Maybe it was the unexpected snow. Or perhaps the transport strike. But when Philip Wolf, CEO of travel industry analyst firm PhoCusWright, addressed the bloggers summit at ITB Berlin yesterday, he was putting his neck on the line and predicting big storms on the travel industry horizon.
A perfect storm in fact.
Not the kind featuring a wet George Clooney in a fishingboat, but a convergence of three separate stands of online behaviour and technology that look set to impact travel purchase both dramatically and profoundly.
Philip is predicting a perfect storm of search, shop and buy.
But what does he mean?
“A perfect storm is born when several events occur simultaneously which if occurring separately would be far less powerful. What we’ve identified is that the advance of search technology, online shopping and buying will lead to a whole technological revolution.”
What are these converging fronts? Search technology now means that people can find needle in haystack online. Search and user generated content are used together (and also in conjunction with other media) - people have access to so much information they can make the right travel choice accordingly.
Additionally, in a longtail environment of unlimited travel choice online, it can also now be economically viable to be the niche seller of a needle in haystack. From an Online Travel Agent, to a single small business operator - technology allows you to connect your niche, personalised product with its dream purchaser on the otherside of the world.
Purchasing habits are evolving too. While the “research online, purchase offline” is still an important search behaviour, online travel purchase has become mainstream to the extent that it no longer just represents flight and hotel sales, but also everything including costly luxury packages. More and more people contain to come online and to buy travel online - the US has already surpassed the 50% mark for online bookings and in emerging markets like India, travel is the “killer” e-commerce application.
Social media have also shifted power to the consumer. There is now a closer blurring of search, shop and buy. The process of conversing about travel, watching travel images and video, reading user reviews and sharing knowledge drives the sale process. It inspires travel decisions and influences the purchase specifics. In his presentation this morning, Tom Klein, Group President of Sabre Travel Network used the (unattributed) statistic that 75% of shoppers spend more on online travel after consulting reviews.
What does this perfect storm mean for travel and tourism businesses? Philip explains that:
“Unlike the metrological kind, this digital kind of perfect storm provides perfect opportunity. That will be provided to travel companies that exploit new technology and the momentum and they stop worrying about business model preservation. When you concentrate on trying to preserve business models instead of preserving customers, sometimes really scary things can happen.”
He predicts that as with earlier industry transformations, there will be new agents of change, new winners and losers. That may mean that the new generation of online travel firms that ousted the establishment a decade ago, will themselves then be ousted by a newer generation of firms if they fail to respond to converging customer needs with further technical innovation.
Philip adds that in these times of upheaval, it is more important than ever before to trust your instruments and consult your intelligence, but that the stage remains set to exploit opportunity everywhere is this online perfect storm.
Good news for researchers and industry analysts then?
This entry was posted on Thursday, March 6th, 2008 at 6:07 pm and is filed under Conference learnings, Future trends, Tourism market research, Travel 2.0. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.