You know, the very stuff we bang on about all the time in this blog. Usability. Conversion. Analytics tied to revenue tracking.  Campaign return on investment. All the critical online fundamentals that either save money or generate revenue/visitor satisfaction.

But, what we have found, is that compared to a straight e-commerce business this has been technically far harder to achieve for the tourism businesses.

So hard that it has kept us away from the blog that we love as we have dived deeper into data, code and various site architectures than is healthy before lunch – and for site after site.

And so this post is an exploration (and a plea for your thoughts) on why that may be.  Why are tourism and travel businesses often technically and organisationally less able to maximise their performance from what in many cases is, or should be, their primary sales channel than say a straight e-commerce retailer?

And what can travel and tourism businesses do themselves, and through their technical suppliers, to overcome this in a way that drives efficiency in their business and improves the online user experience?

But first things first:

• This is not a blaming exercise. Common with many in the industry, each of the very successful businesses we are working with are fully bought into the idea of generating more revenue from the web and to the idea of improve their online user experience in order to generate more bookings.  The type of business I refer to in this post actively wants to get better, yet encounters technical challenges nevertheless.
• Nor is this about specific organisations – each of the clients we have been working with have shared common issues, but that process has highlighted to us just how often those issues are shared by travel and tourism businesses the world over.  This is about the many, not the few, and the points made here apply to general businesses in the industry, not specifically to the businesses we are working with.
• This is not just a “nice to fix”, it is a fundamental that matters to the bottom line and to the visitor experience.  It is nearly 2 years ago since we reported how customers are more satisfied with submitting their tax return than booking a flight – and as an industry (perhaps with the exception of some leading Online Travel Agents and travel technologists) the online travel shopper experience isn’t getting much better.

Why is this so difficult?

So why isn’t it easier for a small to medium tourism or travel business to seize online opportunities to drive revenue, delight customers and slash operating costs?  Why, even when the strong management desire is there, is implementation often so much harder than the “advising” national/regional tourism bodies might have you believe?

I don’t have the answers but I still think the question is worth tackling.

What follows are my personal thoughts and they don’t represent any one specific business (even if you do think I’m talking about you, I promise, I’m not).  They may be mis-guided (do let me know) and there may be easy fixes I’m not seeing (in which case I beg you to let me know).  But here are my ideas on why I think we are encountering so many technical, structural and strategic challenges now that are impeding the ability of travel and tourism businesses to fully succeed online.

1. Travel and tourism rarely thinks of itself as an e-commerce or even an online business. After pure online retail, travel/tourism is the next biggest e-commerce revenue generator on the web. But unlike the online retailer who created a business purely focussed on the web, many tourism businesses have evolved stealthily  into e-commerce businesses – so stealthily they may have barely noticed and do not have a rolling development strategy in place.

And for those for whom the majority of priorities/staff are involved in offline servicing of real-world visitors, it is no surprise that the businesses doesn’t think or behave like an e-commerce business – even when it is.  But the danger of not thinking in those terms is that the tourism business puts up with far lower proportions of direct online bookings than it could achieve (significant given this is typically the cheapest sales channel).  It may also fail to deliver the customer the level and quality of online self-servicing that the visitor actually desires.

This isn’t unique to travel though – think of the traditional high street retailer like Marks and Spencer, or the cinema like Vue – these too have “evolved” into e-commerce businesses even if the bulk of their staff service customers offline.   It is possible to do this with great success.

2. Under-investment, under-valuation and under-delivery of critical technical skills. Compared to straight e-commerce retail, where failure to deliver online means the business as a whole will fail fast (as opposed to potentially fail slowly), I believe tourism and travel has typically under-invested online as it has undervalued the channel’s contribution to the bottom line.  Tied to this is then the issue that by choosing what appears to be the cheap option, businesses find themselves either experiencing a massive under-delivery of skills and service levels, or they become tied into highly inflexible systems with hidden costs.  Too many times it is both.

3. No room for the online specialist.  Another symptom of the undervaluation of the channel, therefore the under-investment & under-performance is that is extremely rare for a travel or tourism business to have an online or development specialist (and I refer here to businesses of a size where this could potentially be achievable).   They are at a massive disadvantage compared even to far  smaller retail e-commerce businesses, or to pure OTAs, where a developer/online marketer is typically sought in the early rounds of hiring.

Without any access to a trusted online specialist, there is often then an organisational lack of confidence in its technical knowledge.  Negotiations with technical partners are frequently started at the outset with the admission that “I’m not technical” or “we’re not interested in how it works.”  For the unscrupulous supplier this is easy pickings.  For the merely incompetent it means that the lack of skills are likely to go undetected long after the damage is done (and why would the supplier both improving their skills at their own expense, if the customer doesn’t know/care either way).  And for the competent supplier it is demotivating and not likely to produce their very best work.

4. The booking system barrier & ad hoc bolt ons

For many tourism and travel businesses, the website started as a fixed brochure-type site and it evolved into an e-commerce site through the addition of third party e-commerce provisions and off the shelf booking engines.  There is nothing wrong with this in theory, for a site should never be viewed as finished and should be able to adapt.  And there are a number of good third party party booking systems out there, including our friends at ezRez and Rezgo who are occupying very different niches in the market.

But coming back to point 2, that integration of ad hoc elements, sometimes across multiple domains and microsites, has often been clumsier and less skilful than is desirable.   It has also often been reactive rather than strategic development, undertaken in isolation from overall operational planning.  User experience, search engine visibility, the ability to optimise the site and general business flexibility are impacted.   Businesses may find themselves paying for expensive amends to inflexible systems and set-ups, for example when they want to add web analytics tracking to transactions or want achieve bookings in fewer clicks.

Few existing providers (as opposed to new market entrants) seem to have embraced the rolling technology model, ie “we’re going to build an agile integrated, fit-for purpose system now, knowing that our needs, our customer needs and technology will be continuously evolving”.  Instead, where public bodies and businesses have built their own systems, these have frequently been costly, delayed and if ever fully fit for purpose, they have become quickly outmoded.

I think part of the reason for this is educational, as outlined in the next 2 points.

5. The educational/best practice examples shown by public tourism bodies

I think that due to their political remit, it can happen that public bodies focus their technical education and training/support on the smallest operators with the simplest online challenges, at the cost of those with more complex technical needs.  For example, by focusing on the small accommodation provider at the cost of the tour operator.   This can create the illusion that for all organisation types “adding e-commerce” is something one-off, quick, cheap and simple – rather than something strategic, ongoing and central to business operations.

At the same time, those same public bodies issuing the advice can be amongst the worst offenders at creating the costly, giant of an outmoded site that becomes almost too expensive to walk away from (more about the sunk costs fallacy here).  For the small/medium business that is looking round for an example to follow, they do not necessarily represent the best role model.  So, by looking only to the existing tourism sector and its associated public/support bodies alone, it may not be possible to find the best practices and understand where the benchmark for success really should be.

6.  Sectoral isolation

So, final point.  I accept that travel and tourism has its unique features and challenges as a sector.  But, the customer/website visitor spends more of their time on sites from other sectors – they have a holistic view.  I think that when it comes to e-commerce and online best practice – and to seeking third party suppliers with good skills/reputations -  the travel and tourism industry needs to look wider to fully be inspired, to understand what investment levels/supplier performance standards are required and to see where the market is moving.

Other businesses from all sorts of sectors have tackled how to get the best online results from the smallest necessary investments.  They have made all the mistakes and learned valuable lessons in the process.  From pizza delivery, web dvd rental and gaming, to straight retail e-commerce – businesses are proving that small teams can deliver profits and great customer service from their online investments.  I think tourism needs to look at other sectors more often, not just to understand how to to fix problems, but to visualise what really good actually looks like online.

Any thoughts on how to fix this?

To conclude, yes I appreciate that only many, many levels retail e-commerce and travel/tourism e-commerce are very different beasts.  For the e-commerce retailer (as for the specialist online travel firm) failure to invest and failure to get the web technology right means they fail fast.  But I think that for the tourism business that doesn’t invest and doesn’t get the technology right, there is still a significant risk to the business, it is just less immediately apparent and failure plays out more slowly.  Ad hoc fixes become more embedded and costly,  as opposed to forming strategic rolling investments,  yet feel ever harder to walk away from.

I think for those working in the field of support, education and development of tourism and travel online there are skills gaps, confidence gaps and value perceptions that need to be addressed.  I’d argue that looking primarily to the simplest model of the micro-accommodation provider when delivering education/advice does no favours to the sector as a whole.  There are typically far more complex e-commerce business models and configurations to be planned and invested in, demanding a higher level of technical awareness from management and a more sophisticated educational infrastructure to support them.

For the ambitious business owner determined to maximise online success, there is distinct value in talking to e-commerce retailers, as well as your tourism sector peers, when it comes to making critical decisions about suppliers, investment and online strategy.  If you don’t have confidence in your own technical skills, can you find a way buy them in, share them or borrow them, so that the online channel and associated expenditure doesn’t flail around outside the control of your main operations?

But I am aware that all I have done here is highlight my take on the questions and associated problems – where do you see the solutions?

Posted by Vicky

The Tracking Tourism team is currently in Berlin attending ITB and, courtesy of PhoCusWright, the conference organizers, attending the PhoCusWright@ITB conference and Bloggers Summit. All in all, a fantastic chance to meet with the great and good of travel and analyse where the industry is, where it is going and what the heck can be done about it.

And what a day one it has been – social media optimism, mobile as critical to business strategy, a new word “moxie” for the vocabulary – oh, and a dash of economic apocalypse.

We’ll have a series of posts over the next few days looking in detail at some of these themes, but we thought we would kick off with a quick report from the opening day, including the Bloggers Summit part of the conference.

Wise words from Philip C Wolf

The briefing from PhoCusWright’s CEO, Philip C Wolf, is always a highlight for me, and this year was no exception. With a self-confessed “keen sense of what’s hot and what’s not” he proclaimed 2009 as the year of 4 Ms:

• Money - not just lack of it, but also in terms of low interest rates and “bottom feeding” investors

• Media - “its all rough and tumble right now” with pay per click and user generated media really impacting travel distribution models.

• Mobile - “2009 is the year when mobile platforms become a strategic business imperative” (quote of the day in my opinion!)

• Moxie - (for readers outside of North America: verve, pep, know how and guts). The business acumen to “be comfortable swimming against the tide”

As Philip explained, it takes lots of moxie to control costs in the operating plan, while simultaneously investing in capital expenditures/innovation. For if companies only play defence then at best they may preserve their business entity – “but what if you work really hard to preserve something that is out of sync when the tide starts rising?”

Philip was careful not to dwell on bleak economic scenarios. His focus was primarily on identifying opportunity and “the big rewards for gutsy innovation”. He explained the signals of recovery that his analysts are looking out for.

The views at the ITB Convention Future Day was both more apocalyptic while actually reinforcing some of Philip’s sentiments.

You don’t even want to hear the worst case scenario…

I guess “Tourism in Times of the Global Financial Crisis” was never going to be uplifting. In the course of his introduction, Professor Max Otte, author of “The Crash Comes” managed to depress the audience into shell-shocked wide-eyedness with promises that “there are lots of bombs still to go off”, that the global banking system is technically insolvent and that in the worst case scenario of global depression “all bets are off“.

Professor Lipman of the UNWTO tried to raise spirits but somehow “as the economy goes so goes tourism” didn’t achieve the desired bounce. He did however express the goal to get tourism on the table as part of the G20 stimulus package discussions, due to its critical role in two way trade.

Some good news to be had the fact that a lot of the fundamental shifts in responding to the customer in travel have already been underway for some time. Meaning those who have already invested in understanding what the customer wants and building business models that enable them to deliver on that are in a stronger position. But as Dr Auliana Poon of Tourism Intelligence International warned:

“Customers have long memories… destinations and companies not on track with what the customer wants will fall by the wayside… customers are deciding”.

People still want to travel – I loved Dr Dieter Semnelrioth of the TUI’s analogy that “25 million Germans are sitting on their packed luggage.” But the early bird offers are not working, bookings are down – operators may move straight to last minute deals, eroding margins. As we have heard previously, customers are not trading out completely, but they are trading typically down (though it is the middle ground, 3 stars, feeling the most pain).

“Transformative” was used a little too much for comfort – the point being that there remain opportunities and that to quote Dr Poon “this recession will force us to live differently and travel differently and travel differently.” But transformative sounds kind of apocalyptic to me – after all, isn’t transformative what they said about the Black Death?

However, the themes mentioned at the PhoCusWright session earlier – particularly Moxie and Money – also made an appearance at an earlier presentation by Rolf Frietag, delivering the results of the largest worldwide travel survey in the form of the ITB World Travel Trends Report.

Put simply, if you have the guts to invest in the present climate, then there are great opportunities – construction costs and interest rates are low but you’ve got to be able to ride out a recession potentially lasting until late 2012.

I (Vicky) have lots more notes from this session, with each sound bite more depressing than the last – but for all our sakes I will handover to Stephen and the cheerier travel bloggers and their discussions on social media in tourism and travel.

The Top Social Media Trends for Travel and Tourism

The bloggers workshop sessions explored what blogging folk from within the industry believe are the top social media trends for travel and tourism.

Asked to choose a main theme for the coming year, the panelists opted for:

* More Twitter
* Better understanding how to use social media
* Increased use of social media as a PR tool
* More Twitter
* Employing a social media guy

These issues were then put before the audience to vote on what they thought of these prognostications. Despite the endorsement of Twitter from the panel, I seemed to detect a degree of skepticism in the hall and Twitter got lowest audience votes on key trends – suggesting perhaps that people feel the need to drive philosophy change and strategies, rather than simply focus on specific applications.

The discussions moved onto practical applications of social media within travel organisations. Klaus Hildebrandt reminded the audience that businesses didn’t used to be able to see how the web could deliver revenue – they finally saw that it comes with investment and effort. To get buy in to social media is to highlight the business cases, the good examples of how to add this to strategy.

Kevin May of Travolution cited the Queensland Dream Job as the perfect example of an integrated destination campaign using both traditional PR and social media marketing.

Stephen Joyce summarized the workshops with the sensible conclusion that “your customers are talking about you anyway. How are you, as leaders in your organisation, going to step into the conversation in the most meaningful way?”

However, while PhoCusWright is following a deliberate policy here of focusing on the can-do in the programming of the conference on the basis that wallowing in gloom isn’t really going to help any of us, I think there is still a world represented here at this conference that is a) frightened at what’s to come and b) has bigger fish to fry than considering the best way to use Twitter.

As a Twittersceptic (note not a Twitter-phobe!), I thought the more practical suggestions from the panel included:

• The role of mobiles will increase (more on this in a coming post)

• Using 2.0 for PR in a more savvy way and integrating this messaging with traditional forms of PR will grow

• Feedback 2.0 – tourism providers might start to listen to what their customers are saying across multiple channels.

• Context rather than content will become important – you need to get to the real info you want, not wade through interminable irrelevant guff.

• ‘We must do our homework’ – Companies must take a hard look to define what goals they want to reach, what target groups do we want to reach?

• Traditional metrics for online activity are inadequate for measuring social media.
• New metrics such as ‘volume of mentions’ will become important in judging success.

We look forward to tomorrow’s PhoCusWright@ITB09 conference.

Wouldn’t it be great if…people understood the distinction between User Generated Content and social media?

This is one of the most common muddles that we come across and this confusion can have investment implications so it’s important to be clear about what the difference is between these two.

While similar information can appear on these channels, the tourism provider that says, “I’ve gotta get me a Facebook page” but is unaware of the stinking reviews they’re getting Tripadvisor and the videos of their cockroaches on Youtube is getting their priorities wrong.

Wouldn’t it be great if…businesses saw the recession as a long term opportunity rather than a short term one?

I have this (probably unfounded fear) that lousy tourism providers in the UK will get a boost this year on account of the weakness of the pound and the growth in domestic tourism.  What I would like to happen is that this is treated as a rare opportunity to show visitors, domestic or otherwise, what’s great about travel in the UK.  I fear though that some might feel that it’s an opportunity to gouge a market where demand has grown, while cutting back on service and value delivery as far as possible.

Wouldn’t it be great if…A/B and Multivariate site testing became mainstream?

That’s probably not the sexiest sentence I’m ever going to write but it amazes me how, given free tools to measure how changing a website layout affects response rates, few businesses (those in North America excepted) can be bothered with this.  Come on folks – this is a quick and easy win! Surely, as Tesco would say, every little uplift in conversion rate helps?

Wouldn’t it be great if…people checked their assumptions before starting their marketing?

A case in point: we’re doing some work at present that reveals that a destination is wanting to attract Category X visitors and assumes that their marketing message is sufficient for them. But they are actually missing pressing the buttons of this category and are actually speaking directly to other less significant markets by accident.

They have assumed, rather than tested, that they know what Category X visitors want and have based all their spend around those marketing messages. But because they’re the wrong messages, all that investment is in essence wasted. Challenging those assumptions through testing at the campaign development and early roll out stage would have avoided this waste.

In a way, this is a repeat of the old adage that ‘you are not your customer’  but it’s something worth reminding yourselves and checking to make sure you are getting your comms strategy right.

Wouldn’t it be great if…protectionism didn’t return to travel?

I don’t think that there is any suggestion at the moment that protectionism is about to rear its head in travel but remains a fear of mine that it could make an appearance at some point.  If it happens within the EU, I suspect that it would be under the guise of a green initiative but globally it would be about protecting home carriers.  Watch this space if things get reeeally bad.  

Wouldn’t it be great if…the issue of peak oil had gone away?

Well, in a sense, the issue of peak oil has gone away owing to the immense demand destruction we have witnessed over the past eighteen months but the fundamental issue is that demand outstrips supply in oil production was poised to come true at the beginning of 2008 and there is no reason why it won’t be true again when the world economy picks up.  Which means that some of this stimulus money will have a lasting legacy if it is spent in a way that prepares the infrastructure for a world in which oil is really expensive.

Wouldn’t it be great if…over to you!

In writing this post, I am aware of approaching this issue from a specific perspective but am aware that there are probably a lot more ‘wishes’ out there to be claimed – so get contributing in the comments box below.

Post by Stephen

Although the concepts are clearly interlinked, lets take each of these themes in turn and examine their implications.

Transparency

At a broad level, transparency works in two ways.

Firstly, there is the need of businesses to be transparent. Secondly, transparency is imposed on businesses by the consumer whether that business likes it or not. But let’s unpack those two sentences yet further.

When we are talking about transparency, it is not just a case of being honest about the building site opposite your hotel but about allowing your consumer easy access to both your product and reliable information about that market.

Ian cited both:

• the demand for the right results fast, with absolute intolerance of slowness; and
• the desire to see through the blizzard of choice to get to where we actually want to get to

Added together this means a ‘culture of convenience’ in which consumers are simply more demanding and less tolerant of the slow and vague. As Joe Buhler discussed at Canada e-connect last week, the web 3.0 nirvana for the customer is the shift from searching to finding, from ‘pile ‘em high’ to personalised.

It should be appreciated that while the blizzard of choice might seem confusing at the outset, this blizzard is actually the crowded market place in which the consumer can be seduced by a huge variety of options and so the producer therefore needs to work harder to attract the consumer’s attention.

Until the semantic web nirvana arrives (see a great little video on what that means over at Buhlerworks), customers are having to do all the hard leg work of searching and researching. No wonder they’re impatient! It was suggested last week that people typically look at 17 websites while planing a trip (I don’t have a source on this, so don’t treat that as fact!)

Even the best website has just a few seconds to speak to and successfully sign-post the prospective visitor. 7 seconds used to be the number often quoted – now (as we’ve seen in user testing) its considerably less time than that.

“People want sites to get to the point. They have very little patience.” Jakob Nielsen

So in this context, transparency is about easy provision of information.

Trust

So, why do companies also need to be transparent? (Apart from the fact that whatever you’re hiding, it’s already on the internet somewhere!)

Because, in turn, transparency engenders trust.

From focus groups we’ve done, we’ve found that there is a residual distrust that areas (especially) marketed at a national level through a tourist board are simply not going to be how they are presented. It’s as though the consumer now feels that they are not going to get the full story about what the place is really like – is the pretty old town actually just a small part of a grimy industrial city for example?

It is no wonder, as we wrote about here, that the traveller places less trust in brand marketing than they do in user reviews and ratings. In fact, reviews/ratings from other travellers were seen as twice as influential in the online travel planning process than brand and significantly more important than recommendations from friends and family.

As Ian noted, “Less and less the consumer trusts advertising. One major consequence is that every tourism organisation or business needs to work hard to preserve whatever authority and trust-worthiness it has accumulated.”

So your brand still has capital, even though you can’t control communication. An organisation has to respect the fact that it is no longer the only information source, but acknowledge that it still has the potential to influence. By embracing – and having a strategy to manage and respond to – the authentic views of others, the business has the opportunity to benefit even when those reviews reflect an image removed from perfection.

Trendwatching have coined the term Brand Butler’s to express this concept:

BRAND BUTLERS “If consumers value the authentic, the practical, the exclusive, and they’re also forever looking to make life more convenient, even save some time, then why persist in bombarding them with one-way advertising campaigns? Instead of stalking potential and existing customers, why not assist them in smart, generous, relevant ways, making the most of your products and whatever it is your brand stands for?” Trendwatch Feb 09 Briefing

Technology

Of course, technology has been at the forefront of enabling this explosion of choice and views. If you think back to as little as 15 years ago, for ‘real’ views about a place we would consult either our travel agent or read a Lonely Planet guide (which I ended up not particularly trusting!). In terms of pricing, it was a lot simpler and often a case of ‘take it or leave it’.

The internet has of course opened up much of the industry to closer scrutiny as well as offering far wider choice (not that the choice wasn’t always there – it was just harder to find).

Search, meta-search & price comparisons, user generated content, dealing with multi websites simultaneously – and the fact that none of this stuff goes away – has changed the information gathering landscape.

Clear…as mud?

Interestingly, Ian also noted that

“There is a counter trend to everything transparent, in which opaqueness is accepted by tourists. Many tourists will accept an opaque offering, if that experience consistently delivers and surprises. Also, a lot of tourists like to keep things simple. They want to save time. They don’t want to make all the decisions. In other words, if you operate and deliver in a superior way, consumers may actually be happy and they don’t want to spend valuable time researching or engaging in conversations with you. They will trust you to do the right thing. Surrender control in order to get on with more important business. If your business or destination is opaque, it means you are one of the best, but you have to work at it to maintain that trust.”

It seems to me there are two things going on here. The first is the organisation that can anticipate and over deliver – the ability to surprise, and delight is trusted, presumably due in part to great word of mouth.

The second is the “easy life” compromise and sounds like the Easyjet scenario to me. Hidden extras I have to uncheck if I don’t want them added, a fairly unlovely experience alround and I don’t want to engage with them. But they get me there, its quick and its cheap. I’m not sure that’s trust, but its certainly willingly surrendered control, in exchange for convenience.

So what do I take away from this?

I guess for me this prognosis should be read as implying that these ‘Three Ts’ are about more than saying it’s a good idea to respond to user generated content such as hotel reviews. That’s certainly part of the environment but I think this is also talking about fundamental ways of doing business.

One of the cardinal lessons I would stress from this is the importance of ensuring access to the product. I don’t mean this in terms of being able to get to a destination but rather in terms of making sure that the custsomer’s voice is heard and served amidst the cacophony.

So, on a practical level, we’re looking at usability issues, we’re looking at understanding your customers and their behaviour, we’re looking at making sure that they are able to get information and maybe convert in a style that suits them, not you.

Ultimately then, it’s about trying to create a win/win transaction and the ways of getting to this state are indeed being fully explored both at the level of the here and now (see out recent post about the Phocuswright Innovation Summit for example) and as a meaningful future concept (again, see our post on Travel 3.0). 

And, for me, one of the most exciting parts of this is the fact that these developments are aligning themselves to the fundamentals of doing business – they’re not just filling some strange need for a new fad (although there are exceptions…) but rather they’re about building trust, they’re about delivering value to the customer in a way that suits them and they about enabling  voices to be heard in an ultra-competitive and challenging environment.

Filed by Stephen (29/01/09)

Just over a year ago, in sunny Orlando, we were optimistically looking forward to a Travel 2.0 future where the playing field was level for online innovators.

At the PhoCusWright Conference the travel industry met to discuss the long tail in travel, and envisaged an environment  where (in PhoCusWrights’ words):

“Little guys compete on the merits of the products and services, not the size of their marketing budgets. Big guys are all of a sudden at increased risk if they ignore too many little things.“

Thanks to the long tail in travel it seemed there was a chance for an almost infinite number of destinations and niche providers to find their perfect match online amongst the tiny minority of consumers searching for the very thing they offered.

And thanks to web 2.0 technology, revenues would be shifted along the tail, redistributed from a few big players in the head and disseminated more widely to the many, many players in the tail.  The “new market” shown in the graph.

Well, it turns out we may have been deluded – at least about that whole revenue and profit part.  Research from digital music sales, online retailers – and dare I suggest even travel industry analysts themselves – started to suggest that the long tail does not deliver on its market level revenue redistribute promise.

Google delivered what may be the knock-out blow. As Google CEO Eric Schmidt explained (interview in full here)

“It’s a 90/10 model. We love the long tail, but we make most of our money in the head”.

So Pareto’s Law (the 80/20 distribution of pretty much anything) lives on?  Certainly, an unequal distribution suggests the significant bulk of revenues continue to come from the minority of products/customers – 90% from 10% in Google’s case.  In case he wasn’t clear enough, Eric Schmidt drives it home:

“I would like to tell you that the Internet has made such a level playing field that the Long Tail is absolutely the place to be, that there’s so much differentiation, so much diversity, so many new voices. I’d love to tell you that that’s in fact how it really works. Unfortunately, it’s not.”

An exaggerated death, or the emperors new clothes?

So is the whole concept of The Long Tail dead?

The Register takes a typically sardonic view, declaring: Anderson downgrades Long Tail to Chocolate Teapot status They add that Chris Anderson, author of The Long Tail, has “downgraded it from “the future of business” to something that’s, er, not very helpful for your business at all.”  In Chopping the Long Tail down to size, another post on The Register, data from an extensive study of digital music sales is discussed – with a quote from economist Will Page that:

“Is the ‘future of business’ really selling more of less….. Absolutely not. If you had Top of the Pops now, you’d feature the Top 14, not Top 40.

Personally, I think even without the melodramatic approach taken by The Register, the evidence has been coming in from the travel and tourism sector that a handful of big players – even if they are Web 2.0 players – dominate when the wider market picture is viewed.

In their great Travel 2.0 webinar earlier this year, Hitwise and Jupiter Research demonstrated that while visits to Travel User Generated Content sites was growing (though still a tiny proportion of overall travel visits online)  – this growth was not evenly distributed along a neat long tail.  Rather than a lot of little players accounting for the bulk of  travel user generated content, instead it is just 2 players that account for almost 85% of  travel UGC market share  (Tripadvisor and IgoUgo as shown in Hitwise’s data below) and 5 players accounting for 99% of marketshare.

Not a long tail scenario.  Instead, TripAdvisor’s dominance could be explained in terms of critical mass, economies of scale, consolidation and its position at the “head” not in the “tail”.

Slide from Hitwise webinar on Travel 2.0

So, the long tail is not dead, just unprofitable?

Chris Anderson himself, writing recently in Wired, tries to square the research coming in with his predictions of more widely distributed markets.  But he has to concede that the data just doesn’t stack up for redistributed revenue:

“I’ll end by conceding a point: It’s hard to make money in the Tail. As Schmidt notes, it’s also hard to make money if you don’t have a Tail (to satisfy minority taste, which improves the consumer experience), but the revenues are disproportionately in the Head.”

So the value of all the little things combined, does not outweigh the value of the tiny minority of big things after all….

Does that mean niche products and marketing activities are over?  Or the little guys competing on merits, not marketing budgets are doomed?  Does it mean that we should forget about the low traffic, highly specific terms used in online search?

No, I don’t think so at all.  There is value in niche activity, tactical search and online marketing -  and the smaller business has to compete somewhere.  I just don’t think we’re going to see that level playing field, or the industry’s revenues shifting from the big players to the small players any time soon.

Stephen adds: Assuming that the Long tail only accounts for 10% of Google’s income, that means that it accounted for a paltry HALF A BILLION DOLLARS of revenue …in the third quarter last year! The Long Tail lives on but with companies like Amazon and Google holding virtually limitless inventory (and having the economies of scale to reduce costs still further), they still hold the dominant market position and this includes that part of the market that can be described as long tail.

Post by Vicky

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Finally, an apology to subscribers whose email/RSS feed has misbehaved this week.  Tracking Tourism was upgraded to the new version of Wordpress at the weekend and this resulted in a test message being issued to subscribers, via Feedburner (the tool we use to manage email and RSS feeds).  We apologise for any inconvenience and believe the issue is now fixed.  If you continue to encounter any problems with your email/RSS feed, please do let us know the details so we can investigate further.  Thanks,  Vicky!

But what does this mean?

Have a bunch of under-employed bloggers just got a little over-excited and made up a term that has no relevance to the rest of us but makes them look clever?  Or does it actually signify something that will have an impact on the way we do business?

Well, I think it’s a little of both – certainly at this stage.  The ambitions stated for Web 3.0 projects will have an impact on day to day life once realised but I think we’re not close to mass deployment yet so there is no need to start panicking.  However, I thought I would dedicate this week’s post to looking at some of the basic questions surrounding this potential change, starting with the two most fundamental ones, “What is 3.0″ and “So what?”

What is 3.0?

As is often the case, it’s possible to start with a Wikipedia definition of 3.0 which states:

“Web 3.0 is one of the terms used to describe the evolutionary stage of the Web that follows Web 2.0. Given that technical and social possibilities identified in this latter term are yet to be fully realised the nature of defining Web 3.0 is highly speculative. In general it refers to aspects of the internet which, though potentially possible, are not technically or practically feasible at this time.”

Which isn’t really that helpful.

However, the rest of the article goes into some more detail and, overall, the impression is that the ambition of Web 3.0 is to create an internet that is simply with fewer boundaries than we (often unconsciously) experience at the moment.  And while these ideas are mainly being considered at a technical level that baffles the rest of us, there are indicators of what this might eventually mean for how we interact.

The semantic web

For example, commenting on a recent TrackingTourism post, Phil Caines of Tourism Tide said

“As far as where we can look for the next ‘wow’ change, I can only guess, but if you asked Joe Buhler, he would undoubtedly say “The semantic web of course!’, and I think he is right.”

The Semantic Web is a key part of 3.0 ambitions.  Put simply, it is a development that would enable web sites to be able to understand the relationship between things.

Let me unpack that last paragraph a little.  At the moment, web sites can be seen a bit like an encyclopaedia.  For example, there might have entries on separate sites with the following information:

• Boston is in Massachusetts
• MIT is in Cambridge, over the river from Boston
• MIT undertakes work in Biotechnology

As a human, you understand that there is something linking these statements but a computer doesn’t.  So the aim of the semantic web is to enable computers ‘intuitively’ to understand that these three statements are linked. Simple, eh?

So what?

Ignoring the technical practicalities of this, you’re probably asking the question, ’so what?’ by now.  To my mind, this kind of advance has the potential to make the internet ‘blend together’ in a far more efficient way than it does at present.

So, it could be used, for example,  to develop sites that are able to offer best travel packages based on the question, “I live in Boston but I want to watch Manchester United at home some time in October, staying in a budget hotel with easy access to public transport.  What are my best options and when is the best time for me to go?”   This is not an impossible question to answer at the moment but you will probably need to go to 3+ sites to even start to work out an answer.

On the other hand, the semantic web should make that question a lot easier to answer.  All the separate elements of the question (Manchester United playing times, flight times, lodging info etc) would be understood seamlessly and then used to deliver a swift, comprehensive answer.

Another example of how the Semantic Web could be used in marketing is contained in the following article: What the Semantic Web — or Web 3.0 — Can Do for Marketers.

Mobiles and ubiquitous connectivity

As I mentioned earlier, Web 3.0 also seems to imply an internet that is simply more ubiquitous and less bound than at present.  This means, for example,

• The continued march of the internet onto mobiles as well as the simultaneous blurring of the boundaries between those mobiles and computers;
• The rise of ubiquitous computing where connectivity is as common as the air you breathe (see this recent MIT article on the possibility of receiving wireless as you drive for example).

But what does this all mean to travel and tourism?

That’s a difficult question to answer (but one that will seem frustratingly easy in hindsight).  In some ways, the answer could be something as simple as , ‘what we’re doing now – but a lot better’ but that ignores the possibility of developments as revolutionary as Tripadvisor and Facebook have been in the last five years.

So, dipping our toe in the quagmire of prediction, our guess is that the web as an experience will become more of a hive than a collection of isolated websites.  What I mean by this is that one site will have the the potential to blur with another and so the web will be more of a collective than previously. If you cast your mind back to an interview we conducted with travel futurologist Ian Yeoman, one of the main points made was that:

“The traveller will want more in less time or with less effort – this has implications for everything from the format of events through to booking processes and the nature of breaks.”

And, in this context, consumer demand will dictate that they want more efficient access to information than they currently get. In other words, if there are still pain-points involved in reaching your data, then customers will be less inclined to pursue your offering to the point of booking when there are easier alternatives.

Another implication is that sites will need to ‘tagged’ effectively in terms that other sites and, more importantly, customers understand. Perhaps the implication is that we are moving from ’search engine optimisation’ to simple ’search optimisation.’

But the future is still hazy so I throw the floor open to the hive mind of our readers and conclude by asking, “What do YOU think 3.0 will mean and what might it look like for travel?”

Filed by Stephen (11/12/08)

Well, a week or so ago I was in London for World Travel Market. The following week I was supposed to be in Los Angeles as a guest of PhoCusWright for their 2008 Conference. Unfortunately, work here got in the way and so, instead of the sunny streets of Hollywood, I have been in Scotland instead.

However, from all accounts, the PhoCusWright Conference delivered its usual insight and I thought I would use this blog to highlight some posts from fellow bloggers and other online reports from the conference that caught my eye.

Before I do so, I should mention that I was fortunate to be a guest blogger at the Phocuswright Conference in Berlin earlier this year and so I’ll say a quick word about their conferences as background. For those of you who have been to one, you know what they’re like. But for those of you who haven’t and feel that the conferences that you are currently going to seem to have the same old people with the same of things to say, then I think the PCW conferences might be a nice surprise. I found the level of discussion there much higher and it struck me that this is the place to go to hear from the most senior people in the industry how the travel and tourism sector is progressing.

So, I’ll start with my impressions (second hand) of their Travel Innovation Summit which showcased before the main event solutions and innovations “that significantly impact travel planning, purchasing and trending.” The presentations can be found here and an overview (also second hand!) can be found on William Bakker of Tourism BC’s blog here.

I sense in William’s post a slight sense of being underwhelmed by what was on offer and that’s a sense I share (William, if I’ve got you wrong, let me know!). But, on reflection, I think that being underwhelmed is possibly not the appropriate description – most of the innovations are solid if unshowy examples of how people are exploring niches and looking for new opportunities. So instead of looking for something revolutionary, it is perhaps more appropriate to look at these products as evolutionary.

That said, some of the themes I picked up from the presentations were:

• Consumer interfaces are increasingly trying to become more human – think visuals (TV especially)
• User generated content continues to be key
• Aggregation also remains key – whether that’s of UGC, fare data or a combination of the two and more.
• There are niches to be explored – whether its for the smaller end of the market like Rezgo or for train travel, adventure holidays, or vacation rentals.

A first-hand overview of the ‘winners’ of the summit can be found in Jaime’s post here.

The Uptake Travel industry Blog has an excellent overview of the themes of the conference ‘proper’ here and they seem to reflect notions that I have come upon in different places on them same theme. In summary:

• Look east for new customers (’cos it’s going to get a bit grim if you just rely on your usual markets…)
• Travel is seems to be increasingly embracing TV images as part of the pre-booking experience
• Mobiles really are finally becoming more significant to travel.

Interestingly on mobiles, a session I went to at WTM recently suggested that although mobiles are rising in importance, they are not yet being used for financial transactions in the travel industry but mostly in making the process of travel less painful (more destination info, barcode check-in, that kind of thing).

So, what do I make of all this? It seems that there is a greater air of caution for obvious reasons among travel innovators at the moment. The industry seems to be still changing quickly but it it seems more of a period of organic ‘natural’ evolution rather than left-field innovations suddenly seizing centre stage.

However, despite only experiencing PhoCusWright virtually, it seems to me that the innovators are still miles ahead of many of the players in markets closer to my home in Europe (I know, I know, there are exceptions, especially in London). What this surge of innovation says to me is that, even in this dark economic period, there are people out there thinking really creatively about how technology can make customers’ experiences better.

But I fear this is a spark that is still more conspicuous by its absence than presence in many areas. Despite the low and free cost of many of these technology services, I suspect too many people in the more local tourism sector will miss out.

I think the reason for this is that without exposure to the evolving technology in the context of its creators’ objectives – such as improved user experience, improved travel research processes, better customer experience through ease of booking – the ripple-out from the source gets more and more focussed on “must have” technology for the sake of it. In other words, the its reason for being gets forgotten and it moves from something that intelligently serves the customer to something that a site feels it ought to have but isn’t too sure why.

That risks leaving local tourism businesses continuing to try to play technology catch-up in the difficult years to come, rather than understanding the fundamental customer experience issues that technology was supposed to solve.

But if Web 2.0 has meant anything, it is that the technology exists to enable us to share and learn from each other, meaning that ignorance becomes more of a personal choice rather than an enforced state of affairs. The links in the post to PhoCusWright and associated commentary mean that you can experience these innovations in context and apply their insights and attitudes to your business.

But the time can come when a man tires of stands offering similar offerings and needs to go in search of something else. Perhaps a walk on the wild side.

So, with that in mind, I decided to venture (within the safe confines of WTM) into the ‘axis of evil’ – in other words, I decided that I would visit the stands of countries that draw a fair amount of opprobrium and see how just how they were marketing themselves from a…errr…negative brand position.

The end result? In some cases, ‘ethical’ concerns might matter but I suspect that this can successfully be got round by some nifty marketing that addresses the emotional fears that unethical actions are a proxy for.

What do I mean by it being a proxy? Well, for example, if I believe that a government ready to imprison and torture its citizens seemingly on a whim, then I fear that there might be a chance that I might be subject to the same treatment, equally on a whim. But, there are ways and means around these unconscious fears that can help present destinations in a more favourable light. And the stands here are WTM might well be interesting insights into how to deal with these perceptions.

Take Cuba for example.

Cuba is not officially a paid up member of the axis of evil but Human Rights Watch (hardly a US stooge) notes that it is still a repressive country but the international public perception of it (outside the US) is that it is, at worst, almost a slightly wayward social democrat country that it is important to visit before it is ruined by nasty commercialism. I suspect that Cuba is well aware of this and, as such, its stand here at WTM is big, brash and confident. Ironically for a communist country, it is is a well marketed and professional destination marketed with considerable commercial nouce.

And it is fun.

As such, Cuba would appear to have listened to research and market forces and responded to consumer demands in improving and diversifying its product.

On the other hand, the Iranian stand (representing a country that is officially a member of the ‘axis of evil’) lacks this confidence. Like many of the Middle Eastern countries, it seems to rely on old images and on a slightly worth line of products. Their product appeals to a bookish person like myself but I think it communicates at the level of the head, not the heart. By this, I mean I need to be reassured that Iran, for example , is a safe place to visit where I won’t be stopped for a cultural misunderstanding. This doesn’t seem to happen and so, despite the attractions, there is still some nagging doubt. Overall, there doesn’t seem to be a suggestion of fun and the emphasis seemed to be on the historic, not the living.

However, fun seemed to be on the minds of the fellow evil-ites in the Syrian stand. Although the cliches undoubtedly abounded here as well, they were living cliches with people enjoying themselves – people laughing, people eating and people chatting. All of which are reassuring images common to all humanity.

While not an official ‘axis of evil’ country, China is nevertheless working hard to improve its image as a destination to visit. They’re not at the Iran level but neither are they are the Cuba level. I think their game is a longer one that will slowly build their brand to the point that they are perceived as a super-charged Singapore – no better or worse but certainly not grounds to avoid.

Finally, I went in search of the really evil Hermit Kingdom of North Korea. However, if they are here, their reputation for secrecy is intact as I couldn’t find them.

So, what can we learn from this slightly silly excuse of a post? Well, I think it is the lesson that destinations need to market to the heart as well as the head. As we noted a while ago, many of us carry conscious and unconscious prejudices and destinations need to address these in order to position themselves effectively. And although I have been using perhaps extreme examples, this lesson applies also to mainstream destinations – I don’t care if somewhere has a spectacular castle if it is an area where I’m likely to be mugged, for example.

Right, I’m off to find the Zimbabwean and Guantanamo Bay stands.

Update 1700: Well, after my mention of the Zimbabwe stand, I did go to and it struck me as traditional (safaris and all that) but…actually good. Despite the situation in the country, the stand suggested safety and fun. Not sure what that means for my theory.

External Links:

GoCuba (Canadian official site)

Iran Tourism

Syria Tourism (actually not a great site in contrast to the stand – you need to come and talk to us, guys)

China Tourism

Tourism in North Korea

Axis of Evil

WTM Global Trends Report

OK, let’s start off with an overview of the WTM Global Trends Reports prepared in partnership with Euromonitor.

Despite the talk of markets that have growth potential, it is clear that in the next few years, there is going to be, at best, a slow down in the tourism and travel sector. Beyond that, however, there are new markets and new possibilities. So here are a few of the highlights for me from the report:

• Free and cross-subsidized pricing will become increasingly used (but regular Tracking Tourism readers knew that back in March!)

• Customers are downsizing in a variety of ways – but still travelling. In some cases, this downsizing happily coincides with a desire for more authenticity (home swaps, for example, so that you get to live like a local) and in other cases it’s simply a move to cheaper alternatives (good old price elasticity of demand coming into play).

• Destinations are having to cast their nets wider to catch customers. For example, the report cites the Bahamas and the British Virgin Islands marketing beyond the traditional US market. Although not made explicit in the report, this surely means greater competition among destinations for similar pools of customers, something I’ll touch on a little later.

• The downsizing/authenticity nexus can arguably be described as resulting in a travel 2.0 experience in which ‘user generated’ social network interaction online result in real visits made to real people in real neighbourhoods as a logical extension of that way of interacting. Obviously, before we get to breathless about this, most of you will appreciate that this is a variant on ‘visiting friends and relatives’ and it’s what people do when they have less cash. But, I can see that Web 2.0 technologies can make this a more easily facilitated process than might have occurred in previous years.

• There’s an increasingly complicated pictures of inter-regional travel and tourism. For example, a Scot working in the Oil industry in Saudi and part of the large expat community there should be considered not only as a Scot in terms of travel preferences but also as a potential traveller defined by where he currently works. So, to take our example further, his circumstances mean that a jaunt to Dubai might be more appealing than a jaunt to Ibiza or somewhere similar popular with British people.

Some elements of the report I disagree with or feel that they occupy a really niche market. For example, there is a section on philanthropic tourism whereby rich westerners have a feel-good break that ethically engages with the local community (a bit like Fairtrade travel). I don’t deny that such travel exists and that there is some customer demand for it (as opposed to it being part of the Corporate Social Responsibility PR agenda of the supplier) but wonder how large such a market will be over the next torrid couple of years and their lingering aftermath. I’m not too sure how charitable I might be feeling in 18 months time!

The press release for the WTM Global Trends Report can be accessed here.

Increased competition

I also attended a press conference yesterday for Croatian Tourism and, as with most countries, there is a real recognition of the benefits of tourism for the economy and the image of the country. But seeing Croatia’s efforts also made me realise the sheer intensity of competition in some regions and the need to define a really clear proposition for the customer.

Put simply Croatia is a great Mediterranean country with a great coast that wants to get more upmarket customers. Great ambitions but I suspect that it has France, Italy, Turkey, Greece, Cyprus, Malta, the Balearics, Israel, Lebanon, Morocco, Libya, Tunisia, Egypt and the rest of the 25 countries bordering the Med. as competition and all adopting similar strategies.

This doesn’t mean that Croatia shouldn’t try but rather that each of these areas needs to have a clear USP, brand or market position to get ahead. And while ‘quality tourism’ remains an attractive prospect, I often wonder whether ‘good value’ (i.e. cheaper) tourism isn’t still a viable aspiration. Your thoughts on this one gratefully received.

Stop me!

Finally, I suspect that many of Trackingtourism.com’s UK readers are attending WTM so do email me if you want to meet up on Tuesday 11th November.

My post last week was a bit of a moan – probably something to do with winter returning to Scotland and the general state of the world.  So, I thought I would balance out some of the negativity with some posts on people that are really getting things right.

Firstly, I would like to point you to William Bakker, director of eBusiness at Tourism British Columbia. As an area marketing agency, I think Tourism BC has one of the most sophisticated and advanced operations I have seen and the following paragraphs encapsulate one of the reasons why:

“We have conducted focus groups, phone interviews, card sorts and/usability tests to find the best way to organize the content on each website. We start with research about how our target audience in a particular market approach their trip planning; their mental model. We adjust our taxonomy where needed. For example, in North America a farm accommodation is called a ‘guest ranch‘. In the UK it’s called a ‘cowboy ranch‘ and in Australia a farmstay.”

What can I say apart from, ‘Wow!’  Although this approach might seem sophisticated to some, I recognise it as actually very simple at heart.  It’s the approach that says you should remember that your customers are human and need to be researched as such to get the full picture.

I particularly liked William’s comment about language.  This is something I think might be overlooked by a number of businesses and organisations but is vital if you want people to recognise what it is you are offering.  In some instances, you might get a clue to this if you are able to analyse searches made from within a site that have ‘odd’ terms but I think that the larger issue of language and its use is probably best started with real live people in focus groups.

Its an approach we always take in our tourism research projects as well – we recognise the immense value of quantitative data (whether that’s web analytics or traditional surveys) but feel that the best value is derived when you go that one stage further to probe the human element and combine it with the quant. I think this usually leads to a far more sustainable outcome.

You can read more at William’s blog here.

Another post that caught my eye was from the Karin Schmollgruber’s interview with Angela Zechmann(Director of E-Marketing and Internet for Salzburg Area Tourism) at the blog Fastenyourseatbelts.com. The interview is about about the Salzburg Area Tourism’s efforts to attract a younger audience to the area the site www.onebigpark.at and, in some ways, continues the theme from British Columbia that you need to understand that different audiences need information in a language specific to them.

But the other thing that made me sit up was that I was reminded of a conversation related to me a while ago about Austrian tourism to the effect that their ongoing research revealed that the country was having difficulty attracting young people.  I am not privy to the data for Salzburg so will assume that their research also suggests that, for mainland Europeans, Salzburg means Mozart and pretty mountains and, for people from the UK and the US, the Sound of Music – none of which suggests to me a largely younger profile of visitor (Angela, Karin – let me know if I am way off the mark here!).

And it’s not only a case of identifying an issue but doing something tactical about it with a considered Web 2.0 to help fulfil a strategy to encourage younger people back.  In other words, it’s a piece of joined up thinking and a good example of the intelligent application of 2.0.

The original is in German here and one of those rather odd internet translations for you non-German speakers can be found here.

My eye was also caught by this post at Phil Caine’s Tourism Tide on the potential conflict between Yield Management and Price Transparency.

To some of you, this might sound at best an arcane venture into a world far beyond your business.  I would disagree as it concerns something fundamental to all business – trust and transparency.  So, for example, reviews on tripadvisor at the moment just have people discussing the condition of an establishment.  What if those reviewers ever started comparing prices with one another?

Well, there are already moves that way in the accommodation sector with the likes of Farecast. This added-value price comparison site is essentially doing for the accommodation sector what price comparison sites have been doing for the transportation sector for a while.

For many establishments thismight not seem an  issue but, from experience, I know that accommodation prices can fluctuate at certain parts of the market and for much the same reasons as at the top end of the industry – such as sellers want to make a buck without having to pay an intermediary.

To that end of the tourism sector that thinks this is some far-off fad, let me say that this will happen whether you like it or not.  It doesn’t matter that you think of intercontinental air jouney is a big ticket item and your accommodation offering as small ticket item – customers will apply the same standards of transparency of value to both. Looking beyond the lowest common denominator horizon will help you prepare for changes like this.

Finally, I think the Canada-e-Connect Tourism Strategy Conference 2009 might just be the place if you are looking for intelligent debate and insight into how best to harness the new opportunities.  I don’t think the program is finalised yet but, judging on the people behind it, it won’t be looking at ‘lowest common denominator’ stuff but instead offering something for those with more vision.