Understanding the Top 5 Travel Distribution Trends - By Ritesh Gupta

With such queries looming around, these are certainly exciting times for the travel sector.

All the talk and even the emergence of new social travel services, the combination of sophisticated mobile devices coupled with location based applications, the possibility of offline navigation with no roaming fees, augmented reality and more of such new features mean the world of travel planning and buying continues to evolve.

As EyeforTravel gears up for one of its biggest events of the year, Travel Distribution Summit North America 2010, to be held in Chicago (13-14 October), we chose to speak to Susan Black, Co-Founder at The Black & Wright Group, who has been closely associated with EyeforTravel’s events in the US as event moderator and chairperson. Susan spoke about five top issues the travel industry is facing at the moment:

1. New developments:

Susan believes that the way is Google is moving in this sector, especially with its $700 million deal with ITA Software, and the entrance of Apple, which has been in news for registering patents for two travel-related applications for the iPhone and iPad, major changes are in the offing. In all, it has been reported that Apple has registered three patents in total, one for travel reservations, another for hotel bookings and a third which is focused on fashion retail.

Susan believes that these developments can have a major impact on the entire industry.

ITA Software's QPX software uses algorithms to combine and parse multiple sets of flight information from airlines, including pricing and availability data, to create an up-to-date database that can be searched across. Google is buying ITA Software to create a new, easier way for users to find better flight information online. By combining ITA Software's expertise with Google's technology, the search giant believes it would be able to build new flight search tools for users that will make it easier for them to search for flights, compare flight options and prices, and get them quickly to sites where they can buy their tickets.

Searches for travel-related information are among the highest-volume queries which Google receives.

Susan says the latest development can have an adverse impact on the likes of Kayak and Bing Travel. It is also expected to change the search pattern and offer a more robust way search is done. She believes Google has power to change the equation by driving more traffic directly to travel suppliers and also adversely impact the OTA business.

2. Enhanced search and personalisation:

The industry is witnessing rapid and continued innovation in enhanced search at this juncture. When one looks at the capabilities of the iPhone and other GPS-based devices, and what Google is doing with ITA, it’s clear that the industry is moving quickly towards better, faster and more accurate personalised search.

There is still a long way to go.

“Unfortunately, that “holy grail” of the perfect search return has not been found yet and I think that given the tremendous complexity of the problem, the issue won’t be completely solved for a long time. While there is improvement all the time in this area, many times the consumer’s search results are not what the consumer wanted,” says priceline’s executive vice president - corporate development, Glenn D. Fogel.

From a consumer’s perspective, Susan believes that the increasing number of options to get associated with them means that there are opportunities to go beyond the planning and booking process. “It is going to be equally important to consider the time period just before the time of travel, in-destination and also post arrival in order to get in touch for the next trip,” says Susan.

The industry is moving towards slowly towards personalisation and there are some clear reasons for this. Travel isn’t bought all that frequently, possibly only two or three times a year, so the industry’s ability to build up an accurate picture of travellers’ needs – which may change in any case between business and leisure travel for example – is much lower than other industries. The industry is beginning to see this to change though, and within the constraints of increasing concerns about user privacy, one expects more investment in this.

The travel industry has witnessed a series of initiatives over the past few months, resulting in a fully customisable offering as per a traveller’s preferences.

On how e-commerce in the travel sector has moved towards personalisation, priceline’s Fogel, says, “It is getting better but I think it can be improved. No travel service knows me well enough yet to make algorithmically driven suggestions that would be correct a high percentage of the time. Of course, part of the issue is many people don’t want to have all of their interests, history, etc. accessible by businesses. The privacy issue is an interesting one as we all want personalised service but are reluctant at times to provide the personal data that is needed to create such a service.”

3. OTA business - International (relying more on outside the US market) and strengthening of the advertising and media revenue

The online travel industry is becoming ever more complex, multi-faceted, global and less reliant on the transactions business. Key players are learning to better monetise their site traffic and deliver improved marketing channels for their partners.

A company like Orbitz Worldwide believes that it’s really about utilising scale to build healthier, more diversified businesses that leverage the very benefits of scale – audience reach, cost efficiency, and continued R&D.

“If you can achieve scale, you’re able to grow all of these core business lines in parallel,” says Ronnie Gurion, president, Orbitz Worldwide Distribution.

For her part, Susan says the success of international demonstrates that Internet penetration and usage is growing in other countries and offers opportunity. In markets like Europe and Asia, which are much more fragmented marketplaces with inventory being more independent vis-a-vis the US, the OTA business is better placed as Susan says it is less expensive to pay commissions in such markets.

While advertising and media represent ancillary revenue sources, there are still different schools of thought as to whether the presence of these messages helps or hinders travel transactions.

4. Is this finally the year for mobile?

After its recent survey, featuring 2,524 U.S. households and assessing the impact of the current economic environment, social values and media habits on the travel habits of Americans with an annual household income of $50,000 or more, Ypartnership stated that mobile devices are destined to play an increasingly important role in the distribution and sale of travel services in years ahead. Both shopping and more real-time engagement in the discovery of what a destination has to offer are likely to rival talking and texting in the years ahead.

The company found that nearly one-half have navigated a destination using the built-in GPS functionality (47 percent) or searched for the latest information on flight schedules and delays (46 percent). Nearly three in 10 have compared airfares or hotel rates (29 percent) or shared information or photos about their travel experiences (28 percent) using their smart phone. Approximately one in six has booked air travel or lodging (18 percent) or viewed a virtual visitor guide that provides information on things to do and see while visiting a destination (15 percent). Finally, more than one in 10 (11 percent) has used their smart phone to download and redeem mobile coupons, while one in 20 (six percent) has downloaded an audio walking tour of a specific destination.

Susan says the mobile market is definitely finding its way into the travel business, more as an information tool and service portal than as a major source of transactions at this time.

The industry believes that the obvious next big thing will be in the mobile space, going from where we’re at now –which is largely access and research – to a full-service booking path available directly from your device.

But Susan emphasised that its time for the industry to ensure the best of the offerings are produced through collaboration or concerted efforts featuring the travel sector and other key stakeholders in the chain. She also added that the way Google and Apple going about their businesses in the sector, especially the contrasting styles, one can expect a lot more concrete results this year and in 2011.

5. Cracking the utility of social media

Recently, in an interview with EyeforTravel, Nigel Pocklington, VP global marketing and strategy, Expedia, mentioned: “We can’t ignore the size of social media, and its potential to help users engage with our brands, but it needs to be seen differently to the more transaction focused marketing channels – it’s a dialogue, not a broadcast. I would expect to see more investment in this area across the travel industry, especially because customers will come to see Facebook and Twitter as communication channels alongside the more traditional telephone and email, but it needs to accommodate the very different nature of the medium. It poses a new creative challenge and opportunity for marketers.”

For her part, Susan social media platforms are indeed very legitimate channels for travel companies – but – many travel companies are going headfirst into these channels without a developed strategy; without specific plans to measure what matters to them, based on the strategic goals; without sustainable tactics; underestimating the bandwidth, expertise, and cost associated with maintaining a robust social media presence; and finally, without a true sense of dialogue, that is the very essence of this channel.

“Social media as an effective customer service and sales platform has yet to be proven, because it is still in its infancy, and the true effectiveness of this powerful channel has yet to be fully developed by travel distributors,”concluded Susan.

Travel Distribution Summit North America 2010

EyeforTravel is scheduled to conduct the two-day Travel Distribution Summit North America 2010, to be held in Chicago (13-14 October). The event will feature over 80 speakers, including the ones from Hilton, Wyndham, Travelport, Lufthansa, Expedia, Google and from many other such organisations of repute.

For more information, click here:

Or contact:

Marco Saio

Event Director

[email protected]

0044 (0) 207 375 7219

Or

Rosie Akenhead

Event Director

[email protected]

0044 (0) 207 375 7229