Archive for December, 2017

Did you know…Air Travel Fairness urges US DOT to halt approval of airline antitrust immunity without new consumer protection?

air travel fairnessAir Travel Fairness, one of the largest traveler advocacy organizations in the U.S., called on the U.S. Department of Transportation (DOT) to reject any applications from airlines for either new or expanded antitrust immunity (ATI) agreements between carriers without first instituting new protections from the harm these schemes are causing consumers.

Airlines with antitrust immunity are able to freely cooperate between each other on fares, schedules, fleets, marketing programs and operations.  Essentially, these mega-joint ventures operate as if they are a single, giant airline.

For example, once approved for antitrust immunity, two airlines that previously competed against each other for travelers’ business, perhaps offering the only nonstop flights on a given route, behave as if they are one company. The two airlines can share costs and revenues on flights, set prices including minimum fares offered on each of their flights, reduce capacity if too many low-priced seats are offered, or do away with the type of bonus and discount programs offered to frequent flyer program members when two or more airlines are vigorously competing for travelers’ business in a truly competitive market. The airlines might call this efficiencies of scale, but consumers are the big losers.

The consumer impact is the same as when a market with two competitors changes to only having one. Two airlines, in this case, essentially merge into one, but there is no change in ownership. Continue reading →

2018 Travel Technology Trends

The annual Phocuswright Conference took place last month and for travel, tourism, and hospitality industry professionals, the show serves as a bellwether for tech trends across all key travel segments. We conducted a post-show interview with Phocuswright research analyst, Alice Jong, to discuss the hot topics and opportunities for 2018 that created buzz at the show.

WATCH our video interview with Alice Jong, Phocuswright research analyst

ExpertFlyer: Give us a high-level description of what Phocuswright is and the purpose of the conference?

Alice Jong: We are a travel market research company and we focus on anything related to travel distribution and technology. The U.S. conference is our largest event where we gather the biggest ideas and the biggest opinions in the travel industry, and present them on stage to share trends and things to watch out for. We cover all the segments in travel … it’s a great opportunity for attendees to not only gain knowledge about what’s happening in the travel industry, technology and innovation, but also make connections with the biggest minds in this space.

EF: There were a number of highlights that came out of the show, one of which was the popularity of tours and activities and its impact on search and booking technology. How is this segment evolving?

AJ: It’s actually a big study that I worked on directly so I’m quite passionate about this segment. Essentially, so much of tours and activities — the things that you do once you’re in the destination — whether it’s going on a walking tour or participating in a cooking class or going scuba diving, much of that is still transacted offline. Travelers tend to book these activities very last minute in destination – with many actually walking up to the ticket booth or into the shop to purchase the experience in person. But there’s been a big shift where all of this is moving online now. So, think about how hotels and airlines are online.  You can easily compare options, whether it’s on a metasearch site or on an OTA like Expedia. That’s starting to happen for tours and activities now. Bike tours were among the first to do this in a big way, but in recent years, many more startups are getting on board, so platforms like “Get Your Guide” are surfacing and they’re aggregating all these activities that you can do and putting them online where travelers can easily research activities by category and then book them from a computer or mobile device.

Many of these activities and experiences tend to be operated by small “Mom and Pop” shops, but there are new technology platforms now that are being created that cater to these smaller players enabling them to basically digitize their inventory. So, once the supply is digitized, then the consumer can also book it digitally and it’s really gaining momentum, such that even the biggest travel players are now seeing a lot of potential in the tours and activities space.

The first time we did a study related to activities was back in around 2011, so just over six years ago and around that time the biggest players were lukewarm about tours and activities. Since then, brands like Expedia, TripAdvisor, Airbnb, and Booking.com, are all looking to add tours and activities into their online platform.  As a result, it’s going to be easier for travelers to research activities they are interested in, compare what they want to do and then book it directly online. With more than 80% of the activities marketplace still offline, this category is expected to grow quickly based on the demands of travelers and their online search and booking expectations.

EF: What are some of the sites that are fulfilling this travel niche search now?

AJ: Some of the biggest or well-known brands, Expedia, has a local expert now and they’ve actually integrated that into their mobile platform, as well. Airbnb launched Experiences last year, so more focus on that local experience in the destination. TripAdvisor, after acquiring Viator, one of the largest online tours and activities booking agencies, started integrating bookable content onto TripAdvisor. So, travelers may now directly book those activities from TripAdvisor. Some of the other examples are Get Your Guide, which is one of the larger global platforms, and others with a regional spin, like Newman Tours specializing in Asia, as well as Klook, and Be My Guest. In India, you have options, like Make My Trip and Clear Trip. There is a good deal starting regionally, which indicates a lot of opportunities to grow. It’s very exciting to see where these players are going to take this and keep growing the inventory.

EF: There was some talk about the impact of artificial intelligence and voice recognition associated with travel search and sourcing. What’s on the horizon?

AJ: This technology is still quite new. We’re in our infancy with this and many of the biggest online players are exploring possibilities and options. They’re looking at chat, they’re looking at voice, and they’re looking to see how they combine a mix of A.I. chatbox with human interaction to find that right balance. Many of them are analyzing and testing what they can do with customer service inquiries. Expedia has been experimenting with Facebook Messenger and earlier this year they rolled out a Facebook Messenger booking capability for Hotels.com. Kayak has been looking at Alexa capabilities, so they’re all dabbling and they’re trying to see what the possibilities are, but so far what we are hearing from them is it’s still new and they are exploring the early stage capabilities.

Over in Asia, China’s biggest OTA, Ctrip, is using A.I. customer service chatbox to handle many of their customer inquiries. Make My Trip in India also rolled out chat-based online booking for their packaging business. So, we see different players exploring different routes but ultimately it’s like finding that right balance that makes things easier and more personalized for the customer.

We saw in our travel technology survey that in the U.S. about half of online travelers now use some kind of voice assistant in their everyday life. In terms of travel though, it’s most advantageous future usage is still developing. Companies are looking at opportunities starting with customer service for now and they’re considering how the technology will play out in terms of shopping and booking stages.

EF: Let’s talk about loyalty and loyalty programs. It was interesting to see some data on customer loyalty and membership programs. According to your analysis, membership to a loyalty program doesn’t necessarily mean a customer is all that loyal. What do you think is coming down the pike in terms of airline and hotel rewards programs? Are we ripe for reinvention in this space?

AJ: Well, for both air and hotels in general, we’re definitely seeing that loyalty programs don’t mean loyalty necessarily. And what we’ve seen in our studies is that loyalty programs aren’t deal-makers for the traveler either. Overall, they aren’t making their final booking decision based on a loyalty program. In fact, for air, we see that the majority of travelers belong to either multiple loyalty programs or none at all. So the share of travelers that belong to just one is the minority. And further to that, we also find that they’re willing to book with an airline outside of their loyalty program if it means a better price or schedule. So that’s what’s really driving those purchases. On top of that, air travelers’ loyalty greatly depends on their home base location. If you’re based in Atlanta, Delta’s probably going to be your preferred airline. So much of it is based on these variables that aren’t necessarily about loyalty. It’s about the commodity and what’s available and what’s most convenient and priced right for your budget.

It’s been fascinating to see how Airbnb has been able to build this brand affinity with its user base where people keep coming back and reusing again and again – and they don’t have an official loyalty program. With the airlines, especially in the U.S., there are a set number of carriers you can fly on. If there’s the option of a $100 flight versus a $600 flight and the schedule’s pretty close, you’re probably going to go with the $100 flight rather than trying to get 500 extra points on your frequent flyer program. So, I think for loyalty, what we’re looking for is who is going be able to find a way to differentiate their brand through some kind of deeper connection, not just by offering these perks because the loyalty program and frequent flyer miles are no longer differentiating brands.