Q Thoughts

The Travel Innovation Summit

by Jay Habegger

The past week I had the privilege of participating in the Travel Innovation Summit, part of the annual PhoCusWright Conference. My role was judge, along with other executives, of four finalists for the Travel Innovation Award.

The PhoCusWright conference is the leading gathering for the online travel distributor ecosystem: OTA’s (Online Travel Agencies); GDS’es (Global Distribution Systems); the companies that depend on them and the companies that provide services to them.

My experience in this ecosystem has been exclusively as a consumer. Like most people, I book my travel online. I was assured by PhoCusWright CEO Philip Wolf that my lack of industry experience would not be a problem in judging; my entrepreneurial experience is what counted. I’ll admit that I did begin to doubt this when I found myself sitting next to fellow judge Terry Jones, the current Chairman of Kayak and the first CEO of Travelocity.

Nonetheless, the judging went fine as evidenced by the fact that my top pick, SilverRail Technologies, was the Travel Innovation Summit winner. They are building a platform for aggregating rail supply across the globe into a single platform, so online distributors can sell rail trips in the same way that they currently sell air travel.

Aside from judging the Travel Innovation Summit, I also learned a lot about the workings of the online travel industry.

In particular, the conference provided a glimpse of what the industry structure and digital marketing looks like when 52% of all transactions in the sector take place online, as they do in travel. The OTAs – the firms that the customer typically buys through – have massive market power and the largest market capitalizations. Phillip Wolf put up a graph on the first day of the conference that showed how Priceline has the largest market capitalization in the entire sector by a wide margin. To put a fine point on it: Priceline’s market capitalization is larger than all of the US airlines or hotel chains that supply Priceline’s inventory.

Bottom-of-the-funnel search, both SEM and SEO, dominate digital marketing for online travel distributors. Virtually every CEO that spoke alluded to the importance of search in their media mix. The discussion of emerging topics was dominated by mobile and social, both predictably hot topics across all digital media these days.

The CEOs of Expedia, Priceline and Travelocity all talked about how fast bookings through mobile platforms were taking off. Their consensus prediction was that bookings on mobile devices, such as tablets and smart phones, will exceed 10% of total bookings within the next 18 months.

The role of social networking platforms in OTA customer acquisition was as also much discussed. Facebook can’t be ignored, but there were widely differing opinions among the CEO’s of the OTAs on its importance and how it should be integrated. For example, the CEO of Kayak, Steve Hafner, thinks social is “over-hyped” while the CEO of Expedia, Dara Khosrowshahi, thinks it’s important but is content to let their TripAdvisor division experiment with it.

What surprised me most about the digital marketing discussions at the conference was how much the radically transformed world of display had yet to come into focus. The thinking about display seems stuck in the early banner ad era and hasn’t caught up to the current state of the art. Given that typical user behavior is investigating multiple OTAs, the only marketing that can be in front of user during the research and discovery phase after they have left a search results page is a widget or ad placed into an on-site ad unit. Thus, bottom-of-funnel display strategies, such as placing a flight-search widget into a remote website to win the final OTA-search-and-book should be more central to the digital marketing agenda.

Integration of a robust bottom-of-funnel display strategy, including application projection, re-targeting and data driven targeting, is going to get even more important given the increased strangle-hold that Google will have over the first step in the OTA path-to-purchase as a result of the pending ITA software acquisition. Widgets, data and DSP capability, such as MostIQ, provide OTAs and the online travel industry with an alternative way to intercept consumers along the path-to-purchase and reach them across the web, not just on a Google search screen.

As knowledge of the recent transformation of the online display industry with widgets, data targeting, ad exchanges and RTB becomes more main stream, perhaps next year we’ll see display advertising take a more prominent place in the online travel digital marketing discussion.

Thanks again to Philip and PhoCusWright for putting on a great event.

Categories:Posts from 2010


3 thoughts on “The Travel Innovation Summit”

  • Jay, We were pleased to have you as a judge and appreciate an outsider’s (now insider’s) insight.
    By way of response, the character of travel website is often driven by its monitization. In the case of OTAs, their heritage is booking fees, leading to a focus on shopping and booking, not on a media model (advertising)which dominates travel planning sites. The third monitization approach is referral fees (meta search sites depend on these).

    Few travel companies excel at 2 approaches to monitization and almost none at all 3.

    I used to do innovation for one of the GDSs. We looked at all kinds of things that embraced all 3 models until the CFO called me in one day and chastised me: “It’s the booking stupid”


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