers

I found it interesting that two prominent software companies (if you can call a GDS a software company) one within the travel industry, Sabre, the other the poster child for social computing, Myspace, have both recently come out with rules (or lack of) regarding 3rd party software developers that hook into their systems. In the case of Sabre, there has been a lot recent press around the new fees Sabre is now charging 3rd party applications such as Booking Builder. For Myspace the issue is one of widgets used by third parts to embed content inside their site. The most common example is Youtube whose growth as a company's was significantly driven by MySpace.

In a recent blog entry by Josh Kopelman, Managing Director of First Round Capital (which was also carried on the Always On Network), Josh compared MySpace's lack of a clear "widget road map" to that of Prodigy. "This brings back memories from the early days of the Internet, when companies like Prodigy and AOL were the only online services in town. Despite the launch of the web browser (which unleashed the creation of millions of web sites), AOL and Prodigy initially focused on maintaining their proprietary online environment and controlling everything on their site." "Myspace does not have a formal development program and has blocked several widgets , (and) built their own widgets to compete in certain areas." In contrast, Facebook, Myspace's chief competitor has announced a new development platform encouraging 3rd party applications that work with their site.

Though I recognize that contrasting Sabre's actions to that of Myspace is a bit of an apples and oranges comparison, but the end result is similar with each company trying to protect what they perceive as their proprietary competitive advantage. Like Myspace, Sabre is blocking some third party development , while promoting their own alternative tools (based on Agentware). Hopefully one of the other GDS (Galileo, Amadeus are you listening?) will learn from the Myspace / Facebook battle and take an opposite stance from Sabre, promoting and supporting 3rd party development tools.

Digital Public Space Advertising

I am fan of the 2002 sci-fi movie Minority Report. In the film Tom Cruise is bombarded by digital advertising as he walks through a crowded mall. The ads are triggered by a retina scan personalizing the offering to respond to the character's specific needs. (In the case of the film, Tom Cruise actually replaced his eyes with another character's so the ads reflect that person's preferences).

A recent article in Always On talked about the emergence of adverting in public spaces such as NYC taxi cabs. Combining that with the growth of Behavioral Targeting, the world described in Minority Report is rapidly emerging. Each generation has become more desensitized to the onslaught of media. My 16 year old son is perfectly happy doing his homework, responding to multiple IM messages all while listing to his favorite tunes. I have no doubt that his current ability to manage multiple media inputs will allow him to handle the coming onslaught of personalized advertising. The growth of public space advertising over the next 5 years will be dramatic.

Desktop tools

I met some representatives from OTOlabs at the recent TravelCom conference in Las Vegas in April. Desktop tools such as the Southwest's DING! application have clearly proven their value in creating a more intimate relationship with customers. OTOlabs' is the developer of ThinkDesktop applications such as Vail Resorts' SnowMate. I worked with Vail Resorts (as part of a PhoCusWright engagement) back in 2005. The SnowMate application is a critical tool Vail has successfully used to bond with their best customers. The Southwest DING! application had over 1 million downloads the first six months. Southwest delivers daily messages on special promotions to the desktop of millions of customers reinforcing their image as a low fare leader and bonding the customer to the Southwest brand.

I am a strong believer that providing a small desktop application to deliver personalized information to your customer is an essential component of a Travel 2.0 strategy. To my surprise the OTOlabs folks indicated that other airlines have been very slow to embrace this concept. This is truly baffling considering the transparency of the Web and desire of airlines to develop a closer bond with their best customers.

Service Oriented Architectures

A lot has been written over the last three years about the topic of a service oriented architectures (SOA). The concept refers to a more flexible way to create software using Web services. Rather than creating tightly coupled code that bounds specific functionality within the application, software written using SOA principles creates loosely coupled components that can easily be removed or altered without impacting the entire application. "SOA turns monolithic inflexible applications into hundreds, even thousands of small flexible applications" Gartner research estimates that by 2008, more than 60% of enterprises will use SOA as a “guiding principle” when creating mission-critical applications and processes.”

Understanding the underlying architecture of software has always been a difficult task for a variety of buyers in the travel value chain. Whether it is a corporate travel manager evaluating self-booking software or a leisure travel agency looking at reservation technology, the need to evaluate the underlying software architecture has never been greater.

Often vendors confuse the issue by stressing their use of Web services. Utilizing Web services to connect to disparate sources of content has become the norm in the last 3-4 years. Just because an application uses Web services for connectivity does not mean the software has been written using a SOA approach. As an example, a major hotel chain still uses a mainframe running TPF (an old operating system created by IBM for the GDS) as their central reservation platform. The company has created a Web services layer to aid in the communication with property based system and external channel distributors. This is obviously a good use of Web services but does not reflect a service-oriented architecture. If this chain wanted to do a complete revision of their rate structure, the antiquated mainframe approach would lead to a nightmare of programming tasks. If this application was built using SOA, an overall rate revision would be done with less pain, implemented faster and would not disrupt other modules of the reservation process. Unfortunately for this supplier, SOA theories were not around in the 1970's when the core reservation system was built.

Wireless Travel Applications

Last week I was interviewed by USA Today Weekend regarding mobile technology for the traveler. The premise of the call was focused on the prevalence of IPODs among travelers. The reporter asked some specific questions about downloading audio blogs for use by leisure travelers. The obvious application would allow the provider to segment the traveler population into special interest groups. A guided city tour for a history buff may be quite different from a couple looking for gourmet restaurants. Our conversation went beyond this point to encompass all types of gadgets now carried by frequent leisure or corporate travelers. I mentioned that last year I wrote an article for the PhoCusWright GDX technology subscription service on the hotel room of tomorrow. A common theme within that article is the emergence of multi-media stations in hotel rooms where travelers could hook up their MP3, digital camera or laptop and view the content on new HDTV sets. As always I am interested in any new application being deployed by travel suppliers or intermediaries that enhances the travel experience. If you know of some interesting apps, please let me know.

Web 3.0

First let me apologize to my blog readers for my long absense. I have been juggling a number of different client projects working long hours (which I know is the norm for today's 24/7 business environment). Fortunately three of the projects are closing out this week so I am back.

Lately I've been seeing a number of articles describing Web 3.0. Is Web 3.0 just another buzz word fueling the pundits and press or does it have some substance? One fallacy that is perpetuated by buzz words such as Web 2.0, 3.0 is the impression that the introduction of new technologies and approaches happens all at once negating prior technologies. In reality technology change is evolutionary. For example adding an improved consumer UI using AJAX or Flash to a Travel 1.0 platform may change aspects of the application to be more engaging, but it doesn't necessarily mean that the software is Travel 2.0 throughout its underlying code.

So what is Web 3.0? A common mantra expressed around Web 3.0 is that software will be more pervasive, faster and cheaper to deploy. Web 3.0 applications will understand the semantics of Web sites enabling new levels of machine-to-machine communication. Personalization will filter information to deliver information that is more relevant to the consumer delivered on the device of there choice. Information itself will be dynamically generated reflecting the needs of the supplier to sell perishable inventory. With the travel industry still struggling to integrate Web 2.0 features and functionality (e.g. user generated content, new UIs using AJAX or Flash) the arrival of Web 3.0 will likely take some time to manifest itself in travel applications.

O'Reilly ECT Day #2- Incantations for Muggles: The Role of Ubiquitous Web 2.0 Technologies in Everyday Life

The talk began with this basic premise: How do you balance needs of the users with emerging technologies? The goal of the talk was to use different lens on emerging tech and end-users. The backside of technology development is people. How to segment people which are not like "you" - don't design for oneself or one size fits all. There are four life stages each with a different set of properties- stage one - friends, attention, play/leisure, sex, consumption; stage #2 - Sex, friends , money , play/leisure, labor; stage #3 - labor, family, money, power, property; stage #4 - family, health, religion, hobbies, friends. technology adoption and priorities reflect these four life stages. Corporations are currently driving technology. Corporations need to satisfy shareholders reflecting continuous growth. To monetize the interaction people the user must be passionate about the technology. Unhappy users don't make products stick. Four aspects of modern technology: persistence (never goes away) searchability (ability to find what you want), replicability (what is truth?, the ability to copy), Invisible audiences - (don't have a sense who is in the audience- you don't know who your are talking). All rules of privacy is changing. When things really go mobile will create a new shift in practice - combining location and technology.

O"Reilly ECT - The Coming Age of Magic -Mike Kuniavsky, Co-founder and Principal, ThingM

Ubiquitous computing is moving away from traditional platforms (PC, PDA, smartphone) to include non traditional platforms such running shoes. In 1995 General Magic designed their wireless handheld interface as a desktop. This interface had limited functionality partially due to the desktop metaphor. Extending the desktop metaphor to a wireless device doesn't work with ubiquitous computing. Mike is advocating the use of existing cultural understanding (magic) to describe the behavior of ubiquitous computing objects. Design principles- every day objects (shoes, hammers, hats, plates), they are familiar, physical, no screen , not human, not superhuman, reinforcing the fact that we don't believe in magic. Ambient orb from Ambient Devices looks like a crystal ball. the Nokia medallion - allows communication. Wands (Nintendo Wii), Hitachi Magic wanted. Concept of wands already exists based on embedded technology. The move towards "magic" devices is already happening. The age of magic is coming. Using the magic metaphor should not be an excuse for poor design.

Jeff Hawkins

Jeff is the original founder and designer of Palm. He described human function and how his new company Numenta is developing next generation for intelligent computing. Jeff stated that you can’t get computers to act as humans- visual perception, auditory perception, somatosensory perception, Languages, Adaptive behavior, planning, thinking etc….

What is preventing this? Common wisdom believes:

• Computers are not powerful enough - no longer the case

• Brains are too complex to understand
  

• Brains work on quantum principles
  

• Brains are magic

Reality is not too complex, don’t work on strange principles and we just didn’t understand how they work.

Hierarchical Temporal Memory (HTM) –

1) Creates a model of its worked

2) Recognizes new patterns

3) Predicts

Generates behavior Numenta Platform for Intelligent Computing (NuPIC)

Simple vision system –

HTM applications areas of focus:

1. Automotive
2. Gaming
3. Network modeling
4. Drug discovery
5. Vision systems
6. Market analysis
7. Business modeling
8. Nurture applications
9. Anything requiring prices timing or high order temporal data
10. Music
11. Language
12. Robotics

Werner Vogels, Vice President & Chief Technology Officer, Amazon.com

Mr. Vogels is the VP and CTO of Amazon.com. His talk focused on how Amazon has created an the backbone which can enable small start-ups to reach scale by using the Amazon's infrastructure. The talk centered around how to build a business around ideas verses resources. Amazon services is designed to help a launch new businesses. Building an architecture to deal with peaks 3-4X the average daily transactions is difficult. The 70/30 switch 70% on heavy lifting (infrastructure) and only 30% time investing in actual product development. Amazon chart - service oriented - 150 services together to create a single page. Three parts of infrastructure = EC2 - Compute, S2- Storage - SQS which does Messaging= Web scale computing. Web-scale computing turns huge fixed costs into a variable cost. scalable-increase or decrease capacity impacts cost Effective - low rate pay-as you-go, Reliable and Simple- SOAP and REST based computing. Simple storage service 15 cents per Gigabyte per month and 20cents a GB data transfer. Why can't the GDS follow this model. Rather than owning the transaction, how about owning the infrastructure?
.

VC Forum - Web 2.0 and Wall Street

Panel with Tim O"Reilly and William H. Janeway, Vice Chairman, Warburg Pincus and
Peter Bloom, Managing Director, General Atlantic LLC. What can Web 2.0 learn from the financial markets and visa versa? Attributes of Web 2.0 demonstrated on Wall Street. Speed matters. e-Trade strived for a 9 second trade. Average trade on NYSE is now 30 milliseconds. A thousand transaction a second have become the norm. How does this compare with travel transactions which is measured by 2-3 second response time? Web 2.0 economy - network intelligence phenomenon. Focus on transactional efficiency. The pressure of Wall Street to push down the cost of transaction cost down to zero. Profits as "agents" was no longer possible (sound familiar?). Those who had been agents became traders. This is just like a GDS becoming a travel agent (e.g. Travelocity). Now promoting marketplace based on automated trading systems. Technology turning agents into principles. The interaction of computers and human beings. Now computers trade with each other but are shut off switching to human trading during a major drop.

Jeff Jonas - IBM Chief Scientist

Using an story of a cheating Vegas dealer illegally working with a customer to illustrate how data silos don't interact, Jeff introduced the concept of "Enterprise Amnesia". In this story the dealer and customer share a common address - clearly a signal that something is wrong. "Enterprise Amnesia" is when marketing, HR an security departments don't share a common database. Enterprise Intelligence requires persistent context. Data and queries in a single data space. Federated search - just in time context.

Sequence neutrality - identifying the same customer in a database. Database drift is natural and the bigger the wearhouse the more this problem persists.

Live from the O"Reilly Emerging Technology Conference

I am blogging today from the O'Reilly Emerging Technology Conference in San Diego. In 2006, my friend and colleague Philip Wolf coined the phrase Travel 2.0 to describe the new focus on user-generated content and improved user interfaces in online travel. To all deference to Philip, it was Tim O"Reilly who actually coined the original Web 2.0 phrase to describe the user generated and interface changes that is impacting the entire technology industry. Attending pure technology conferences such as this one, always reinforces the fact that the travel industry continues to lag behind the general tech curve. I will be blogging all day on each topic covered: The agenda can be found here.

After the opening remarks, the first speaker is Jeff Jonas, Distinguished Engineer and Chief Scientist, IBM Entity Analytic.

New Joint Study with PhoCusWright

In an effort to answer my prior blog entry regarding the commodification of self-booking technology, I am pleased to announce a new joint research study with PhoCusWright. As most of you know I have a long association with Philip's organization as an analyst and subcontractor on multiple projects over the last 6 years. In 2003, we jointly published a study on Dynamic Packaging technology. In a similar fashion this new study will look at corporate travel technology trends particularly as it relates to the implementation of Travel 2.0 technology. We are targeting late May- early June for the publication. It will be available as part of the PhoCusWright Channel as well as available both at the PhoCusWright and Travel Tech Consulting online stores.

Here's the abstract:

Abstract: Traditionally the corporate travel market has lagged in the adoption of emerging technologies. Despite this fact, technology for self booking, corporate portals, meetings management, business intelligence, expense management, risk management and the aggregation of content has become a key part of the travel management process. Services, such as consulting and account management also depend heavily on technology for analysis and support. With the emergence of Travel 2.0 technologies in the consumer market, how are corporate providers reacting to these trends? This study will take a look at key TMC and corporate travel software applications reviewing current functionality with an eye on future development. The research will showcase unique product offerings from software developers and TMCs reviewing vendors' plans for adding Travel 2.0 features such as user generated content and rich Internet UIs using technologies such as AJAX.

The World is Flat

In his 2005 book, The World is Flat, Thomas Friedman describes the unplanned cascade of technological and social shifts that effectively leveled the economic world, and “accidentally made Beijing, Bangalore and Bethesda next-door neighbors.” I experienced this phenomenon first hand recently evaluating suppliers for a consulting engagement. When it came down to the short list of suppliers that met this DMO's requirements, two companies emerged providing the best fit for my customer's needs. Both of the companies have headquarters in the US, but have approximately 90% of their employees in Asia (India and Sri Lanka). Over last two-three years the majority of travel software companies have either outsourced part of their development to off-shore centers or formally opened branches in places like Bangalore or Saint Petersburg. Eastern Europe and Asia are not only catching up fast, but are quickly passing the US in highly skilled software engineers. To better understand the global impact of the flatting of the world phenomenon take a look at this video: http://www.scottmcleod.org/didyouknow.wmv

Are corporate self booking tools becoming a commodity?

I have been involved with corporate self-booking tools since their inception in the early 1990s. At that time companies such as TravelNet and TTG (now TRX) pioneered a new concept allowing business travelers to book online, but restraining their activity through policy enforcement. Now in 2007 where corporate booking tools have become a mainstream part of a good travel management program, innovation has stalled resulting in a common look and feel across vendors. Many of the corporate tools have embraced the familiar consumer matrix approach pioneered by Orbitz (and quickly copied by Expedia and Travelocity), but other emerging trends are slow to come to the marekt. This is in contrast to new consumer oriented Travel 2.0 companies such as Kayak, Farecast and Farecompare are who are blazing new territory incorporating tools such AJAX and mash-ups to change the stale booking flow common on the big OTAs, but what about the corporate market? Where is the next innovation in corporate tools? My belief is that innovation has already begun and lies in the underlying platform rather than the UI. Yes corporate tools should embrace drag and drop capabilities enabled by AJAX, but at the end of the day you still need to enter your dates, select your flights, hotel and car. How these tools integrate disparate sources and user generated reviews and content will be a space to watch in 2007.

Mobile Photo Sharing

M:Metrics released some detailed stats on 3G usage that should raise a flag for all in the travel industry. If you don't know, 3G refers to the third generation wireless networks that provide more features and faster speeds than 2G networks. What caught my eye was the stat which concerns photo-sharing, which skyrockets to 45.1% monthly penetration among 3G users, up from 17.1% of non-3Gers. The bottom line is that next generation cell phone users are increasingly depending on their camera phones. What does this mean for the travel industry?

If you combine the growth of user generated content with this increased photo-sharing usage, the picture should be clear. Travel suppliers, especially hoteliers, need to be sensitive to the fact that an upset customer will not only blast the hotel at review sites such as Trip Advisor or IGUGO, but will increasingly use their cell phones to document short comings of a property augmented by real- time pictures posted to blogs or photo-sharing sites such as Flickr. The old cliche that a picture paints a thousand words says it all.

Peer to Peer Computing in Travel?

First they brought us Kazza and then Skype. Janus Friis and Niklas Zennstrom are now working on a new peer to peer (P2P) application that is taking on TV. Their Venus project, expected to be called Joost changes the playing field again by allowing users to view video content though on demand P2P network

Is there any value of a P2P network in the travel space? Absolutely! The current trend to create a site for online travelogues is a common Travel 2.0 business model. What if the content did not need to be uploaded to a single site, but rather accessed pictures and video content housed on an individual's hard drive. Unlike the Kazza implementation, Friis and Zennstrom are working with content owners to launch Joop with targeted advertising as part of the delivery. Behavioral targeting is a major trend in Web advertising. A P2P network could deliver targeted ads based on information extracted from multiple computers. The new Joost network is based on this type of targeted advertising and a similar application could be developed for online travel.

Article for The Beat

Today, the Beat (part of ProMedia http://www.promedia.travel/) released an article I created regarding the gap between emerging technologies and the travel industry. The focus of the article is on how the corporate travel industry continues to be behind the technology adoption curve.

If you are not a subscriber to the Beat, I strongly encourage you to become a subscriber. The team at the beat is lead by Jay Campbell, Chief Content Officer. While at Business Travel News (BTN) Jay constantly pushed through the barriers within the industry to uncover the underlying key issues in the corporate travel world. At the Beat, Jay is joined by David Jonas and Mary Ann McNulty two seasoned journalists who know the industry inside and out. Jay founded the Beat just a few years ago, but it has clearly emerged as the number one source for breaking news in all sectors of the travel industry. It was my privilege to contribute this article to the Beat. Let me know if you have any feedback.

Eye for Travel CRM Part II

I am glad to report that the remaining speakers at the recent Eye for Travel CRM conference in San Fransisco improved significantly from the first panel, (my prior blog entry). Eye for Travel still doesn't get some of the basics of running a conference in 2007 (free WiFi, plugs for laptops, active blog), but despite these short comings, the Eye for Travel CRM conference was very valuable.

My biggest "aha" moment came at the end of day one with the session entitled "Discover how integrating CRM with Pricing and RM can maximize revenue" (Session Four on Day 1). My readers will recall my frequent theme concerning true dynamic packaging - hooking into existing revenue management systems (RM) on the back-end and CRM systems on the front end to deliver content that maximizes revenue for the supplier while targeting the company's best customers. This theme was at the heart of this session. Here's some highlights:

• Rom Hendler, VP of Strategic Marketing at The Venetian Resort Hotel Casino gave an excellent review of how difficult it is to identify who is the best customer. He showed various ways to measure the profitability of a given customer (frequency, amount of purchases, etc..) demonstrating that defining the best customer is not a simple measure of revenue generated by the guest
• Dave Pelter , VP of Supplier Development & Pricing at Farecast showed how their technology is the next evolution in meta-search. Farecast provides the consumer the ability to target low prices through their predictive fare logic challenging traditional RM systems
  
• Cameron Davies, Sr. Manager, Customer Centric Revenue Management, Walt Disney Hotels and Resorts showed how understanding consumer demand and requirements should be part of a comprehensive revenue management strategy

This and other sessions that featured airlines (Delta, British Airways, JetBlue, Southwest, Alaska & American), hoteliers (Best Western, Starwood, Fairmont) and OTAs (Travelocity, Expedia) provided a wealth of insight into various segment's efforts to capture loyalty and provide a common personalized approach to the customer at every touch point.

Eye for Travel CRM conference

I am attending a new conference today in San Francisco: "CRM and the Travel Industry" organized by the Eye for Travel organization. So far, the main focus of the speakers has been on customer service (training employees on the importance of the customer). There is no doubt that the human interaction element of CRM is a key in keeping customers happy, but so far there has been limited discussion of technology that is needed to provide the infrastructure to support CRM at every touch point. Jon Marnela from Fairmont did mention the fact that a consumer's profile is sent down to the property's PMS system. British Airways establishes a score based on corporate relationships and influence to develop a score for each traveler

In my view is that CRM is more than customer care. Yes it is true that technology is not a CRM solution, but without the proper infrastructure, executing on CRM will likely fails. So far there has been no mention of Web 2.0 and the new role of customer generated content on the CRM process.

Dynamic Packaging or Shopping Cart?

When I authored the report on Dynamic Packaging I had high hopes that we were on the brink of a new era; one which the value of a customer and the need for inventory management were both satisfied through an end-to-end solution. I apologize for using this hackney phrase, but my reference to the concept of end-to-end in this context means satisfying customer needs in a profitable manner. In that research study I described the ultimate dynamic packaging system where the users preferences were stored, filtering content, while supply levels had a "just in time" quality, controlled by direct connections into revenue management software. Well its 2007 and we've had some movement such as the success of HBSI in connecting to a variety of PMS. Some of the Travel.2.0 start-ups have implemented personalization techniques using AJAX, but overall no one has implemented a true end-to-end implementation

A question prompted by some work with a new client concerns the true nature of a dynamic packaging system verses a travel shopping cart. The ability to simply put items in a basket with opaque prices that adjusts the total based on a rules engine is a typical way "dynamic packaging" is being implemented today. Examples of this style of shopping cart based dynamic packaging can be found at a number of sites using a variety of technology solutions. The key element missing in these implementations is not dynamic packaging, but dynamic pricing. The ability to adjust the overall price based on relationship between the components and ultimately the value of the customer is missing from most of these implementations. This vision of the ultimate in dynamic packaging is still an admirable objective, but so far the market has not reached this ultmate goal.

Sabre and G2 Collaboration

Travel Weekly reported today that Sabre is exploring possible collaboration with G2 SwitchWorks. This is based on a comment made by Sabre CEO Sam Gilliland in response to a question from a Sabre employee on December 12th. Texas Pacific Group one of the private equity companies that purchased Sabre also holds a 20% stake in G2 Switchworks. What does all this mean? This could be a good test on whether the equity buyout truly impacts Sabre's strategic direction. Some pundits have voiced their view that the equity buyout will free up Sabre from the constraints of public ownership allowing the company to innovate. Another camp, looks at the acquisition as a short term cash cow for the new owners, who will likely seek to reduce costs at Sabre while positioning the company for a future sale. Remember that private equity's primary interest is bringing a good return back to its investors. If Sabre does pursue a relationship with G2, this would be a sign that the traditional "not invented here" philosophy is changing. G2 has been struggling to differentiate itself in light of the new GDS/airline agreements. How could the two really work together? If G2 continues to position their solution as an aggregation tool a layer above the GDS it would not be in Sabre's best interest to partner with a company who is essentially eliminating their traditional single source GDS model. On the other hand where the aggregation point lies is not as important as who owns middleware. G2 could benefit if Sabre where to endorse the G2 travel agent point of sale tool and help distribute it to the large Sabre subscriber base. This is an interesting story to watch as we enter the new era of private equity owned GDS.

Sabre and Private Equity Buyouts

The announcement today that two private equity firms are buying out Sabre is part of a bigger trend. Over the last two years, investors have been putting billions of dollars in private equity firms. Recently private equity has bought out firms with such well known brands as Clear Channel, Readers Digest, Eddie Bauer, Burger King, Hertz, Domino's Pizza and AMC Entertainment. What is behind this trend? There are two camps of thought. The first highlights the benefit of removing a company such as Sabre from public scrutiny where financial details are required to be shared as a publicly traded company. The other view of this trend is a bit more skeptical. One needs to remember that the private equity buyouts are intended to provide a profit for the equity investors. This is often realized when these buyout companies are in turn sold. The first step the equity owners take is to cut expenses at these companies. Often, private equity firms borrow money to buy a company and then keeps on borrowing. The private equity firms can borrow the money in the company's name and then can keep the money themselves. This saddles the company with the debt while the private equity firms continue to siphon money out of these companies. This is all fine and well as long as the company continues to bring in a substantial cash flow, but if things change the heavy debt could be a problem. So which scenario drove the Sabre deal? When private equity offers an acquisition price above the current stock price, companies such as Sabre have no choice but to accept the offer as the short term benefit to shareholders is clear. As with the Blackstone buyout of Travelport and the subsequent purchase of Worldspan the jury is still out on whether this will truly be good for the travel industry. My concern is that with the focus of private equity in cutting costs, the new owners of Sabre, Galileo and Worldspan may decide to eliminate needed R&D and slow the process of moving off legacy mainframe technology to more open systems.

TRX buys Hi-Mark

Today's announcement by TRX on the acquisition of Hi-Mark marks a significant step in the area of corporate travel data management. Over the last 6-7 years Hi-Mark has successfully marketed their data management solution to many large corporate buyers. Despite this success, Hi-Mark's position in the market is strongest with second tier TMCs and corporate buyers. By acquiring Hi-Mark, TRX expands their reach to the mid to lower part of the market. TRX's DATATRAX is an extremely robust platform with a price tag only affordable to the high end of the market. With this acquisition TRX not only expands its reach, but eliminates a major competitor. It is clear that corporate travel data management is still a wide open market, particularly as procurement takes a more active role in travel management.

Travelport Worldspan merger

After years of speculation, today's announcement of the merger between Travelport and Worldspan came as no great shock to anyone in the industry. The only surprising aspect of the deal is the lack of a competitive offer from Amadeus. As far as a fit, Amadeus and Worldspan would have been more complementary. Travelport has been suffering pre and post the Blackstone acquisition from an inability to easily integrate disparate entities and systems such as eBookers, Gulliver's and Galileo. The task of integrating Worldspan and Galileo is huge, and most likely will result in the Worldspan platform and brand fading from the marketplace. The biggest winner in this transaction is Rakesh Gangwal, whose golden parachute from the transaction is substantial. Considering his missteps at both USAir and Worldspan, his multi-million dollar payout seems unjust, but clearly reflects the benefit to Worldspan's stockholders not the industry at large. During his time at the helm at Worldspan, Gangwal saw the errors of his continued support of the "Worldspan inside" strategy with the loss of business from Expedia , Priceline and Orbitz. Worldspan's insistence to "stay the course" in regards to not launching their own online retail brand was a key factor in their demise. With executive compensation not reflecting actual performance, no wonder the traditional players in the industry are unable to anticipate the next wave of technology disruption.

Amadues introduces Meta Pricer

Amadeus introduced a new technology service this week called Meta Pricer. The service "allows airlines to optimise marketing and distribution reach by making cost-efficient use of travel search engines". This is a clear effort to re-insert the GDS into the travel booking value chain in an era of increased fragmentation of content. There is no doubt that there is some benefit to suppliers on reducing hits on their Websites from site scrapping technology. In an era of disintermediation, this major distributor is trying to diversify beyond segment revenue and add value in a new way. Interesting move, let's see if airlines who have successfully dintermediated Amadeus by negotiating deals with meta search engines (SideStep, Kayak, Mobissimo) would be willing to add another layer in their distribution strategy in order to reduce automated hits on their sites. Kayak has implemented an alternate strategy using ITA software to calculate fares (with a cache of availability from a GDS) limiting the query to booking only. If more meta-search vendors adopt this strategy, the opportunity for Amadeus will be further diminished.

Nile Project Personalized Trip Planning

This week I met with Josh Steinitz, CEO of a new start-up called the Nile Project. The Nile Project uses personalization techniques enabling the consumer to create a more customized tour of a city. The consumer explicitly choosers an area of interest, then by using Ajax, the Nile project presents the consumer a limited number of preferences related to those interest. The application uses an Ajax slider (chose a value within a range) allowing the consumer to rate an attribute on a scale (e.g. cost from budget to most expensive). These than act as dynamic filters that present content that meets a consumer's requirements. Additionally the site acts as an aggregator of ratings from other sites (e.g Trip Advisor, Travelpost). As with other Travel 2.0 sites, trips can be shared with friend, relatives and travel companions. Once the itinerary is set, the Nile Project creates a customized itinerary in a PDF file so the consumer can take it along with them on the trip. The Nile Project represents a great example on how personalization can filter content to drive a more customized travel planning experience.

Recap of PhoCusWright Executive Conference 06

It has been my pleasure to be associated with PhoCusWright over the last 7 years. I met Philip Wolf in the late 1980s and I have always repected Philip's ability to understand emerging trends and push the industry towards a more user centric approach to online and offline travel. I have been attending Philip's conference since its inception. Each year Philip and his team strive to provide an innovative approach to conference execution and this year was no exception. With a theme "Travel 2.0 Confronts the Establishment" the PhoCusWright team again pushed the envelope by breaking down the barrier between conference content and networking opportunities. Each attendee was able to listen to the on stage content through a wireless ear bud while still interacting with tradeshow participants. I applaud the PhoCusWright team for another successful innovative conference.

VC Forum panel at PhoCusWright

The VC panel this morning echoed a theme I have heard a lot over the last 8 months: VCs will only invest in online travel companies that have already established customers and revenue. The important thing to remember is that the true disruptors in the online travel market where not funded by VCs. Expedia was an incubator at Microsoft, Travelocity was launched with funding by Sabre and Orbitz was founded by the airlines. History teaches us that VCs are not very good at understanding the next online travel trend and with the current climate most will likely miss the next disruptive application

Corporate Travel Panel

Listening to the corporate travel panel, it is very clear that these executives don't get it. Travel 2.0 means disruption. This panel is still sticking to the same themes they've used for years.

OTA panel at PhoCusWright

Wow, listening to Expedia, Travelocity, Orbitz and Priceline reinforces the fact that they are really the legacy online players. Nothing new from the panel and a characterization of Travel 2.0 as "tools" misses the fragmented nature of the every increasing number of new travel sites. Will Expedia et al be able to capture the Facebook/My Space generation?

Live from PhoCusWright

I am listening to the opening panel at this year's PhoCusWright Executive Conference. The Wall Street panel seems to be missing the Travel 2.0 wave by labeling the new move to social networks and other Travel 2.0 brands as not worthy of investment and incapable of stand-alone success. The attitude expressed seems to be missing the next disruptive impact of true Travel 2.0 apps. I am not surprised that this panel is blind to the shift as they all cover the traditional 1.0 companies that has gone public, who in general also are not understanding the latest trend.This group probably ignored Google's growth in the early 2000's because the "search area" was already established. There is a tidal wave a foot and Wall Street is still focusing on traditional 1.0 companies, what a shame.

See You in Hollywood!

A little later today I will be off to the PhoCusWright Executive Conference in Hollywood. As an PhoCusWright analyst , I will be blogging both on the PCWI blog site and on this blog as well. With the focus on Travel 2.0, this year's conference promises to be packed with lots of announcements, engaging presentations and controversy -
o Are Travel 1.0 companies ready to embrace Travel 2.0?
o With the recent buzz about Web 3.0 ( the semantic Web), how will that impact this week's discussions?
o What new alliances will be announced at the conference?
I will keep you posted.

See you in Hollywood!

The Consumer as the Ultimate Aggregator

Much has been written about the changing travel distribution landscape. The four GDS have been forced to lower their fees in exchange for "full content" agreements with the airlines. A closer look at these agreements reveals loopholes regarding special promotional fares. Recently there has been some rumbling from the major hotel chains about going direct. TMC platforms such as TravelBahn (Amex) and Symphonie (CWT) are being promoted as the ultimate solution for total content. GNEs have emerged as viable aggregators and alternate distribution platforms.

Within this context, old models continue to be the dominant theme as the traditional distribution players promote their definition of total content. A key point missed by this familiar discussion concerns the very nature of the Internet itself. So let me ask, how many travel Websites are there on the Web? What percentage of these sites have content in a single system? This facetious comment does have a point. There is no limit on content on the Internet. One might argue that there are a limited number of airlines, hotels and car rental companies so therefore there is a limit on the number of potential content sources. That may be true, but once you add new Travel 2.0 sites that promote user generated content, predictive modeling or mash-ups of fares and maps, the true nature of content is revealed. I believe that no single system will ever have total travel content. Ultimately it is the consumer who acts as the ultimate aggregator. The continued discussion which paints content as finite, misses the very nature of the Internet. Travel 2.0 will be followed by Travel 3.0, 4.0 and beyond. The way we think about online travel may be radically different within 10 years. Let's abandon the archaic notion of total content access and recognize that the travel industry has been permanently changed by the Web. Expecting any one source whether GDS, OTA or GNE to have full content is not only outdated, but ignores the very nature of the Web. At the end of the day it is the consumer who decides the relevance of content sources.

Using the Virtual World for Real World Business

Second Life is a virtual world where you can explore and interact with other online players. Initially Second Life was similar to other online multi-player games where an avatar representing your real or desired self can teleport to anywhere in the virtual world. Second Life gained additional prominence when it was featured on the cover of the May 20th Business Week. In last 6 months Second Life has attracted more traditional corporate entities. Last month my former employer, Sun Microsystems held a press conference in Second Life. Howard Rheingold author of such visionary books such as Smart Mobs, recently gave a talk in Second Life.

The travel industry has also made their mark in this new virtual world. "Starwood, owner of the chic W brand as well as the Westin and Sheraton chains, became the first real-world hospitality company to open in Second Life, and joins a growing list of other companies who are using the online world to build their brand name, test products, or simply sell merchandise (albeit digital merchandise). You can't check into aloft, Starwood's new line of moderately priced, loft-style hotels, until the first quarter of 2008. Since September , you can wander into the lobby of its digital version inside the popular online world of Second Life."

How else could real world travel companies use this virtual world? By definition, your avatar is constantly traveling, though teleportation is much faster and does not cost any money verses an airline ticket in the real world. Who provides a guide for exploring Second Life? The search functionality can be used to pinpoint particular places of interest, but what if a large travel agency developed enough knowledge of the virtual world to create tours? This is only one example. Given the recent corporate focus on Second Life the travel industry needs to pay close attention this virtually world as a way to promote their brand and provide services at a fee.

Loki - A new twist on Location Based Services

Traditionally, most software developers think of GPS or A-GPS as the preferred technology to pinpoint your location and deliver relevant content related to that location. Loki an application developed by Skyhook Wireless, uses the ubiquitousness of Wi-Fi networks to determine your location. Between the movement to provide wireless connectivity throughout a city (e.g. San Francisco, Philadelphia) and the integration of Wi-fi into portable devices (e.g. smartphones), the ability to use Wi-Fi to deliver location based services (LBS) has become a reality. In a recent article on LBS I authored for the PhoCusWright's GDX subscription service, I talked about the "walled garden" that exists at the wireless carriers which inhibits the advancement of broad distribution of applications. Despite the fact that the wireless carriers are gradually dismantling their "walled garden", companies such as Verizon and Cingular still make it difficult for travel software developers to use their network to deliver services that are specifically targeted to the business or leisure traveler.

Why is this important for the travel industry? The business and leisure traveler are by their very nature the best target for LBS. Business Travelers often are the early adopters of new technology. By enabling location identification through Wi-Fi access points, the traveler can benefit from a whole host of services. These may range from identifying restaurants in their immediate area to locating family members at a resort or theme park. These services can help suppliers and intermediaries bond with their customers while they are on their trip enhancing the travel experience and reinforcing the supplier or intermediary's brand.

Skyhook Wireless has recently opened up their API to allow software developers the ability to create location based applications on top of the Loki application. I encourage travel software companies to take a good look at Loki. Here is a link to a CNET video which describes the Loki service.

An Automated Travel Assistant

Every since I first viewed the historic Knowledge Navigator video produced by John Scully CEO of Apple in the late 1980's, I have believed that an intelligent assistant would truly be a killer app for the travel industry. As originally envisioned, Knowledge Navigator was going to be a tablet, the size of an opened magazine, and would have very sophisticated artificial intelligence. The machine would anticipate your needs and act on them. The Apple Newton was the first generation of these types of tools, but as anyone familiar with technology knows, the Newton was a resounding failure. (Though Palm a few years later did make PDAs a reality).

I have been involved with various AI scientists since the mid 1980s while I was still at United Airlines. A friend (the husband of one of my wife's bridesmaids) worked for a company called MAD Intelligent Systems here in Silicon Valley. Steve and I would spend hours talking about how to apply AI to the travel industry. Sadly Steve passed away in the late 1980s dying of leukemia at the young age of 35. Steve inspired me to continue to explore the possibilities of AI in the travel space.

We are now in the future (certainly in 1980s terms) and AI applications have been used in a variety every day activities. Examples include control, planning and scheduling, the ability to answer diagnostic and consumer questions, handwriting, speech, and facial recognition.

Over the years I have worked with a variety of clients who have tried to use optimization technology, constraint engines and other pieces of AI software to improve the travel process. Disruptive technology such as the Orbitz fare matrix was built by the AI scientists at ITA Software. My partners at Fetch Technologies represent some of the brightest minds in AI today. Once we are funded I plan to use AI techniques to fulfill the dream first described in John Scully's video. The creation of a master itinerary will allow us to run background queries to search for better fares, rates, and travel research items based on consumer preferences. In the early 1990s TMCs touted their mid-office software (such as TRX's CoRRex) as a quality control tool and as a way to search for better fares and seats against the GDS inventory. We are now in a much more fragmented, Web-based environment and the ability to use AI "agents" to perform similar tasks against Web information is not only possible, but can truly change the travel shopping experience.

Fetch Collaborative travel planning tool

I wanted to provide you an update on my efforts to launch a new company based on the extraction applications from Fetch Technologies. As a reminder, through the use of a Web browser plug-in, the application will allow the consumer to Collect, Organize and Share travel planning, research, shopping and purchases across all the major travel Websites. Travel Tech Consulting, Inc. and Fetch Technologies will be the founders of this new company (name TBD). Fetch will have a minority equity position in exchange for a perpetual license of their patent-pending "As U Browse" technology. The new company will own the source code and have field of use exclusivity (travel industry vertical). The new company will be based in the San Francisco Bay area.

I am currently in discussions with a number of VCs and Angel investors who are considering investing in the new start-up. I also have begun my search for potential employees who have experience in the online travel industry and are interested in participating in this new venture. If you know of someone who would be interested in either investing or joining our team, please email me at norm@traveltechnology.com.