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March 11, 2009

2009 Travel Technology Trends: Insider’s View


PhoCusWright CEO, Philip Wright, giving the Blogger’s Summit the inside scoop on the research trends

Direct from PhoCusWright’s CEO Philip Wolf, here are the driving forces of change for travel technology through 2009 and into 2010. He’s been at this game since 1994 and is one of the top authorities on the topic. His top trends? Money, media, mobile and moxie.

Here’s the detailed low-down.

Money: Yes, companies without serious business models or real value to add will get snuffed out in a struggling economy. This trend, however, is not just about which companies have money in the bank or can keep cash flowing, but which are able to take advantage of very inexpensive debt and leverage it to gain advantage on their competition. While a broad analysis of the market indicates a general decline in business, PhoCusWright’s more detailed analysis shows that 70% of companies are hurting, 10% are holding their own, and 20% are innovating and investing like mad, seizing opportunities and moving boldly because they have access to money and the nerve (moxie) to use it.

Media: This refers to not just the traditional newspaper websites, but any platform that brings buyers and sellers together to do a transaction. Media attracts both and puts them together. Online media is “wreaking havoc” in the industry. For example, Travelocity (owned by Sabre) has worldwide employees numbering around 5,000. More air travel searches, however, are being done by consumers on Kayak and they have just 76 employees. Quick maths: nearly 66 times the number of employees, and all the costs associated with it. Media innovation (often through new search technologies) will continue to force the existing garde to adapt and will keep undercutting their profits. Result: a very dynamic and competitive marketplace at the moment.

Mobile: Wolf likened 2009 to 1995, which was the year that big companies began to build their first websites and to take the medium seriously. According to him, 2009 will be the year that established companies in the travel industry will roll out mobile applications. There are a lot of smart mobile handsets in the hands of many of people, and this opportunity won’t be overlooked any longer. As with the 1995 trend of the corporates taking their printed brochures and turning them into static websites, most companies will take their existing websites and just adapt them to mobile apps (applications) in 2009. The innovators, however, will invest in meaningful applications that take advantage of locational information (GPS data), user-generated content, multimedia content and the prevalence of Wi-Fi (wireless) and 3G networks and change the game. We have yet to see the Expedia and TripAdvisor of mobile apps, but they may well become known during 2009, even if they don’t go big just yet.

Moxie: Wolf defines this as “vigor, verve, pep, courage, nerve, skill, know-how”. Real leaders will be the ones cutting operating costs to keep profitable while investing in capital projects (like mobile apps). The key quote here: “Companies working hard to defend their place in the market and do so successfully will probably find that, once the turnaround begins and the tide begins to rise, they’ll have defended a space that is out of date or out of sync with the market.”

So what does Wolf look at to see whether the tide is turning? He speaks about watching the average hours worked per week by hourly workers (new hires are a lagging indicator), hiring of temporary workers, increases in orders – pretty basic macro-economic indicators. Having said that, he also feels that the turnaround will come faster than ever before once these indicators have been sighted and a positive trend is even vaguely clear.

For all the current gloom, PhoCusWright is bullish and believe 2009 will be an exciting year, one that brings advantage to companies and organisations with strategic moxie and the money to act.

PhoCusWright is a research authority in the travel industry focusing on market research.

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