Insight into travel & transportation

Perpetual Motion Why Travel & Transportation will never be the same Fjord Strategy August 2012 Slide 1 © Fjord 2012 | Confidential

What we‟ll cover 1. Setting the scene The landscape and how it’s changed 2. The new frontier Key themes for understanding the new landscape 3. What do we do now? Principles for travelling 4. Opportunity spaces Areas to apply these frameworks and principles Slide 2 © Fjord 2012 | Confidential

1. Setting the scene Slide 3 © Fjord 2012 | Confidential

We get around At home (or in a familiar base) Mobility is core to the On my On my way human condition – we somewhere way back have evolved based on our motion. At the heart of this is a very simple cycle. Somewhere else Slide 4 © Fjord 2012 | Confidential

Simple concept, vast ecosystem Slide 5 © Fjord 2012 | Confidential

People are ruining everything (for traditional businesses) Peer-to-peer services are cutting into territory formerly owned by industry giants • Hotel chains • Guide books • Specialised Tour Operators • Navigation & Traffic ….and are branching out into public transportation and Car Rental too… Businesses will need to drastically upgrade their value propositions if they are to survive. Slide 6 © Fjord 2012 | Confidential

And there‟s no place like home anymore (these people may be rare, but they‟re influential) Colocation for the non-wealthy. • As globalisation and the availability of low-cost intercity travel sends more and more business travellers around the world for work, a growing number of these road warriors maintain multiple residences in the places they visit most often (or like the best). They challenge notions about what it means to be „at home‟ – which home? The 2000k commute. • The same low travel costs make it possible for people to live wherever they want to, sometimes commuting a few hours by plane rather than by car or public transport – for example, the CEO of a London-based startup might live in the Alps to be close to his favourite hobbies and give his children the kind of upbringing he thinks best, and commute to London every week*. These people take the demand for commuting efficiency in air and long-distance rail travel to a whole new level. Global Nomads are a real, and growing, segment. • “Global Nomads,” professionals who have no fixed address at all, have very sophisticated preferences and advanced knowledge of the travel industries – what‟s more, they have become hubs of travel knowledge and advice for their social networks. * This is a true scenario involving a person known to Fjord. Slide 7 © Fjord 2012 | Confidential

These aren‟t the right questions Business or Leisure? Long or Short? Budget or Luxury? ? City Break or Adventure? Family, Romantic or Solo? Guided or Independent? Old-school travel categories aren‟t fluid enough to address the needs of today‟s travellers, and create dangerous levels of fragmentation in a digital service environment. Different things are important to different people, and these questions don‟t adequately capture context. So what does? Slide 8 © Fjord 2012 | Confidential

The critical question for travel Is it ROUTINE? Or is it an EXCEPTION? • Twice a day between Bethnal • Somewhere I‟ve never been Green and Oxford Circus • Somewhere I usually visit alone • Once a month from Berlin to or for business, this time going London with family or friends • Once a year from London to • A mode of transport I rarely use Thailand (e.g. road trip in a rented car) Slide 9 © Fjord 2012 | Confidential

This shapes fundamental priorities ROUTINE VS. EXCEPTION Delays Directions Friends Places/Sights Distraction Focus Efficiency Discovery Slide 10 © Fjord 2012 | Confidential

Routine Exception Slide 11 © Fjord 2012 | Confidential

Personal context is the next layer Routine vs. Exception is the foundation of context for travel and transportation. The next layer is personal preferences – including financial comfort, hobbies and interests, destination preferences, accommodation priorities, etc. Slide 15 © Fjord 2012 | Confidential

I am who I am, wherever I am People like to run, or enjoy art, or great coffee. These preferences travel with them wherever they go. Slide 16 © Fjord 2012 | Confidential

Social factors complete the picture The topmost layer is the individual‟s social graph – family, friends, trust networks and collective preferences. Slide 17 © Fjord 2012 | Confidential

My people are an extension of me Family, friends, partners – loved ones are an important part of how we travel, whether Slide 18 © Fjord 2012 | Confidential they are with us or elsewhere.

A framework for opportunity Taken together, these layers of context create a framework for evaluating service propositions and uncovering new opportunities for business and customer relationships. Slide 19 © Fjord 2012 | Confidential

2. This is a new frontier Slide 20 © Fjord 2012 | Confidential

Three keys to navigating the landscape 1. The Experience is as important as the destination. Car manufacturers have understood this for years. Whether the customer‟s expectation is a quick and effortless journey, or the journey is the focus, an experience that extends beyond traditional boundaries can have massive value and impact. 2. Peer-to-Peer services are here to stay. No longer a supplement to traditional business, or a money-saver for students and budget travellers – P2P services now offer quality and professionalism equal to or greater than the industry leaders. 3. Everyone (and everything) is everywhere. Even when we‟re not physically present, we‟re virtually there. Aggregate data from the masses supports the needs of the individual. Mobile content sharing means we can take everyone on holiday with us. Review sites provide the means for instant global broadcasting of every delight – and every complaint. Slide 21 © Fjord 2012 | Confidential

Theme: The experience is as important as the destination Whether it‟s efficiency or exploration, experiences need to match with expectations. Slide 22 © Fjord 2012 | Confidential

KLM now offers a service that allows customers to select seatmates based on Facebook or LinkedIn profiles, giving passengers unprecedented control over their on-board experience. Flying high Virgin Atlantic has taken their experience well beyond the simple flight – in addition to award-winning seats and a swank on-board bar, their lounge, spa and chauffeur service extends the overall „rockstar‟ promise. Slide 23 © Fjord 2012 | Confidential

The open road Some people love to drive. Whether they‟re focussed on getting there as quickly as possible, or on discovering something new along the way, in-car interfaces need to give drivers the freedom to configure the experience that suits them on that day – scenery or traffic, official or peer-to-peer. Slide 24 © Fjord 2012 | Confidential

Freedom of movement At the opposite end of the scale is the self-driving car, which Google has been testing and could be on the streets in less than a decade. As drivers relax into only part-time (or less) responsibility, they‟ll have more attention for content – email or documents on the way to and from work; games for old and young alike. Slide 25 © Fjord 2012 | Confidential

Precious moments Delivering the right experience means understanding the unique needs of any journey –P2P services offer huge flexibility in terms of lodging, tours, activities, social opportunities. Big chain hotels with a „one size fits all‟ mentality are finding it increasingly difficult to compete. Boutique and design hotels, meanwhile, have gained ground because they offer another kind of value – free high-tech amenities like WiFi and iPod docks, sometimes even iPads, combine with beautiful design and personal service that travellers remember, value and recommend. Slide 26 © Fjord 2012 | Confidential

Don‟t make me think! With the proliferation of review and price comparison sites, many travellers – especially those with less experience – are feeling overwhelmed. This has led to a sharp increase in the use of travel agents over the past 12-18 months (including niche agencies such as Black Tomato, shown here), and also explains the rise of curated collections like Tablet Hotels and Design Hotels. These businesses provide a service that assures travellers the experience of their journey will meet their desires and expectations, without them having to do the legwork. Slide 27 © Fjord 2012 | Confidential

A vehicle for every journey Automobile manufacturers no longer stop at cars – in an effort to capture a consumer market more concerned with environmentally friendly, healthier transport, many manufacturers (VW, BMW, Mercedes, Maserati, etc.) are now making bicycles as well. Some have also engaged with the short-term car hire market through programs like BMW‟s DriveNow. Slide 28 © Fjord 2012 | Confidential

Theme: P2P is here to stay We are only at the beginning of the Peer-to-Peer revolution. Slide 29 © Fjord 2012 | Confidential

Pro-sumer evolves into pro-merchant Flat sharing, once relegated to bare-bones listings sites like Craigslist, has become a legitimate business – and it‟s not just about flats anymore. People are now sharing all sorts of things – houses, bicycles, flats, boats, unoccupied land. P2P services stay competitive by taking a smaller cut than traditional agents, but equally importantly they observe the behaviours of their users and adjust the experience accordingly. Gidsy and AirBNB both provide a framework that‟s strong enough to enable and encourage both merchants and buyers to engage, yet open enough to flexibly accommodate users‟ unforeseen ideas. Slide 30 © Fjord 2012 | Confidential

P2P technology catches up Thanks to NFC technologies and marketplaces like the Apple and Android app stores, high-end security infrastructure is no longer the exclusive domain of the manufacturer or major auto rental agency. The P2P service Getaround offers its customers proprietary technology similar to that used by DriveNow or Zipcar. Equivalent security from a neighbour and a megachain? This completely alters the terrain, capitalising on the basic human desire to connect with others. Provided the service and technology are up to par, many will choose P2P over corporate for emotional reasons alone. Slide 31 © Fjord 2012 | Confidential

The personal touch What sounds better: a one-size-fits-all tour around town, led by a bored and underpaid guide, or a customised and intimate walk focused on what *you‟re* interested in, led by someone who‟s passionate about it, in your native language?. Humans will almost always choose the more personalised, intimate, tailor-made engagements. This is why services like Gidsy are so successful – they faciliate the connections between those willing to offer experiences and those who want to partake in them. No large corporation could offer a comparable breadth of choice. Slide 32 © Fjord 2012 | Confidential

Something for every budget Because P2P service platforms are inherently flexible, they tend to contain a much broader range of cost options. Renting a flat that sleeps 10 on AirBNB could cost less than a double room at a high-end hotel; borrowing a car from the guy down the street will almost certainly be cheaper than agency rates. Slide 33 © Fjord 2012 | Confidential

Theme: Everyone (& everything) is everywhere We take more than luggage with us when we travel. Slide 34 © Fjord 2012 | Confidential

Everybody‟s holiday Gone are the days of the awkward post- holiday slidshow. Nowadays, thanks to Twitter, Facebook, Instagram, EyeEm, iCloud etc., we can take our friends and family with us when we travel. While many people still create photo books (physical or digital) when they get home, increasingly people share their travels on the fly and let their whole social network participate in the journey. The other side of this is that we can take anything with us on the road – whether that‟s work to catch up on, or our entire library of beachside fiction. Slide 35 © Fjord 2012 | Confidential

Safety in numbers The flipside of P2P services are aggregate data services. Large-scale review sites like TripAdvisor, Yelp and Qype have been helping people for years, but newer services are taking things further. Waze uses data from millions of users to generate realtime traffic alerts and navigation, as well as show drivers useful tips like speed camera and speed trap locations, accidents, and who offers the best fuel prices. Slide 36 © Fjord 2012 | Confidential

Mash it up! Banjo, Sonar and Circle use aggregate data from multiple social platforms to provide connections and suggestions. These services provide value by translating masses of data into useful, actionable information - without the need to read dozens of reviews and suggestions. Slide 37 © Fjord 2012 | Confidential

How are you feeling? A new bumper crop of objects are coming onto the market to help soften the effects of distance. These appeal to road warriors with partners and children at home, as well as to parents whose adult children and grandchildren live far away. Visceral and simple, these objects evoke a sense of togetherness that traditional technological services – texts, emails, even photos – cannot. Slide 38 © Fjord 2012 | Confidential

Let people be the inspiration We‟ve already established that the traditional categories of travel and transportation are not relevant anymore. The only way to successfully negotiate this changing landscape is to put people first. Observing human behaviour – and there are ample opportunities at every airport, hotel lobby and train station to do so – is the surest way to uncover opportunities to improve existing services and invent new ones. Slide 40 © Fjord 2012 | Confidential

Make it pleasant, not seamless Clever services make the transition from one step to the next feel pleasant and understandable – but not invisible. Particularly when moving around, we need to understand where we are and what‟s going to happen next. Research has shown that something as simple as notifications of delays to a flight significantly increase customer satisfaction and trust – and these SMS are not seen as an intrusion, because they provide relevant information. Different destinations have different immigration and security requirements – services that help travellers know what to expect can gain a lot of goodwill, and businesses that strike a balance between making things run smoothly and managing customer expectations will continue to win in the travel landscape. Slide 41 © Fjord 2012 | Confidential

Match complexity to context Travel can be hugely complex – every transit station, airport and road system has its own peculiarities, and this can be stressful for seasoned travellers and occasional holidaymakers alike. Then again, frequent travellers are easily irritated by superfluous information about places and systems they already know. Taking note of which journeys are routine and which are exceptional, and adjusting the default information settings accordingly, will go a long way to improving the experience of travel. Slide 42 © Fjord 2012 | Confidential

Balance the measures of success Single point of focus Focus on many areas at once Know „what‟ but not „why‟ Confusion The trick is to choose a framework of KPIs that work together to show you not just what your customers are doing, but why they might be doing it; not just how your business is performing, but where the opportunities lie to improve. Slide 43 © Fjord 2012 | Confidential

Look at the whole ecosystem People engage with many hubs of the travel ecosystem on every journey – think if it as a series of interconnected parts that can work together. Slide 44 © Fjord 2012 | Confidential

Think laterally One of the most prominent patterns in all this change is the blending of concepts that used to be kept separate. Gidsy, for example, is a combination of a number of existing ideas; it‟s the combination that‟s innovative. Social Localisat ion Grap h P2P Event Com m erce Planning Looking acoss contexts of use Sp ecialist Niche to find new value in existing Know led g e Int erest s information opens up great opportunities for service based relationships. Slide 47 © Fjord 2012 | Confidential

Everywhere is home Connected objects and the app ecosystem open up the possibility to make anywhere – any car, any airplane seat, any hotel room – feel a bit more like home. Auto manufacturers have already begin to embed personal preferences in an NFC or SIM based keyfob. What if my entertainment, food and sleeping position preferences could be saved and applied to every airplane seat I travel in? Or what if every hotel room I stayed in had a lamp that connected to my daughter‟s night-table at home? Personal touches like this are precious to people, and offer an opportunity for larger players – hotel chains, airlines, railways – to establish deeper value in their passenger relationships. Slide 48 © Fjord 2012 | Confidential

No more „us vs. them‟ All this P2P trading has made many traditional businesses nervous, but it doesn‟t have to be such a pitched battle. What if the big players helped to facilitate P2P interactions? What if cities funded and facilitated local experts and tour guides? Or auto manufacturers facilitated shared-ownership schemes? What if a hotel chain co-branded with like-minded flat owners to create a hybrid service that brought the best of both worlds to the consumer? Opportunities exist to break down boundaries and establish new business models that allow businesses to do what they do best – and people to do what they do best. Slide 49 © Fjord 2012 | Confidential

The portable self One of the most common causes for stress amongst travellers is remembering all the things we‟ll need for the journey. These are remarkably similar from person to person, and indeed hotel chains have long provided toiletry kits for an additional fee. What if a service could learn what I need for which kinds of journeys and transmit that information to anyone who could use it? What if a hotel (or an AirBNB host) provided not only basic toiletries and WiFi, but also chargers, and perhaps even a card for the local Public Transit System? Something as simple as chargers for laptop, phones and cameras saves up to a kg or more in packing weight, and lightens the mental load as well. And anticipating a customer‟s needs can feel, to them, like magic. Slide 50 © Fjord 2012 | Confidential

Interpreters needed As new mash-up services begin to resolve the crisis of choice and travellers become more comfortable with P2P options, the market for travel agents and package operators will contract again. But people will still need guidance – whether that‟s someone to help them plan their entire journey or simply someone to show them around once they get there. P2P services that offer end-to-end planning could be the next big thing, and businesses that help to facilitate this could establish themselves for a long-term win. Slide 51 © Fjord 2012 | Confidential

Personal data brokerage As customers become more savvy about their data, new opportunities open for merchants to barter discounts or freebies in exchange for access to personal information. This means opportunity for deeper, more meaningful relationships with customers. Slide 52 © Fjord 2012 | Confidential

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