Amateur Expert Traveler

The Amateur-Expert Traveller
Three important trends in travel which
are being accelerated by the recession

Content
Foreword, by Ian Wheeler 1

The Amateur-Expert Traveller 2

> New destinations 4

> The rise of the BRIC economies 5

Building the brand in the online world 6

The Responsive Journey 8

> Technology and the total trip experience 9

> Waiting for mobile 12

> Looking further into the future 14

> …but it’s so much nicer to [stay] home? 15

The consumer booking experience 16

All Niches Great and Small 18

Appendix 22


Foreword, by Ian Wheeler started during the Great Depression; Microsoft and The Gap Limited
were founded during more recent recessions. Indeed, in some ways,
recessions make starting new businesses easier – there is a larger
number of talented people looking for work, suppliers are more
open to negotiation and customers may be more open to trying a
new product or service that promises cost savings.

Niall Ferguson, a financial historian at Harvard University, draws a
similar parallel between biological and business evolution: “…often,
the real drivers [of financial history] are the process of speciation -
when new types of company are created - and the equally recurrent
process of “creative destruction” - whereby weaker companies die
out or, more commonly, get ‘eaten’.” 2

In this paper, we describe three broad trends influencing the travel
industry today – increasingly expert customers, the ever more
technological trip experience and the growth of “niche” travel
– that we believe are being accelerated by the current downturn.
To reach these findings, we interviewed thirty leading executives
and thought-leaders in the travel industry and polled 2,719 travel
professionals worldwide about a series of key trends in the travel
industry. We then conducted extensive desk research to understand
how these trends might be affected by the recession.

The amateur-expert traveller: the Internet has put much more
information at the fingertips of the average traveller – whether from
professionally produced content or user reviews and other social
media. With business and personal budgets squeezed, the incentive
to put all that knowledge to good use has never been greater.

The responsive journey: technology has improved the booking
experience immeasurably but the trip itself remains ripe for
technological innovation. Such innovation may be provided by
talented executives using the recession as an opportunity for a
change in direction.

All niches great and small: travel companies will increasingly look
In the summer of 2007, as the first cracks in Wall Street’s mighty
at opportunities in travel niches or selling niche travel services or
financial edifice began to appear, a natural disaster was already well
additional offer opportunities for additional revenue as well as
under way on the other side of the United States. Millions of acres
higher margins for in-depth expert advice.
of the American West were ablaze in what would turn out to be the
second most destructive summer of forest fires since records began
in 1960 1. On the other side of the Atlantic, the European Forest Fire Just as forest fires form an important part of the regeneration
Information System called July 2007 the worst on record. process, we believe that the current recession will clear the way for a
fresh burst of innovation in the travel industry.
Forest fires, like recessions, are both painful and tragic. In this report,
we have tried to look beyond the immediate devastation of the
credit crisis and ensuing global recession, to the future. We have
tried to look at the trends and innovations which might flourish in
the post-recessionary environment. Ian Wheeler
Recessions – and even depressions – do not always smother Group Vice President, Marketing Distribution, Amadeus
innovation as much as we are sometimes told. Hewlett-Packard, www.amadeus.com
Geophysical Service (now Texas Instruments), Polaroid and Revlon all



The Amateur-Expert
Traveller



Towards the late 1990’s doctors began to notice a curious trend: increasingly, patients
knew almost as much about their illnesses as their doctors did3 , who, after all, have the
benefit of years of university study.

This is the result of two factors: as people live longer, more Just as the Internet has empowered patients with knowledge, social
suffer from long-term illness meaning that people live with their networks, user-reviews and other Internet resources have, and will
condition for years whereas doctors have merely studied it. The continue to, devolve to travellers the power of knowledge. Over
medical industry has dubbed these the “Expert Patient”. Second, the next ten years, half of the experts in our panel expect to see a
the Internet has given patients more access to information and “major change” in travellers’ level of knowledge about their travel
helped them to diagnose their condition. This has given rise to options (see chart).
“participatory medicine”, in which the rational relationship between
an all-knowing doctor and a dutifully passive patient is replaced
by a team which includes a knowledgeable and actively engaged The corollary to this is that half of our experts expect a similarly
patient, specialized social networks, and clinical researchers in a significant change in the level of service which travellers will
“collaborative relationship of mutual respect”4 . demand over the next ten years. This is partly a function of a
customer service “arms race” in which travel companies compete to
give better customer service, which in turn sets a higher expectation
Something similar is happening in the travel industry. The current among customers. “The challenge there is, the more you give the
recession notwithstanding, travel has increased enormously over customers the more they demand,” as Paul Ellerby of easyCruise
the past 10 to 15 years. Similar to someone with a long-term illness puts it. A smaller – but still significant – proportion of our experts
– though, one hopes, not suffering quite as much – the frequent expect travellers to become less likely to seek professional advice in
traveller will often know more about their destination and how best the future.
to get there than a travel agent. This applies as much to business as
it does to leisure travel.

Looking to the future, to what extent do you think consumer behaviour will change over the next 10 years in each
of the following ways?

More knowledgeable about options 50% 43% 7%

More demanding in terms of service 50% 36% 14%

Less likely to seek professional offline advice 25% 50% 11% 14%

Major change Reasonable change Slight change No change Don`t know

(Expert interviews: Base: all responding: 28)



New destinationsDescription

Travellers are expected to become more adventurous in the future Organisation, the current top three travel destinations globally
too. This makes sense: if fore-warned is fore-armed, then more are France, Spain and the United States. Although our panel do
knowledgeable travellers will feel more confident about travelling to not expect a major shift, they do anticipate that China is likely to
places about which, previously, there was little information. become a major travel destination. Asked what they think the top
three destinations will be in 2020, most popular choices were the
USA (76%), France (66%) and China (52%). Spain was relegated to
According to the UN World Tourism Organisation 5 growing demand fourth position (28%).
for new and unusual destinations continues despite the broader
recessionary trend of falling global visitor numbers. Globally,
international tourism declined by 8% between the first four months
of 2008 and the first four months of 2009; but tourism to Africa
increased by 3% over the same period, driven by North Africa (+6%)
and the return of tourism to Kenya following unrest in 2008.

Indeed, according to Gerard Bellino, a vice president at Carlson
Wagonlit’s leisure division, quoted in Business Week, the recession
may even be accelerating the growth in travel to non-traditional
destinations: “People are taking advantage of a down market for
things they may have had to save more and longer for in the past.” 6

Perhaps unsurprisingly, China also looks set to benefit from
changing patterns of tourism. According to the World Tourism

Looking to the future, to what extent do you think consumer behaviour will
change over the next 10 years in each of the following ways?

More travel abroad 29% 43% 14% 7% 7%

More adventurous 25% 29% 29% 14% 4%

More cost-conscious 25% 21% 29% 21% 4%

More short-term booking ahead 11% 43% 29% 11% 7%

Major change Reasonable change Slight change No change Don`t know




The rise of the BRIC economies

Not only will the traveller of the future be more knowledgeable respectively in 2009. The economies of China and India, by contrast,
and more willing to try new destinations, they will increasingly are expected to grow by “only” 6.7% and 5.1% in 2009.
arrive from different countries too, as the growing middle classes of
As Western households rein in spending and rediscover the
developing economies such as Brazil, Russia, India and China (BRIC),
virtue of living within their means, Chinese consumers are taking
lead to an increase in tourism from those countries.
full advantage of their higher savings rates and an enormous
Developing countries are playing a growing role as a source of government stimulus package. Consequently, excluding Sports
tourists and business travellers. Tourism from China grew by an Utility Vehicles, almost as many cars have been sold in China as in
average of 27% a year between 2002 and 2008 7 . Each year, the America in 2009 11 . In 2006 Americans bought twice as many. In the
world receives 45 million tourists from China – that is more than the airline sector, Air China, China Eastern and China Southern posted
entire population of Spain, the world’s second most popular tourist 16%, 25% and 6% growth in revenue per passenger kilometre on
destination 8 . Between 2000 and 2007, Russian outbound tourist domestic Chinese routes for the first four months of 2009 12 .
numbers increased by 9.4% a year and the money spent in foreign
The growing importance of non-Western cultures in the make-up
countries by Russian tourists increased by 14% each year over the
of the world’s travellers has very real consequences for the travel
same period. In 2007, Russia was the 9th largest outbound tourism
industry. An Amadeus-sponsored Economist Intelligence Unit survey
market 9 .
published in early 2009 found Asian business travellers to be more
Eye-popping statistics about growth and opportunity in emerging influenced by the respectability of a hotel’s brand than Europeans or
markets – especially Brazil, China, India and Russia – have been a North Americans.
staple of management consultants and journalists for much of the
With more travellers taking more, longer and more adventurous
21st century. So far, though, this has been a pre-recessionary story.
trips, increasing numbers of travellers from the emerging economies
Will the growth in developing economies continue through – and
and the all-pervasive impact of the Internet on the travel experience,
beyond – the recession?
it will become an increasingly global marketplace, breaking down
The story is mixed, but overall the recession may well accelerate geographical boundaries. In this context, customers will need to
the global economy’s shift Eastwards. While the current recession be segmented across new lines. An 18-year-old male from China
is undoubtedly global, its effect is not equal. Generally-speaking, may have more in common with an 18-year-old male from the US
Western economies have been pushed into reverse whereas the than with a 40-year-old male from his own country. Over 80% of
BRIC countries have merely had hitherto spectacular growth rates our expert panel accept this proposition, most of them strongly
clipped. The International Monetary Fund 10 expects the economies agreeing.
of the United States and Europe to contract by 1.6% and 2.0%

Key findings
The Amateur-Expert Traveller is much more knowledgable about
his or her destination and what to expect when they get there.
Their expectations of service have diverged: they either expect a
totally touchless online experience or they expect a very high level of
personalised service.
The Amateur-Expert Traveller is more adventurous about trying new
destinations. Africa and Asia are more accessible and popular than ever.
The North Americans and Northern Europeans who have traditionally
dominated the travel industry will increasingly make way for Brazilian,
Russian, Indian and Chinese tourists and business travellers.


Building the brand in the online world

tation of the market, the
They cite the increased fragmen
online brands take a larger accessible to the customer,
As more business goes online and wide number of options readily
ket, the relationship of travel s, the volume of user-
and larger share of the travel mar the loss of personal relationship
becomes more fragile. price competitiveness.
companies with their customers generated comment and greater
at Forrester Research,
Most of our expert panel acknowl
edge that it is harder to According to Henry Harteveldt,
was offline. Marilu Ngo, of to discover options that
build brand loyalty online than it “It is so much easier for people
much easier for them to
Griffin Sierra Travel in the Philippi
nes sums it up thus, “In the they may not be aware of. … It is
ent, customer loyalty is others’ opinions and be
proliferation of user-generated cont share their opinions and to read
ronment because now, it is the Internet to find new
inadvertently lost in the online envi swayed by them, and then to use
mostly price-driven.” options.”
uld you say that most important factors
According to our panel, the two
Compared to the offline world, wo ther online or offline,
ine world is in building an effective brand, whe
building brand loyalty in today’s onl promise and delivery and
are consistency between brand
easier or harder? . Word of mouth and
the quality of the user experience
effective promotion are both considered to be marginally
building an emotional
more important online, whereas
ght to be more
connection with the brand is thou
10% important offline.
3% Much easier h of the
7% How important would you say eac
e brand in
A bit easier
following is in building an effectiv
online and
40%
The same today’s travel industry for both
all responding: 30)
A bit harder offline? (Expert interviews: Base:
40% Much harder

Consistency between brand
promise and product delivery
onding: 30)
(Expert interviews: Base: all resp
Quality of user experience

Peer-to-peer word of mouth

Effective brand and product promotion

Emotional connection with the brand
Average score based on
nt,
scale 5 = vital, 4 = very importa
1 2 3 4 5
very
3 = fairly important, 2 = not
important, 1 = not imp ortant at all
Online Offline


a company has over its
s actually reduce the control
the question of whether user-review terms of the service and product
We explored in our interviews e other parts of the brand in
ingi at Yatra.com in India, “Th ” For Mr Shringi, user
own brand. According to Dhruv Shr trol. The user generated con tent just reflects these factors. e
company’s con ed content is just an outcom
are still very much within the trol the others, the user generat
cause, “…so if the company can con
reviews are a symptom, not a
an impact.”
and won’t really have too much of
nds
quality and expectations of bra
are a positive force, driving up
eve that user-generated reviews erally refl ect this view. Most
Most of our expert panel beli part in the online survey gen
reputation (13%). Those taking %). Fewer than
(73%), rather than a threat to brand itive’ vs. 27% overall ) and online travel agencies (39
panies (42% see it as ‘very pos
positive are the car rental com s are more likely to do so (25
%).
ough the offline travel agencie
one in five regard it as a threat, alth

3%
16%
ed content with respect 27% Very positive 27%
How do you see user-generat
Moderately positive 55%
to your brand?
onding: 2,646) Moderate threat 16%
(Online survey: Base: all resp
Severe threat 3%

55%

rs are going to get into the
“I think that the travel provide
k they’re going to let their
review business as well. I thin on
share the demographic data
customers read a review and
customers. ”
the reviews with their other
Brian Harniman, Kayak, USA

e even more pressure to
“I think that hoteliers will hav
to ensure that a customer still
upgrade their experiences and
er has that much more of an
comes to them, when a custom
erience in advance.”
ability to understand the exp
rs, UK
Alan Josephs, formerly ebooke


The Responsive Journey

The Responsive
Journey



Technology’s impact has largely been concentrated around searching for, and booking, the
journey, not the journey itself. That, according to our panel, is about to change.

The 1987 film, Planes, Trains and Automobiles, tells the story of Neal Page, an uptight advertising executive, trying to get home to see his
family in Chicago for Thanksgiving after a business trip in New York. Among the many absurd misfortunes which turn a 1 hour 45 minute
flight into a three day epic, he suffers a downgrade from business to economy, a diverted – then cancelled – flight, an awful motel room, an
abortive train journey and an irritating travel companion. Despite the considerable impact of technology on the travel experience, the story
is no less plausible today.

To what extent do you agree or disagree with the elements included in the statement?

Technology hasn’t changed what the
17% 45% 14% 24%
consumer experiences on a journey

That`s about to change 41% 34% 3% 14% 7%

Totally agree Partially agree Neither Partially disagree Totally disagree


Technology and the total trip experience

Technology offers significant immediate opportunities to improve the customer experience before,
during and after a trip. The travel professionals on our expert panel acknowledge that this will generate
additional revenue and 79% agree that it will solve the problem of online customer loyalty.

To what extent would you agree or disagree with the following statements from your own perspective?

Services beyond the booking stage will
generate further revenue 69% 28% 3%

Services beyond the booking stage will
solve the problem of online customer loyalty 34% 45% 3% 7% 10%

Completely agree Agree to some extent Neither Disagree to some extent Completely disagree


0 The Amateur-Expert Traveller


Technology and the total trip experience Description

According to our panel, the opportunities Looking ahead, to what extent would you say each of the following
are most evident in researching the trip, elements offers an opportunity for technology to improve the customer
finding price and availability information experience before, during and after a trip in the immediate future?
and booking the trip.

If the industry is to make the most of
Researching the trip 66% 17% 10% 7%
these opportunities, then it will have to
embrace new technology solutions that will Finding price / availability information 52% 34% 14%
help to make the travel experience more
comfortable, secure and personalised for the Booking a trip 48% 38% 7% 7%

traveller – the ‘humanisation of technology’.
Researching / choosing hotel 45% 52% 3%

With the pace of technological change Choosing destination 45% 38% 10% 7%

accelerating, our expert panel feel that
Comparing price information 41% 38% 17% 3%
the impact will be greatest for those tools
which particularly address the issues around Acitivities upon return 21% 41% 31% 7%
poor user experience, making the online
experience more personalised and easier to
use. Major opportunity Reasonable opportunity Slight opportunity None / D.K.

Foremost among these are likely to be more
sophisticated customer information systems
which select destination information based
on customer preferences, and intuitive
interfaces, which will provide new ways to
interact with computing devices, such as
next-generation touch-screens and voice Which of the following will have the biggest impact on humanising the
interaction. Nearly one-third also anticipate travel experience? (Expert interviews: Base: all responding: 29)
the role that virtual reality may play in
humanising the travel experience.
Personalised destination information 55%
But the Internet is a continually evolving
phenomenon, and, even in mature markets, Intuitive interfaces 41%
the likes of Web 2.0, social networking and
mobile technology continue to be drivers of Virtual reality 28%
growth. Our expert panel predict that, by
2020, technology will have brought about Geo-localisation technologies 21%
significant improvements in capabilities for
travel providers, sellers and consumers in all Tailored loyalty programmes 17%
areas of the travel industry – in particular,
the ability of travel sellers to make more Social computing 17%
travel options available to the public and the
ability for consumers to share information Digital concierge 14%
about travel providers with other consumers
– both themes picked up in other places Digital identities 7%
throughout this research.
Sensory airport / airline systems 7%



Thinking ahead to 2020, what would you say the further impact of technology will be on the following …

Ability of travel sellers to make more
travel options available to the public 31% 59% 10%

Ability for consumers to share information 28% 66% 3% 3%
about travel providers with other consumers
Ability for travel providers and sellers to make pricing
and availability information available to the public 10% 76% 10% 3%

Ability for consumers to find information
about the quality of travel providers’ products 7% 79% 14%

Ability of travel providers to manage the
logistics of travel better 7% 79% 7% 7%

Ability for independent travel providers
and sellers to increase market share 14% 41% 38% 7%

Improve beyond all recognition Improve a lot Improve a little Hardly / not at all

Nearly all of our expert panel agree that Web 2.0 improves As with many of the changes associated with the Internet, it is not
information transparency ‘a lot’ (69%) or ‘a little’ (28%), although so much the technology itself but the way that technology enables
one disagrees, believing that it actually makes information less behaviour which is important. Kerry Cannon Jr., at iM@, captures
transparent. Around 80% of them have already added or are the essence of this when he says: “There’s always been user-
considering adding social computing or user review functionality to generated content; it was called word of mouth. Technology has
their own websites. Airlines are perhaps a little behind others, but just empowered that word of mouth… technology has absolutely
they too are generally considering taking this step. changed the game in terms of how many other mouths you can
Without exception, our experts agree that Web 2.0 will improve hear from.” Or, in the words of media consultant and author, Clay
the customer’s travel experience between now and 2020, whether Shirky, “[social media] tools don’t get socially interesting until they
‘beyond recognition’ (17%), ‘a lot’ (59%) or ‘a little’ (24%). In get technologically boring.” 13
particular, they see Web 2.0 as an answer to user experience issues Looking forward to how user-generated content itself will evolve,
which may be hindering the growth of online travel services. Nikos Goulis, of E Travel SA, in Greece, sees the proliferation of UGC
Primarily, it will give the user more and better information that will continuing unabated, “User generated content will have more data,
be better organised, easier and faster to access and more interactive, both in text and picture, video and music. I believe we will have
leading to greater satisfaction with the whole online experience. content for destinations that are not very popular right now and
“There will be a dramatic change in the way the content is searched there isn’t much … and, for the popular destinations, we will have
and organised. It is still extremely hard for customers to find a plurality of the content which might be missing today.” (Nikos
content, define content easily and to actually use it. Going forward, Goulis, E Travel SA, Greece)
all these factors will change tremendously and … it will be very
easily accessible. … The technology will add a lot of value in terms of Joe Bous, at US travel agency, Wholesale Travel Center, thinks the
how data gets collated and presented to the end consumer.” (Dhruv challenge is not so much to get more content, but to find meaning
Shringi, Yatra.com, India) in the content you have, “there might be 4000 reviews – what are
you going to do with 4000 reviews? And it all, of course, comes
Some also point to the increased opportunities to personalise down to 3.5 stars. It’s sort of worthless.” Part of the answer is
and select the information that is most relevant to the user’s own knowing who wrote a given review, as Brian Harniman, Kayak,
circumstances and to share experiences. According to Timir Bhose points out, “I can look for people that seem to be like me and really
and Pia Viljaniemi of Finnair, reading user reviews, “…supports better trust their judgement more than the rest of the great unwashed
pre-planning so that the customer will be able to plan better ahead reviews. If someone is travelling for a different reason from me, a
and get more knowledge about other customers’ opinions.” hotel may be good for them but by the same token horrible for me.”



Technology and the total trip experience Description

For Mr Bous, there is an opportunity for smart technology to panel see potential – as yet unfulfilled – for user-generated content
pluck meaning from the mass of content already available, “the to add value to the business travel experience.
next generation of technology will look at something that can do
With corporations under more pressure than ever to keep costs to a
semantic analysis and come up with some sort of metric or analytic
minimum, a mechanism which allows employees to share cost-
that can make sense of all that drivel that people write.”
saving tips and for travel managers to aggregate feedback from
A final word on business travel. Until now, leisure travel has travellers which can be used in supplier negotiations, becomes all
benefitted most from user-generated content, but two thirds of our the more attractive.

To what extent do you agree with the following statements? (Expert interviews: Base: all responding: 29)

User-generated content has yet to improve
the business travel experience 31% 34% 7% 21% 7%

User-generated content would be beneficial to the business
traveller in much the same way that it is to the leisure customer 41% 21% 3% 31% 3%

Totally agree Partially agree Neither Partially disagree Totally disagree

Waiting for mobileription

Nearly a third of respondents to our online survey felt that mobile devices will have a greater impact on the way the next generation
researches and books travel than social networking, user reviews, video sharing or visualisation tools. According to the International
Telecommunications Union, the number of mobile phone subscriptions exceeded 50% of the world’s population in 2008. Once again, the
BRIC countries are responsible for a large share of this: over 1/3 of the world’s mobile phone subscriptions are accounted for by these four
countries .14

Which of the following do you think will have the 2% 10%
8% N/A
greatest impact on the way the next generation
researches and books travel? Visualisation tools (ie Second life)
22%
Users reviews
26%
Mobile devices
(online survey: Base: 2719)
Social networking

Video-sharing (eg YouTube)
32%



Waiting for mobileription

In a March 2009 report, PhoCusWright calls mobile, “The Next Platform for Travel” 15 and Samsung, the electronics group, expects the
market for smart phones – which combine voice calling with email and Internet access – to grow from 170 million in 2009 to 500 million in
2012 16.

Long anticipated, mobile internet really does seem about to take off. As PhoCusWright has pointed out, “the more compelling opportunity
[than simply shifting reservations from fixed Internet to mobile] will be to create mobile-specific applications that go beyond shifting share
to a new channel, and thus generate ancillary revenue that was not previously available.” 17

This is certainly not lost on application developers. Today, Apple’s website lists over 3,700 travel-specific applications for its iPhone, for
everything from checking flight delays to finding the cheapest
petrol station to a mobile travel map of China specifically for fans
of kung fu.

Henry Harteveldt of Forrester Research points out that the nexus
between mobile Internet and user-generated content will be
increasingly important. “Travel is one of the businesses that lends
itself to user generated content and the sharing of ideas, opinions
and suggestions. … A big factor behind this increase will be the
growth and evolution of mobile internet devices that are geared
more for data than voice. These will allow person-to-person or
group messaging that might be written word or voice, SMS text or
other data, and along with this will be the emergence of new types
of internet sites.”

Indeed, some of the most interesting iPhone applications combine
mobile with user-generated content. Roadtrippr is like a wiki of
interesting destinations for people to visit while on a road trip.
Users contribute information about interesting attractions in their
home town and, in turn, use it as a resource when they are on the
road. When used from an iPhone, the application is aware of the
user’s location and tailors (user-generated) content accordingly.



Looking further into the future

The futurologist Ray Kurzweil (The Age of Spiritual Machines: by private individuals or delivery fleets 20 . Such applications are
Timeline) predicts that, in ten years’ time, computers will be largely even changing the way we think about cars: Zipcar is a car-sharing
invisible and embedded in walls, furniture, clothing and even bodies. service billed as an alternative to car ownership or rental. Members
Mr Kurzweil accurately predicted the emergence of the Internet and of the service are given an electronic card which they can use to
the fall of the Soviet Union, so he is worth listening to. access any one of 6,000 cars in North America and London 21 . The
cars themselves report their positions back to head office so agents
What is more, his vision of embedded computing is already
can tell customers where their nearest car is. Customers rent the
becoming a reality. Cars are a case in point: the 1978 Cadillac Seville
cars by the hour or for days at a time, picking them up from where
was the first car to include a – single – microprocessor, to power its
the previous customer left them. Such a model potentially releases
trip computer18 . Thirty years later, even the world’s cheapest new
car rental companies from the necessity of renting out large car
car – the Tata Nano – carries twelve microprocessors. Car rental
parks; the problem is, in effect, crowd-sourced. Similarly, a car rental
companies already offer optional GPS devices which not only show
company could aggregate historical location data of all the cars
you the way to your hotel but can also suggest nearby tourist
in its rental network, combine this with the real-time locations of
attractions.
the cars in its network and put such data to commercial use. They
As with personal computers in the nineties, treating cars as nodes could recommend services not just on the basis of their geographic
in a network is revealing valuable new applications 19 . Inrix is proximity but also on the basis of how popular such services have
a start-up which aggregates information on traffic flows from been with other drivers in the network: “drivers who stayed at this
GPS systems installed in vehicles, fixed traffic sensors and other motel ate at Chez Gerard’s Bar and Grill”.
sources. This is then delivered to in-car GPS systems used either



…but it’s so much nicer to [stay] home?

The ultimate travel technology would enable all the benefits of
travel without leaving the comfort of your home or office. Mr
Kurzweil predicts that within a few short years, three-dimensional
virtual reality displays embedded in glasses and contact lenses
will be used routinely as primary communication interfaces,
and that high resolution virtual reality and all-encompassing
tactile environments will enable people to do virtually anything
with anybody, regardless of physical proximity. And the rise in
visualisation tools and virtual reality may change the whole concept
of travel. Travellers can experience the travel sensation while
making their choices, whilst “virtual” travel (video conferencing,
hologram meeting, etc.) may completely change travel patterns.

The technology of the moment, in this respect, is TelePresence.
Launched by Cisco three years ago, TelePresence is basically a high-
quality video conference system. It is still used mostly by larger
companies because the technology is still expensive. Of course,
this is no reason to write it off; as adoption increases the cost will It remains unlikely that TelePresence will completely replace the
fall. The question is, will it replace business travel? Starwood and business trip; much less the holiday abroad. Since the invention
Marriott think not: both have announced TelePresence services of the telegraph, advancing communications technologies have
at their hotels . The target market is smaller companies or local tended to go hand-in-hand with a global growth in travel, driven
branches which can’t afford their own dedicated TelePresence by among other things advancing transport technology, the
set-ups but would still like the virtual face-to-face experience. internationalisation followed by the globalisation of business and,
At 500USD an hour the service still isn’t cheap, but it is a lot cheaper simply, the desire to get away from it all. After all, it’s still nice to go
than flying from New York to London, for example. travelling.

Key findings
We are about to see a significant amount of technological innovation
to streamline the experience of travellers during their trip.
Mobile internet will combine with social networking to offer new
opportunities for travel companies to offer an improved trip experience
for business and leisure travellers.
TelePresence technologies will complement, but not replace, business
travel.


The consumer booking experience

s must work hard to improve
out this research is that provider
One of the clearest messages we have heard through is the most important element in
erts felt that the user experience
the user exp erience. Indeed, our panel of exp
creating brand loyalty online.
nd loyalty in the online world?
have the most impact on bra
Which of the following will
73%
responding: 30) Improved user experience
(Expert interviews: Base: all
43%
Personalised web content

40%
Offer better value for money

rests 40%
Segment products to target niche inte

ile 30%
Support multiple platforms, e.g. mob

30%
Incorporate user-generated content

alisation, using customer
Customisation and person
how travel companies can intelligence to address per sonal needs, offer relevant
In this sub-section, we look at s nt suggestions.
erience in the online world. Thi information and make intellige
achieve excellent customer exp
must increasingly include:
Andy Bateman of Interbrand,
This is neatly summed up by
, speed and ease of access that reflects the needs of
A smooth online experience USA: “Provide a great service of
freedom from technical content that gets in the way
through multiple channels, and customers rather than push
do.”
hitches; what customers are trying to
of MakeMyTrip, India: “The
In the words of Jasmeet Singh
anisation is the time when a
moment of truth for every org l.
iness, irrespective of the channe
customer interacts with the bus vide a top
it is imperative to pro
In the case of online businesses, ortant at
class user experience . This experience is not only imp
payme nt) but it must begin with
the latter part of the funnel (at
the word Go.”

delivery, making it easy to find
Comprehensive information
t price, transparency, and the
the right product at the righ e.
rmation required in one plac
ability to access all of the info
%
okers, says, “It should be 100
Alan Josephs, formerly of ebo the ability to easily
… Speed and
focused on user experience.
find the right product.”


tak e
specific actions companies can
Below we outline some more
online.
to improve customer loyalty

t and
ld consumer confidence, trus
Especially in Asia-Pacific, bui ments and personal
credit card pay
comfort with security around about giving credit card
details: “Ma ke the customer comfortable will
not happen all of a sudden, it
details over the Internet. It will
MakeMyTrip, India)
be gradual.” (Jasmeet Singh,

incentives, such as financial
Creating urgency and offering
ed value, to do the deal: “If the
incentives, discounts and add there is a
d user experience first time,
customer has had a very goo er coming
referral and for the custom
lot of possibility for positive g.” (Helen
back. I think user experie nce is the most important thin
tralia)
Demetriou, Wotif Group, Aus
ed
ediately – the old tried and test
“Offer an incentive to book imm
en, Kan oo Travel, Saudi Arabia)
method.” (Abdulla Abikhamse

just transparency but, where
Reassurance on pricing – not even
tees and promises: “Customers,
possible, lowest price guaran from different
price, still tend to ask
if they are getting the lowest Have a ‘Lowest
sources, ‘are there any lower prices available?’.
your pro ducts well.”
Fare Guarantee’ and explain
air, Finland)
(Tim ir Bhose Pia Viljaniemi, Finn

erent ering niche products and
aggregating products from diff Quality of products – off
Providing a ‘one-stop shop’, customer rket
providers, including competitive
product, allowing the
differentiation, not just commodity mass ma
tailored package without hav
ing to visit honest products. Many new
to build their own offerings: “Offer niche and rators which have
g con tent. … Travel suppliers travel agencies and tour ope
multiple sites: “More far-reachin online ,
ts into their site to generate ’t know what they sell and
nee d to aggregate different produc a lot of mass products don year after the client
pliers need to have metasearch while they may get one boo
king, the
customer interest. These sup or ent is ‘class instead
show real time seat inventories return to them. Our statem
properties in their site that can lippines) does not
, Griffin Sierra Travel, Phi
room availabilities.” (Marilu Ngo of mass’.”
, Germany)
(Pascal Zahn, Olimar Reisen
illary
only for travel but also for anc
“Make it a one-stop shop, not tomer can ,
supermarket where the cus h the process step-by-step
processes. … It needs to be a Helping customers throug reached, providing
gs he wants.” has been
go in with a list of thin making it clear what stage haps allowing for
(Ratan Ratnaker, Kingfisher Airl
ines, India) reassuran ce where required and per
offline support if needed.


All Niches Great and Small

All Niches Great and
Small



Reports of the death of the travel agency have, by and large, been extent. Even if the products will become a humanised experience
exaggerated. According to PhoCusWright, “The dramatic shift in when they surf the web, the customers will still feel they need
online share towards supplier Web sites that took place in the earlier something extra by talking to someone … you cannot take that
part of the decade has slowed or stopped.” 22 Indeed, PhoCusWright away.”
expects share to shift from supplier websites back to online travel
Regardless of where the online / offline equilibrium eventually rests,
agencies as the economic downturn puts a premium on finding
our panel expect to increase the proportion of their IT spend which
deals and comparing different suppliers.
is allocated to supporting their online strategy.
Moreover, there is still a significant proportion of travel booked
The Internet has enabled other industries to increase the length of
offline. PhoCusWright estimates that in 2007, 49% (by value) of
the distribution curve – i.e. sell more of the small-volume products
travel booked in the US – the most advanced in terms of Internet
– a phenomenon made popular by Wired editor Chris Anderson in
penetration in travel – was booked offline. Will the shift to online
his book, The Long Tail: Why the Future of Business Is Selling Less of
level off or will we carry on all the way to 100% online booking?
More. For example, Amazon.com makes 30% of its revenue selling
Three-quarters of respondents to our global online survey think books which are not cost-effective for the world’s largest offline
100% penetration will never be reached. bookseller, Walmart, to stock.

In our online survey, less than a third of respondents follow the
Do you think the proportion of travel booked online will
traditional retail model, deriving 80% of their revenue from only the
ever reach 100%?
top 20% of their product portfolio. However, for nearly 4 out of 10 of
respondents, 80% of revenue is spread across 60% or more of their
product portfolio, which is much closer to the long-tail model.
No, the proportion is as high as it will get 10%

No, there will always be a small
65%
proportion of travel booked offline What percentage of your company’s IT spend would
Yes, but a long, long time in the future 10%
you estimate is allocated to technology to support your
online strategy?
Yes, soon 15%

(Online survey: Base: all responding: 2,731)

Indeed, one in ten suggest that it has already peaked or will
even start to fall. This view is most likely to be held by those in
91% - 100%
traditional travel agencies – and nearly one in five of those in North
81% - 90%
America believe that the peak has been reached. Kerry Cannon Jr.,
at iM@ thinks, “There is and there will always be a cross-section 71% - 80%

of the public that just won’t ever use [the Internet to book travel]. 61% - 70%
Regardless of how much you humanise it, there will always be a 51% - 60%
cross-section of people that will hire people to do that stuff for
41% - 50%
them. … There are certain things that the Internet has definitely
changed, but human nature, no.” Up to 40%

However, the majority – 65% – of respondents think the proportion
of travel booked offline will only be small.

Marilu Ngo of Griffin Sierra Travel in the Philippines suggests that Currently In 2020
cultural differences may lead to asymmetric penetration of Internet
travel around the world: “In South East Asia, clients prefer person-
to-person communication or a personalised service … it is this
preference that inhibits growth of online travel services to a larger

0 The Amateur-Expert Traveller



Online travel agencies are more likely to be at the “long-tail” end of Travel 1975 Travel 2009
the spectrum, with 30% saying that the top 80% of products account The Old Marketplace The New Marketplace
for 80% of their revenue. Scheduled Airlines, Cars,
Scheduled Airlines
Hotels, Cruises

Low-cost Carriers

Popularity

Popularity
Head Head Tours and Activities
Which of the following best describes your business? Cars, Hotels Adventure Tours
Vacation Homes
Spas
15%
Long Tail Long Tail
28% Top 20% products = 80% revenue
Products Products
Top 40% products = 80% revenue
23%
Top 60% products = 80% revenue Source: PhoCusWright, Inc.

Top 80% products = 80% revenue
What might those niches be? Although family-friendly travel is still
34% reckoned to offer the greatest opportunity – and is not exactly niche
(Online survey: Base: all responding: 2,515) – our panel did see opportunity in, among other things, adventure
travel (83%), religious travel (55%) and weddings (45%).

Selling niche content has two obvious challenges: low volume
Our expert panel generally agreed with the view that “the future of and finding enough customers. By definition, a company will not
the travel business is in the millions of niche markets at the shallow sell a high volume of a niche product. To become large, a business
end of the distribution curve” (illustrated in the PhoCusWright must work out how to standardise across a number of niches
diagram right). Two thirds agree with the statement, and only one to gain sufficient economies of scale to make low volumes on a
in four disagree (airlines in particular). number of niches add up to a large and profitable business. Low-
Although most of our panel still see big-selling products as their cost carriers operating a network of routes to secondary cities are
greatest opportunity, around half see significant opportunity in a good example of this in the travel industry: the absolute volume
selling more niche content and selling to niche customers. of passengers on each route may be small but so long as they are
profitable, the carrier’s total volume may be large.

Which of the following do you think offers the greatest financial opportunity for your own business?

Selling more of existing big-selling products 41% 17% 28% 14%

Selling more niche content 31% 21% 34% 14%

Selling to niche customers 24% 24% 17% 34%

Selling more to existing biggest customers 7% 48% 24% 21%

Greatest opportunity Second Third Least opportunity

(Expert interviews. Base: all responding, 29)



Specialisation is another strategy. How would you rate the business opportunity in each of the following
Companies like Trailfinders, which areas?
specialises in adventure travel, or Griffin
Marine, which specialises in marine travel Family friendly travel 56% 39% 6%

and participated in this study, can offer
Lifestyle travel 50% 39% 6% 6%
specialised knowledge of a specific sector
which elevates the decision process beyond Groups and meetings 50% 28% 17% 6%
price.
Adventure travel 39% 44% 11% 6%
It also builds loyalty. Outside the travel
industry, the carmaker Subaru has Aircraft charter 33% 28% 22% 6% 11%
successfully operated in a niche; the
company specialises in vehicles for outdoors Eco / green travel 22% 50% 22% 6%
enthusiasts and ‘experience-seekers’. An
article in the Financial Times quotes Tim Religious travel 22% 33% 33% 11%
Mahoney, US chief marketing officer at
Ground transportation 17% 44% 28% 6% 6%
Subaru, “We’re a niche brand but that has
nothing to do with size, it’s more about Weddings 17% 28% 39% 6% 11%
finding a relatively safe place where we can
exist comfortably.” 23 Dining reservations 39% 33% 17% 11%

The same article quotes John Wolkonowicz, Travel goods 28% 44% 17% 11%
an analyst at financial analysis and market
intelligence consultancy, IHS Global Insight,
explaining, “I don’t think you could find a Major opportunity Some opportunity Limited opportunity No opportunity Don`t know
more fiercely loyal body of customers [than
Subaru’s], except perhaps for BMW.”
(Expert interviews. Base: all travel agencies: 18)
In an increasingly online world, where
loyalty is hard to earn and easy to lose,
and barriers to entry are low, scale or
specialisation or a combination of the two
are rare routes to profitable growth.

Key findings
The shift to online will continue but will most likely
plateau before 100%: some travel will always be booked
offline.
The millions of niche markets at the shallow end of the
distribution curve represent a significant opportunity for
travel companies to increase revenue and loyalty.


Technical Appendix

Amadeus commissioned independent research consultancy, David Burton Associates (DBA), to undertake a
programme of research within the global travel industry in autumn 2008.

30 in-depth interviews were conducted with key senior opinion-leaders in travel and travel-related companies
worldwide – our ‘expert panel’ – offering a broad-based and informed insight into trends in the travel business.
Interviews were conducted between September 2008 and January 2009. These were principally conducted by
telephone by senior DBA executives and associates, with one or two interviews being completed by correspondence.

Our expert panel comprised:

Saudi Arabia, Abdulla Abikhamseen, Executive General Manager, Kanoo Travel, Online travel agency

USA, Andy Bateman, Chief Executive Officer, Interbrand, New York, Branding agency

Finland, Timir Bhose, Director Pia Viljaniemi, Development Manager – e-commerce, Finnair, Airline

USA, Joe Bous, Director, Wholesale Travel Center, Online travel agency

USA, Kerry J. Cannon Jr., Chief Executive Officer, iM@ (interactive MOBILE @dvertising), Travel information

Taiwan, Jeff Chu, Managing Director, Grand Travel Inc, Travel agency

Australia, Helen Demetriou, Executive General Manager, Flights Business Unit, Wotif Group, Online travel

agency

UK, Paul Ellerby, Sales Marketing Director – UK USA, easyCruise, Cruise

USA, Robert Gallagher, Chief Operating Officer, AIG Travel, Travel insurance

Greece, Nikos Goulis, Managing Director, E Travel SA, Online travel agency

USA, Brian Harniman, Executive Vice President, Marketing Distribution, Kayak, Travel search engine

USA, Henry Harteveldt, Vice President, Principal Analyst, Airline Travel Industry Research, Forrester

Research INC., Travel research

Colombia, Maria Claudia Isaza, Vice-President – e-business, Aviatur Group, Travel agency

UK, Alan Josephs, Managing Director, formerly ebookers, Online travel agency

Malaysia, Shivanathan Kesavan, Travel Manager, Gem Travel, Travel agency

Canada, Guylaine Lavoie, Director – Marketing Innovations, Air Canada, Airline

UK, Ignacio Martos, Chief Executive Officer, Opodo, Online travel agency

Philippines, Marilu Ngo, Vice-President General Manager, Griffin Sierra Travel Inc., Travel agency / marine

crew corporate travel

Qatar, Peter Pohlschmidt, Manager – E-commerce, Qatar Airways, Airline


USA, Alexander Pyhan, Director – Global e-Commerce Channels, Marriott International Inc., Hotels

Lithuania, Audrius Ramanauskas, Chairman, Interneto Partneris UAB, Online travel agency

India, Ratan Ratnaker, Vice President – Revenue Optimisation, Kingfisher Airlines, Airline

India, Dhruv Shringi, Chief Executive Officer, Yatra.com, Online travel agency

USA, Lorraine Sileo, Vice-President – Research, PhoCusWright Inc., Travel research

India, Jasmeet Singh, Manager – International Air, MakeMyTrip, Online travel agency

Japan, Mr Takano, H.I.S. Co, Travel agency / Online travel agency

Chile, Gonzalo Undurruga, Vice-President – e-commerce, LAN, Airline

Poland, Janusz Wierbowski, Owner, Sonata Travel, Travel agency / Online travel agency

Germany, Pascal Zahn, Executive Officer, Olimar Reisen GmbH, Tour operator

One additional panel expert asked to remain anonymous.

This was supported by an online survey, conducted in November 2008. Invitations were e-mailed to Amadeus
contacts throughout the worldwide travel industry, and a short questionnaire was completed by nearly 3,000
travel professionals, covering all regions of the world and a spread of business sectors.

The profile of the sample was as follows:

BY SECTOR: BY REGION:

Airline 19% Western Europe 34%

Car rental company 2% Eastern Europe 5%

Hotel 15% Southern Europe 4%

Travel agency 52% USA Canada 25%

Online travel agency 3% Central America Caribbean 3%

Cruise 1% Latin America 11%

Other 9% Middle East North Africa 4%

Subsaharan Africa 2%

North Asia 1%

South Asia 1%

South East Asia 6%

Central Asia 1%

Pacific 4%


Appendix

1. http://www.nifc.gov/fire_info/fires_acres.htm

2. http://www.niallferguson.com/site/FERG/Templates/ArticleItem.aspx?pageid=56

3. http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/ DH_4006801

4. http://en.wikipedia.org/wiki/Participatory_Medicine

5. http://www.unwto.org/media/news/en/press_det.php?id=4421

6. http://www.businessweek.com/bwdaily/dnflash/content/jul2009/db2009079_431299.htm

7. http://www.outbound-tourism.cn/english/intro.asp

8. http://en.wikipedia.org/wiki/World_Tourism_rankings

9. http://pub.unwto.org/epages/Store.sf/?ObjectPath=/Shops/Infoshop/Products/1482/SubProducts/1482-1

10. http://www.imf.org/external/pubs/ft/survey/so/2009/RES012809A.htm

11. http://www.economist.com/world/international/displaystory.cfm?story_id=13871969

12. http://www.flightglobal.com/articles/2009/06/17/328318/china-bucks-the-downturn-at-home.html

13. http://www.ted.com/talks/lang/eng/clay_shirky_how_cellphones_twitter_facebook_can_make_history.html

14. http://www.itu.int/newsroom/press_releases/2008/29.html

15. http://www.phocuswright.com

16. http://www.reuters.com/article/technologyNews/idUSTRE53I03V20090419

17. Mobile: The Next Platform for Travel, PhoCusWright, March 2009

18. http://www.embedded.com/columns/significantbits/13000166?_requestid=192742

19. http://www.economist.com/sciencetechnology/tq/displaystory.cfm?story_id=13725743

20. http://www.inrix.com/pdf/INRIX%20Corporate%20Overview.pdf

21. http://www.zipcar.com/how/technology

22. U.S. Online travel overview, Eighth Edition, PhoCusWright, November 2008

23. http://www.ft.com/cms/s/0/430b9fd8-721e-11de-ba94-00144feabdc0.html

Acknowledgements

PUBLISHED BY
Amadeus IT Group, SA

DESIGN PRODUCTION

Amadeus IT Group, SA

PHOTOGRAPHY
Daniel Greaves

Alejandra Contreras

Amadeus Image Bank

RESEARCH
David Burton Associates

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