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  • 1.  
  • 2. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series         Library  of  Congress  Cataloging-­‐in-­‐Publication  Data   Fitzgerald,  Chicke  J.   Dare  to  Differentiate,  Tapping  the  Drive  Traveler  –  The  Forgotten  Mass  Market   ISBN  0-­‐9721398-­‐3-­‐4   Copyright  @  2010,  Solutionz  Group  International,  Inc.   All  rights  reserved  under  the  Pan-­‐American  and  International  Copyright  Conventions.    No  part  of  this  book,  in   whole  or  in  part,  may  be  reproduced,  stored  in  a  retrieval  system,  or  transmitted  in  any  form  by  any  means   electronic,   mechanical,   photocopying,   recording   or   otherwise,   without   the   prior   written   permission   from   Solutionz  Group  International,  Inc.     Dare  to  Differentiate   Tapping  the  Drive  Traveler  |  The  Forgotten  Mass  Market   Cover  image  courtesy  of  MMG  Worldwide,  all  rights  reserved       Publisher:     Solutionz  Group  International  Inc.   13911  W.  Hillsborough  Avenue,  Suite  312   Tampa,  FL    33635  U.S.A.     Printed  in  the  United  States  of  America       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  i    
  • 3. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series                     Dare  to  Differentiate   Tapping  the  Drive  Traveler  |  The  Forgotten  Mass  Market            By  Chicke  Fitzgerald     Summer  2010  Edition     “Not  So  White  Paper™”  series         ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  ii    
  • 4. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series         THE  FACTS   • 85%  of  all  overnight  trips  in  the     US  are  taken  by  car       • 78%  of  all  spending  on  travel  in     the  US  is  done  by  people   traveling  by  car     • 6  out  of  the  top  10  search  terms     in  the  travel  category  include     mapping  and  driving  directions     Do  you  intentionally  market  to  the   drive  traveler?                 1 Source:    U.S.  Travel  Association  and  Hitwise   PREFACE   For   over   50   years   airlines   have   been   the   biggest   guns   in   the   travel   industry;   it   is   therefore  no   surprise   that   the   air  traveler  sits  at  the  heart  of  the  multi-­‐billion  dollar  travel  industry.       As   an   industry,   we   cater   to   [aka   intentionally   market   to]   the   air   traveler   at   every   turn   –   providing   tools   for   them   to   plan   their   business   and   leisure   trips,   as   well   as   giving   options   for   their   vacations   and   weekend   getaways.    We  quite  naturally  sell  them  airline  tickets.    We  also  sell  them  hotel  rooms,  timeshare  ownership   and  vacation  home  rentals,  we  rent  them  cars,  motorcycles  and  RVs,  we  sell  tours  and  cruises  to  them  and  we   entice  them  to  come  to  our  destinations  and  attractions.    Even  our  technology  is  geared  around  their  needs   and  their  behaviors.    Yet,  air  travelers  are  a  surprisingly  small  part  of  the  total  travel  picture.   2. The  U.S.  Travel  Association  reports  that  there  are  ten  trips  by  car  for  every  air  trip    Whether  or  not  this  is  a   surprise   to   you,   wouldn’t   it   be   irrational   to   focus   on   just   the   one,   versus   the   ten?     But   it   is   both   a   fact   and   the   topic  of  this  paper  and  the  reason  that  I  urge  you  to  consider  this  opportunity  for  differentiation. The  obsession  that  we  have  with  the  air  traveler  is  superficially  logical.    The  foundational  technology  for  the   retail   side   of   our   industry   was   built   by   the   airlines.     And   the   air   traveler   spends   more   per   trip;   stays   away   longer  and  quite  frankly,  the  mechanics  behind  planning  a   point-­‐to-­‐point  trip  are  much  easier  than  one  taken   by   car.     However,   with   air   travelers   representing   just   15%   of   all   overnight   trips   in   this   country   and   just   22%   of   all  travel-­‐related  spending,  if  you  are  looking  for  a  competitive  edge  and  if  you  need  to  grow,  you  owe  it  to   yourself  to  evaluate  the  drive  market  opportunity.   I  do  not  suggest  that  you  should  turn  away  from  the  air  traveler,  which  may  still  be  lucrative  for  you.                                                                                                                                           1  U.S.  Travel  Association  Domestic  Travel  Market  Report  –  2007  Edition  and  June  Hitwise  Top  Search  Terms  as  of  June  26,   2010   2  A  trip  is  defined  as  being  more  than  50  miles  from  home  or  at  least  one  night  spent  away  from  home       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  iii    
  • 5. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       However,  I  do  want  to  point  out  the  fact  that  growth  may  be  as  simple  as  expanding  your  focus  to  the  “other   85%”  of  travel  in  this  country,  which  for  the  purpose  of  this  report  I  have  dubbed  the  “Forgotten  Mass   Market”.   3 A   few   years   ago,   I   wrote   a   guest   article   that   was   published   in   ProMedia’s   The   Beat™   subscription   newsletter.     It  was  entitled  “The  Irresistible  Pull  of  Irrational  Behavior  –  Travel  Industry  Style”,  with  the  title  borrowed  from   4 the   sub-­‐title   of   the   book   Sway,   by   Ori   and   Rom   Brafman.     The   subject   of   that   article   was   distribution   channel   choice  and  more  specifically,  the  use  of  travel  agents  and  the  GDSs  by  travel  suppliers,  a  subject  on  which  I  am   extremely  passionate  –  and  very  vocal.    I  have  included  excerpts  of  the  text  of  that  article  here  because  it  also   applies  as  strongly  to  the  industry’s  love/hate  relationship  with  the  airlines  and  our  natural  obsession  with  the   air  traveler,  as  it  does  to  travel  distribution  channel  choices.         I  just  started  reading  a  book  titled  Sway  last  night.  The  parallels  of  the  stories  told  by  authors   Ori   and   Rom   Brafman   about   various   situations   where   intelligent,   normally   logical   individuals   make  decisions  that  make  absolutely  no  sense  immediately  struck  me.   For  anyone  that  follows  my  musings  about  distribution  on  a  regular  basis,  you  know  that  I  have   written  columns  for  The  Beat  that  poke  a  bit  of  fun  at  our  industry  and  discuss  how  the  issues  of   distribution   fall   into   that   category   of   "irrational   behavior."   While   told   tongue-­‐in-­‐cheek,   they   ring   all   too   true   and   are   a   stark   example   of   how   our   decision-­‐making   in   this   industry   gets   derailed  by  looking  at  what  is  going  on  around  us.   The  key  points  of  the  book  focus  on  the  things  that  "derail  our  decision-­‐making":   • Loss  aversion  -­‐  tendency  to  go  to  great  lengths  to  avoid  perceived  losses   • Diagnosis  bias  -­‐  original  diagnosis  blocks  our  ability  to  see  subsequent  results  clearly   • Chameleon  effect  -­‐  tendency  to  take  on  characteristics  that  have  been  arbitrarily  assigned  to  us     This   paper   is   about   differentiation.     The   basic   premise   behind   my   thesis   is   that   when   you   market   and   sell   your   products   and   services,   if   you   remain   focused   on   the   status   quo   (marketing   to   the   air   traveler),   you   may   be   missing  a  huge  opportunity.   We   hope   that   this   paper   prompts   you   to   determine   which   of   these   derailing   drivers   are   keeping   you   from   exploring  how  to  differentiate  and  grow  your  business  by  extending  your  marketing  to  the  “other  85%”.   1. What  do  you  think  you  might  gain  if  you  added  a  focus  on  the  drive  market?     2. If  you  were  starting  at  ‘ground  zero’  how  would  you  think  about  this  opportunity?     3. Are  you  thinking  independently  and  being  objective  about  evaluating  the  potential  of  this  market?     When  you  finish  reading,  if  you  find  that  you  have  been  focusing  solely  or  primarily  on  the  air  traveler  and  see   merit  in  exploring  the  drive  market  in  greater  detail,  then  by  all  means,  stand  out  from  the  crowd  and  go  for   the  incremental  profits!       At  the  end  of  the  day,  you  will  need  to  make  your  own  decisions  that  make  sense  for  you  and  your  business.     And   perhaps   you,   too,   can   be   an   iconoclast   and   help   the   industry   "sway"   the   other   direction!     Dare   to   differentiate  your  marketing,  your  services  and  your  business  models.   Chicke Fitzgerald CEO  Solutionz  Group    |  |  1-­‐813-­‐925-­‐0789  |                                                                                                                                       3   4  ©2008  by  Ori  Brafman  and  Rom  Brafman,  Sway.  All  rights  reserved,  Doubleday.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  iv    
  • 6. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       EDITORIAL  NOTES   WHY  IS  THIS  REPORT  FOR  ME?    AM  I  REALLY  OBSESSED  WITH  THE  AIR  TRAVELER?   Individuals   who   should   read   this   report   include   C-­‐level   executives   (and   investors)   that   set   strategy   and   influence  technology  investment  in  the  following  sectors:   Travel  suppliers  (air,  car,   If  your  selling  process  begins  with  where  your  product  picks  up  and   hotel,  rail,  cruise)   leaves  off,  then  you  are  an  air-­‐traveler  centric  supplier.    And  if  you  are  a   hotelier  and  you  are  not  asking  the  starting  point,  you  are  missing  out  on   the  potential  of  securing  the  enroute  bookings,  as  well  as  those  on  the   way  home.   Travel  retailers  (online   If  your  dialogue  with  a  traveler  begins  with  where  do  you  want  to  go  and   and  offline  agencies)   when,  and  you  never  ask  them  their  starting  point  or  mode  of   transportation,  you  are  an  air-­‐traveler  centric  retailer.   Corporate  Travel  Agencies   If  you  are  not  providing  a  service  for  the  52%  of  corporate  travelers  that   drive  (other  than  expense  report  processing),  you  may  be  missing  a  huge   opportunity  to  aggregate  the  purchasing  power  for  and  make   commissions  on  the  hotel  nights  consumed  by  this  group.     Travel  packagers   If  you  package  together  travel  at  a  destination,  then  you  are  an  air-­‐ traveler  centric  packager.   Destination  marketing   If  you  don’t  help  travelers  get  from  where  they  are  to  you  and  your   organizations/convention   planning  process  is  all  about  your  destination,  then  you  are  an  air-­‐ and  visitors  bureau   traveler  centric  DMO/CVB.   Travel  technology   If  your  technology  dialogue  with  retailers  or  the  consumer  starts  with   companies  and  Global   when  and  where,  and  you  never  ask  them  their  mode  of  transportation,   Distribution  System   you  are  an  air-­‐centric  company  (even  if  your  technology  is  for  hotels,  car   companies   rental  companies,  and  cruise  lines).   Attractions  and   If  you  don’t  help  travelers  get  from  where  they  are  to  you  and  your   destination  resorts   planning  process  is  all  about  your  attraction  or  resort,  then  you  are  air-­‐ traveler  centric.   Industry  associations  and   If  your  meeting  and  conference  agendas  and  your  research  and  lobbying   government  agencies   efforts  do  not  include  the  drive  market  as  a  key  topic/focus,  then  you  are   air-­‐centric  and  not  helping  your  constituents  tap  into  the  85%  of  travelers   that  drive.   Location-­‐based  services   If  your  product  simply  does  point-­‐to-­‐point  mapping  and  navigation  and   companies,  including  GPS   doesn’t  take  into  account  that  people  using  your  product  need  to  plan   and  navigation  firms  and   their  entire  journey,  have  different  preferences  when  they  are  with   mapping  technology   different  people  and  travel  under  different  circumstances,  then  you  are   companies   not  tapping  into  the  drive  traveler  market.     Investors   If  your  questions  about  travel  trends  start  with  what  is  happening  with   vacation  travel  (8%  of  total),  corporate  travel  (25%  of  total),  or  air  travel   volume,  or  what  will  happen  in  the  next  round  of  GDS  negotiations,  then   you  are  air-­‐centric  and  missing  a  huge  upside  opportunity  for  the   companies  in  which  you  have  invested  (or  are  about  to  invest).       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  v    
  • 7. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       NAVIGATING  THIS  REPORT     We   recognize   that   everyone   who   reads   this   paper   will   come   from   a   different   place   of   knowledge   and   understanding  of  the  travel  industry,  of  the  history  behind  the  industry’s  focus  on  the  air  traveler  and  of  the   drive   market.     Some   may   need   to   “stop”   and   think   about   your   current   approach,   or   at   minimum   “yield”   to   the   possibility   that   there   is   an   opportunity  that  is  yet  untapped.       Here  are  some  tips  of  how  to  get  the  most  out  of  this  report:   • If  you  are  not  at  all  familiar  with  the  travel  industry,  we  recommend   that  you  read  the  report  in  its  entirety.   • If  you  don’t  need  the  history  and  background  on  the  air  focus  and   want  to  just  “cut  to  the  chase”  about  the  drive  market  opportunity,   then  you  should  begin  with  The  Forgotten  Mass  Market.   ABOUT  THE  NOT  SO  WHITE  PAPER™  SERIES   Our   reports   are   topical   and   timely   and   we   focus   on   analyzing   emerging   trends.     Because   they   are   published   in   real  time,  we  constantly  update  the  content.    This  report  is  an  update  to  a  paper  on  the  Drive  Market  titled   “Are  You  Reaching  the  Forgotten  Mass  Market?”  originally  published  in  2008.       Our   authors   are   considered   experts   in   the   selected   subject   and   they   are   backed   up   with   respected   industry   5 research .     The   papers   include   anecdotal   insights   and   analogy   to   stress   the   points   of   the   paper.     They   are   written  in  a  slightly  irreverent,  frank  style.    Items  of  particular  importance  are  noted  with  a  light  bulb.         Throughout  this  report  the  use  of  “I”  denotes  my  personal  perspective  and  “we”  generally  refers  to  the  “global   we”  where  I  speak  as  a  member  of  the  travel  industry,  unless  used  in  a  personal  story.   If   you   are   fond   of   reports   with   a   heavy   statistical   or   analytical   bent   or   those   written   in   the   detached   third   person,  the  Not  So  White  Paper™  series  may  not  be  for  you.    However,  if  you  consider  yourself  intellectually   curious  and  are  willing  to  look  outside  of  our  industry  and,  more  importantly,  outside  of  your  own  experience,   then  you’ve  come  to  the  right  place.   ABOUT  THE  AUTHOR   Chicke   Fitzgerald   is   the   CEO   of   Solutionz   Group   International,   Inc.,   a   Tampa-­‐ based   global   consultancy   specializing   in   marrying   travel   buyers   and   sellers   via   multiple  channels.       Chicke   has   over   thirty   years   experience   in   the   electronic   distribution   and   marketing   fields,   with   a   focus   on   the   travel,   transportation,   and   mobile   industries.       She   is   a   strategist,   author,   keynote   speaker   and   was   an   early   investor   in   a   groundbreaking  technology  firm  serving  the  travel,  mapping,  navigation,  and  media  industries.  That  company   is  currently  sitting  in  hibernation,  waiting  for  the  inevitable  financial  thaw  and  for  the  “believers”  in  the  drive   market  opportunity,  who  are  surely  out  there.   Her   specialty   is   developing   strategy,   crafting   profitable   business   models,   and   creating   executable   plans   to   achieve   her   client’s   vision.     Her   passions   include   incubating   early   stage   businesses,   fostering   joint   ventures,   and  mergers  and  acquisitions.                                                                                                                                       5  See  Appendix  A  for  information  about  the  resources  used  for  this  paper       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  vi    
  • 8. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       The   firm   has   expertise   in   all   sectors   of   the   travel   distribution   value   chain,   including   offline/online   agencies,   corporate   travel,   travel   suppliers,   GDS   companies,   destinations,   travel  technology,  service  providers,  content  companies,  and  social  media.    Prior  to  forming   her  own  consulting  firm,  Ms.  Fitzgerald  held  senior  positions  with  Equant,  SITA,  Worldspan,  and  Sabre.   In   addition   to   the   Not   So   White   Paper™   series,   she   has   published   three   books   on   travel   distribution,   known   as   the  Travel  Distribution  Library.    She  also  was  the  executive  editor  on  a  series  of  white  papers  completed  for   the  Hotel  Electronic  Distribution  Network  Association  (HEDNA).       Her  iconoclast  style  is  also  featured  in  regular  articles  on  The  Beat™  subscription  newsletter  and  in  their  blog   <>.   The  investment  community  recognizes  Chicke  as  an  expert  on  the  travel  industry.    She  has  achieved  top  5%   status  in  the  Gerson  Lehman  Group  Council  of  Expert  Advisors,  <>,  in  a  field  of  more   than  250,000  advisors  across  all  industries.       Chicke  and  her  husband,  Michael,  presently  reside  with  their  son  and  daughter  in  Tampa,  Florida.       For  more  information,  see,  or  contact  Chicke  by  email  at  or  phone   (+1-­‐813-­‐925-­‐0789).           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  vii    
  • 9. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       TABLE  OF  CONTENTS     EXECUTIVE  SUMMARY................................................................................................... 1   Breaking  Down  the  Limiting  Myths ....................................................................................................1   Turbulent  Times  Demand  Creative  Solutions .....................................................................................2   How  is  Planning  Done  Today? ............................................................................................................3   The  Purpose  of  this  Report.................................................................................................................4   WHY  DIFFERENTIATE? .......................................................................................... 5   eCommerce  Pioneers .........................................................................................................................6   Differentiation  or  Accelerated  Commoditization? .............................................................................6   Disintermediation  as  a  strategy..........................................................................................................7   What  now? .........................................................................................................................................8   THE  FORGOTTEN  MASS  MARKET ............................................................................ 9   The  Terminology.................................................................................................................................9   Non-­‐Air  Traveler..............................................................................................................................9   Drive  Market ...................................................................................................................................9   Mass  Market ...................................................................................................................................9   Life  Travel......................................................................................................................................10   The  Logic...........................................................................................................................................10   Better  said  “Why  should  I  care?” ..................................................................................................10   Measuring  the  Impact...................................................................................................................10   The  Decision  to  Drive ....................................................................................................................11   Sizing  the  Market..............................................................................................................................12   Total  Trips  by  Mode  of  Transportation .........................................................................................13   Overnight  Trips  by  Mode  of  Transportation  –  2006  to  2009.........................................................14   Top  Misconceptions  of  the  Road  Traveler.....................................................................................14   Fallacy  #1  –  Low  Income  Demographic ...................................................................................................................... 15   Fallacy  #2  –  This  is  the  Economy  Traveler .................................................................................................................. 15   Fallacy  #3  –  We  already  serve  the  road  traveler ........................................................................................................ 16   The  Electronic  Distribution  Picture................................................................................................17   Air  Disintermediates  Hotels..............................................................................................................17   Investment  Community  Focus..........................................................................................................18   Further  Reductions  in  Air  Travel.......................................................................................................19   THE  HEART  OF  THE  MATTER  –  A  PRIMER  ON  THE  DRIVE  MARKET ............................ 20   Road  Trip  2010  Style.........................................................................................................................21   Why  Do  I  Need  a  Primer  on  Marketing  to  the  Drive  Market? ..........................................................22   Distribution  Value  Chain  Penetration ...........................................................................................22   Getting  Perspective.......................................................................................................................23   Why  Does  Mode  of  Transportation  Matter?.................................................................................24   Changing  your  mindset .................................................................................................................24   Road  Traveler  Needs ........................................................................................................................26   The  Online  Planning  Process ............................................................................................................26   The  Journey  Planning  Tools ..............................................................................................................27   The  Model .....................................................................................................................................28       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  viii    
  • 10. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Demographics  -­‐  It’s  not  just  the  Economy  traveler .......................................................................28   The  Bottom  Line ...............................................................................................................................29   LOOKING  OUTSIDE  OUR  INDUSTRY ...................................................................... 30   The  Transformation  of  the  Restaurant  Industry  –  A  Story  of  Product  Centricity .............................30   The  Television  Industry  –  A  Story  of  Customer  Centric  Design ........................................................32   The  Shipping  Industry  -­‐  Becoming  Multi-­‐Modal...............................................................................33   From  Hamburgers  to  Televisions  to  Shipping...................................................................................33   HIGHER  ORDER  MARKETING™ ............................................................................. 34   Product .............................................................................................................................................34   Action ...............................................................................................................................................34   Intent ................................................................................................................................................34   The  Higher  Order  Marketing  Equation .............................................................................................35   MOVING  FORWARD ........................................................................................... 36   There  is  Hope ...................................................................................................................................36   The  Profitability  Challenge ...............................................................................................................36   Cost  Cutting  is  Not  a  Strategy...........................................................................................................37   Mode  of  Transportation  Matters .....................................................................................................37   Are  You  Customer  or  Product  Centric? ............................................................................................38   TAKING  ACTION................................................................................................. 39   Your  To  Do  List..................................................................................................................................40   The  Role  of  the  Travel  Agent ............................................................................................................41   Geographical  Focus ..........................................................................................................................42   Sector  by  Sector  Action  Plan ............................................................................................................42   Gathering  Data  and  Creating  A  Marketing  Plan ...........................................................................42   Travel  Suppliers .......................................................................................................................................................... 42   Travel  Technology  Companies.................................................................................................................................... 43   Destination  Marketing  Organizations ........................................................................................................................ 43   Industry  Associations  and  Government  Agencies  and  Research  Companies............................................................. 43   BACK  TO  THE  “IRRESISTIBLE  PULL  OF  IRRATIONAL  BEHAVIOR” ................................ 44   Loss  aversion ....................................................................................................................................44   Diagnosis  bias ...................................................................................................................................44   Chameleon  effect .............................................................................................................................44   CONCLUSION..................................................................................................... 45   NOTES .............................................................................................................. 46   CONTACT  INFORMATION .................................................................................... 47   APPENDIX  A  -­‐  RESOURCES .................................................................................. 48           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  ix    
  • 11. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       EXECUTIVE  SUMMARY   As   you   look   at   the   cover   of   this   report,   you   will   see   a   lone   airplane   and   on   the   roads   below,  scores  of  cars,  along  with  SUVs,  motorcycles,  trucks  and  RVs.       Every  day  on  every  road  in  the  U.S.  the  story  is  the  same.    Excluding  commuters,  each   vehicle  is  on  a  journey  of  varying  lengths  and  different  levels  of  complexity   –  taking  trips   around   town,   day   trips   and   weekend   getaways   in   the   region,   all   the   way   up   to   and   including   the   Great   American   Road   Trip.     Some   have   pre-­‐planned   their   outings.     Still   others  are  more  spontaneous,  planning  as  they  go.       According  to  research  conducted  on  this  market  in  2007  by  the  U.S.  Travel  Association,  there  are  over  2  billion   trips  taken  annually,  with  over  85%  by  car,  representing  78%  of  all  spending.    Over  50%  of  those  vehicles  ⎯   1 yes,   that   is   one   billion   ⎯   are   going   more   than   50   miles   from   home   and   will   require   a   hotel   room .     And   6 according  to  our  own  research,  over  85%  of  those  ⎯  850  million    ⎯  will  stay  in  3,  4  and  5  star  motels/hotels .       Most  all  of  these  road  travelers  will  need  driving  directions  for  at  least  a  portion  of  their  trip,  suggestions  of   where   to   eat,   things   to   do,   places   to   shop   and   some   will   want   to   know   about   events.     However,   today   as   a   rule,  the  travel  industry  leaves  all  this  work  to  the  consumer.    And  by  and  large,  as  an  industry,  we  maintain   our  singular,  transaction-­‐focused  model,  making  money  from  the  sale  of  our  products  (or  the  booking  fees  or   commissions  from  those  sales).    Most  industry  players  have  not  given  serious  consideration  to  the  possibility   that  they  can  augment  this  tried  and  true  model  with  a  new  revenue  stream  by  knitting  these  tools  together.   7 Hitwise  reports  that  6  out  of  10  of  the  top  search  terms  in  the  travel  category  include  mapping  and  driving   directions.     It   is   no   surprise   that   the   bulk   of   the   revenues   from   this   lucrative   market   go   to   MapQuest   and   Google,  CitySearch  [and  the  like],  while  the  travel  industry  happily  serve  the  other  15%  of  overnight  travelers   that  fly  to  their  destination.       BREAKING  DOWN  THE  LIMITING  MYTHS   The   purpose   of   this   Not   So   White   Paper™   is   to   break   down   the   myths   that   hold   us   in   our   present   conundrum,   focusing  on  the  addressable  air  traveler  market,  which  is  declining  before  our  very  eyes.    Those  myths  are:   MYTH   FACT   Air  travel  is  the   Air  travelers  only  represent  15%  of  all  travel  in  the  US  and  just  22%  of  all  spending  in   8 mass  market   the  travel  category .    The  real  mass  market  is  the  drive  market.   We  know  our   We  may  know  their  preferred  airlines  or  hotel  brands,  but  we  do  not  understand   customers  and  their   their  behavior  under  different  situations  and  how  it  changes  based  on  whom  they   behaviors  and  intent     are  traveling  with  or  why  they  are  traveling.   The  current   Travel  technologies  (including  those  selling  hotel,  cruise  or  those  supporting  travel   technologies  meet   planning  to  destinations)  are  highly  air-­‐centric.    They  begin  the  dialogue  with  the   the  needs  of  the   traveler  asking  them  WHERE  they  want  to  go  and  WHEN,  with  an  orientation  on  top   mass  market   destinations.    They  don't  include  the  customer’s  starting  point  (other  than  an   airport),  the  details  of  the  journey,  mapping  and  driving  directions,  which  are  key   needs  of  the  drive  market.                                                                                                                                       6  LeisureLogix  Drive  Market  Study  2006  –  LeisureLogix  was  co-­‐founded  by  Chicke  Fitzgerald   7 th  Hitwise  Top  10  Travel  Search  Terms  As  of  June  26 ,  2010   8  US  Travel  Association  2007       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  1    
  • 12. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       TURBULENT  TIMES  DEMAND  CREATIVE  SOLUTIONS   “If  people  say  that  Sept.  11  was  a  perfect  storm,  I  believe  now  that  that  was  just  partly  cloudy  with   a  chance  of  showers.”   Roger  Dow,  president  and  CEO  of  the  U.S.  Travel  Association.     9 In  2008  and  2009,  the  U.S.  saw  double-­‐digit  cutbacks  in  airline  capacity  and  frequency  as  a  direct  result  of  the   10 fuel   crisis .     The   Air   Transport   Association   reports   that   from   2000-­‐2009,   over   700   planes   were   retired   and   parked  in  the  desert  or  sold  to  third  world  nations,  never  to  return  to  service  here  in  the  U.S.       Domestic  air  ticket  sales  though  the  travel  agency  community  (online  and  offline)  for  2008  and  2009  declined   11%   and   5%   respectively.     International   air   ticket   sales   through   the   travel   agency   channel   for   the   same   period   11 declined   14%   and   9%   respectively .     In   2010,   if   approved,   the   United   and   Continental   merger   promises   to   yield  another  10%  decline  in  their  combined  capacity  and  frequency.       These   declines   have   impacted   every   sector   of   the   travel   industry   and   have   been   compounded   by   the   extreme   economic   challenges   we   have   faced   over   the   last   24   months.     And   while   airlines   will   invest   in   new   aircraft   when  the  economy  recovers,  channel  shift  will  persist  as  they  continue  dogged  pursuit  of  direct  distribution   through  their  websites.    This  strategy  of  disintermediation,  albeit  misguided  in  my  opinion,  is  here  to  stay.   As   a   group,   the   travel   agency   community   faces   continually   shrinking   (and   even   vanishing)   supplier   commissions   and   the   pressures   of   suppliers   selling   direct   to   consumers   and   corporations.     The   industry   has   gone   from   a   high   of   47,000   agencies   in   1996   to   just   under   16,000   in   2010.     Last   year,   with   system-­‐wide   air   12 sales  of  $186.1  billion,  just  $65.8  billion  (35%)  was  sold  through  the  agency  channel .   As  the  air  business  through  the  agency  community  declines,  so  goes  the  primary  revenue  stream  to  the  GDS   companies,   which   are   based   on   booking   fees   from   the   airlines.     And   every   other   type   of   supplier   and   every   destination  that  depends  on  air  travelers  for  business  are  likely  seeing  similar  rates  of  decline  in  business.       Following   the   lead   of   the   airlines,   other   travel   suppliers   continue   their   pursuit   of   direct   distribution   to   the   consumer,  cutting  out  as  many  middlemen  as  possible.    Statistics  show  that  this  strategy  may  save  on  the  cost   side   of   the   equation,   but   the   net   yield   on   transactions   is   substantially   less   due   to   the   focus   on   price   that   is   rampant  online.    The  profit  gap  cannot  be  made  up  in  volume.       It  is  certainly  a  turbulent  time  for  the  travel  industry.       Welcome  to  the  new  norm.       It   will   be   up   to   you   to   determine   how   you   will   respond   to   continued   pressure   on   the   current   model,   particularly  if  you  rely  heavily  on  air  travelers  for  your  revenues.    The  question  isn’t  whether  we  need  a  new   business   model   moving   forward   ⎯   it   is   “When   will   we   agree   on   a   model   that   will   result   in   growth   for   the   majority  of  constituents  in  the  travel  value  chain?”.       The   challenge   we   pose   through   this   paper   is   whether   there   is   opportunity   that   has   been   missed   due   to   the   singular  focus  that  most  of  the  travel  industry  has  on  the  air  traveler.       Imagine  if  you  will,  being  able  to  sell  the  same  products  and  services,  but  appealing  to  a  much  larger  audience   than  you  do  today,  simply  by  making  some  changes  in  the  tools  that  are  used  to  market  to  and  service  your   customers.                                                                                                                                       9  Air  Transport  Association  (ATA)  2010  Industry  Review     10  ATA 2010 Industry Review reports that in 2008 alone, U.S. airlines paid $16 billion more in fuel than in 2007.   11  Airline  Reporting  Corporation  (ARC),  Sales  by  Agency  Type   12  ATA  System  wide  Sales  versus  ARC  Agency  Sales  for  2009       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  2    
  • 13. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Before  you  can  move  forward,  sometimes  you  have  to  think  back  and  see  how  history  has  played  out.    And   sometimes  you  have  to  look  outside  of  your  own  world  and  see  what  has  happened  in  other  industries.       This  paper  will  take  a  look  at  both  the  restaurant  and  television  industries,  contrasting  the  adjustments  that   they   made   as   their   consumer   changed   before   their   eyes.   In   both   cases,   the   tools   and   delivery   mechanism   changed,  but  the  products  (e.g.  hamburgers  and  TV  programming)  remained  the  same.    We  will  also  look  at   the   shipping   industry   and   their   need   to   consider   the   investment   required   to   meet   multi-­‐modal   shipping   opportunities.     I   believe   there   is   a   strong   correlation   to   marketing   your   existing   products   and   services   specifically  to  the  drive  market  and  adopting  that  same  multi-­‐modal  approach  to  your  customers.       HOW  IS  PLANNING  DONE  TODAY?   Planning  a  trip  by  car,  SUV,  RV,  motorcycle  or  truck  is  more  complex  than  planning  a  trip  by  air.    The  consumer   who  is  driving  instead  of  flying  generally  has  a  number  of  different  needs  in  planning  their  trip:   • Picking  their  destination  (often  impacted  by  who  they  are  traveling  with  and  what  they  want  to   accomplish)  and  options  for  the  return  trip  or  trip  extensions  to  other  nearby  destinations   • Choosing  a  tool  to  plan  their  route,  including  determine  where  the  stopping  point  is  each  day  (based   on  route  preferences,  driving  style  and  speed  limits)   • Finding  someone  to  book  their  lodging  (offline  agency,  online  agency  or  supplier  direct)   • Locating  what  is  in  proximity  to  where  they  are  going  (places  to  stay,  things  to  do,  things  to  see,   places  to  eat,  places  to  shop,  events  to  attend)   • Exploring  what  is  along  their  route  (things  to  do,  etc.)  and  knowing  how  long  it  will  take  to  stop  and   get  back  on  their  way   • Seeing  who  else  is  going  to  the  same  place  that  they  are  going   • Getting  input  from  others  on  the  choice  of  destination  or  things  to  do  and  see  along  the  way  and  at   the  destination   While  there  are  some  very  interesting  trip  planning  and  social  media  tools  in  the  marketplace,  in  general  we   still   have   a   chasm   that   exists   between   the   travel,   the   mapping/navigation   and   the   location-­‐based   content   industries.    We  lack  an  integrated  solution.   The  travel  industry  generally  focuses  on  the  destination  or  the  product  itself  (e.g.  the  hotel,  the  attraction,  the   cruise)  and  has  a  bias  toward  top  destinations.    The  mapping  and  navigation  industries  focus  on  getting  from   point  to  point  and  providing  location  based  content  information  (e.g.  points  of  interest),  but  do  not  do  a  good   job  on  the  planning  of  multiple  day  journeys.    Both  camps  have  their  hands  in  the  content  game,  but  neither   one   has   the   ability   to   tailor   content   to   match   the   travelers’   unique   needs   based   on   the   purpose   of   trip   or   who   is  traveling  together.    These  variables  are  not  easily  handled  by  single  dimensional  travel  profiles.   I  liken  this  to  the  way  that  we  used  to  do  our  shopping  before  the  launch  of  superstores,  such  as  Super  Wal-­‐ Mart,  BJ’s  or  Super  Target.    We  went  to  one  store  for  our  food  staples,  another  for  our  beer/wine,  for  paper   goods,  for  home  and  garden,  for  clothes,  for  toys  and  yet  another  for  pharmacy  items.    You  get  the  picture.     There   were   some   stores   that   stocked   several   categories,   reducing   the   number   of   steps   to   fulfill   our   list,   but   nevertheless,  the  onus  was  on  us  to  make  our  list,  determine  the  best  places  to  go  and  then  plot  out  the  most   efficient  way  to  get  everything  that  we  need.       Consider  for  a  moment,  what  it  would  take  to  plan  a  road  trip  from  Tampa  to  New  York  City.    You  are  going  to   an  industry  conference,  but  decide  to  take  your  family  along.    On  the  way  up,  you  want  to  take  the  most  direct   route,  with  a  minimum  number  of  stops.    On  the  way  back,  it  doesn’t  matter  how  long  it  takes  and  you  want   to  visit  the  Jersey  shore,  several  battlefields,  visit  friends  in  Murfreesboro,  TN  and  visit  Dollywood.    It  would  be   fun   to   go   through   Atlanta   on   the   way   back   and   see   the   Coca   Cola   museum   and   catch   an   Atlanta   Braves   game.     You   have   your   favorite   hotel   chain,   or   perhaps   you   want   to   stay   at   historic   bed   and   breakfast   inns.     And   of   course,   you   want   to   know   where   all   the   Starbucks   are   along   the   way.    Where   would   you   start?     How   many   players/tools  would  be  involved  in  the  process?    Give  it  some  thought,  and  let’s  move  on.         ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  3    
  • 14. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       THE  PURPOSE  OF  THIS  REPORT   This   report   will   provide   you   with   some   practical   suggestions   for   understanding   the   mindset   of   the   drive   traveler  and  their  unique  needs.       I  will  start  by  challenging  you  in  why  you  need  to  differentiate  and  develop  a  new  expertise,  setting  yourself   apart  from  the  crowded  field  of  serving  the  price-­‐sensitive  air  traveler.       I  will  then  outline  the  impact  of  a  customer’s  mode  of  transportation  on  travel  planning  and  booking.    More   specifically,   it   is   my   goal   to   educate   and   help   you,   the   reader,   understand   what   is   required   to   effectively   market   to   the   drive   market.     This   includes   gathering   better   data   up   front   and   taking   advantage   of   the   tools   that  are  available  in  the  market  today,  as  well  as  those  that  are  on  the  horizon.       The  key  points  of  this  report  include:   • Road  travelers  shouldn’t  be  dismissed  -­‐  The  frequent  road  traveler  is  an  upscale  traveler,  which   contradicts  the  conventional  wisdom  that  would  suggest  this  is  an  economy  segment.    The  frequent   road  traveler  is  also  an  air  traveler  ⎯  the  same  person  that  you  are  already  serving  under  different   circumstances.   • Today’s  travel  technology  is  air-­‐centric  –  Almost  without  exception,  the  bulk  of  travel  planning  and   management  technologies  have  been  built  with  the  air  traveler  in  mind.    The  current  players  don’t   provide  tools  to  reach  this  forgotten  mass  market.    When  you  lead  with  “where”  are  you  going  and   “when”  versus  asking  the  mode  of  transportation,  the  default  assumption  is  that  the  individual  is   traveling  by  air,  or  somehow  magically  arriving  at  a  destination.    This  is  true  of  GDSs  and  online   booking  systems,  as  well  as  hotel  and  cruise  booking  technology.   • The  product  doesn’t  change,  just  the  tools  needed  to  sell  it  –  drive  market  travelers  have  different   requirements  in  planning  their  trips,  including  needing  maps  and  driving  directions,  plus  access  to   what  they  can  see/do  along  their  route.    But  they  still  stay  in  hotels,  go  on  cruise  ships,  rent  vehicles   (in  lieu  of  driving  their  own  cars).    And  for  fly/drive  trips,  following  the  purchase  of  the  air  ticket,  they   still  have  many  of  the  same  needs  as  the  drive  traveler  who  originates  from  their  home  or  office.   • Mode  of  transportation  matters  –  Although  frequent  road  travelers  and  air  travelers  are  the  same   person,  there  are  different  decision  drivers  for  each  kind  of  traveler  and  it  is  imperative  that  you   market  differently  to  the  road  traveler.   13 • The  opportunity  is  BIG  –  PhoCusWright  reports  that  the  sale  of  leisure  (and  unmanaged  business)   travel  via  electronic  channels  will  yield  over  $238b  in  2010.    This  effort  is  largely  focused  on  the  air   traveler,  estimated  at  15%  of  the  market.  However,  as  mentioned  in  the  preface,  there  are  10  car   trips  for  every  air  trip  and  over  50%  of  the  drive  market  travelers  spend  at  least  one  overnight  where   lodging  is  required.       I   will   also   address   the   derailing   drivers   introduced   in   the   Preface   ⎯   loss   aversion,   diagnosis   bias,   and   the   chameleon  effect.       It   is   my   intent   to   urge   you   to   consider   the   role   that   you   could   play   in   addressing   this   highly   underserved   market.       And  of  course  ⎯  to  dare  you  to  differentiate  your  products,  services  and  business  models.                                                                                                                                       13  The  Role  and  Value  of  the  Global  Distribution  Systems  in  Travel  Distribution,  November  2009  PhoCusWright       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  4    
  • 15. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       WHY  DIFFERENTIATE?   The  more  competition  you  face,  the  greater  the  need  to  highlight  the  differentiation  -­‐-­‐  the  unique   advantage  of  your  product  or  service  -­‐-­‐  in  order  to  succeed  in  the  marketplace.     14 Evan  Carmichael,  entrepreneur  and  speaker   Industry  leaders  do  not  get  where  they  are  by  deciding  to  commoditize  their  products  and  services.   Successful  companies  in  all  industries  have  long  engaged  in  head-­‐to-­‐head  competition  in  search  of  sustained,   profitable  growth.  They  have  fought  for  competitive  advantage,  battled  over  market  share,  and  struggled  to   balance  differentiation  with  both  risk  and  available  resources  for  development.   The  companies  in  the  travel  industry  are  no  different.       Over  the  course  of  the  last  30  years,  the  various  constituents  of  the  travel  industry  have  knitted  together  an   amazing   distribution   ecosystem,   marrying   members   of   the   value   chain   with   consumers   to   support   both   business  and  leisure  travel,  serving  individuals  and  groups  alike.       The   value   chain   includes   a   wide   range   of   travel   suppliers   [air,   car,   hotel,   tour,   cruise,   rail,   attractions,   insurance,   destinations   and   content   companies],   marketing   products   and   services   to   consumers   through   wholesalers,  consolidators  and  retailers,  both  offline  and  online.     Travel   is   sold   through   retail   establishments,   call   centers,   through   catalogs   and   newsletters,   online,   mobile   and   even  via  social  media  tools.    By  and  large,  the  consumer  is  the  one  who  decides  how  they  elect  to  buy  (e.g.   through   which   channel)   and   from   whom.     Billions   of   dollars   are   spent   annually   using   traditional   and   online   advertising  and  marketing  methods  to  try  to  sway  that  decision.   A  host  of  technology,  service  and  content  companies  provide  a  wide  set  of  tools  and  aggregation  services  to   assist  in  the  marketing  and  sales  of  the  travel  products  and  services  over  a  number  of  channels.       The   model   for   the   industry   is   largely   the   commerce   model   or   stated   more   simply,   the   sale   of   products   and   services  for  a  fee.    Various  constituents  benefit  from  that  transaction,  from  the  retailer  that  typically  earns  a   percentage  based  commission  on  the  sales  price,  to  the  GDS  company  that  earns  a  booking  fee  for  putting  the   supplier’s   product   on   their   global   “shelf”   in   front   of   thousands   of   retailers,   to   the   supplier   themselves   who   earn  the  net  of  those  fees.       Destinations   make   money   from   bed   and   restaurant   taxes   and   membership   in   their   destination   marketing   organizations.       Technology  companies  make  license  fees  and  service  fees  from  the  provision  of  the  tools  needed  to  support   the  value  chain.       Online  players  enjoy  commissions,  as  well  as  augmenting  those  revenues  with  advertising.       I  could  go  on  and  on,  but  while  the  models  in  our  industry  could  use  retooling,  the  model  itself  is  not  currently   a  source  of  differentiation.       But  it  could  be.   Sustained,   profitable   growth   often   comes   from   stepping   outside   the   status   quo   and   looking   for   new   opportunities  for  differentiation,  including  new  models  and  new  markets.       Before  we  dig  into  the  opportunity,  allow  me  to  frame  the  status  quo.                                                                                                                                           14       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  5    
  • 16. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       15 ECOMMERCE  PIONEERS   16 In  the  late  70s  several  major  U.S.  airlines  led  the  electronic  commerce  charge,  taking   their   central   reservations   system   (CRS)   technology   out   of   their   internal   “marketing   automation”  organizations  to  the  travel  agency  community.       Yes,   that   is   correct   ⎯   electronic   commerce   existed   in   the   travel   industry   nearly   20   years  before  the  commercialization  of  the  Internet.       These   systems   (later   dubbed   GDS   or   global   distribution   systems)   gave   us   the   ability   to   marry  buyers  and  sellers  globally.    They  were  indeed  the  original  eCommerce  Pioneers   and  have  been  a  pivotal,  driving  force  behind  the  growth  of  the  industry.       Not  surprisingly,  their  airline-­‐funded  distribution  technology  was  highly  air  centric.    Due  to  the  point-­‐to-­‐point   nature  of  air  travel,  the  dialogue  for  the  sales  process  began  with  needing  to  know  “where”  you  were  going   and  “when”  you  were  traveling.       A  typical  air  segment  in  the  GDS  looked  something  like  this:    115JUNDFWTPA8A   th While  incredibly  efficient  for  checking  availability  for  a  flight  on  the  15  of  June  from  Dallas  to  Tampa  around   8am,  the  cryptic  air  segment  didn’t  lend  itself  to  the  sale  of  products  that  weren’t  as  cut  and  dried  as  a  seat  on   an  airplane.         Even  once  other  types  of  segments  were  introduced  to  sell  hotel,  car  rental  and  later  tour,  cruise,  insurance   and  other  ancillary  products,  the  air  segment  was  not  only  the  foundation  used  for  the  sales  process,  but  air   continued  to  be  the  dominant  product  sold  using  the  GDS  technology.    This  makes  total  sense,  as  there  was   plenty  of  business  to  go  around  and  it  was  both  lucrative  and  easy  for  retailers  to  sell  airline  tickets  using  the   GDS.    This  was  a  boon  to  both  the  corporate  and  vacation  travel  markets.   Over  30  years  later,  the  GDS  companies  have  introduced  more  user-­‐friendly  platforms  and  offer  a  wide  range   of   other   products   and   information,   but   still   make   over   90%   of   their   revenues   from   the   sale   of   air   tickets.     And   as  a  result  of  the  commodity  product  focus  of  the  GDS  and  the  lack  of  tools  needed  for  the  person  that  travels   by   car,   other   than   AAA,   the   travel   agency   community   by   and   large,   does   not   serve   the   needs   of   the   drive   market.   DIFFERENTIATION  OR  ACCELERATED  COMMODITIZATION?   In  the  mid-­‐90s,  the  Internet  dramatically  changed  the  way  travel  was  sold  by  giving  a  broad  base  of  consumers   direct,  7x24  access  to  travel  information  and  products,  365  days  per  year.         In   a   largely   commoditized   industry,   the   Internet   gave   organizations   a   new   way   to   differentiate.     Suppliers   could  now  show  a  product,  such  as  a  hotel  room,  in  all  its  glory,  no  longer  limited  by  a  cryptic  GDS  segment.     And  the  web  site  environment  allowed  the  addition  of  editorial  content,  which  supported  the  introduction  of   advertising  revenues  to  augment  the  eCommerce  model.       But  the  differentiation  was  short  lived  and  the  competition  was  fierce.       Online   travel   agencies   emerged   as   major   players   in   the   new   ecosystem,   waltzing   easily   past   the   leaders   in   the   traditional   agency   space   to   take   their   place   in   the   top   10   agencies   in   the   U.S.,   less   than   5   years   after   their   launch.    And  just  last  week,  Travel  Weekly  published  its  2010  Power  List  and  for  the  first  time  ever,  an  online   player  (Expedia),  took  the  #1  spot,  bypassing  long  time  leader  American  Express.                                                                                                                                       15  Published  by  Solutionz  Group,  copyright  2002   16  American  Airlines  Sabre,  United  Airlines  Apollo,  TWA  Pars,  Delta  Deltamatic  and  Eastern  Airlines  SODA       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  6    
  • 17. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Suppliers  also  invested  in  the  new  channel,  augmenting  their  call  centers  with  their  own  websites,  as  well  as   teaming  up  with  their  colleagues  in  supplier-­‐founded  sites,  such  as  TravelWeb™  and  Orbitz™.     The  mistake  was  a  subtle  one.       Remember  that  the  GDS  systems  were  focused  on  the  air  traveler.     The  new  online  platforms  essentially  took   the   same   model   for   commerce   and   moved   it   online.     The   “booking   widget”   was   the   online   iteration   of   the   travel  segment  in  the  GDS  and  generally  had  prominent  positioning  on  the  first  page  of  the  site.    It  extended   the  “where”  and  “when”  buying  metaphor  geared  at  the  air  traveler  and  once  again,  there  was  no  provision   made  for  the  traveler  who  elected  to  drive.       And  whether  you  were  an  online  agency,  a  hotel,  a  cruise  line,  a  destination  or  an  attraction,  by  adopting  the   traditional  buying  metaphor  and  not  asking  the  mode  of  transportation  as  a  part  of  the  up  front  process,  you   were   unwittingly   limiting   yourself   to   the   15%   of   travelers   that   fly   and   missing   the   broader   opportunity   represented  by  the  other  85%.       DISINTERMEDIATION  AS  A  STRATEGY   As   the   competition   online   increases   and   the   traditional   agency   channel   continues   to   lose   business   to   their   online  compatriots,  the  airline  industry  continues  to  vigorously  pursue  disintermediation  of  not  only  the  GDS   companies,  but  in  many  cases,  the  agencies  that  are  reliant  on  the  GDS  platforms.       This  past  week  the  Beat  published  a  story  about  the  director  general  of  the  International   Air   Transport   Association   (IATA),   Giovanni   Bisignani,   who   called   the   GDS   industry   “leeches”.    This  remark  was  made  in  the  organization’s  annual  state  of  the  industry  speech   in   Berlin   on   June   7th.     The   “wanted”   poster   to   the   right   was   from   his   speech   where   he   compared  the  “western”  GDSs  to  China’s  TravelSky.   Theoretically,  disintermediation  is  a  sound  strategy.    Cut  out  the  middleman,  lower  costs   and  get  closer  to  your  client.    It  makes  sense.    Well,  that  is  if  all  things  are  equal.    But  they   are  not.   The  travel  agency  channel  [powered  by  the  GDS]  has  not  only  been  a  substantial  part  of  airline  distribution  for   more   than   three   decades,   but   it   holds   the   dual   distinction   of   being   a   variable   cost   distribution   channel   for   the   airlines  and  being  the  highest  yield  channel  available  to  them.       st 17 Do   the   math.     In   the   1   quarter   of   2010,   the   average   mega   agency   produced  a  domestic  ticket  value  of  $391.41.    The  remaining  15,000+   agencies   produce   an   average   ticket   value   of   $382.04.     Let’s   use   the   lower  number  as  our  benchmark  to  be  conservative.       Assuming   a   10%   agency   commission   ($38.20)   and   a   GDS   booking   fee   of  $16.00  (four  segments  at  $4.00  per  segment),  the  net  to  the  airline  is   $327.84.     At   the   same   time,   online   agencies   produced   an   average   transaction   of   $301.56.    Assuming  that  the  airlines  are  at  or  below  the  OTA  ticket  rate,  the  profit   difference  out  of  the  gate  is  $26.28.    You  just  can’t  make  that  up  in  volume.   So  what  does  this  mean  to  you?       If  you  are  a  GDS  or  a  travel  agency  or  even  an  airline,  I  would  hope  my  message  is  clear.    Don’t  throw  the  baby   out   with   the   bathwater.     Work   out   your   differences   and   come   up   with   a   model   that   rewards   high   yield   business  that  comes  without  a  fixed  cost.                                                                                                                                         17   Domestic   air   ticket   sales   as   reported   by   the   Airline   Reporting   Corporation   for   2009.     Mega   agencies   include   Amex,   CWT,   BCD,  HRG,  Maritz,  Omega,  CWT/SATO  and  SATO.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  7    
  • 18. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       If  you  are  another  type  of  business  that  either  directly  or  indirectly  relies  on  the  air  traveler  for  your  revenues,   as   the   airlines   continue   to   shift   away   from   this   channel,   be   aware   that   the   consumer   planning   a   trip   by   air   will   have  to  find  out  about  your  product  and  service  in  new  ways.    It  may  just  cost  you  a  bit  more  to  attract  them   directly  to  you  than  it  did  when  the  travel  agent  was  at  the  helm  in  the  transaction.       WHAT  NOW?   You   buy   that   there   is   an   opportunity   that   you   may   not   be   fully   tapping.     And   if   the   drive   market   (the   85%)   produces  even  the  same  revenues  as  the  air  traveler  market  (the  15%),  we  may  be  able  to  grow  revenues  by   $238  billion.       That  is  big.   If   you   elect   to   stay   with   the   status   quo,   you   now   know   that   as   travel   suppliers   continue   to   pursue   the   disintermediation  strategy,  following  the  lead  of  the  airlines,  the  picture  will  get  more  fragmented.    And  your   ability  to  reach  the  air  traveler  will  become  a  bit  more  challenging  and  more  costly.   So   what   happens   when   competition   increases   in   this   already   crowded   marketplace,   and   one   day   you   wake   up   and  find  that  you  are  in  a  “sea  of  same”,  everyone  marching  to  the  same  drummer?       What  happens  when  you  look  at  the  sum  total  of  your  sector  of  the  industry  and  see  that  there  is  precious   little  growth  and  your  only  gains  come  from  stealing  customers  from  your  competitors?       You  may  truly  have  a  unique  advantage  to  your  product  or  service.    But  what  I  am  talking  about  here  is  not   product  or  service  differentiation  or  even  managing  churn.       Instead,   let’s   talk   about   true   growth   ⎯   achieving   differentiation   through   extending   your   current   market   focus   and  reach  to  a  market  that  you  and  your  competitors  may  serve  by  default,  but  not  intentionally.   The  quickest  path  to  differentiation  is  to  focus  on  your  customer.    Pay  attention  to  not  only  their  vacation  and   business   travel   needs,   but   expand   your   focus   to   the   other   opportunities   ⎯   weddings,   funerals,   birthday   celebrations,  sporting  events,  concerts,  reunions  and  the  like.       Set   yourself   apart   by   focusing   on   100%   of   travel   for   your   customers   [and   the   customers   of   your   customers   for   18 B2B  businesses],  not  just  the  15%  that  is  done  by  air .       Let  me  provide  a  better  picture  of  this  forgotten  mass  market.                                                                                                                                       18   Based   on   the   trips   taken   by   air   as   a   percentage   of   total   person   trips   more   than   50   miles   from   home   or   spending   at   least   one  night  away  from  home  as  reported  by  the  U.S.  Travel  Association  in  2006  and  2007       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  8    
  • 19. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       THE  FORGOTTEN  MASS  MARKET   I   will   shift   now   to   focus   on   the   non-­‐air   traveler,   aka   the   drive   market.     The   drive   traveler   is   forgotten   not   because   it   is   not   a   significant   market,   but   because   those   travelers   that   drive   are   not   well   understood.     Consequently,   they   are   not   well   served,   as   the   current   infrastructure   for   both   the   offline   and   online   sale   of   travel  products  and  services  was  simply  not  designed  with  their  needs  in  mind.   THE  TERMINOLOGY   Non-­‐Air  Traveler   Is   there   anyone   else   besides   me   that   finds   the   term   “non-­‐air,”   a   non   sequitur?     Wikipedia   reports   that   the   official  definition  of  the  term  “non-­‐sequitur,”  is  a  “logical  fallacy.”         So  what  does  non-­‐air  mean  to  you?       Actually,   if   memory   serves   me   correctly,   “non-­‐air”   is   a   term   that   originated   at   the   GDS   companies,   where   I   spent  over  a  decade  in  the  early  part  of  my  career.    As  discussed,  the  bulk  of  GDS  booking  revenues  come  from   airline  bookings,  so  the  term  “non-­‐air”  was  used  to  describe  every  other  sector  of  the  travel  industry.       Sounds  logical.    I  have  to  admit  that  when  I  worked  for  the  GDSs,  I  had  no  idea  that  the  bulk  of  travel  in  the   U.S.  was  not  done  by  air.   Historically,  the  individuals  responsible  for  the  hotel,  car,  tour,  and  cruise  products  at  the  GDS  all  fell  in  the   “non-­‐air”  product-­‐marketing  group.    It  could  even  be  extended  to  incorporate  insurance  sales,  other  ancillary   products,  or  even  content.       And   when   the   GDS   companies   were   all   public,   they   reported   their   sales   broken   down   into   “air”   and   “non-­‐air.”     As  such,  you  can  see  that  by  their  definition,  “non-­‐air”  actually  refers  to  product  versus  describing  the  mode  of   transportation  for  the  traveler.       This  is  at  the  heart  of  the  misunderstanding  –  the  logical  fallacy.   Drive  Market     The   person   that   elects   to   drive   from   Tampa,   Florida   to   their   class   reunion   in   Greenfield,   Indiana   or   who   drives   to  the  cruise  port  in  Fort  Lauderdale  because  it  is  faster  and  cheaper  than  flying,  is  not  a  different  person  from   the  one  that  flies  from  Tampa  to  a  conference  in  Scottsdale,  Arizona.    The  circumstances  behind  the  trips  are   simply  different,  but  the  person  is  the  same.       The  purest  definition  of  the  drive  market  includes  those  who  travel  by  car,  taxi,  rental  car,  motorcycle,  RV,  or   other  vehicle.    By  definition  you  may  think  that  it  excludes  the  air  traveler,  but  in  reality,  most  people  that  fly   to   their   destination   also   at   some   juncture   get   into   a   vehicle   and   have   many   of   the   same   needs   as   the   drive   market    ⎯  mapping,  navigation,  things  to  do  and  see  along  the  way.       The   bottom   line   is   that   you   are   likely   already   serving   the   person   that   elects   to   drive   some   of   the   time,   but   are   simply  missing  out  on  participating  in  100%    [or  at  least  a  greater  share]  of  their  trips.       Mass  Market   Wikipedia  describes  mass  market  as:   “A   general   business   term   describing   the   largest   group   of   consumers   for   a   specified   industry  product.  It  is  the  opposite  extreme  of  the  term  niche  market.”   For  every  one  traveler  that  flies  in  the  U.S.,  10  people  drive  on  their  trip.    By  that  definition,  the  drive  market  is   indeed  a  mass  market.   Read  on.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  9    
  • 20. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Life  Travel     Rounding   out   our   definitions   is   the   term   “life   travel”.     According   to   the   U.S.   Travel   Association,   in   2010   leisure   19 travel   will   make   up   nearly   77%   of   all   travel   in   the   U.S.     Vacation   travel   is   just   8%   of   that.     The   remaining   69%   is   what   I   call   life   travel.     Life   travel   includes   visiting   friends   and   family   and   going   to   weddings,   funerals,   reunions,   bar   and   bah   mitzvahs,   concerts,   tournaments,   and   the   like.     One   of   the   other   distinctions   to   life   travel   is   that   it   generally   happens   in   the   other   88,900   cities,   towns   and   villages   in   the   U.S.,   versus   the   top   100   destinations   common   to   vacation   [and   business]   travel.     Understanding   this   market   is   essential,   as   many   of   these  trips  out  of  both  necessity  and  convenience  are  drive  market  trips.   THE  LOGIC       Better  said  “Why  should  I  care?”   In  the  past,  a  marketing  and  technology  focus  on  the  air  traveler  may  have  been  an  adequate  strategy  and  not   at   all   illogical.     In   fact,   it   may   have   been   highly   profitable.     After   all,   it   is   generally   a   more   affluent   market.     According   to   the   2007   Domestic   Leisure   Market   Report   published   by   TIA   (now   the   U.S.   Travel   Association,   USTA),  the  average  spending  per  trip  of  $878  is  the  highest  of  all  modes  of  transportation,  with  longer  average   trip  duration  (4.6  nights)  than  any  other  mode,  including  the  drive  market.     In  the  past,  the  air  traveler  market  may  have  filled  your  rooms,  destination,  resorts,  restaurants,  attractions  or   cruise  ships.       20 Last   week   Google   announced   the   acquisition   of   ITA ,   primarily   known   for   its   airline   search   and   booking   technology.    Would  Google  invest  $700  million  in  an  industry  that  didn’t  have  a  future?     The   question   isn’t   whether   there   is   a   future   in   the   marketing   and   sales   of   airline   tickets;   it   is   whether   it   is   prudent   to   expand   your   focus,   while   continuing  to  serve  this  marketplace.       The   most   compelling   reason   to   diversify   your  approach  to  include  the  drive  market   is   that   even   if   the   economy   recovers,   we   cannot  immediately  return  to  the  previous   levels  of  air  booking  and  revenues.     As   shown   in   this   picture,   hundreds   of   planes   are   parked   in   the   desert,   never   to   return   to   service.     And   as   we   will   see   when   we   take   a   look   at   historical   trends,   air   travel   had   started   its   decline   more   than   a   decade  ago.   Measuring  the  Impact   If  you  don’t  know  what  the  impact  to  your   company   would   be   of   another   decline   in   air   travel,   perhaps   you   should   start   with   determining   what   percentage  of  your  revenue  is  derived  from  airline  travelers  (where  air  is  the  primary  mode  of  transportation   for  their  trip).       If  you  don’t  have  any  visibility  into  mode  of  transportation,  changing  that  is  a  good  place  to  start.                                                                                                                                           19  Vacation  travel  excludes  weekend  getaways  and  visiting  friends  and  relatives   20       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  10    
  • 21. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Add   a   question   to   your   customer   surveys   or   to   your   call   center   and   check-­‐in   scripts.     By   analyzing   how   you   market   and   understanding   what   audience   you   are   attracting,   you   will   be   able   to   tweak   your   product   and   service  offerings  to  leverage  that  knowledge.   If  you  have  not  considered  what  it  takes  to  reach  the  non-­‐air  traveler  (or  for  airlines,  to  help  your  passengers   reach   their   ultimate   destination   versus   just   the   airport),   it   is   time   to   think   through   your   strategy   about   this   “forgotten  mass  market.”   The  Decision  to  Drive   Annette   Hogan,   head   of   marketing   for   the   Kennedy   Space   Center   Visitor   Complex   offered   the   following   anecdote   from   her   days   in   the   Parks   and   Resorts   division   of   Delaware   North.     “People   going   to   any   of   our   properties  in  National  parks  had  to  take  a  big  plane…  to  a  little  plane…  to  a  car…  to  the  park…  to  our  property.”     While   these   trips   included   an   air   ticket,   these   were   travelers   who   faced   the   same   challenges   as   travelers   driving  from  home.    Where  is  the  entrance  to  Yellowstone?    Oh,  there  is  more  than  one?       People   drive   for   a   lot   of   reasons.     Barbara   Steele,   the   director   of   tourism,   department   of   public   affairs   for   Ocean   County,   N.J.,   offers   these   reasons   for   people   driving   to   her   destination   (the   Jersey   shore)   from   the   Midwest  versus  flying:       • Security  delays   • Security  rules  about  what  you  can  take  on  -­‐  and  the  inconvenience  of  forgetting   • Extra  cost  of  seat  reservations/ticketing/baggage/food  that  used  to  be  free   • Sitting  in  the  waiting  room  or  worse,  on  the  plane  due  to  "mechanical  failures"   • Delayed  and  canceled  fights     My  favorite  of  Barbara’s  stories  is  from  one  of  their  visitors  who  said,  “I  drive  to  the  shore  because   that  way  I   take  my  shoes  off  because  I  want  to,  not  because  I  have  to,”  referring  to  his  airport  security  check.   Randi   Minitor,   writer   for   Falcon   Guides   and   her   photographer   husband,   Nic,   traveled   over   100,000   miles   by   car  over  the  last  three  years.    She  says  that  even  though  the  cost  is  about  the  same  for  them  to  drive  or  to  fly,   “Car  travel  allows  us  to  pack  the  ‘might-­‐needs,’  like  extra  sweatshirts,  blankets,  and  our  own  food  in  an  electric   cooler,  it  allows  us  to  control  our  schedule  and  make  spontaneous  stops  along  the  way,  and  it  turns  the  journey   into  a  goal  in  itself.    For  us,  car  travel  also  means  that  we  load  and  unload  the  car  completely  every  day,  both   because  we  arrive  at  a  new  destination  almost  daily  and  because  we  carry  high-­‐end  optics  and  camera  gear   that  must  come  in  with  us  every  night.”   One  of  the  key  reasons  that  the  drive  market  is  as  large  as  it  is  centers  on  the  fact  that  it  is  not  made  up  solely   of   vacationers   or   even   “life   travelers”,   but   people   like   Randi   and   Nic   who   travel   on   the   road   for   work   reasons.   In   fact,   according   to   the   U.S.   Travel   Association,   56%   of   all   business   travel   over   75   miles   from   home   is   conducted  by  car.       Bill   Carroll,   Ph.D.,   is   an   economist,   author,   and   recognized   expert   in   the   areas   of   travel   and   hospitality.     Bill   does  research  and  writes  for  PhoCusWright.    In  his  work  as  a  visiting  professor  at  Cornell  University,  he  also   offered   an   observation   that   changing   demographics   are   a   big   factor   in   business   shifting   from   air   travel   to   travel   by   car.     He   cited   that   the   older   generation   (which   he   referred   to   as   the   “grays”)   “has   more   time   to   drive   than   the   time-­‐starved   Gen   Xers”.     And   according   to   a   survey   by   Merrill   Lynch,   baby   boomers   that   retire   (estimated   at   10,000   per   day)   are   fundamentally   reinventing   retirement.     They   will   alternate   between   periods   of   work   and   leisure,   rejecting   doing   either   full   time.     This   group   generally   has   more   disposable   time   and   income  than  the  general  population  ⎯  a  key  characteristic  of  the  drive  market.       The  U.S.  Travel  Association  reports  that  for  those  that  elect  to  drive,  the  average  age  is  45.    The  Recreational   Vehicle   Industry   Association   reports   that   a   typical   RV   owner   is   age   49.     Both   fall   squarely   in   the   boomer   category.    And  today,  in  the  baby  boomer  group,  one-­‐in-­‐ten  vehicle-­‐owning  households  own  at  least  one  RV.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  11    
  • 22. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       SIZING  THE  MARKET   In   order   to   understand   the   significance   of   the   drive   market,   it   is   important   to   first   take   a   look   at   the   full   opportunity,  as  well  as  the  trends  and  projections  by  type  of  travel  and  mode  of  transportation.   From  1996  to  2006,  travel  by  car  grew  12.8%  and  rental  car  volume  for  that  same  period  grew  13.9%.    For  the   same  period,  air  travel  decreased  by  3.6%.    As  Figure  1  shows,  drive  market  trips  have  outpaced  trips  by  air  by   a  significant  margin  for  a  very  long  time.   Figure  1  -­‐  Trips  by  Mode  of  Transportation  1996-­‐2006   Trips  by  Mode  of  Transportahon  1996-­‐2006   1800   1600   Trips  (in  millions)   1400   1200   1000   Trips  by  Car   800   600   Trips  by  Air   400   Trips  by  Rental  Car   200   0   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005   2006     Source:    2006  Travelscope  Directions  Survey       21 According  to  the  2006  Travelscope  Directions  Survey  done  by  TIA,  2006  was  the  first  time  the  number  of  U.S.   domestic  trips  topped  2  billion.    As  the  chart  In  Figure  2  shows,  the  number  of  trips  since  2007  has  declined   somewhat  due  to  the  fuel  and  economic  crises  late  in  the  decade.    Modest  growth  is  expected  in  2010  and   trips  are  expected  to  top  2  billion  again,  in  2011.       Figure  2      U.S.  Domestic  Trips  2006  –  2013,  including  forecast   US  Domestic   2006   2007   2008   2009   2010     2011     2012     2013F   Ttl  Person  Trips   2000.5   2004.5   1964.9   1905.7   1945.3   2002.3   2046.4   2076.7   (millions)   Growth   n/a   0.20%   -­‐2.00%   -­‐3.00%   2.10%   2.90%   2.20%   1.50%   Business   508.7   494.3   461.1   432.6   443.6   459.9   467.2   473.4   %  of  Ttl   25%   25%   23%   23%   23%   23%   23%   23%   Leisure   1491.9   1510.3   1503.8   1473.1   1501.7   1542.2   1579.2   1603.3   %  of  Ttl   75%   75%   77%   77%   77%   77%   77%   77%   Source:    U.S.  Travel  Association                                                                                                                                       21  The  2007  TIA  TravelScope  Directions  Survey  included  a  consumer  mail  and  online  panel  of  1.5m  households.    Shifflet  has   continued  the  research  panel,  but  the  USTA  no  longer  publishes  the  same  data.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  12    
  • 23. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Since  2008,  the  business  and  leisure  mix  has  skewed  more  toward  leisure,  with  business  travel  now  only   making  up  23%  of  all  travel.    Some  6%  of  business  travelers  generally  combine  business  and  pleasure.    That   same  2007  TIA  Domestic  Travel  Report  reported  that  out  of  all  trips,  just  8%  are  for  pure  vacation.       Total  Trips  by  Mode  of  Transportation   What  is  not  obvious  from  the  previous  statistics  is  that  in  2006,  according  to  TIA,  of  the  2  billion  trips,  nearly   1.7   million   of   them   (86%)   of   them   were   by   car   and   another   118.6   Figure  3  -­‐  US  Trips  by  Mode  of  Transportation   million  (6%)  were  by  rental  car.     (including  daytrips)   Just  156.8  million  (8%)  of  total  trips  were  by  air.       U.S.  Trips  by  Mode  of   Looking  at  the  percentages  in  Figure  3,  if  you  add  the  car  trips  and   Transportahon   the   rental   car   trips   together,   you   are   looking   at   a   drive   market   By rental car and other that  includes  92%  of  all  trips.       By air (6%) This  is  a  mass  market  by  any  measure.  And  if  you  didn’t  previously   (8%) know  that  it  was  this  large  and  growing,  I  have  accomplished  my   first  goal.     Figure   4   shows   mode   of   transportation   data   from   TNS   Global  for  2006-­‐2009.       By car Annually  TNS  surveys  a  panel  of   (86% ) over  70,000  travelers  with  a  set   of   questions   about   their   travel   Source:    U.S.  Travel  Association  (based  on  2006  trips)   behavior,   including   mode   of     22 transportation .    Although  slightly  lower  than  the  USTA  numbers,  as  I  move   on   to   peel   back   the   layers   of   this   marketplace   you   will   see   that   TNS’   numbers  look  very  similar  to  the  overnight  trip  numbers  (with  day  trips  stripped  out).       Figure  4  -­‐  Trips  by  Mode  of  Transportation  (2006  -­‐  2009)       Source:    TNS  2009  TravelsAmerica™  survey                                                                                                                                       22  http://www.tns-­‐       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  13    
  • 24. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Overnight  Trips  by  Mode  of  Transportation  –  2006  to  2009   Of   the   just   over   1.0   billion   overnight   trips,   U.S.   Travel   Association   reports   that   736   million   are   by   car   (73%),   118.6  million  are  by  rental  car  and  other  (12%)  and  156.8  million  (15%)  are  by  air.       Figure  5  -­‐  U.S.  Overnight  Trips  by  Mode  of  Transportation   In  fact,  let’s  bundle  the  736  million  with  the  118.6  million   when  calculating  the  size  of  the  drive  market,  as  car  rental   U.S.  Overnight  Trips  by  Mode  of   customers   have   many   of   the   same   unique   needs.     So   Transportahon   when   we   include   the   car   rental   market   we   are   looking   at   85%   of   the   market,   versus   the   15%   that   is   the   primary   By rental car and other (12%) focus  now.   By air (15%) With  the  higher  price  of  gas,  car  rental  companies  are   seeing  an  increase  in  the  rental  of  more  fuel-­‐efficient   vehicles  than  the  family  SUV.    Companies  like  Eagle  Rider   rent  motorcycles  and  we  see  new  entrants  like  Scarab   coming  on  the  scene  with  innovative,  portable  lightweight   RV  rentals.    As  a  result,  over  time  we  can  expect  the   “other”  category  to  grow  slightly.       By car So,  what  does  this  mean  for  the  travel  industry?       (73% ) In   2007,   over   52%   of   overnight   travel   included   a   hotel   stay.   This   means   that   companies   dependent   on   the   traditional   Source:    U.S.  Travel  Association  (based  on  2007  trips)   commerce-­‐oriented   business   model   will   benefit   from     pursuing  this  traveler.       If  I  want  to  be  really  conservative  in  sizing  the  drive  market,  I  would  look  at  just  those  trips  that  would  yield  an   ecommerce  transaction.    So  out  of  503  million  trips,  428  million  are  by  car  or  rental  car.   Although  I  am  not  an  economist  by  training,  that  is  still  a  mass  market  by  my  calculations.       Top  Misconceptions  of  the  Road  Traveler   I  have  talked  to  various  industry  players  about  the  drive  market  over  the  past  several  years  and  I  have  found  a   common  thread  in  their  perception  of  the  road  traveler.       First,  most  survey-­‐based  research  in  our  industry  is  done  by  first  asking  how  many  trips  were  taken  last  year  by   air,  or  how  many  trips  did  you  book  online,  which  we  know  is  dominated  by  air  travelers.    My  point  is  not  that   this  approach  is  wrong,  it  just  forces  a  focus  on  15%  of  the  travelers’  behavior.   As  previously  mentioned,  the  drive  traveler  and  the  air  traveler  are  largely  the  same  person,  under  different   circumstances.    As  such,  it  is  essential  in  understanding  the  behavior  of  the  drive  traveler  to  expressly  survey   individuals  that  frequently  travel  by  car  and  ask  about  their  decision  drivers  and  activities  when  they  elect  to   drive.   In   the   spring   of   2006,   my   firm   sponsored   a   limited   study   of   frequent   road   travelers   prior   to   investing   in   building   technology   to   address   this   market.     Results   were   segregated   into   those   that   travel   once   or   twice   a   year   by   car,   3-­‐5   trips,   and   more   than   5   road   trips   per   year.     The   survey   results   were   segregated   by   income   level,  gender,  region,  purpose  of  trip,  and  also  by  source  of  booking.    Although  slightly  dated  now,  the  results   were  very  telling,  so  I  am  including  the  highlights  here.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  14    
  • 25. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Fallacy  #1  –  Low  Income  Demographic   While   the   U.S.   Travel   Association   reports   the   mean   household   income   of   a   road   traveler   at   $67k,   the   LeisureLogix  Drive  Market  study  shows  that  the  frequent  road  traveler  (3-­‐5  trips  per  year)  actually  skews  much   higher,  with  more  than  44%  having  income  over  $100k  per  year.       Note:   The  U.S.  Travel  Association  shows  a  mean  household  income  of  $88.9k  for  the  average  air  traveler.       Figure  6  -­‐  Average  household  income  of  frequent  road  traveler    –  2006  Drive  Market  Survey     Since  road  travel  typically  takes  longer  than  air  travel,  it  makes  sense  that  the  frequent  road  traveler  would   have  more  disposable  time  and  money  than  their  air  travel  counterparts.    Also,  we  are  seeing  increasing  use  of   smart  phone  based,  handheld,  and  in-­‐dash  GPS  systems,  both  in  rental  cars  and  private  vehicles  ⎯  hardly  a   low-­‐income  demographic  trend.   Fallacy  #2  –  This  is  the  Economy  Traveler   The  misconception  is  that  this  is  the  motel  or  camping  crowd,  or  that  these  travelers  only  stay  with  friends  and   family   to   save   money.     While   this   may   have   been   the   case   at   one   point   in   time,   the   LeisureLogix   research   shows  that  the  frequent  road  traveler  stays  in  luxury  properties  nearly  4%  of  the  time,  upscale  24.9%  of  the   time,  midscale  55.6%  of  the  time  and  economy  properties  just  15.9%  of  the  time.   Figure  7  -­‐  Lodging  Preference  of  the  Frequent  Road  Traveler  –  2006  Drive  Market  Survey                   ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  15    
  • 26. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Fallacy  #3  –  We  already  serve  the  road  traveler   While   some   of   your   customers   may   arrive   by   car   or   rental   car,   the   bulk   of   technology   in   this   industry   assumes   travel  by  air  (e.g.  where  are  you  going  and  when)  and  does  not  provide  tools  geared  toward  the  road  traveler.       Case  in  point  is  the  provision  of  driving  directions  and  things  to  do  along  the  way  from  the  consumer’s  home   to  your  venue  or  destination.    And  lest  you  think  that  this  is  not  important,  take  a  look  at  consumer  search   behavior  according  to  Experian’s  Hitwise.       As   of   the   week   ending   June   26,   2010,   Hitwise   reports   that   the   top   two   sites   in   the   travel   category   are   GoogleMaps   and   MapQuest.     And   of   the   top   20   sites   in   the   travel   category,   27.14%   of   the   visits   are   from   mapping   and   local   content   sites.     Similarly,   of   the   top   10   travel   search   terms,   six   of   them   have   to   do   with   mapping  and  driving  directions.       My  contention  is  that  if  the  travel  industry  were  doing  this  well,  with  an  integrated  approach  for  the  traveler   that  drives,  we  would  see  a  much  different  picture  here.    There  is  no  need  to  shop  at  multiple  stores  if  one   store  meets  the  whole  need.     If   you   are   selling   hotel   rooms   in   Omaha,   starting   with   “where”   are   you   going   is   fine   for   someone   flying   to   Omaha.     You   have   a   good   chance   of   selling   a   room.     But   if   that   person   is   driving   from   Seattle   to   Dallas,   although  they  may  want  to  stop  in  Omaha  to  overnight,  your  chances  of  getting  in  on  that  trip  are  slim  to  none   if  your  brand  website  or  call  center  can’t  plot  out  that  trip  for  a  consumer.       In   fact,   if   you   are   a   hotel   chain   that   has   hotels   in   a   broad   range   of   destinations,   you   have   an   even   greater   reason   to   think   about   this   market,   as   many   road   travelers   would   stick   with   a   single   chain   or   brand   family   if   there  were  tools  that  allowed  them  to  plot  a  trip  across  a  region  with  your  hotels  laid  out  for  them.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  16    
  • 27. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       I  encourage  you  to  try  this.    Call  your  favorite  travel  planner,  whether  that  is  a  hotel  chain,  a  retail  travel   agent,  an  online  agent  or  the  destination  marketing  organization.    Tell  them  you  are  driving  from  Seattle  to   Dallas  and  check  out  their  reaction  and  how  much  of  the  work  that  they  expect  you  to  do,  versus  what  they   are  capable  of  doing  for  you.   The  Electronic  Distribution  Picture   Figure  8  -­‐  US  Travel  Sales  2006-­‐2008   PhoCusWright’s   November   2009   report   titled   “The   Role   and   Value   of   the   Global   Distribution   Systems   in   Travel   Distribution”   reflected   that   in   2008,   offline   travel   agencies   sold   $100   billion   and   online   travel   agencies   sold   another   $37   billion.     The   supplier-­‐direct   channel  brings  in  an  additional  $142  billion,  for  a  total   of   $279   billion.     Collectively,   I   refer   to   this   as   the   Electronic  Distribution  Marketplace.   2008   was   the   first   year   that   travel   agency   sales   declined   to   less   than   50%   of   this   market,   as   shown   in   Figure  8.   When  you  take  into  consideration  the  fact  that  the  U.S.   Travel  Association  reports  that  travel  industry  revenues  hit  $772.5  billion  in  2008,  there  is  $493.9  billion  (64%)   of   all   spending   unaccounted   for   —   done   outside   of   the   electronic   channels   measured   in   the   PhoCusWright   study.    The  USTA  number  includes  travel  booked  by  phone  or  transient/walk-­‐up  traffic,  and  in  addition  to  air,   car,   hotel,   tour   and   cruise,   it   includes   attractions   and   entertainment   and   the   like.     It   does   not   include   the   cost   of  fuel  for  the  drive  traveler.   Granted,   some   of   that   $493.9   billion   cannot   be   sold   or   reserved   electronically,   but   it   can   certainly   be   promoted   (and   perhaps   packaged)   to   the   traveler   and   the   business   model,   which   would   include   advertising   and  sponsorship,  can  augment  the  current  e-­‐commerce-­‐  driven  model.   My  personal  philosophy  is  that  collectively  we  are  missing  business;  we  are  looking  in  the  wrong  place  and  we   are   stuck   in   old,   outmoded   business   models   and   technology   that   is   air-­‐traveler   centric.     We   are   forgetting   people  that  travel  for  reasons  other  than  a  point-­‐to-­‐point  business  trip  or  a  vacation  to  a  popular  destination.   AIR  DISINTERMEDIATES  HOTELS   This   section   is   especially   for   GDS   company   executives   or   investors,   agency   owners   and   the   hospitality   industry.     Airline   execs,   you   might   want   to   bypass   this   section…..   In   trips   involving   more   than   3   hours   of   flight   time,   an   air   trip   produces   less   hotel   revenue   and   in   fact   less   revenue   for   the   entire   distribution  value  chain.     Allow   me   to   demonstrate   my   point   and   do   the  math.   If   I   am   flying   from   Tampa   to   New   York   and   staying   4   nights   in   New   York   City,   that   yields   gross   revenue   to   the   hotelier   of   $695.60,   based   on   an   average   daily   room   rate   of   $173.90.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  17    
  • 28. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       23 If  you  are  a  GDS,  you  have  revenues  from  the  air  booking  and  the  hotel  booking  fees .    If  you  are  an  agency,   you  have  a  commission  on  the  air  ticket  and  the  hotel  booking.    The  yields  are  shown  on  the  previous  page.   If   I   am   driving   that   same   trip   and   taking   my   family,   assuming   I   take   a   direct   route   and   do   a   little  sightseeing  along  the  way,  I  would  generally   need   a   minimum   of   two   hotel   bookings   on   my   way  up  to  New  York  and  at  least  two  on  the  way   back,   in   addition   to   the   4   nights   at   the   destination.     Clearly   the   person   who   drives   600+   miles   a   day   could   make   it   with   just   one   night   enroute,  but  this  is  not  the  norm.   For   this   trip,   if   a   single   brand   of   hotels   were   recommended   on   the   trip,   that   company   would   make  $1,295.60  and  a  net  of  $1,141.04  if  booked   through   an   intermediary.     This   includes   use   of   a   lower  average  daily  room  rate  enroute  and  the  higher  one  in  New  York.   A  GDS  would  make  booking  fees  on  5  hotel  bookings,  versus  just  one,  and  of  course  would  not  have  the  air   segment  revenue.    This  would  still  produce  a  gain  of  $11.00.       An  agency  would  make  commissions  on  the  full  5  hotel  bookings,  for  a  gain  of  $60.00.    And  the  hotel  chain   would  net  an  additional  $520.     So  for  everyone  in  the  value  other  than  the  airline,  on  a  multi-­‐region  trip  where  hotels  are  used  (versus  staying   with   friends   and   family   or   camping),   the   drive   traveler   is   definitely   more   profitable   than   the   air  traveler   based   on  the  eCommerce  model.       INVESTMENT  COMMUNITY  FOCUS   I   do   a   significant   amount   of   work   with   the   investment   community   and   am   constantly   perplexed   at   their   singular   focus   on   the   air   traveler.     As   I   discuss   the   drive   market   opportunities   with   various   investment   bankers   and   even   with   industry   leaders,   it   is   amazing   to   me   that   I   am,   more   often   than   not,   faced  with  a  lukewarm  reaction,  despite  the  size  of  this  underserved  market.   If  I  probe  deeper,  I  generally  find  that  the  person  has  not  taken  a  trip  in  a  car  since  childhood,  if  at  all;  may   fully  believe  that  anyone  worth  selling  to  is  flying  to  their  destination;  or  they  discount  the  part  of  the  drive   market  that  is  actually  arriving  by  air,  renting  a  car  and  driving  the  rest  of  the  way.   Whenever  I  talk  to  the  investment  community  about  the  GDS  companies,  their  primary  concern  as  investors  is   about   what   will   happen   during   the   next   round   of   airline   negotiations.     My   position?     The   GDS   companies   should  be  spending  time  and  energy  reducing  their  reliance  on  the  airline  revenue  stream  as  a  percentage  of   total  revenues,  versus  being  concerned  about  the  pricing  pressure  that  will  likely  come  from  the  next  round  of   contract  discussions.       The  private  equity  industry  has  invested  over  $16.2  billion  purchasing  the  three  GDS  companies  in  the  last  5   years.     These   companies   are   singularly   focused   on   selling   and   marketing   to   the   air   traveler,   making   more   than   90%  of  revenues  from  air  bookings  and  less  than  10%  from  “non-­‐air.”       So,  how  much  have  they/will  they  invest  in  companies  addressing  the  85%?    That  is  the  billion-­‐dollar  question.                                                                                                                                       23  I  have  used  an  average  booking  fee  for  air  of  $4.50  per  segment  and  a  $5.00  booking  fee  per  hotel  segment.    If  the  flight   is  not  non-­‐stop,  clearly  the  GDS  would  make  more  on  the  air  booking  fees  than  the  $9.00  shown.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  18    
  • 29. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       FURTHER  REDUCTIONS  IN  AIR  TRAVEL   I  recommend  that  you  ask  yourself  what  you  will  do  in  the  event  that  there  are  further  reductions  in  air  travel.     I  believe  that  this  is  a  very  real  possibility.   As   mentioned   earlier,   if   United   and   Continental   are   allowed   to   merge,   economists   estimate   that   their   combined  capacity/frequency  will  be  cut  by  10  percent.   Another   factor   in   the   potential   of   a   reduced   demand   for   air   travel   is   the   increase   in   sophistication   and   affordability   of   teleconferencing   technology.     It   is   likely   that   in   the   future,   more   and   more   business   will   be   24 done   remotely,   versus   face   to   face.     In   a   recent   Forrester   study   of   business   travelers,   46%   had   used   conference  calls,  32%  used  web  conferences  and  17%  used  virtual  presence/video  in  lieu  of  travel.       We   are   already   seeing   an   increased   use   of   Skype   and   similar   technologies   even   for   staying   in   touch   with   friends   and   family.     Mobile   platforms   and   smart   phones   are   becoming   more   and   more   sophisticated,   with   video  calling  already  being  announced  by  more  than  one  carrier.       And   if,   indeed,   Americans   see   their   vacation   as   an   inherent   right   versus   a   luxury   as   reported   by   Henry   Harteveldt  of  Forrester;  and  if  (more  likely  when)  fuel  prices  continue  to  climb  or  technology  starts  to  reduce   the  frequency  of  face  to  face  get  togethers,  air  travel  is  likely  to  suffer  much  more  than  car  travel.    People  will   likely  stay  closer  to  home  and  rent  fuel-­‐efficient  vehicles  versus  driving  their  gas  guzzling  SUVs  and  RVs,  but  I   believe  they  will  still  travel.   The  2009  TNS  Global  survey  reported  that  regardless  of  outside  influences  (gas  prices,  the  economy,  weather),   the  proportion  who  drive  to  their  destination  wavers  little  (hovering  between  72%  and  73%).       For  this  reason,  I  urge  you  to  consider  the  possibility  that  the  pursuit  of  the  drive  market  can  be  a  part  of  an   overall  strategy  to  insulate  your  company  from  further  reductions  in  air  travel.    And  if  you  don’t  have  funds   earmarked  for  business  development  in  this  area,  you  might  try  exploring  the  risk  management  approach  with   your   leadership,  outlining  how   to  create  a  sustainable  plan   moving  forward,  versus  just  trying   to   hold   on   to   your  current  market  share.                                                                                                                                       24 ®  Forrester  North  American  Technographics  Travel  And  Automotive  Study,  Q4  2009       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  19    
  • 30. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       GETTING  TO  THE  HEART  OF  THE  MATTER  –  A  PRIMER  ON  THE  DRIVE  MARKET   Sometimes  we  have  to  look  outside  ourselves  to  see  ourselves.   Chicke  Fitzgerald   When   I   was   young,   my   family   took   driving   trips   every   summer.     My   father   was   a   minister   and   had   a   month   vacation   and   my   mother   was   a   teacher   with   the   whole   summer   off.     We   lived   in   central   Indiana   and   most   years  we  took  a  month  and  drove  cross-­‐country  to  California  where  we  had  relatives.    Amazing  memories  still.   I  think  most  Baby  Boomers  took  road  trips  at  some  time  or  another,  but  somewhere  along  the  way,  just  got   too  busy.       We  were  fortunate  as  I  was  growing  up  to  do  more  than  one  Great  American  road  trip,  from  one  end  of  the   country  to  another.    We  took  them  for  every  possible  reason  ⎯  vacation,  visiting  friends  and  relatives  (now   known  as  VFR),  trips  to  graduations  and  weddings.       Driving   by   car   was   fun,   as   we   could   stop   and   see   whatever   looked   interesting.     We   camped;   we   stayed   in   motels  and  even  the  occasional  hotel.    We  ate  by  the  roadside  in  parks  with  sandwich  fixings  purchased  at  the   IGA  and  in  roadside  cafes  and  diners.       The   components   of   planning   a   drive   trip   then   were   maps,   driving   style/elapsed   time,   choice   of   a   route   or   places  to  stop  along  the  way  to  visit  friends,  relatives  or  to  see  sights,  estimating  a  destination,  finding  lodging   and  things  to  do  and  see  along  the  way  or  within  a  radius  of  where  you  end  up.       Trip  planning  entailed  making  hotel  or  campground  reservations,  calling  and  cancelling  if  you  didn’t  get  as  far   as  you  planned  –  and  then  finding  an  alternative.       It   included   keeping   your   eyes   peeled   for   “Vacancy”   signs   (remember   those?).     To   save   your   memories,   you   shared   pictures   and   stories   with   friends   and   marked   the   places   on   the   map   or   guidebook   that   you   want   to   make  sure  to  return  to  and  those  you  would  rather  forget!   So,  how  do  those  stack  up  against  where  we  are  now?    We  recognize  that  people  still  use  the  traditional  tools,   but  there  are  a  number  of  new  ways  to  obtain  and  aggregate  information  for  your  journey.       As   you   read   the   new   list,   do   a   mental   checklist   of   how   many   of   these   things   you   do   [or   could   do]   for   road   travelers  today.   The  Tools   The  Traditional   The  New   Figuring  out  where   Travel  books,  travelogues  at  the  library,   Travel  agents  and  online  planning  (browsing),   you  are  going     brochures,  past  experience,  dreams,  and  word   consumer-­‐generated  content  and  opinion/ranking  sites,   of  mouth.   travel  publisher  sites,  destination  sites,  call  centers,  TV   shows,  articles  in  magazines,  newspapers  and  blogs.   Figuring  out  how  you   The  road  atlas  and  a  magic  marker  or  for  AAA   Online  maps  and  routing  tools,  including  GPS,  and  AAA   are  going  to  get  there   members,  the  TripTik™.   TripTik™,  now  available  online  even  to  non-­‐members.   Figuring  out  who  you   The  long  list  of  relatives  and  friends.   Social  networking  sites,  plus  your  online  address  book.   were  going  to  visit   along  the  way   Figuring  out  how  long   Past  experience  (Dad).   Online  routing  tools  and  GPS  systems  and  road   it  will  take   trip  commentary  sites.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  20    
  • 31. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       The  Tools   The  Traditional   The  New   Figuring  out  where  to   Hotel  directories.   Travel  agents,  supplier  and  destination  call   stay  along  the  way   centers,  hotels  (online  and  offline),  camping  and   and  at  the  destination   RV  sites,  opinion/ranking  sites.   Figuring  out  what  is   No  “Vacancy”  sign.   Online  booking  sites  (travel  agent  and  supplier),   available   as  well  as  supplier  and  destination  call  centers  or   your  travel  agent.   Figuring  out  what  to   Travel  books,  travelogues  at  the  library,   Online  planning  (browsing),  consumer-­‐generated   see  and  do  along  the   brochures,  past  experience,  dreams  and   content  and  opinion/ranking  sites,  travel   way  and  at  the   word  of  mouth,  newspaper,  and  magazine   publisher  sites,  destination  sites,  park  service   destination   articles.   sites,  TV  shows,  etc.   Documenting  the   A  stack  of  books,  maps,  an  address  book,   A  travel  agency  itinerary,  a  stack  of  books,  maps,   plans   and  tons  of  paper.   your  PDA,  GPS,  and  possibly  tons  of  paper.   Finding  a  place  to  eat   Eagle  eyes  so  dad  wouldn’t  pass  the  place   Online  opinion  sites,  restaurant  and  city  guides,   we  wanted  to  eat.   as  well  as  handheld  and  in  dash  GPS  systems.   Keeping  the  kids   Games,  books,  singing  songs,  and  the   DVD  players,  Nintendo  DS  or  old-­‐fashioned   happy   radio  (if  you  were  lucky  –  our  car  didn’t   ingenuity.   have  one….).   Keeping  and  sharing   Still   film   cameras,   Super   8   movies,   a   diary,   Digital  cameras,  online  photo  and  video  sites  with   memories   or  postcards  sent  home.   digital  download,  blogs.     While   life   has   changed   and   technology   has   intervened,   planning   a   trip   by   road   is   much   the   same.     Cumbersome.     It   was   often   much   more   than   just   a   trip   or   going   to   a   destination.     It   was   a   journey,   an   experience;  it  was  exploring.    It  was  a  memory  in  the  making.       ROAD  TRIP  2010  STYLE   Even   as   I   write   this   section   of   the   report,   my   family   and   I   are   on   a   road   trip,   roundtrip   from   Tampa   to   Cherokee,  North  Carolina,  with  a  side  trip  to  visit  friends  outside  of  Nashville.    This  road  trip  is  the  first  one   that   I   can   remember   in   over   a   decade   (unless   you   count   going   to   Orlando   or   Kennedy   Space   Center   Visitor   Complex).       Like   many   of   you,   I   have   spent   my   entire   adult   career   in   an   industry   where   flying   to   your   destination   is   the   norm.    But  on  this  trip,  where  we  visited  friends  near  Nashville  before  coming  to  Cherokee,  North  Carolina,  an   airplane  just  wouldn’t  have  worked.    Nor  would  it  have  been  cost  effective  for  4  people.    Gas  mileage  aside,   the  SUV  was  our  vehicle  of  choice.   Personally  I  prefer  room  service  to  roasting  hot  dogs  by  a  campfire,  however  it  was  definitely  time  to  expose   our  kids  to  something  other  than  4  star  resorts,  Disney  and  SeaWorld  and  cruises.    And  from  the  volume  of   people  that  we  saw  on  the  road,  a  number  of  other  parents  are  having  the  same  epiphany.   On   our   trip   north,   at   the   last   rest   stop   on   I-­‐75   in   North   Georgia   on   our   way   up   to   Nashville,   there   were   at   minimum,  150  cars.    Over  half  of  them  hailed  from  somewhere  other  than  Georgia.    And  at  our  Cherokee  NC   campground  this  morning,  my  10  and  12-­‐year  old  kids  took  an  unofficial  census  of  the  cars  in  the  campsites.         ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  21    
  • 32. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       There  were  18  from  Florida,  16  from  North  Carolina,  5  from  Tennessee,  4  from  South  Carolina,  2  from  Georgia   and  one  each  from  Kentucky,  California,  Illinois,  Maryland  and  Texas.       While   not   exactly   scientific,   should   you   venture   outside   of   any   metropolitan   area   or   vacation   resort,   particularly   in   summer,   you   may   see   a   similar   pattern   of   locals,   those   from   adjoining   states   and   those   from   other  regions.   Figure  9    -­‐  Trip  breakdown  by  destination   Actually,  as  reflected  in  Figure  9,  the  U.S.   Travel   Association   reports   that   the   split   for   domestic   travel   is   on   average,   58%   from   the   same   state,   18%   from   the   same   region   and   24%   from   outside   the   region.   These   statistics   of   course   vary   from   destination   to   destination   and   your   interest   in   this   split   also   varies   depending   on   whether   you   are   a   hotel,   a   destination,   an   attraction,   a   cruise   line,  etc.   Source:    U.S.  Travel  Association  2007  Domestic  Leisure  Market  Report   To  which  of  the  slices  do  you  proactively   market  your  product?   WHY  DO  I  NEED  A  PRIMER  ON  MARKETING  TO  THE  DRIVE  MARKET?   By   now,   you   are   aware   that   the   forgotten   mass   market   refers   to   the   “non-­‐air”   traveler,   which   for   the   purpose   of   this   paper,   includes   the   85%   of   travelers   driving   their   own   vehicle   or   a   rental   vehicle,   not   taking   an   airplane   for  any  portion  of  their  journey.       One  reason  that  I  call  it  the  forgotten  mass  market  is  because  the  research  done  in  this  industry  almost  totally   ignores   mode   of   transportation   as   a   key   filter   in   their   reports.     Hence,   the   information   about   the   drive   traveler’s   behavior   and   preferences   is   basically   off   our   radar.     It   isn’t   discussed   at   major   industry   conferences.     It  is  rare  to  see  a  story  about  the  drive  market  in  major  trade  publications.       So  why  is  this  the  case?     Distribution  Value  Chain  Penetration   In   looking   at   how   the   distribution   value   chain   is   or   isn’t   penetrating   this   market,   let’s   begin   with   the   503   million  domestic  trips  in  the  U.S.  that  include  a  hotel  stay.       To  put  those  numbers  in  perspective  from  a  distribution  perspective,  let’s  first  look  at  domestic  air  ticket  sales   in  the  US,  as  reported  to  the  Airline  Reporting  Corporation.       In   2007   there   were   156.5   million   documents   issued   through   ARC   by   the   offline   and   online   agencies.     ARC   reports   that   40%   of   the   sales   that   year   were   international,   so   to   be   generous,   let’s   say   that   the   agency   community  booked  93.9  million  domestic  trips.    And  per  Travelclick,  there  were  just  103.8  million  room  nights   booked  through  the  GDS  and  Pegasus.       While  these  numbers  don’t  equate  directly  to  trips  (as  ARC  includes  both  air  tickets  and  other  miscellaneous   documents  and  there  are  multiple  room  nights  per  trip),  it  does  demonstrate  that  the  travel  distribution  value   chain  doesn’t  begin  to  make  a  dent  in  addressing  the  overnight  trips  by  car.   The   total   travel   expenditures   in   2006   were   $695.8   billion.     This   includes   the   commodity   air,   car   and   hotel   expenses,  plus  on  property  restaurant,  attractions  and  entertainment.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  22    
  • 33. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       When  we  look  at  the  division  of  spending,   even   though   the   air   traveler   spends   more   on  average  per  trip  (not  including  airfare),   because   of   the   sheer   number   of   drive   market   travelers,   the   division   of   spending   is  still  stark,  with  78%  of  all  spending  in  the   US   done   by  the  drive  market,  and   just   22%   by  air  travelers.     In   2010   the   expenditures   are   expected   to   be   $748.0   billion.     If   we   apply   the   same   percentages   from   2006,   travel  spending  by  the  drive  market  in  2010  will  be  $583.4  billion.    When  juxtaposed   against  the  $164.6  billion   spent  by  the  air  travelers,  it  seems  rather  imprudent  to  limit  our  focus.   Getting  Perspective   Before  we  look  at  the  differences  in  the  needs  of  the  drive  market,  we  need  to  first  step  back  and  look  outside   of  ourselves,  our  historical  approach  to  the  industry,  and  get  some  perspective.   If   you   are   an   executive   of   an   airline,   a   rail   company,   a   cruise   line,   or   other   form   of   transportation   marketed   in   the  U.S.,  you  may  be  tempted  to  put  this  paper  down  right  now.    Hang  on,  as  each  of   you  touch  this  customer   segment,  too.    You  will  understand  this  better  later.       If  you  are  a  mapping  or  navigation  company  executive,  or  an  organization  with  a  trip  planner  tool,  you  may   believe  you  already  have  this  nailed.    After  all,  serving  people  who  drive  is  what  you  do.    Let’s  see  how  well   you  score  on  serving  this  market  when  you  finish  reading  this  tome.   If  you  are  an  executive  of  a  hospitality  company,  a  destination  marketing  organization,  an  attraction,  a  travel   retailer  (online  or  offline)  or  wholesaler,  or  you  provide  technology  or  services  to  one  of  these  sectors,  some   of  you  are  thinking  right  now:       “I  market  to  all  kinds  of  travelers  without  distinction.”   Therein  lies  the  fundamental  problem.    You’ve  made  an  assumption  that  is  basically  false.     Rest  assured  you  are  not  alone  in  believing  that  you  can  market  the  same  way  to  all  travelers.   How  much  do  you  know  about  your  customers?       “Last   year   we   implemented   a   very   sophisticated   Customer   Relationship   Management   system.    We  collect  and  analyze  demographic,  psychographic  and  transactional  data.  ”         And  does  it  tell  you  how  they  behave  when  they  travel  alone  versus  when  they  are  with  a  spouse,  significant   other,  or  with  their  buddies?    When  they  drive  their  car,  RV  or  their  new  motorcycle?    How  about  when  the   kids  are  along?    How  do  things  change  then?       And  how  about  their  choices  when  the  purpose  of  their  trip  changes?    Does  a  family  reunion  trip  look  like  a   state  volleyball  tournament  trip?    How  about  a  wedding  or  a  funeral?   I  can  hear  some  of  you  beginning  to  run  through  all  the  different  ways  that  you  currently  market  your  services   and  products,  perhaps  even  taking  offense  to  my  statement.     “I  market  very  differently  to  business  and  leisure  travelers,  as  well  as  the  meetings  and  conventions   market.    And  I  have  a  groups  division  that  markets  to  the  group  travel  sector.”   Or  perhaps  you  are  making  a  mental  note  to  talk  to  your  CRM  director.    Bravo.    That  is  a  great  place  to  start.       But  it  isn’t  enough.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  23    
  • 34. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Why  Does  Mode  of  Transportation  Matter?   The  drive  market  has  different  needs  and  unique  characteristics.    You  can’t  just  lead  with  the  traditional   “where  and  when”  questions.   There  are  actually  major  distinctions  between  someone  that  travels  by  air  and  one  who  decides  to  drive  ⎯   whether  from  home,  an  airport,  or  train  station;  in  their  own  vehicle,  a  rental  car,  or  by  taxi  or  hired  car  to   their  destination  or  a  series  of  destinations.       First  of  all,  there  are  usually  at  least  two  people  in  the  car,  with  two  different  and  hopefully  blended  sets  of   preferences  that  need  to  be  considered,  versus  just  dealing  with  a  single  profile  of  an  air  traveler.    And  often,   there  are  others  in  the  vehicle  that  impact  choices,  from  where  to  stay,  to  where  to  eat,  to  what  to  do  along   the  way.    So  you  must  know  the  “who”  in  the  journey  equation.   Even  if  you  are  traveling  with  the  same  person,  if  the  circumstances  or  time  of  year  are  different,  so  will  your   preferences  vary.    In  the  summer  with  my  spouse,  I  may  generally  go  to  beaches  or  camping,  whereas  in  the   winter,  we  may  always  go  skiing.    So  the  “why”  is  also  important,  particularly  when  coupled  with  “when”.   And  if  the  vehicle  changes  —  from  the  two-­‐seater  convertible  for  the  romantic  weekend  getaway  to  the   beach,  the  motor-­‐bike  for  the  road  trip  with  the  boys,  the  SUV  for  the  family  camping  trip  or  the  RV  for  the   family  vacation    —  so  does  the  driving  style  and  the  preference  of  route.    Sometimes  you  want  to  drive  on  the   freeway,  and  sometimes  you  prefer  the  back  roads.    In  the  RV,  you  need  to  avoid  certain  roads  with  low   bridges.       You  may  drive  pedal  to  the  metal  when  you  are  alone  or  with  your  spouse,  going  600  miles/day,  and  with  the   family  and  the  dog  along  you  may  only  drive  200  miles  a  day.    This  changes  how  many  hotels  you  may  need  on   your  journey  and  definitely  changes  the  timing  of  that  need.    I  call  these  the  “how”  part  of  the  equation.    If   you  assume  someone  is  flying,  you  would  never  get  to  this  information  unless  the  customer  offered  it.   And  even  the  “when”  question  is  very  different  when  driving.    First  of  all,  you  have  to  back  into  your  arrival   date  if  you  have  a  specific  event  that  you  are  attending.    You  can  accelerate  your  schedule  by  literally   accelerating  your  day  –  traveling  further  before  breaking  for  the  night.    And  quite  often,  when  planning  a  trip   by  car,  you  don’t  know  the  precise  departure  date    –  the  timing  may  be  as  general  as  spring  or  summer,  or  as   nd specific  as  sometime  during  the  2  week  of  September.    Many  travel  sites  can’t  show  a  lit  of  hotels,  absent   the  availability  component  with  specific  check-­‐in  and  out  dates.   Also,  with  the  drive  market,  you  have  the  “hurry”  factor.    Sometimes  on  your  way  to  your  destination,  if  it  is   time  sensitive  such  as  going  to  a  reunion,  a  concert  or  a  birthday  celebration,  you  are  only  willing  to  look  a  few   miles  off  of  your  route  for  a  place  to  stay  or  eat.    On  that  same  trip,  on  the  way  back,  you  may  be  willing  to   take  your  time  and  in  fact,  take  a  completely  different  route  home.       And  if  you  are  a  hotelier,  you  need  only  ask  your  doorman  about  the  unique  needs  of  the  person  who  arrives   in  the  fully  loaded  mini-­‐van  or  station  wagon  that  invariably  includes  a  cooler  that  needs  fresh  ice.   I  think  you  will  agree,  that  this  is  very  different  from  marketing  to  and  serving  the  point-­‐to-­‐point  air  traveler.       Changing  your  mindset   When   I   began   this   research,   as   I   mentioned,   it   was   surprising   to   me   to   think   that   we   would   build   an   entire   technology   and   distribution   infrastructure   based   on   such   a   small   slice   of   the   market.     But   as   the   research   shows,  that  is  precisely  what  has  happened.       Well,   you   say,   products   other   than   air   are   sold   by   retail   agents   and   through   the   GDS.     Even   Southwest   and   American  Airlines,  among  others,  sell  non-­‐air  products  on  their  site.       Very  true.    However,  once  again,  ask  yourself  how  the  dialogue  on  those  sites  begins.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  24    
  • 35. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       I’m  quite  certain  that  the  sales  pitch  is  “where  do  you  want  to  go”  and  “when,”  which  is  clearly  the  dialogue   that  you  have  with  someone  traveling  by  air.     When   times   were   good,   air   travelers   filled   our   hotels   and   motels,   our   cruise   ships   and   our   destination   attractions.     When   the   economy   tanked   in   2009   following   the   2008   fuel   crisis,   the   air   traveler   marketplace   changed,  perhaps  forever.    Planes  were  parked  in  the  desert.    Schedules  and  frequency  were  cut,  along  with   capacity  in  primary  and  secondary  cities  alike.    Some  cities  lost  jet  air  service  completely.       Airline   cutbacks,   coupled   with   the   increasing   hassle   of   air   travel   and   decline   in   on-­‐time   performance,   quite   naturally   resulted   in   an   increase   in   travel   by   car,   both   for   business   and   for   leisure   travel.     By   itself,   this   should   be  a  signal  to  take  a  look  at  the  drive  market,  but  I  don’t  see  the  mainstream  players  in  the  industry  rushing   ahead.       Look  around  you.    It  is  a  sea  of  same.    Nearly  every  travel  retailer,  whether  offline  or  online  and  most  travel   suppliers  and  packagers  cater  primarily  to  the  air  traveler  by  asking  about  the  destination  city.    Even  cruise  line   websites   begin   planning   for   a   cruise   with   the   port   city,   presuming   that   their   guests   are   flying,   versus   asking   where  they  live  and  helping  them  determine  how  to  get  to  the  port  city.       There  is  very  little  room  for  differentiation  in  a  commoditized  industry.   We   are   facing   a   new   economic   norm.     It   demands   that   we   revisit   everything   that   we   currently   do   and  how   we   think.     If   you   want   to   grow   and   you   want   to   differentiate   from   the   masses,   you   owe   it   to   yourself   to   see   if   there  is  indeed  opportunity  beyond  just  serving  the  air  traveler,  because  that  market  has  not  only  dwindled,  it   is  saturated  from  a  distribution  perspective  and  largely  commoditized.   Changing   your   mindset   begins   with   no   longer   being   susceptible   to   loss   aversion,   diagnosis   bias   and   the   chameleon  effect  that  are  steeped  in  the  air-­‐centric  status  quo.    This  includes  the  following  actions:   • Realize  that  you  don’t  have  to  walk  away  from  the  air  traveler  to  also  serve  the  drive  market.       • Remove  your  diagnosis  biases  —  that  most  travelers  fly  or  that  the  drive  market  traveler  isn’t  as   valuable  or  that  if  you  can’t  book  it  and  make  a  commission  on  it,  that  there  isn’t  a  way  to  make   money.    These  things  have  colored  our  ability  to  see  the  drive  market  opportunity  clearly.   • Be  willing  to  step  out  of  what  is  expected  of  you  based  on  history  (e.g.  focusing  on  the  air  traveler,   and  the  mainstream  vacation  and  business  travelers  and  making  money  on  transactions)  and  broaden   the  types  of  trips  we  can  plan/book  for  our  current  customer  set.   Once  you  embrace  these  three  items,  you  will  need  to  get  into  the  drive  travelers  mind.       Think  about  what  would  change  if  your  customer  starts  from  their  home  or  office,  instead  of  departing  from   and  arriving  at  an  airport.    Local  driving  directions  to  your  venue  may  not  be  sufficient.   How   might   they   be   using   mobile   technology   enroute?     How   can   you   connect   with   them   using   a   mobile   application?    Have  you  checked  your  mapping  and  GPS  listings  lately  to  ensure  that  guests  can  find  you?   Then  consider  how  you  can  tailor  the  various  phases  of  the  dreaming,  planning  and  purchasing  and  experience   phases  of  their  trip  to  accommodate  both  the  drive  traveler  and  the  fly/drive  market.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  25    
  • 36. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       ROAD  TRAVELER  NEEDS   There  are  certain  essential  pieces  of  information  needed  for  a  road  traveler  that  could  expand  your  value  to   your  customers  and  even  increase  your  revenues.   • Where  are  you  starting  your  trip  (home,  airport,  rail  station,  cruise  port,  etc.)  and  do  you  need  a   rental  car?   • Where  do  you  want  to  go  (or  stop)  along  the  way?   • How  fast  do  you  normally  drive?   • Do  you  drive  via  freeways  or  avoid  them?       • Where  do  you  want  to  end  up  each  day  on  a  multi-­‐day  drive,  or  do  you  want  it  to  be  governed  by   how  many  miles  (or  hours)  a  day  you  want  to  drive?   Thinking   these   things   through   is   the   first   step   in   what   the   Solutionz   Group   has   branded   as   higher   order   marketing™  methodology.   • Why  should  I  care  about  mode  of  transportation  as  long  as  the  customer  is  able  to  buy  my  product  or   service?       • How  should  I  market  differently  to  this  type  of  customer?       • Do  I  need  different  “packaging”?       • Do  I  need  to  add  in  different  technology  to  reach  the  customer?   THE  ONLINE  PLANNING  PROCESS   Let’s  take  a  look  at  how  online  tools  address  the  planning  process.       In   most   OTA   booking   engines,   the   default   screen   that   is   displayed   on   the   booking   widget   is   for   the   flight   portion  of  the  itinerary.    The  consumer  has  to  then  select  “Hotel”  or  one  of  the  combination  options  to  the   right  to  see  the  hotel  booking  widget.     The  example  to  the  right  is  Expedia’s  booking  engine  once  you  select  hotel.       When  the  first  question  you  ask  on  that  window  is  about  the  destination  or  worse,  an  airport,  you  presume   that  the  consumer  is  flying  in,  versus  driving.    You  are  talking  to  the  15%.   If  they  are  driving,  the  online  tools  generally  require  them  to:   • Figure  out  their  own  route  based  on  their  driving  style  (e.g.  miles  per   day  to  determine  stopover  locations).   • Once  you  know  your  route,  come  back  to  the  online  site  and  do   individual  transactions  in  the  hotel  engine  or  call  the  call  center.     • Go  to  another  product  to  map  out  the  journey  (or  use  their  GPS  in  the   car)   Some  sites  have  introduced  mapping,  but  it  is  generally  point-­‐to-­‐point  mapping   (directions   to/from   the   venue),   versus   journey   mapping   (from   point   A   to   B   to   C   to  D,  etc.),  finding  the  “must  see”,  “must  do”  things  along  the  way.       In   fact,   Expedia   does   have   “U.S.   Address”   in   the   drop   down   for   “find   hotels   near”,   but   it   is   the   fourth   selection   in   the   list   and   still   does   not   provide   for   a   multi-­‐city   itinerary   with   the   need   for   multiple   hotels.     Both   Expedia   and   their   brand   have   at   one   point   offered   limited   road   trip   planning   (e.g.   trips   within   6   hours   of   home),   but   the  current  product  does  not  have  this  option  on  either  site.   Lest  the  Expedia  team  be  concerned  that  I  am  somehow  picking  on  them,  as  you  look  at  the  other  two  top   OTAs  and  a  leading  hotelier  and  cruise  line  on  the  next  page,  you  will  see  that  they  are  all  air  traveler  centric.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  26    
  • 37. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series           THE  JOURNEY  PLANNING  TOOLS   Next,  think  about  the  tools  that  drive  market  travelers  are  using  that  you  may  or  may  not  be  providing   (mapping,  navigation  and  content).       As  mentioned  earlier,  six  of  the  top  ten   search  terms  in  the  travel  category  include   25 the  words  mapping  and  driving  directions .   To  appropriately  plan  a  journey,  you  need   mapping,  routing  and  navigation  tools,  so  this   statistic  is  not  surprising.       But,  just  as  most  online  systems  are  geared   for  the  air  traveler,  most  mapping  and   routing  technologies  today  are  geared  for   tooling  around  town,  not  for  multi-­‐day  trip   planning,  so  consumers  are  left  to  do  much  of   the  journey  planning  task  even  with  those   products.                                                                                                                                       25  Hitwise  Week  Ending  June  26,  2010       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  27    
  • 38. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Of  the  pure  travel  industry  companies,  AAA’s  TripTik  comes  the  closest  to  a  true  journey-­‐planning  tool.    And  in   their  retail  branches,  AAA  separates  the  desk  that  handles  the  preparation  of  the  traditional  TripTik  from  their   travel  agents,  so  it  appears  that  they  “get  it”.   While  some  of  the  most  popular  online  tools  do  sport  a  trip  planning  component,  most  are  just  stringing   together  point  to  point  planning,  versus  taking  into  consideration  the  who,  what,  when,  where  and  how   variables  that  impact  each  trip.   And  content  is  not  only  king,  it  is  key  to  meeting  the  needs  of  the  drive  market.    The  data  needs  are  not  only   about  commodity  travel  products,  but  also  about  needing  to  know  where  the  closest  ATM  or  outlet  mall  is,  or   to  find  the  restaurant  or  lodging  choices  near  Aunt  Margaret’s  house  or  where  the  kids  can  play  paintball  or  go   bowling.       There  are  numerous  content  sites,  including  the  broad  sites  such  as  AOL  Local,  CitySearch  and  the  like,  and   narrow  sites,  such  as  the  destination  sites  for  cities,  states  and  regions.    To  plan  a  journey  effectively,  you   need  content  for  all  of  the  89,000  cities,  towns  and  villages  in  the  US  versus  just  the  top  100  destinations   found  in  most  online  systems  that  focus  on  business  and  vacation  travel.   The  Model   Travel  businesses  fall  into  several  camps  as  it  relates  to  business  model.   • eCommerce/product  sales  model  –  businesses  that  have  this  model  primarily  earn  money  on  the  sale   of  travel  components,  either  through  commissions  if  you  are  selling  as  an  intermediary,  by  booking   fees  for  the  GDS  or  from  the  net  profit  if  you  are  a  travel  supplier  or  wholesaler.    These  companies  do   not  generally  want  to  distract  the  consumer  with  a  lot  of  content  and  additional  capabilities  if  it   doesn’t  fit  their  primary  model,  or  worse,  if  it  distracts  from  conversion.   • Advertising  model  –  businesses  that  have  this  model  bank  on  the  unique  visitors  to  their  site  (or   readers  of  their  publication  or  viewers  of  their  TV  content)  and  trade  on  their  ability  to  display   advertising  to  that  audience,  or  in  the  case  of  metasearch  sites  like  Kayak  and  Hotwire  or  even   mainstream  search,  get  paid  for  click-­‐through  to  another  site.   • Sponsorship  model  –  this  model  is  very  similar  to  the  advertising  model,  but  a  particular  sponsor  may   elect  to  pay  a  flat  fee  to  a  company  to  have  their  brand  associated  with  a  particular  category  of   content  on  a  site,  such  as  a  Golf  Magazine  sponsoring  a  golf  content  page.   While  some  of  the  existing  travel  players  leverage  both  the  eCommerce  and  advertising  models,  one  generally   takes  precedence  over  the  other  and  drives  both  content  and  functionality  decisions.   Since  the  drive  market  generally  engages  in  a  lot  of  dreaming  and  planning  (and  hence  a  lot  of  potential  page   views  per  unique  visitor),  the  advertising  and  sponsorship  models  are  generally  the  better  primary  model  for   this  function.   Demographics  -­‐  It’s  not  just  the  Economy  traveler   Last,  in  the  section  on  major  misconceptions,  I  talked  about  the  demographic  of  the  drive  traveler.    It  is  much   more  attractive  than  conventional  wisdom  would  dictate.       The  LeisureLogix  study  done  in  2006  showed  that  for  the  frequent  road  traveler  (3-­‐5  trips  per  year):   • Over  45%  have  annual  income  over  $100k   • Price  is  much  less  important  than  destination   • 25%  stay  in  upscale  and  luxury  hotels,  60%  in  midscale  hotels  and  just  15%  in  economy  lodging   • The  higher  the  average  income,  the  more  road  trips  they  took  each  year   • The  majority  plan  3-­‐5  weeks  out  for  a  trip  lasting  longer  than  5  days   • Over  81%  also  take  fly/drive  trips  where  they  fly  and  rent  a  vehicle       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  28    
  • 39. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       When  you  look  at  the  numbers  that  stay  in  luxury  and  upscale  hotels,  it  really  isn’t  so  difficult  to  understand.     The  more  affluent  you  are,  presumably,  the  more  disposable  time  and  income  you  have  to  travel.       THE  BOTTOM  LINE   When   you   sit   back   and   think   about   it,   the   drive   market   includes   everyone   that   gets   into   a   car,   taxi,   rental   vehicle,  RV  or  on  a  motorcycle  to  get  to   their   destination.     That   includes   those   that   fly   to   one   place   and   drive   to   another,   where   the   starting   point   of   their  journey  is  the  airport,  versus  their   home  or  office.       How  do  you  size  that?   Today,   by   and   large,   the   travel   industry   looks   at   the   trip   from   the   destination   perspective,   with   a   classic   travel   itinerary   including   just   the   air,   car   and   hotel   portions   of   their   trip.   More   often   than  not,  the  trip  is  to  one  of  the  top  100  destinations  in  the  US.       Some  suppliers  and  online  travel  agents  have  added  ticketed  attractions  and  mapping  tools  to  their  website,   but  few  have  taken  a  view  of  the  entire  journey,  versus  just  helping  folks  to  get  to  their  destination.   Agencies,  suppliers  and  online  sites  that  are  focused  on  the  pure  vacation  (e.g.,  top  100  destination  approach)   and   business   travel   markets   miss   a   huge   part   of   the   leisure   travel   market   —   people   traveling   every   day   to   the   other  86,900  cities  towns  and  villages  in  the  US.       Conventional  wisdom  indicates  that  with  85%  incremental  market  potential,  we  should,  as  an  industry,  at  least   be  able  to  match  the  current  revenues,  particularly  since  we  can  expand  beyond  the  eCommerce  model  and   add  advertising  and  sponsorship  business  model  components.       But   what   if   the   opportunity   is   indeed   the   full   pie?     What   percentage   of   the   $495   billion   in   spending   can   be   addressed   through   eCommerce?     And   we   must   ask   ourselves   what   portion   of   the   market   can   be   reached   through  an  advertising  and  sponsorship  model,  such  as  is  used  by  content  and  mapping  sites?   The  bottom  line  is  that  your  company  needs  to  market  with  all  types  of  travelers  in  mind  and  for  leisure  travel,   broaden  your  view  a  bit.       In  summary,  the  opportunity  is  significant,  untapped  and  attractive.   My  contention  is  this.    If  you  discount  a  traveler,  just  because  they  are  not  flying  or  worse,  are  unaware  of   your  customer’s  mode  of  transportation  ⎯  either  when  you  first  encounter  them  in  the  provision  of  your   service  or  when  they  leave  you;  and  you  don’t  recognize  the  different  reasons  that  people  travel;  you  may  be   missing  opportunities  for  garnering  additional  revenue  or  for  deepening  their  loyalty  to  your  brand.       Differentiation  may  actually  be  easier  then  you  think.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  29    
  • 40. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       LOOKING  OUTSIDE  OUR  INDUSTRY   Today   I   was   reminded   of   a   story   from   a   dear   friend   of   mine   about   how   important   it   is   to   look   ahead   (e.g.   outside  of  ourselves)  versus  to  “contemplate  your  navel.”       If  you  are  alone  while  reading  this,  stand  up  and  look  squarely  at  your  navel.    Don’t  take  your  eyes  off  of  it.     Try,   if   you   will,   to   see   what   is   in   front   of   you   or   even   what   is   at   either   of   your   sides   (without   moving   your   head).     Even   if   someone   is   standing   in   front   of   you   jumping   up   and   down,   I   guarantee   you   won’t   see   anything   unless  you  raise  your  head.       In   this   case,  consider  the   status  quo   as   your  navel.    Admittedly  and  even  unwittingly,  we’ve  focused  on   the   air   traveler,   who   represents   the   industry’s   “status   quo.”     Unless   you   can   look   side-­‐to-­‐side   to   see   what   your   industry   peers   are   doing   or   look   ahead   and   see   what   forces   may   be   at   work   ⎯   both   outside   your   industry,   with  the  economy  and  political  forces  in  play,  and  within  your  own  company,  you  may  find  yourself  woefully   stuck  in  the  status  quo.   Certainly  the  industry’s  technological  approach  is  air-­‐focused.       If  you  disagree,  check  your  web  site  or  call  center  technology  and  see  if  the  first  thing  you  ask  is  “where”  are   you  going  and  “when.”    Yes.    You’  deduce  that  you  are  indeed  marketing  to  the  air  traveler  and  are  focused  on   your  product,  not  on  their  intent.       You  will  see  that  the  road  traveler  actually  has  very  different  needs  and  much  of  it  has  to  do  with  the  way  that   technology  and  content  have  been  served  to  them  for  the  past  30+   years.       I   say   this,   not   because   there   are   no   exceptions   to   this   rule,   but   because   the   technology   that   our   industry   uses   is   focused   primarily   on  two  pieces  of  a  six-­‐dimensional  puzzle  –  “Where”  are  you  going   and   “When”   are   you   traveling.     That   makes   total   sense   for   the   air   traveler  who  is  traveling  point-­‐to-­‐point.       But   for   someone   driving,   there   are   additional   questions   that   you   need   to   consider   up   front.     The   traveler   puzzle   to   the   right   shows   you  the  full  picture.   So  look  up  and  let’s  look  out.    We  are  going  to  first  look  outside  our  industry  to  the  restaurant  business  and   then  the  television  industry.       At  times,  you  may  feel  like  you  are  looking  in  the  mirror.    That  is  precisely  how  you  can  end  up  seeing  yourself   when  you  look  outside  yourself.    If  that  has  occurred,  this  Not  So  White  Paper™  has  accomplished  my  goal  and   you  will  be  setting  up  both  yourself  and  your  organization  for  success  and  hopefully,  for  growth.     THE  TRANSFORMATION  OF  THE  RESTAURANT  INDUSTRY  –  A  STORY  OF  PRODUCT  CENTRICITY   Think   back   to   what   would   have   happened   in   the   restaurant   industry   if   the   burger   joint   of   the   1950s   hadn’t   morphed  to  accommodate  the  drive-­‐in  craze  popularized  by  A&W  or  the  move  to  drive  through  windows  a  la   McDonalds.    Or  how  it  would  have  impacted  their  business  if  they  had  ignored  the  move  to  take  out  which   was   the   hallmark   of   both   Chili’s   Grill   and   Bar   and   Applebee’s,   or   home   and   hotel   delivery   which   was   successfully  executed  by  TakeOut  Taxi  and  branded,  packaged  foods  in  grocery  stores,  which  has  been  done  by   restaurants  from  White  Castle  to  Friday’s.       The  client  was  the  same  –  the  burger  lover.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  30    
  • 41. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Sometimes  the  customers  were  in  a  hurry,  or  they  had  a  sleeping  child  in  the  car  or  were  having  a  party  at   home  and  didn’t  want  to  cook,  or  their  lunch  hour  wasn’t  long  enough  to  allow  eating  in.    They  didn’t  all  want   to  take  the  time  to  “eat  in”  when  they  visited  restaurants  originally  designed  to  “eat  out”.   The  core  product  stayed  the  same.       But  instead  of  eating  it  the  same  way  [at  a  table  in  the  restaurant],  some  burger  joints  added  an  overhang  and   individual   ordering   devices   attached   to   a   menu   card   and   in   some   cases,   waitresses   on   roller   skates.     Later,   the   capital   expenditures   included   knocking   a   hole   in   the   wall   and   adding   a   drive   through   lane   or   takeout   entrances,  where  the  server  would  bring  the  bags  of  food  and  drinks  out  to  the  car  at  the  curb.    Over  time,   expanding  your  reach  included  investing  in  vehicles  for  delivery  or  added  manufacturing/packaging  plants  to   service  the  retail  grocery  market.    The  tools  changed,  but  the  food  didn’t.   This  analogy  took  us  from  1950,  when  the  restaurateur  knew  that  the  post-­‐war  era  market  was  growing  and   booming  with  people  who  didn’t  want  to  cook  at  home.    That  was  his  customer.    He  capitalized  on  it.    It  made   perfect   sense.     But   it   didn’t   take   him   all   the   way   to   the   next   century   and   while   it   differentiated   him   as   an   “eat   in”  restaurant,  he  missed  the  whole  group  of  customers  that  had  other  ideas.   Over  time,  what  he  learned  about  his  customer  was  that  they  morphed  into  “sub-­‐markets”  and  he  actually  lost   some  of  them  by  not  making  the  necessary  changes.    Granted,  had  he  made  some  of  the  changes  he  observed   around  him  (e.g.  adding  a  drive  through),  he  may  have  lost  some  of  his  higher-­‐end  customers.       His   customers   were   in   a   hurry.     He   wanted   them   to   sit   down   and   take   their   time   while   they   ate.     They   wanted   to   come   in,   get   the   food,   and   take   it   home   to   eat.     They   wanted   to   stay   in   their   cars   to   pick   up   their   food   because  the  baby  finally  fell  asleep  in  her  car  seat.    He  finally  conceded  to  package  the  food  and  bring  it  out  to   the  car,  which  ultimately  accomplished  the  same  end  for  the  harried  new  parents.     Today,   we   have   people   who   eat   in,   carry   out,   get   home   delivery,  go   to   the   drive-­‐through,   and   those   who   pick-­‐ up  pre-­‐packaged,  ready  to  eat  meals   curbside  and  in  restaurants.    People  of  all  economic  strata  participate  in   each  of  these  groups.    In  fact,  statistics  show  that  the  higher  the  income,  the  more  people  eat  out.   So  what  happened  between  1950  and  today?    What  changes  did  restaurants  make?   Procedures   Adding  take  out,  drive  through  and  delivery  of  the  existing  menu   Packaging   Purchasing  the  supplies  to  support  carry  out  versus  eating  in   Pricing     Packaging  different  versions  of  the  same  product   Capital  projects     Knocking  out  a  wall,  and  expanding  the  supporting  systems   Serving  the  expanding  market,  in  some  cases,  means  changing  procedures,  packaging,  pricing,  and  even  capital   expenditures.    You  won’t  necessarily  be  able  to  capitalize  on  every  new  market  segment,  but  if  you  only  look   at  your  product  and  not  the  other  things  that  impact  selection  of  your  venue  over  someone  else’s,  then  you   may  be  missing  out.       Second,  we  need  to  pay  attention  to  this  market  for  another,  less  obvious  reason.    Eating  out  is  the  number   one   thing   that   people   do   when   they   travel   ⎯   often   three   times   per   day   when   away   from   home.     National   Restaurant   Association   research   shows   that   about   20   percent   of   restaurant   sales   come   from   travelers   and   tourists.   For   fine   dining   restaurants,   that   percentage   averages   40   percent.   The   graph   to   the   right   shows   the   contribution  of  tourism  from  each  segment  of  the  restaurant  industry.    It  is  significant.   Helping   people   find   a   place   to   eat   that   matches   their   taste   and   situation   is   a   critical   part   of   every-­‐day   life,   including   when   they   travel   away   from   home.     "Travel   and   restaurants   are   inseparable,"   says   Lynne   Breaux,   president  of  Restaurant  Association  Metropolitan  Washington.  "Travel  decisions  are  determined  by  the  quality   and  popularity  of  restaurants.”       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  31    
  • 42. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       You   may   say   that   this   is   not   a   part   of   the   travel   industry’s   responsibility,   but   look   at   how   mapping   companies,   such   as   MapQuest   and   GoogleMaps   and   locally   focused   content   sites   (such   as   CitySearch   and   AOL   Local)   have   capitalized  on  this,  as  have  the  “directory”  companies,  such  as  Super  Pages.       The   travel   industry   hasn’t   gotten   its   fair   share   of   the   advertising   revenues   that   are   possible   by   adding   restaurant  information  to  the  portfolio  of  products  and  services  offered.    The  same  can  be  said  of  shopping   information,  the  #2  pastime  of  travelers.   Last,  and  most  important  to  this  Not  So  White  paper,  is  that  restaurateurs  have  had  to  grapple  with  the  stark   fact   that   the   “who,”   “how,”   and   “why”   of   a   restaurant   decision   is   every   bit   as   important   as   the   “where,”   “when,”   and   “what”   is   being   offered   to   the   consumer.     The   travel   industry   needs   to   think   as   broadly   about   its   own  product  as  our  hypothetical  entrepreneur.   In  travel,  we  have  people  that  fly  to  their  destination  and  rent  a  car  or  take  a  taxi.    They  need  to  find  a  place  to   stay  and  need  to  know  how  to  get  there.    They  get  picked  up  by  a  friend  and  want  to  see  the  local  sights.    The   friend  is  a  workaholic  that  never  really  gets  out  to  see  what  is  going  on  in  the  town.       There  are  those  that  attend  meetings  or  go  to  business  meetings  and  need  to  find  a  hotel  that  is  close.    Or,   they  need  to  find  a  particular  kind  of  cuisine  they  like  or  where  the  closest  Apple  Store  or  Nordstrom  can  be   found.   There  are  those  who  travel  on  vacation  to  top  vacation  destinations,  to  visit  friends  and  family,  or  to  spend   time   doing   their   favorite   things   or   nothing.     There   are   those   who   go   to   work   events   or   to   obligatory   family   happenings,  like  weddings,  christenings,  bar  mitzvahs  and  funerals.       Asking  them  where  they  want  to  go  and  when  they  want  to  travel  can  fall  far  short  of  filling  the  entire  trip-­‐ planning  bill.       THE  TELEVISION  INDUSTRY  –  A  STORY  OF  CUSTOMER  CENTRIC  DESIGN   Another  analogy  from  the  consumer  perspective  is  the  television.       When  I  was  a  child,  televisions  were  large,  sat  in  the  living  room,  and  were  encased  in  square  yards  of  wood   paneling.    We   got   just   3   channels   and   to   change   the   channel   you   had   to   get   up   and   walk   across   the   room.     However,   the   Japanese   soon   realized   that   there   was   a   need   for   smaller   televisions   for   other   rooms,   like   bedrooms.  They  entered  the  market  with  smaller  TVs  that  were  portable  and  had  remote  controls.    This  had   two  effects.    First,  it  enormously  expanded  the  number  of  television  sets  per  house  and  thus  the  total  market.   Second,   it   got   the   Japanese   companies   into   the   US   distribution   system,   allowing   them   to   sell   more   and   different  products  once  established.       Then,  in  the  80s,  following  the  success  of  the  Walkman,  Sony  created  the  Watchman,  allowing  the  user  to  view   their  favorite  shows  even  when  they  were  outside  the  home.  And  of  course,  the  Internet  and  smart  phones   have  given  broad  access  to  television  shows,  both  on  subscription  and  free,  on  demand.    Such  a  market  did   not  exist  35  years  ago;  the  market  is  now  many  billions  of  dollars,  both  in  equipment  and  content.   In  this  second  analogy,  the  television  shows  themselves  didn’t  change,  but  the  places  where  they  were  viewed   changed   dramatically,   as   did   the   delivery   vehicle.     The   consumers   demanded   it   and   the   manufacturers   responded.   Whether  catering  to  the  air  traveler,  the  drive  market  or  someone  arriving  by  train  or  bus,  the  products  and   services   in   our   industry   are   also   the   same.     A   trip   includes   someplace   to   sleep,   a   place   to   eat   and   generally   includes  things  to  do  and  see.       So  why  is  change  needed  in  our  approach  if  a  traveler  is  driving?    Why  can’t  we  just  continue  as  we  have?       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  32    
  • 43. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Well   the   answer   is   that   you   can   hang   on   to   the   status   quo   and   continue   along   the   same   path.     What   you   can’t   do  is  be  assured  that  the  air  traveler  will  continue  to  provide  the  kind  of  revenues  that  you  have  enjoyed  in   the  past.   THE  SHIPPING  INDUSTRY  -­‐  BECOMING  MULTI-­‐MODAL   Let’s   take   a   quick   look   at   the   global   goods   transportation   market.     In   the   1950s,   companies   in   this   market   defined  themselves  by  mode—that  is,  ship,  truck  or  rail.       As  the  shipping  companies  increasingly  redefined  their  technology—moving  to  containers  for  instance  —  the   other  players  who  did  not  think  in  a  multi-­‐modal  form  were  increasingly  forced  out.       Today,   any   company   in   this   market   needs   to   be   either   multi-­‐modal   themselves,   or   fully   plug   and   play   to   minimize  the  time  to  move  from  shipping  to  rail  to  truck  to  distribution  center  to  local  delivery.       The  industry  fundamentally  redefined  its  operating  and  economic  model  to  respond  to  the  need  to  be  multi-­‐ modal.    We  need  to  follow  their  lead.   You  may  respond:   “We   are   multi-­‐modal.     We   provide   air,   rail,   rental   car   and   cruise   booking   capabilities   and   even   reserve  limousines  for  our  clients.”   Remember,   those   are   products   and   if   you   are   honest   with   yourself,   you   are   likely   selling   multi-­‐modal   travel   to   the   air   traveler.     Here,   we   are   talking   about   the   multi-­‐modal   traveler.     A   subtle,   but   important   shift   in   thinking.   FROM  HAMBURGERS  TO  TELEVISIONS  TO  SHIPPING   Why  share  these  histories  of  various  how  these  industries  have  changed  in  the  U.S.?    This  white  paper  is,  after   all,   about   marketing   to   the   “forgotten   masses”   of   the   travel   industry   and   about   differentiating   yourself   by   serving  their  unique  needs.       While  one  or  more  of  these  examples  may  not  have  resonated  with  you,  I  urge  you  to  bear  with  me.       In  the  first  analogy,  the  intent  is  to  help  you  think  about  the  fact  that  when  people  are  hungry  and  don’t  want   to  cook,  they  have  different  options.    They  go  out  for  different  reasons,  with  different  people,  with  different   time  constraints,  and  under  different  circumstances.    People  who  sit  down  to  eat  are  not  somehow  “better”   than  those  that  go  through  a  drive  through  or  order  take  out.    They  are  just  different  and  may  even  have  a   higher  lifetime  market  value  (e.g.  eating  out  2-­‐3  times  per  week)  than  the  person   who  occasionally  eats  out  in   your  sit-­‐down  establishment.  How  are  you  serving  your  products  to  different  types  of  travelers?   In   the   second   analogy,   the   product   (the   TV   show)   didn’t   have   to   change.     What   had   to   change   were   the   delivery  mechanism  (the  set  device)  and  the  infrastructure  over  which  the  signal  was  carried  (UHF,  VHF,  Cable,   Internet,   etc.).     The   manufacturing   industry   stepped   in   and   served   the   needs   of   the   changing   customer.   If   you   provide  technology  or  services  to  the  industry,  how  are  you  shaping  the  future  by  being  customer  centric  in   your  design?   In   the   third   analogy,   the   shipping   industry   had   to   think   about   being   multi-­‐modal   in   order   to   be   able   to   handle   the  different  needs  of  each  shipper  and  to  take  advantage  of  the  various  ways  that  they  could  get  products   efficiently  to  their  destination.    Are  you  thinking  like  the  customer  or  focusing  on  your  own  products?   It  is  time  to  realize  that  travel  has  many  of  the  same  drivers,  but  as  an  industry  and  perhaps  unwittingly,  we   have  been  focused  on  marketing  myopically  to  the  air  traveler.    We  need  to  shift  from  a  product  focus  to  a   customer  focus,  and  we  need  to  be  multi-­‐modal.    Equally  important,  we  need  new,  integrated  tools  to  effect   this  change.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  33    
  • 44. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       HIGHER  ORDER  MARKETING™     The  Solutionz  Group  has  developed  a  methodology  of  mapping  out  the  customer  centricity  of  our  clients  that   includes  looking  at  how  product  or  organization  centric  they  are.    The  following  scale  measures  the  depth  of   your  customer  centricity.     Using   this   methodology,   Solutionz   measures   your   marketing   programs,   technology,   and   products   and   the   various  channels  that  you  serve  (online,  offline,  call  center,  direct  mail)  and  review  how  you  can  move  to  the   right  side  of  the  customer  centricity  scale  shown  above.   PRODUCT   Solutionz   has   found   that   that   most   companies   have   taken   a   look   at   travel   planning   from  their  own  product-­‐centric  view.  If  someone  is  going  on  a  trip  and  you  are  a  hotel,   it  is  perfectly  natural  and  normal  to  want  to  step  up  and  be  “the”  hotel  for  the  trip,  but   this  view  won’t  give  you  a  sustainable  competitive  advantage.   You  really  have  to  step  back  and  look  at  the  various  types  of  customers  you  want  to   attract   (which   hopefully   include   the   drive   market)   and   why   they   are   traveling   and   ensure   that   you   have   products  and  services  they  will  be  clamoring  for.       When  you  can  move  from  being  centered  on  your  own  product  and  expand  your  view  as  I  have  described,  you   get  closer  to  being  action  focused.    This  is  good;  it’s  where  you  begin  to  expand  your  product  and  services  to   get  closer  to  your  clients’  needs.       ACTION     To   move   to   a   more   action-­‐oriented   approach,   you   must   think   through   context   and   what   happens  before  and  after  the  customer  consumes  your  product.   If   you   are   a   hotel,   you   need   to   provide   a   mapping   tool   to   show   them   not   only   where   you   are,   or  how  they  can  get  to  you  by  car  (whether  from  home,  the  airport,  or  train  station),  but  also   what  is  around  you.       This  is  positive  progress  toward  customer  centricity,  but  still  may  not  have  you  at  the  center  of  the  customers’   planning  efforts.   INTENT   Journey  planning  is  at  the  far  end  of  the  spectrum  and  addresses  what  I  call  the  “intent”   phase   of   trip   planning.     It   takes   into   account   the   full   range   of   elements   that   the   customer   needs   to   get   from   the   starting   point   to   their   destination(s)   and   back   home.     This  should  include  all  points  and  stops  in  between,  the  technology  at  home  or  office,  the  technology  in  the   car,  and  the  systems  that  bridge  trip  planning  with  GPS  navigation.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  34    
  • 45. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Granted,  everyone  can’t  become  a  full-­‐service  travel  provider  serving  all  travelers’  needs  and  providing  end-­‐ to-­‐end  content  for  every  city,  town  and  village  in  the  U.S.,  but  you  can  extend  yourself  and  your  approach.    I   guarantee  you  will  benefit  and  create  more  sustainable  customer  relationships.   THE  HIGHER  ORDER  MARKETING  EQUATION   Here  is  another  analogy.    Back  to  food  and  wine.   At  our  local  grocery  store,  Publix,™  they  really  have  grabbed  hold  of  higher  order  marketing.    I’m  not  sure  they   really  think  about  it  in  these  terms,  but  they  are  doing  it,  which  is  even  more  important.   In  normal  grocery  store  fashion,  the  aisles  are  organized  by  food  type.    They  try  to  organize  the  flow  to  make   sense  from  aisle  to  aisle.    This  is  classic  product  centric  marketing.    If  you  want  broth,  you  go  to  the  soup  aisle.     Or   in   our   vernacular,   if   you   want   accommodations,   you   go   to   the   hotel   web   site,   an   OTA   or   a   bed   and   breakfast  site.   A  few  years  ago  they  started  putting  together  ingredients  that  made  sense  in  an  end  cap  display  (e.g.  pasta,   grated  cheese,  sauce)  or  at  Thanksgiving,  turkey,  broth,  stuffing  mix  and  celery  all  displayed  together.       At  that  juncture,  they  crossed  over  from  product  to  action  (e.g.  removing  the  worry  of  forgetting  an  ingredient   just  because  of  the  flow  of  the  store  and  making  shopping  more  efficient).       They   took   the   final   step   when   they   put   together   recipe   cards   and   all   of   the   ingredients   for   a   full   dinner   including   wine,   and   then   had   someone   next   to   the   display   cooking   it   and   letting   you   taste   it,   or   taping   the   same  thing  and  making  it  viewable  when  you  get  home  via  their  web  site.       Customer-­‐centric  Publix  focused  on  the  intent,  which  was  narrower  than  grocery  shopping.    It  was  getting  into   the   store,   selecting   specific   ingredients   for   dinner,   knowing   how   to   put   them   together,   and   being   confident   that  it  would  taste  good.    Other  stores  have  pre-­‐packaged  prepared  foods  to  accomplish  the  same  end.   Here  is  the  grocery  industry  version  of  the  higher  order  marketing  approach:     So  what  can  you  do  differently  to  think  on  a  higher  order  than  you  do  today?       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  35    
  • 46. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       M OVING   F ORWARD   THERE  IS  HOPE   The  good  news  is  that  the  travel  industry  is  one  of  the  most  resilient  businesses  that  I  have  ever  studied.       I   got  a   kick   out  of   Henry  Harteveldt   of  Forrester  Research  at  TravelCom  in  Dallas  in  March  2010,  who   in  his   opening  remarks  dubbed  2010  the  “Year  that  Sucks  Less”.    In  his  speech  he  reiterated  that  the  latest  Forrester   research  corroborated  his  longstanding  contention  that  travel  is  viewed  as  a  right,  not  a  luxury.    Even  in  the   face   of   tremendous   financial   hardship,   Americans   indeed   value   their   time   off   and   for   most   people,   their   vacations,  as  well  as  time  with  friends  and  family,  are  sacrosanct.    They  will  cut  expenses  at  home  and  perhaps   defer  the  purchase  of  a  new  car  or  living  room  set  before  they  cancel  their  holiday  getaway.       The  other  bit  of  good  news  is  that  we  haven’t  even  begun  to  scratch  the  surface  of  the  opportunities  in  the   travel  industry.    We  just  have  to  harness  them  a  little  differently  than  we  have  in  our  air-­‐centric  past.   On  Memorial  Day  weekend  2010,  a  total  of  32.1  million  Americans  were  projected  to  travel,  a  5.4%  increase   from  last  year.  They  spent  slightly  less  on  average  ($809)  on  their  holiday  trip,  1.1%  less  than  last  year.    The   report   from   AAA   said   87%   of   travelers   were   expected   to   drive   to   their   holiday   destinations,   a   5.8%   jump   from   last  year  -­‐-­‐  thanks  in  part  to  lower  gas  prices.   Many   corporations   have   revisited   the   distribution   of   territories   to   both   sales   and   service   personnel,   considering   the   possibility   of   returning   to   smaller,   regional   territories   versus   having   people   flying   coast   to   coast.     This   again   will   spur   a   need   for   tools   that   service   their   unique   needs   when   driving,   this   time   focused   on   the  business  traveler’s  requirements.   We   will   adjust.     We   are   a   resilient   bunch,   as   are   consumers   who   don’t   get   nearly   enough   credit   from   the   media.   It  is  time  to  ask  some  critical  questions  about  your  reaction  to  the  downturn  that  we  have  just  survived:   Have  you  adjusted  your  approach  to  your  customers?      Have  you  weighed  the  impact  on  your  business  of  further  reductions  in  air  travel  or  your  access  to   the  air  traveler  marketplace?       Will  you  jump  immediately  into  reactionary  cost  cutting  mode?   THE  PROFITABILITY  CHALLENGE   Whether  you  are  a  travel  agent,  supplier,  or  a  destination;  or  a  technology  company  or  consultant  that  derives   a   significant   portion   of   your   business   from   selling   to   the   air   traveler;   then   if   you   want   to   grow,   you   need   a   plan.     It  seems  inconceivable  that  there  would  be  an  untapped  market  that  could  allow  you,  instead,  to  expand  your   horizons.   The   drive   market   is   not   a   new   market.     In   fact,   our   industry   has   strong   roots   in   the   drive   market,   beginning   as   early  as  the  1930s.    The  pie  is  the  same.    It  is  your  choice  whether  to  remain  focused  on  the  smaller  of  the   slices  and  to  try  to  maintain  profitable  results.   Let’s  stop  and  look  at  your  current  profitability  challenge.       When  most  travel  companies  were  faced  with  the  news  of  cutbacks  in  air  frequency  and  capacity  over  the  past   two  years  and  the  ensuing  reductions  in  travel  across  the  board,  they  were  forced  by  habit  to  make  difficult   cost-­‐cutting  decisions  to  remain  in  business  and  attempt  to  eke  out  a  profit.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  36    
  • 47. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       COST  CUTTING  IS  NOT  A  STRATEGY   On  the  left  side  of  the  following  graphic  is  cost  cutting,  which  while  prudent,  is  generally  an  automatic  reaction   versus  a  strategy.    Expanding  markets,  on  the  right,  require  a  little  vision,  a  firm  grasp  on  the  facts,  and  solid   execution.                               Figure  5  -­‐  2008  US  Travel  Sales   MODE  OF  TRANSPORTATION  MATTERS   Quite  simply,  the  travel  industry  is  made  up  of  companies  that  sell  products  and  services  to  people  who  travel.     These   people   go   on   business   trips   and   vacations;   they   do   day   trips   and   long   weekends;   and   they   travel   for   obligatory  reasons,  for  pure  pleasure  or  pure  passion,  or  just  to  get  away  from  it  all.    They  often  travel  not  to   go  somewhere,  but  to  be  with  people  they  love  and  those  whom  they  enjoy  being  with,  or  to  do  or  see  the   things  they  love.    Sometimes,  they  are  just  driving  across  town  looking  for  the  same  thing  that  a  traveler  to   your  city  would  be  looking  for.    So,  day  trips  matter,  too,  as  well  as  tooling  around  town.    While  you  can’t  solve   all  of  a  traveler’s  problems-­‐  nor  should  you,  there  may  be  more  that  you  can  do  than  you  do  today.   As  I  have  said,  more  people  drive  (by  a  large  margin)  than  those  who  fly.       So   your   job   is   to   figure   out   how   to   get   your   product   or   service   included   in   the   consideration   set   as   these   different  types  of  travelers  begin  the  planning  process.   Here   are   a   few   comments   by   some   industry   peers   on   the   market   opportunity   and   some   practical   ways   to   address  it.   Peggy   Coleman,   President   of   the   Steuben   County   Convention   and   Visitors   Bureau,   cites   that     “all   of   our   marketing  messaging  relate  to  [traveling  on]  less  than  a  tank  of  gas  from  home”.   A  GDS  executive  preferring  to  comment  anonymously  noted  that  the  drive  market  “is  an  important  segment   and  will  likely  become  even  more  important  in  the  years  ahead  as  air  travel  becomes  more  expensive.”    He  also   cited  that  “the  cruise  lines  shifting  itineraries  to  port  cities  like  Galveston,  Texas,  and  Baltimore,  MD,  is  another   indicator  of  the  importance  of  appealing  to  the  non-­‐air  market.”         ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  37    
  • 48. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Jay   Rein,   Founder   of   Think   Build   Manage   [and   former   President   of   Travelworm]   shared   his   perspective   with   me:       “The  non-­‐air  segment  is  quite  relevant.    Historically  (as  of  late),  over  10  Million  guests  travel  to  Vegas  from   the  Southern  California  to  Phoenix,  AZ  geography.    Over  75%  of  this  count  drives  to  Vegas.    When  I  was   leading  Travelworm  we  marketed  our  robust  hotel  product  offering  to  this  prospective  guest  base  via  our   own   email   database.    Relatively   similar   statistics   exist   for   the   Orlando   Marketplace   whereby   there   is   a   large   non-­‐air   traveler   base   that   exists   from   Miami   up   to   Atlanta   and   across   to   New   Orleans.    It   is   anticipated   that   the   family   drive   from   the   Northeast   to   Orlando   may   be   reinvigorated   this   year,   even   in   light  of  higher  gas  prices.    It  will  still  be  a  lot  less  expensive  for  a  family  of   4  to  drive  roundtrip  from  NY  to   Orlando  than  to  pay  the  anticipated  airfares  that  will  exist  after  airline  capacity  cuts.”     ARE  YOU  CUSTOMER  OR  PRODUCT  CENTRIC?   It  is  this  author’s  contention  that  we’ve  all  been  guilty  of  being  product  centric.    In  the  restaurateur  example,   he  begins  by  focusing  on  the  hamburger.    In  your  case,  perhaps  you  are  focusing  on  the  hotel  room,  the  car   rental,  or  the  destination/attraction  and  forgetting  that  the  road  traveler  begins  at  home  –  his  home.       I  urge  you  to  think  about  how,  why,  when,  and  with  whom  your  customers  and  prospects  are  traveling.       Peggy   Bendel,   SVP   of   Travel   Marketing   of   Development   Counselors   International   wrote   an   article   for   the   O’Dwyer’s  PR  Report  entitled,  “Marketing  in  tough  times,”  in  which  she  directly  addressed  the  drive  market   from  a  customer-­‐centric  perspective.       In   the   article,   Ms.   Bendel   stated,   “Though   there’s   much   talk   in   the   media,   most   travelers   won’t   be   spending   their   entire   summer   in   their   own   backyard.   They   may,   however,   drive   shorter   distances,   stay   away   a   shorter   time  than  usual,  bunk  with  family  or  friends  instead  of  booking  a  hotel,  choose  less  expensive  accommodations   than  usual,  cut  back  on  restaurant  meals,  and  budget  less  for  admissions  and  souvenirs.”    She  goes  on  to  say   “many  of  my  clients  are  implementing  gas  cards,  vouchers,  value  packages,  etc.,  to  lure  travelers  out  of  their   backyards  and  onto  our  nation's  highways.”   Take   a   step   back   and   ask   yourself   whether   you’ve   been   thinking   solely   about   your   product   or   looking   at   today’s  challenges  from  your  customers’  perspective.   Now  we  know  where  we’ve  been  and,  hopefully,  better  understand  some  of  the  drivers  ⎯  pardon  the  pun.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  38    
  • 49. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       T AKING   A CTION   There  are  a  number  of  tools  that  are  used  by  travelers  that  drive  versus  fly.    If  you  haven’t  taken  a  trip  by  car   lately   ⎯   including   flying   to   an   airport   and   renting   a   car   to   get   to   your   ultimate   destination,   then   pay   close   attention  to  this  section.      Trip  Suggestions   If   someone   is   going   to   be   in   your   city/area   only   for   the   evening   (common   for   business  travelers),  for  just  a  day,  or  for  3  days,  do  you  provide  sample  itineraries   of  what  they  should  do  if  time  is  limited?    A  great  way  to  start  is  helping  people   find  the  “authentic”  things  in  your  market  (the  must-­‐see  places  to  visit)  or  focusing   on  grouping  ideas  together  by  genre.   Cost   When   two   or   more   people   are   traveling,   it   can   often   be   more   cost   effective   to   Comparisons   drive   than   to   fly.     This   is   especially   true   as   airfares   climb.     Providing   (or   using)   a   fuel   cost   calculator   to   calculate   the   cost   of   driving   from   their   starting   point   to   where   you   are   is   a   great   way   to   help   clients   who   are   trying   to   decide   the   most   cost-­‐effective  way  to  get  to  you.   Trip  Plan   A   trip   plan   can   be   as   simple   as   having   an   itinerary   or   confirmation   from   a   hotel   (make  sure  it  includes  your  street  address  and  nearest  highway/exit  numbers),  a   collection  of  addresses  of  friends  and  family  along  the  way  or  a  collection  of  travel   publications   and   articles.     Finding   ways   to   help   ensure   that   you   are   a   part   of,   or   contribute  in  a  meaningful  way  to  the  plan  for  the  journey  is  an  essential  part  of   capturing   this   market.     The   closer   you   get   to   the   provision   of   the   various   tools   needed,   the   more   likely   that   the   drive   market   will   look   to   you   next   time   to   be   a   part  of  a  trip.   Content   Eating,  shopping,  and  sightseeing  are  the  top  three  past  times  for  road  travelers.     Where   do   you   direct   your   customers   for   this   kind   of   information?     How   do   you   segregate  it?    Do  you  assume  that  everyone  wants  the  same  lists  of  top  places  to   go  and  things  to  see  or  do  you  segregate  them  by  genre  or  interest  group?   Printed  Guide   Sandra  Phillips-­‐Posner  of  offered  this  insight  on  printed  guidebooks.     Books   “Government   guide   books   are   organized   by   counties   or   alphabetically   by   city.       People   in   cars   do   not   know   or   care   what   county   they   are   in   and   certainly   don't   drive   in   order   of   the   alphabet.   We   have   talked   with   many   of   the   local   CVB's   and   some  are  beginning  to  see  the  light.  A  few  are  copying  our  exit-­‐by-­‐exit  strategy  as   that   is   what   motorists   need.   Even   e-­‐mail   newsletters   mention   things   by   concept   (fairs,  golf  specials,  shopping)  but  if  you  don't  know  where  they  are  located  in  the   State,  you  don't  know  if  they  will  be  on  your  path.  They  are  extremely  frustrating   for  me  to  read.  I  sit  with  a  map  and  have  to  painfully  look  up  each  one.  “       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  39    
  • 50. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Stories  about   In  concert  with  Sandra’s  comments  about  printed  guidebooks,  make  sure  that  as   Destinations   you  put  together  stories  about  places  to  visit  or  various  experiences.    Be  careful  to   put  ideas  in  a  logical  order  for  driving.   Printed  Maps   Printed   maps   (whether   part   of   a   publication,   an   individual,   folded   map,   or   one   printed  by  an  online  product)  are  an  essential  part  of  driving.    Even  with  a  GPS,  if   you’ve   ever   gotten   the   dreaded   “lost   satellite   reception”   message,   you   will   still   need   a   printed   map   to   visualize   the   route.     Barbara   DesChamps   of   Chateau   Publishing   says   that   she   “memorizes   the   route   so   that   she   can   drive   to   her   destination   without   taking   her   eyes   of   the   road.”     Safe   idea!     Barbara   also   reminded  me  that  printed  maps  do  not  always  reflect  recent  road  closures  or  the   addition  of  new  highways.     If   you   are   in   the   business   of   providing   printed   maps   to   your  customers,  make  sure  that  you  know  when  it  was  last  updated.   Online  Map   Most  online  map  sites  were  created  not  for  multi-­‐day,  multi-­‐destination  travel,  but   Service  for   for   the   provision   of   point-­‐to-­‐point   directions.     They   do   a   good   job   if   you   know   Driving   where  you  are  going,  versus  wanting  suggestions  along  the  way.    Make  sure  your   Directions   venue  is  showing  up  correctly  on  the  top  systems  by  regularly  monitoring  them,  or   hiring  someone  to  do  a  “geo-­‐audit”  of  your  location(s).   GPS   While   GPS   is   a   great   tool,   it   is   difficult   for   travel   providers   (other   than   car   rental   companies)  to  play  in  handing  off  information  electronically  to  these  devices.    This   is   more   a   limitation   of   the   devices   today   plus   the   limited   distribution,   than   our   ability  to  provide  information  to  make  travel  with  a  GPS  easy.    This  is  an  area  of   tremendous   growth   and   should   be   on   your   longer-­‐term   checklist   of   things   to   keep   in  your  field  of  vision.     YOUR  TO  DO  LIST   No  self-­‐respecting  white  paper  would  give  you  this  crash  course  in  a  new  way  of  thinking  without  also  giving   you  an  assignment.       Here  is  the  final  checklist,  with  higher  order  flair:   • WHO  –  Understand  the  types  of  customers  you  want  to  attract.    Make  sure  to  pay  attention  to  their   mode  of  transportation  and  how  they  behave  in  different  groups  –  e.g.  the  business  traveler,  family,   couple,  and  girlfriend  getaway.   • WHAT  –  Map  out  how  your  product  will  fit  under  different  circumstances  or  intent  from  the  customer   (tied  closely  to  WHO).   • WHEN  –  Have  you  considered  how  you  would  market  differently  to  summer  road  travelers,  those   looking  for  fall  foliage,  winter  travelers  and  those  traveling  in  the  spring?    Road  travelers  are  often   more  interested  in  the  sights  along  the  way  than  the  destination  itself.    How  do  you  fit?    Understand   how  your  customers  view  both  seasonality  and  availability  of  your  product  or  service.   • WHERE  –  If  you  haven’t  already  done  so,  plot  a  “one  tank”  radius  around  your  venue  and  look  at  the   wide  range  of  markets  you  can  serve  with  a  more  economical  road  trip       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  40    
  • 51. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       • HOW  –  Understand  mode  of  transportation  for  your  customers.    Adjust  your  surveys  if  you  have  to  in   order  to  collect  the  right  data  for  decision-­‐making.    Also  map  your  product  to  mode  of  transportation   (e.g.  can  you  attract  RV  clients  if  you  don’t  have  adequate  parking,  or  pull-­‐around  facilities  so  they   won’t  have  to  back  up,  or  motorcycle  groups  if  your  parking  lot  is  not  well  lit  24  hours  per  day).   • WHY  –  Expand  your  reach  just  by  offering  products  for  different  types  of  leisure  and  business  travel   than  you  attract  today.    Think  of  all  the  things  that  people  do  in  the  normal  course  of  life  –  attend   weddings,  funerals,  sports  tournaments  and  music  concerts,  etc.    Reach  out  to  your  clients  and  see   what  they  need  that  you  don’t  currently  offer.   • HOW  MUCH  –  Make  certain  that  you  understand  your  metrics.    How  much  of  your  business  is  coming   from  air  travelers  versus  the  drive  market.    Is  there  a  difference  in  price  tolerance  from  each  of  your   markets?    I  would  mention  price  as  an  element  of  the  How  Much  dimension,  but  I  think  our  industry   has  that  one  down  pat!   THE  ROLE  OF  THE  TRAVEL  AGENT   Before  I  wrap  up,  I  would  like  to  speak  overtly  to  the  role  of  the  travel  agent  in  this  whole  equation.  There  are   some   in   the   industry   that   believe   that   this   particular   old   dog   can’t   learn   new   tricks.     Well,   I   don’t   believe   it   for   a   minute.     The   travel   agents   are   a   resilient   bunch.     They   have   adapted   their   business   model   at   least   three   times  in  the  three  decades  that  I  have  been  in  the  industry.   Sharon   Emerson   of   Cruise   and   Tour   Planners   in   Seattle   offers   this   story   about   tools   and   her  initial   take   on   the   ability  for  traditional  travel  agents  to  serve  this  market.    If  you  take  it  at  face  value,  you  might  agree  that  there   is  really  no  place  for  the  travel  agent  in  the  drive  market  transaction.   “I  am  a  travel  agent,  but  15  years  ago  my  husband  and  I  had  sold  2  businesses  and  just  wanted  to  get   away.    So,   off   we   went   in   the   car.     We   had   a   Holiday   Inn   book,   a   wild   flower   book   from   every   area,   and   a   Travel  Guide  USA  from  Reader’s  Digest.    In  addition,  we  had  a  car  phone  (before  cell  phones).      As   we   went   from   state   to   state,   we   purchased   road   maps.    We   didn’t   drive   on   freeways.    We   hit   interesting   towns   with   the   descriptions   on   the   Travel   Guide.    Every   night   we   would   decide   how   far   we   wanted  to  go  the  next  day,  phoned  ahead  to  the  Holiday  Inn,  and  made  a  reservation.     It  was  the  most  fabulous,  relaxing,  and  interesting  trip  we  have  ever  taken,  and  I  have  been  all  over  the   world.    Our  own  country  is  awesome.    We  started  in  Seattle,  headed  North  into  Canada  over  to  Waterton   National   Park   and   headed   south;  13   National   Parks   and   14   states   later   we   wound   up   in   California   and   headed  home.       Road   trips   are   wonderful.    We   will   do   another   one   next   year   on   the   East   Coast.     This   isn’t   something   a   travel  agent  can  help  with.    People  just  need  to  get  out  there  and  explore  on  their  own.”         As   an   interesting   aside,   after   my   call   to   talk   to   her   about   her   input   for   this   paper,   Sharon   shared   with   me   that   her  traditional  business  has  been  impacted  in  recent  years  by  the  reduction  in  air  travel.    She  is  now  looking  at   tools   she   can   use   to   help   her   clients   who   may   be   driving   to   their   destination,   something   that   she   is   clearly   passionate  about.    I  reminded  her  that  if  customers  will  pay  a  service  fee  for  booking  a  simple  airline  ticket,   just  imagine  what  they  will  spend  for  planning  a  complex  road  trip!    She  agreed.   While  I  was  already  impressed  with  her  enthusiasm  and  openness  to  new  ideas  how  to  grow  her  business  in   the  face  of  the  economic  downturn,  I  found  out  the  rest  of  the  story.       Sharon  is  a  69-­‐year  old  home  agent!    Bravo,  Sharon  for  thinking  outside  the  status  quo!         ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  41    
  • 52. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       GEOGRAPHICAL  FOCUS   While  this  paper  is  devoted  to  the  U.S.  opportunity,  the  drive  market  is  not  geographically  constrained,  nor  is   it   just   limited   to   Americans   traveling   in   the   U.S.     The   international   traveler   to   the   U.S.   is   a   huge   part   of   the   opportunity,   as   they   stay   longer   and   spend   more   and   drive   as   much   or   more   than   their   American   counterparts.     They   have   a   greater   need   for   mapping   and   navigation   information   due   to   their   lack   of   knowledge  about  how  very  large  the  U.S.  is  and  how  long  it  takes  to  get  from  place  to  place.   Also,  in  any  country  or  region  where  travel  by  car  is  common  as  an  alternative  to  flying,  you  should  take  a  look   at  your  approach  at  reaching  those  travelers  as  well  as  the  air  traveler.    In  some  cases,  mapping  and  navigation   tools   are   not   as   sophisticated   and   there   may   be   gaps   in   available   geo-­‐coded   content   for   local   points   of   interest,  there  are  things  that  can  be  done  to  beef  up  your  services  to  those  that  travel  by  car.   SECTOR  BY  SECTOR  ACTION  PLAN   Gathering  Data  and  Creating  A  Marketing  Plan   As  you  have  been  reading  along,  you  may  have  become  painfully  aware  of  a  lack  of  information  about  your   own   customers.     The   first   place   to   begin   in   creating   an   action   plan   is   to   take   a   look   at   how   you   collect   behavioral  data  and  the  information  you  store  about  your  customers  in  your  various  systems.    Then  you  have   to  put  yourself  in  their  shoes  (or  rather  in  their  car!).     Travel  Suppliers   Airlines   As  you  continue  to  adjust  your   schedules,  look  at  the  cities  that  you  are  eliminating   from   your   route   schedule   and   develop   a   drive   market   strategy   to   get   travelers   to   your   remaining   airports.     This   is   similar   to   what   cruise   lines   have   done   for   years   with  their  home  ports.   Car  Rental   Look   at   expanding   your   off-­‐airport   presence   and   position   yourself   as   the   “go   to   guy”  for  “one  tank  trips”  as  a  form  of  staycation.    Show  them  what  they  can  do  with   your   rental   vehicle   and   partner   with   attractions   within   a   one-­‐tank   radius   of   your   pickup  location  to  give  people  trip  ideas  in  various  genres.   Cruise  Lines   Evaluate  how  much  of  your  business  comes  from  air/sea  and  reduce  your  top  line   revenues  by  10%.    That  is  the  wakeup  call.       Then,  look  at  how  you  can  provide  road  trip  planning  services  to  your  home  ports   to   ensure   that   you   are   getting   a   piece   of   that   business.     Give   people   ideas   of   things   to  do  along  the  way,  as  well  as  in  the  home  port  (which  you  already  do  well  today).   Rail   Take  a  look  at  how  people  get  to  your  departure  stations.    Not  just  the  commuter   markets,   but   also   the   ones   servicing   your   cross-­‐country   markets.     Offer   driving   direction   services,   as   well   as   things   to   do   within   a   radius   of   your   various   train   stations.     When   they   make   a   reservation,   ask   how   they   are   getting   to   the   train   station.   Travel   What  do  you  know  about  your  customer  base  and  its  propensity  to  take  drive  trips?     Retailers  and   Have  you  got  a  place  on  your  profile  for  any  of  the  information  about  the  trips  they   Packagers   take  by  car?    Have  you  looked  at  what  it  would  take  to  add  a  trip  planning  service   for  the  drive  market  and  determined  what  you  could  charge  for  planning  trips?           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  42    
  • 53. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       Wholesale   Can  you  extend  your  traditional  packaged  tour  business  to  include  drive  trips  or  can   you  allow  people  to  begin  anywhere  in  the  US  without  including  an  air  segment?   Hotels,   It  all  starts  with  the  reservation.    If  you  had  a  system  where  you  could  put  where   Vacation   they  are  starting  from  versus  where  they  are  coming  to  (to  your  property),  then  you   Home  Rental   may   be   able   to   provide   an   added   value   service   in   helping   them   with   driving   and   directions   or   offer   them   a   reservation   at   another   one   of   your   brand’s   properties   Timeshare   along   the   way.     If   you   are   a   chain,   you   may   get   3   or   4   bookings   along   the   way,   versus  just  the  one  at  their  destination.   Talk  to  your  bell  staff.    They  are  the  ones  that  really  understand  the  drive  market   best  as  literally  they  carry  the  brunt  of  the  physical  result!  People  bring  more  by  car   than   they   do   by   air.     It   may   be   just   as   simple   as   adding   more   rolling   carts   to   offload   coolers  and  equipment  that  people  don’t  want  to  leave  in  their  cars,  or  to  provide  a   locked  storage  service  so  they  don’t  have  to  carry  it  to  their  rooms.   You   may   have   been   asking   for   license   plate   numbers   at   check   in   on   cars   for   a   different   reason   historically,   or   not   at   all.     Revisit   the   questions   you   ask   of   your   clients,  both  on  surveys  and  when  they  arrive  at  your  venue,  as  well  as  when  they   leave,  so  you  can  learn  more.   Travel Technology Companies GDS,  CRS,  PMS,   How   much   of   your   business   comes   from   air   travelers?     Do   you   have   the   tools   to   Web  Developers,   hold   together   your   various   products   into   a   form   that   is   useful   for   suppliers,   CRM  companies   destinations  and  agencies  trying  to  reach  the  Drive  Market?   Is  it  time  to  “knock  out  the  wall”?   Destination Marketing Organizations Local,  State,   Take  a  look  at  your  home  page.    Do  you  reach  out  to  the  road  traveler  explicitly?     National  and   Do  you  have  a  way  for  them  to  get  to  you  from  their  home  versus  just  believing  the   Regional   trip  starts  when  they  hit  the  entrance  or  border  to  where  you  are?   DMO/CVB,   What  do  you  ask  folks  that  call  your  call  center  or  visit  your  visitors’  center?    Do  you   destination   know  their  mode  of  transportation?   resorts  and   attractions     Industry Associations and Government Agencies and Research Companies Associations,   Take   a   look   at   your   research   and   reporting.     Do   you   survey   the   Drive   Market   Governments  and   specifically  or  do  you  do  general  surveys  of  the  air  traveler.    Look  at  your  reports   Researchers   and   press   releases.     Are   they   disproportionately   skewed   to   the   air   marketplace?     Do   your   industry   events   give   this   topic   its   due,   based   on   the   percentage   of   contribution  of  this  sector?   Does  your  website  provide  high  level  statistics  about  this  market  and  the  potential   impact  that  it  can  have  on  association  members?         ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  43    
  • 54. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       BACK  TO  THE  “IRRESISTIBLE  PULL  OF  IRRATIONAL  BEHAVIOR”   As  you  read  through  the  facts  and  the  observations  of  this  paper,  your  mind  was  no  doubt  racing.       Is  this  a  new  market  that  I  should  be  pursuing?    How  do  I  start?       If  you  find  yourself  reacting  with  any  level  of  resistance,  it  is  a  good  time  then  to  step  back.       Let’s  look  again  at  the  psychological  influences  mentioned  in  the  preface  that  can  derail  our  decision  making   before  we  even  give  a  new  opportunity  a  chance.     LOSS  AVERSION     The  tendency  to  go  to   If  you  are  a  company  that  currently  markets  to   great  lengths  to  avoid   the  upscale  traveler,  you  may  be  thinking  that   perceived  losses   the  pursuit  of  the  drive  market  would  somehow   cause  you  to  “suffer  a  loss”  of  that  prestige,  or  a   loss  of  revenue.       The  antidote  to  the  loss  aversion  influence  is  to   objectively  look  at  the  impact  of  broadening   your  approach  to  include  the  non-­‐air  traveler   and  realize  that  you  don’t  have  to  sacrifice  your   upscale  focus.   DIAGNOSIS  BIAS     Our  original  diagnosis   If  at  some  point  in  time  you  discarded  the  drive   blocks  our  ability  to  see   market  as  a  valid  target  for  your  product  or   subsequent  results  clearly   services,  you  will  need  to  put  that  original   “diagnosis”  aside  and  give  yourself  the   permission  to  analyze  the  facts  today.    Often   this  diagnosis  is  based  on  your  own  experience   and  rooted  in  the  fact  that  you  never  take  road   trips,  so  surely  no  one  else  of  value  does.   CHAMELEON  EFFECT     The  tendency  to  take  on   If  you  are  already  serving  the  drive  market,  but   characteristics  that  have   ascribed  the  “economy”  characteristic  to  your   been  arbitrarily  assigned   own  product  or  service  because  you  believed   to  us   that  was  the  composition  of  this  segment,  think   again.    Perhaps  you  can  attract  a  higher   demographic,  or  craft  offers  that  would  be   appealing  to  the  more  upscale  traveler.    Or  if   you  provide  technology  to  the  industry  that  is   stuck  in  the  air  traveler  segment,  think  about   broadening  your  focus.   In  conclusion,  I  want  to  address  the  most  irrational  behavior  of  all.    I  have  heard  this  one  on  many  occasions.   We  don’t  have  the  budget  or  resources  to  look  at  something  new.    Our  plate  is  currently  full.   As  the  old  adage  goes,  if  you  continue  to  do  what  you  are  doing,  you  will  continue  to  get  what  you’ve  gotten  in   the   past.     My   position   would   be   that   you   can’t   afford   not   to   invest   time   and   energy   in   at   least   a   basic   assessment  of  this  opportunity.    The  risk  is  just  too  high.       ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  44    
  • 55. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       CONCLUSION   It   is   my   intention   that   reading   this   paper   will   help   you   become   the   new   “thought-­‐leader”   within   your   organization  and  provide  the  tools  for  you  to  use  your  new  insights  to  evaluate  your  organization’s  approach   to  this  very  large,  untapped  market  opportunity.       And   yes,   I   hope   that   you   will   elect   to  Dare   to   Differentiate   and   rethink   how   you   look   at   your   current   and   your   potential  customer.   In  closing,  I  will  reiterate  my  original  question  to  you.       Are  you  reaching  the  forgotten  mass  market?   If  you  weren’t  before,  I  can  only  hope  that  you  will  take  what  you  have  read  here  seriously  and  go  back  to  your   organization  and  ask  some  key  questions.   Are  you  walking  away  with  a  firm  commitment  to  develop  a  plan?   And  last  but  not  least.   Do   you   have   the   corporate   courage   to   explore   the   “Expand   Horizons”   side   of   the   Profitability   Challenge?       Being  prepared  is  half  the  battle.       Ask   your   front   line   about   their   impressions   and   get   them   to   provide   anecdotal   evidence   about   the   various   behaviors  and  needs  as  you  work  on  building  up  the  empirical  data.    And  then  put  together  a  marketing  plan   and  implement  it!   This   is   an   exciting   industry.     We   have   not   saturated   the   market   –   not   even   close.     You   have   a   clear,   unobstructed  opportunity  to  differentiate  yourself  from  your  competitors.       There  is  so  much  more  potential  that  is  as  yet  untapped.       Call  me.    Let’s  tap  it  together.           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  45    
  • 56. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       NOTES   We  recommend  that  you  page  back  through  the  paper  and  review  the  items  with  a  light  bulb  and  then  make   notes  on  your  ideas  for  helping  your  company  differentiate  its  products  and  services  for  the  drive  market.                                                                   ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  46    
  • 57. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       CONTACT  INFORMATION   It  is  my  hope  that  this  paper  will  spur  new  dialogue  about  this  subject  throughout  the  entire  travel  value  chain,   as  well  as  with  leaders  in  the  mapping  and  navigation  industries.       I  have  set  up  a  blog  for  just  that—  Distribution  Solutionz.    Join  us  there  and  comment  on  this  paper  and  our   articles.     http://distribution-­‐   For   more   information   about   Higher   Order   Marketing   or   exploring   the   Drive   Market   Opportunity   for   your   company,  please  contact  me.    For  all  companies  that  have  registered  and  downloaded  this  paper,  Solutionz  is   offering  a  10%  discount  on  our  consulting  services.         Chicke Fitzgerald CEO  Solutionz  Group    |  |  1-­‐813-­‐925-­‐0789  |         ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  47    
  • 58. DARE  TO  DIFFERENTIATE   Summer  2010  Edition  “Not  So  White”  Paper  Series       APPENDIX  A  -­‐  RESOURCES     Throughout   this   report   I   have   used   a   wide   range   of   resources   to   underpin   my   assertions   about   the   drive   market   being   the   “forgotten   mass   market”.     These   resources   have   been   augmented   by   my   30+   years   in   the   travel  industry,  15  years  of  which  have  been  as  a  strategic  consultant  to  the  industry.       Information  in  the  travel  industry  can  be  challenging  to  correlate.    Some  companies  are  public,  while  others   are  private.    And  then  of  course,  we  have  the  companies  that  go  public  again  after  being  taken  private.    This  is   rarely  done  at  an  optimal  time,  which  of  course  guarantees  that  some  years  only  reflect  partial  year  data  for   some   players.     Also,   each   sector   of   the   industry   has   different   metrics   and   unique   definitions   of   the   various   channels   and   product   segments.     For   instance   in   one   case,   the   travel   agency   channel   may   be   defined   as   traditional  offline  agencies  and  in  another  situation,  it  may  include  online  travel  agencies.       Through  my  consulting  to  the  investment  community,  I  have  amassed  more  than  a  decade  of  statistics  from   various  channels  with  details  on  travel  industry  performance  (bookings  by  type,  by  channel,  revenues  by  type   and  channel,  average  daily  room  rate,  geographic  splits  of  bookings  and  revenues  as  examples)  and  routinely   refer  to  this  information  when  talking  about  trends.       While  I  do  not  generally  do  primary  research  as  a  key  part  of  the  Solutionz  Group  business,  I  do  incorporate   data   from   third   party   firms   that   are   research   experts   and   partner   with   the   same.     Standard   resources   used   for   this  type  of  report  include  the  following  organizations’  statistics:   • ARC  –  Airline  Reporting  Corporation  (   • ATA  –  The  Air  Transport  Association  (   • USTA  –  The  U.S.  Travel  Association,  formerly  TIA  (   • AHLA  –  American  Hotel  and  Lodging  Association  (   • Travelclick    (   • PhoCusWright  (   • TNS  Global  Travel  and  Leisure  Research  (http://www.tns-­‐   The  industry  is  very  light  on  research  on  the  drive  market.    The  U.S.  Travel  Association  2007   Research  Report  –  Domestic  Travel  Market  Report,  is  the  most  current  research  that  I  was  able   to   find   that   contains   detailed   information   organized   by   mode   of   transportation.     This   report   26 was  done  in  concert  with  D.K.  Shifflett .       We  also  include  information  on  a  study  that  was  conducted  by  LeisureLogix  in  2006,  prior  to   investing  in  their  integrated  journey  planning  technology.    And  we  are  grateful  to  TNS  Global   for  sharing  their  information  on  the  size  of  the  market  from  2006-­‐2009.   27 NOTE:   Later  this  month,  YPartnership  plans  to  publish  its  Portrait  of  American  Travelers  study  that  will  include  a  small   section   on   mode   of   transportation.     We   look   forward   to   understanding   their   conclusions,   in   light   of   the   assertions  made  in  this  paper.                                                                                                                                       26  Shifflett  is  still  including  many  of  these  questions  in  their  research  panel,  but  U.S.  Travel  no  longer  publishes  this  detail  in   their  Domestic  Travel  Market  Report   27  Portrait  of  American  Travelers           ©  2010,  Solutionz  Group  International,  Inc.    All  Rights  Reserved.   Page  |  48