Now is the time to look ahead

Organisations must innovate or risk becoming middle of the road followers, says David Bicknell as he examines the role of technology as a driver for innovation.

The easy way out in today’s challenging economic marketplace – a market that has already seen PricewaterhouseCoopers dismiss the idea of a short-term recession in the travel industry and warn agents and operators to prepare for three to five years of reduced activity – would be to adopt a ‘steady as you go’ strategy, milk your current revenue streams, minimise business expenditure and sit tight waiting for better times. And middle of the pack mediocrity!

For those wanting to get ahead the message is much simpler: innovate. Some of the biggest names in technology – for example, Google, Cisco, and Sun Microsystems – were all were born in recessionary times.

Indeed, as Sami Mahroum, research director of Britain’s National Endowment for Science, Technology and the Arts and a Visiting Reader at the School of Management, Birkbeck College, University of London, puts it: “During economic downturns, innovation is the single most important condition for transforming the crisis into an opportunity.”

That innovation may not necessarily be in technology. It could also come from innovation in business processes. Nevertheless, as PhocusWright’s Bob Offutt, senior technology analyst and editorial director, Technology Edition, explains, “Innovation is at the very heart of the travel industry – from the beginnings of air travel and global hotel brands to GDS and OTAs. For travel companies with a clear vision and a willingness to assume risk, the economic downturn offers significant opportunities to gain advantage through innovation.”

Investors agree. They believe there is plenty of room for innovation between what we know as Travel 1.0 and Travel 2.0. And they’re proving it. According to Hudson Crossing, a New York-based strategic advisory firm devoted to helping business owners raise the financial performance of their travel, tourism and hospitality assets, 23% of private equity companies, 5% of venture capitalists and 25% of other investors are expecting to increase investment in the travel sector in 2009. Some 30% of private equity companies, 38% of venture capitalists and 12% of other investors find the travel sector attractive.

Offutt says for travellers the information they require on a trip is a confluence from a variety of sources.

“You need to tailor the content of your profile, situation and get the necessary information at the right time. At the moment, there is an integration problem. Is the information being pulled, or in some cases should it be pushed? For example, I want to go out; but the road to the airport just shut.

“It will take two years to mature and achieve this integration, because I don’t think people really know what travellers want. At the moment, the information is what travellers can get, not what they need. There have been a lot of first generation attempts to probe people’s needs. The next big opportunity ahead will be to add value to travel bookings.

“Access to information is always a bother. I’ve just done a leisure trip to the West Coast where I had in-room TV with an archaic TV internet keyboard. Of course, if you have an iPhone as a device, that enables access. But what we need to see is more innovation in access. One Canadian company, Hotel Communication Network, is providing that through stripped down computers in hotel rooms. It is starting with hotels in Chicago to provide access to those people who don’t want to travel with a computer or don’t have a fancy phone.  Another example of innovation is Runtriz. When you check in, you get an iPhone programmed with ‘Hotel Evolution’, a new iPhone application through which you can order room service, set a wake-up call, request your luggage, dry cleaning, check your messages, or set your room to ‘Do Not Disturb’.”

Offutt says such services are also an opportunity for advertising. The problem is that if the services are to be truly useful, they must be relevant and up-to-date.

“Many of the services travellers want – to go and eat, to know more about sports, or sports programming – is dynamic content. You’ve got to programme the date. So the database has got to be time aware,” says Offutt, whose predictions of technology trends with PhoCusWright are covered overleaf.

Geoff Cairns, Microsoft managing director for hospitality worldwide, agrees that despite the challenging times for the travel industry, there are a lot of opportunities to be had using technology as an enabler: for consumers, suppliers, and content distributors.

“Technology creates the opportunity for a much richer experience to take away many of the aggravations of travel while creating greater loyalty, growing market share and improving margins. The industry is a very complex one with many different suppliers, all serving the customer from a different vantage point. It’s not an industry that is dominated by one hardware or software vendor. There’s a reliance on many small partners, which makes innovation a challenge. Trying to integrate disparate systems becomes a very costly proposition for a small hotel. And that’s important because consumers want to be able to look at options from both large and small companies.

“Our design principle is ‘the connected traveller experience’. Where do we have to go? What are we going to touch along the way? And where can we add value? We are looking to provide innovation around search technology, and around the capabilities needed to access features that are relevant to booking and carrying out a journey and acting on information, such as flight data, while collaborating on that journey with friends and family.”

Microsoft is working with SuiteLinq, which provides multimedia interactive, broadband, and on-demand solutions for hospitality environments, offering hotel guests broadband connectivity, from-room printing, business productivity tools and proprietary entertainment content. Each room setup also allows guests to connect to the internet with their own laptops as well.

One of the hotels using the solution is Kimpton Hotels and Restaurants’ boutique Epic Hotel in downtown Miami. All 411 rooms and suites at Epic feature SuiteLinq’s technology, with a customised thin-client computer in each guest room. This runs an interactive portal providing hotel information and amenities, local guides, on-demand entertainment, Microsoft Office software, and an array of embedded Microsoft services, including Live Search.

In the Kimpton Epic hotel’s public area is another technology innovation, Microsoft Surface, an intuitive user interface that works without a traditional mouse or keyboard, allowing people to interact with content and information on their own or collaboratively with their friends and families, just like in the real world. Surface, recently demonstrated at the Travolution Summit, has a 360-degree user interface, and a 30-inch reflective surface which is capable of object recognition, object/finger orientation recognition and tracking, and is multi-touch and is multi-user.

Users can interact with the machine by touching or dragging their fingertips and objects such as paintbrushes across the screen, or by placing and moving placed objects. Other current users of Surface include Sheraton Hotels and gaming group Harrah’s.

Paul Dawson, EMC Consulting experience director, believes the need for more innovation in the critical area of search could be served by mashing up the Microsoft Surface application, with the FAST search technology bought by Microsoft.

Dawson’s EMC Consulting (formerly Conchango) team designed and developed an application demonstrated at FASTForward to show what Surface might do for search. The demonstration uses Surface while taking data from remote data sources, and using the FAST search engine.

For his part, Dawson believes real innovation progress may be driven by from companies outside the travel sector, whose solutions could then be adopted to spur innovation. For example, providers of e-commerce search and merchandising solutions may bring new ideas.

Cairns agrees search is critical, and admits it is still early days. “Search is an important paradigm, and there is a lot of room for improvement. We are in the midst of working out how we want to capitalise in this area. Hospitality and travel is a perfect area for search innovation.”

Another area is in-room technology and environmental controls where Microsoft is working with companies such as Honeywell on developing a new room control system that can be deployed in hotel rooms to enhance the customer experience.

“There is a big green opportunity to calibrate the basic engineering of a room with Presence in the room. Rooms are a very rich place to explore innovation, looking at how to interact both explicitly and subtly within the room environment,” says Cairns.

Another future area of innovation is in journey management, where Microsoft is working with Langley-based Travelport to develop an integrated set of services targeted for the travel industry to address challenges faced by travellers, suppliers and travel agents and to provide airlines, travel suppliers and travel agencies, including travel management companies and online travel agents (OTAs), with new revenue and cost reduction opportunities, broader distribution reach, and improved customer satisfaction.

Henry Harteveldt, vice-president and principal analyst for travel at Forrester Research, says travel firms missed an opportunity for focusing on innovation when times were better. “Travel companies were guilty of fiddling while Rome burned. What worries me is that there are great ideas but the attitude seems to be is that in the current climate too many people are keeping their heads down. They are saying, ‘I don’t know how I can make my case, so I won’t make it’,” he says.

“Companies are squandering the opportunity, although there are good examples of innovation that will have an impact on the travel sector, such as Imagini’s visual booking engine, TravelMuse’s personal online concierge, and Nile Guide’s trip planning site.” He adds: “Ryanair too is very innovative and it really pushes the limits. I think that Amadeus gets innovation too. The customer will let you do things, but often it’s the corporate culture that gets in the way. We have to see organisations be prepared to take more risks if we are going to drive more innovation into the travel industry.”

PhoCusWright’s 2009 Travel Technology Trends

1. The Entire Trip Experience Will Be ‘Informationised’

In the past, the main focus of the travel value chain has been those components that resulted in a booking. Access to further information was a challenge because of limitations of mobile devices, lack of acceptable technology in hotel rooms, language barriers and no clear business model. This is all about to change.

2. Software as a Service, Cloud Computing and Open Source Spawn a Flock of Innovators

Open Source has matured to the point that many companies are fully dependent on it. It has become an enabler for startups, allowing them to rapidly accelerate their time to market. At PhoCusWright’s November 2008 Travel Innovation Summit, demonstrator Home and Abroad explained it would not have been able to bring their product to market if it had not been for Open Source.

3. Suppliers Provide Personalised Shopping/Booking Tools

Today, most OTAs look much the same: Where do you want to go? When? Air only or hotel and/or car? To provide convenience and value to the customer, future learning and shopping screens will adapt to the users’ stated profiles, observed profiles and shopping style. Similarly, the content presented will be the most meaningful to the customer.

4. Technologies Will Continue to Converge

Ten years ago, television networks were distinct from the web. Video was limited to TV and you went to see a movie at the theatre. Now you can make a phone call anywhere to anywhere in the world using your laptop. You can watch movies and TV and browse rich content on your mobile device. You can watch content from the web on your TV and wirelessly network your house for all kinds of content.

5. A Flood of New Mobile Travel and Location-Based Applications Come to Market

Mobile usage in travel applications has languished for years with a poor technology capability and an even worse business model. The mobile platform finally has interactive capability that makes it the fully functioning ‘3rd screen’ alongside the desktop and laptop. With the growth of 3G (broadband wireless) subscriptions and smart-phone adoption, apps will embrace location and context in a new way, enhancing the travel experience.

6. Advertising Technology Transforms Travel Distribution

Pure play booking fee models will become dinosaurs as blended models involving highly targeted ads, referral fees and fees for service establish peaceful coexistence. The technology convergence discussed previously will enable the convergence of business models.

7. Still Searching…for Better Search

Last year the trends were ‘Semantic Technology and the Semantic Web will drive the next wave of Internet technology’ and ‘Search will evolve to become more effective’. These are still true. Lack of adoption of the formal Semantic Web does not mean that search is not getting better. There are several instances where semantics are being used to improve search. As they begin to show differentiated business value over normal search, they will gain traction.

8. Democratisation of Supply Levels the Playing Field

In the beginning when the airlines created travel distribution, the GDSs controlled the distribution of travel content. This created an oligopoly. But times are changing. The implementation of standards for interconnection, the transparency of the internet, web services and mashups, new search tools and SaaS models have all contributed to the development of an open marketplace for travel distribution.

9. Business Intelligence and Analytics Move to Forefront

In tight times, you need to squeeze as much as possible from your existing operations and capabilities. This involves understanding what your competitors are doing, how efficient and effective your own operations are and what your customers are saying.

Winning example

Pixell Travel Suite

Pixell Travel Suite, which won the innovation award at the recent Travel Technology Show, picks best available offers from connected booking engines and distributes your best deals throughout all necessary marketing channels: sites, banner ads, Google adwords, affiliate platforms and newsletter systems.

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