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Digital Revolutions in travel

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This presentation described the four digital revolutions in the travel industry.

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Digital Revolutions in travel

  1. 1. Research & Innovation API & Platform Business Strategy & DigitalTransformation New Usages, Connected Business & Mobility Digital Revolutions in Travel William El Kaim January 2015 – V1
  2. 2. Question Raise your hand if you bought your last trip in a bricks-and-mortar travel agency? Copyright © William El Kaim 2014 3
  3. 3. Copyright © William El Kaim 2014 4
  4. 4. Brick and Mortar Agency in the USA • The ongoing reduction in the number of bricks-and-mortar agencies won't subside. • Seven years ago, according to ARC, about 20,000 travel agency retail outlets processed air sales through its systems. • ARC's latest report, for September 2013, listed just over 13,000. • In another seven years that number may be down to about 5,000, speculated Travel and Transport president and CEO Bill Tech. • Mobile travel bookings are projected to comprise over one quarter of the U.S. online travel market in 2015 – up from just 2% in 2011. Copyright © William El Kaim 2014 5
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  6. 6. Plan • The Third Industrial Revolution • The Entrepreneurial Age • The 1st revolution: Birth of the travel agent and the GDS ecosystem • The 2nd revolution: Internet Travel Agency and instant comparison • The 3rd revolution: Social / Local / Mobile and Meta-search • The 4th revolution: Travel as a Service and Mobility Copyright © William El Kaim 2014 7
  7. 7. The Third Industrial Revolution Copyright © William El Kaim 2014 8
  8. 8. The 3rd Industrial Revolution Jeremy Rifkin • We’re in the first stage of a paradigm shift that is reshaping not only the economy, but also society at large, and even how we think and perceive our world. • The great economic and social revolutions in history occur when two things happen • The emergence of a new energy regime that opens the path to a more complex civilization • The new energy flows can bring more people together, integrate bigger commercial and social units, etc. • To emerge successfully, this new paradigm requires a communication revolution powerful enough to manage the new energy regime. Copyright © William El Kaim 2014 9
  9. 9. The First And Second Industrial Revolutions Scaled Top-down • First Industrial Revolution driven by coal and steam power • When: 19th Century • Energy: Coal and steam power • Communication: Print technology became very cheap when steam power into printing was introduced. That decreased the cost and increased the speed, efficiency and availability of print material. At the same time public schools in EU and USA were established. • Second Industrial Revolution driven by Electricity • When: 20th Century • Energy: centralized electricity, elite energies (coal, oil, gas, tar sands) that are only found in a few places and require significant military and geopolitical investments and massive finance capital, and that have to scale top down because they are so expensive. • Communication: mass communication (broadcast – Top to all), telephone and then later radio and television Copyright © William El Kaim 2014 10
  10. 10. The Third Industrial Revolution Favors Lateral Power • 3rd = Internet for communication and renewable energy • When: Now - When millions of small players come together in vast networks to pool / share their content, risks and their resources. • Energy: Transition to distributed renewable energy sources found in in every inch of the world: the sun, the wind, the geothermal heat under the ground, biomass (garbage, agricultural and forest waste) small hydro, ocean tides and waves. • Communication: The Internet has been a very powerful communication tool in the last 20 years. What’s so interesting about it is the way it scales. The Internet, by contrast, is a distributed and collaborative communication medium and scales laterally. • Disruption comes from lateral power • Electricity 2.0: everybody will become a producer, smart grids • Travel 2.0: social, local, mobile in dynamic networks (ecosystem) Copyright © William El Kaim 2014 11
  11. 11. Looking for the perfect experience ! Always more Content, Usages re-invented new experience: Wikipedia content, in a new app on Ipad Copyright © William El Kaim 2014 12
  12. 12. If We Had To Summarize Each Revolution by a Movie … Copyright © William El Kaim 2014 13
  13. 13. The Entrepreneurial Age New and valued offer in a mass market through the development of a new business model Copyright © William El Kaim 2014 14
  14. 14. Companies Were Designed like Machines … • The average life expectancy of a company in the S&P 500 has dropped precipitously, from 75 years (in 1937) to 15 years in a more recent study. • Companies were built on a corporate model of “knowledge stocks” • Developing a proprietary product breakthrough and then defending that innovative advantage against rival companies for as long as possible. • The issue is now, because of the increasingly global nature of business competition, the value of a major proprietary breakthrough or invention erodes in value much more quickly than in the mid-20th Century. • Companies should create broad networks and finding innovation at “the edge” of their business rather than a proprietary core • Need for a platform and Open Innovation • Network Effect and User Generated Content Source: John Hagel III Copyright © William El Kaim 2014 15
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  18. 18. Smartphone is now the “First Screen” • Daily time spent on mobile devices is now outpacing TV in the U.S. for the first time, according a newly-released 2014 AdReaction study from Millward Brown. • Americans now spend 151 minutes per day on smartphones, next to 147 in front of TVs. But the numbers are even greater elsewhere. In China, consumers spend a whopping 170 minutes a day buried in smartphones, nearly double their TV watching time. • Users in Indonesia, the Philippines, Brazil and Vietnam also spend more total screen minutes on average than the U.S., predominately on mobile. • The firm surveyed more than 12,000 mobile users, between the ages of 16 and 44, in 30 different countries, polling consumption of ads over TVs, laptops, smartphones and tablets. Copyright © William El Kaim 2014 19
  19. 19. Hotel Tonight new experience: Beautiful pictures and selected hotels with discounted fare Copyright © William El Kaim 2014 20
  20. 20. WeHostels new experience: For students, mobile only, all in one app! Copyright © William El Kaim 2014 21
  21. 21. The Entrepreneurial Age: Re-imagination Is Crucial! • A large portion of 2020 revenues are likely to come from products and services that don’t even exist today • Advances in technology without a change in business model nor traction are mere productivity gains from the multitude’s standpoint, and are commoditized in the blink of an eye, preventing the company from differentiating itself. • The new digital, networked, real-time society forces us to start thinking and acting as an Ecosystem • Ecosystem are developed using platforms to glue services via API and Funds to encourage startups and partners to hook in • The Mass customization is accelerated through a rapid adoption pace of technology • 1 million IPOD sold in 2 years at the start … • 1 million of Iphone 5x in … 3 days! Copyright © William El Kaim 2014 22
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  23. 23. “Software is eating the world.” Why Software is Eating the World, Marc Andreessen, The Wall Street Journal, August 20, 2011 Copyright © William El Kaim 2014 24
  24. 24. “Software Is Eating The World” The Age Of Child Companies • Companies that are, on average, 10/15 years old. • FaceBook is nine • Twitter is only seven years old. • The first iPhone got six years old and the iPad was first announced in 2010. • Concur • 600 engineers—"just people who write code • Over the next 10 years: spend about $1.2 billion on innovation • $120 million invested in 10 - Taxi Magic, digital hotel marketing firm Buuteeq and Indian OTA Cleartrip and there is another $200 millions still available • Pentaho is 9 years old Copyright © William El Kaim 2014 25
  25. 25. http://www.orchestra.eu/ new experience: French leader in TO packaging Copyright © William El Kaim 2014 26
  26. 26. Forces RE-imagination of Everything • You should not only re-invent your brand and product, you should re-imagine everything (Mary Meeker 2012) • The risk if not doing so? Being victim of innovative disruptions (see Christensen’s video) • Christensen predicts also the end of consulting as we know it today. • This is also the end of the Enterprise Architect, and the tools and process he used! • The Schumpeter creative destruction theory, is maximized in the digital business world • Winner-Take-All Effect + Network effects • First Time User Experience is key (30/50% of dev), no more documentation! Copyright © William El Kaim 2014 27
  27. 27. Booking.com launches rental site villas.com Copyright © William El Kaim 2014 28
  28. 28. http://alltherooms.com/ AllTheRooms.Com new experience: One request to display them all (hotel, rental, etc.) Copyright © William El Kaim 2014 29
  29. 29. Digital Revolutions in Travel Copyright © William El Kaim 2014 30
  30. 30. TRAVEL INDUSTRY ALREADY EXPERIENCED FOUR DIGITAL REVOLUTIONS! Copyright © William El Kaim 2014 31
  31. 31. GDS Travel Agent 1st Revolution in Travel Industry: GDS Semi-Automated Business Research Environment (SABRE) first came “online” in 1964 (AA and IBM). In a decade, GDSs enabled the travel agency industry to grow revenue 400% while growing employment by only 20% By the late 1990s, Central Reservation Systems had evolved into four large companies known as Global Distribution Systems. Copyright © William El Kaim 2014 32
  32. 32. 1st Revolution in Travel Industry Computerized Reservation System (CRS) • IBM started in mid-50′s with American Airlines the Programmed Airline Reservations Systems (PARS) that finally became in SABRE (Semi- automated Business Research Environment). • The American manufacturer proposed to use The IBM 9040 system to govern the reservation application They predicted a system performance from 1680 transactions in peak hours and a registry storage capacity of 240.000 passengers reservations in 1965 to almost 2000 transactions per hour to 547.000 passengers records by 1975. For storage and process, they proposed two IBM 7040 and two 7750 with 1301 tapes. Copyright © William El Kaim 2014 33
  33. 33. 1st Revolution in Travel Industry Birth of GDS • CRS morphed later into a Global Distribution System (GDS) • took the schedules and • fare information from relatively static sources (CRS) and • then sent a real-time request to the airline for bucket availability. • Bringing those three pieces together, the GDS could calculate and push out all offers. • The travel agent could make a decision and then book a flight with the GDS. • When that happened, the GDS would send the booking back to the airline electronically. • It was built before the internet. Copyright © William El Kaim 2014 34
  34. 34. 1st Revolution in Travel Industry Basic piece of information = The PNR • The Passenger Name Record (PNR) • nowadays accepted in any reservations system (airlines, car rental, hotels, etc.) was introduced by the airlines • now is a standard defined by IATA and the former ATA. • In that definition, the PNR had information about • the flight specifications with a maximum of 48 characters (flight number, flight class, dates, flight’s segments…) • the passenger record, with up to 124 characters (16 less than a tweet) • it had data related to passenger’s name, ticket number, address, phones, reservation status, etc. • PNR creation steps here • http://www.youtube.com/watch?feature=player_embedded&v=Zad7G7e1Ys4 Copyright © William El Kaim 2014 35
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  36. 36. 2nd Revolution in Travel Industry Online Travel Agents GDS Travel Agent TMC/OTA Internet Search / Compare Traveler shopping convenience and price “transparency” From 1995 to 2006 Growth with Internet … From361 million Internet users in 2000 vs. to almost 2 billions today Starting to create alternative listings of properties (hotel, apartment rental, tour and activities ) Booking direct via API or … screen-scrapping from Metasearch, OTA or Suppliers themselves Copyright © William El Kaim 2014 37
  37. 37. 2nd Revolution in Travel Industry Online Travel Agency (OTA) • From 1995 to 2006 : Traveler shopping convenience and price “transparency” • OTA were created with Web 1.0 (Global New Entrant) • Expedia, Orbitz, LastMinute.com, Priceline, etc. • No fees for travelers, war on fare, no more commission, own the client. • Disruptive Innovations through Business Models and UX • Fare Matrix (Orbix) • Opaque Fare (Priceline) - name your own price! • Dynamic Packaging (Expedia) • Flexible date search & Alternative airport • Fare Optimization Copyright © William El Kaim 2014 38
  38. 38. The 3rd Revolution - Travel 2.0 Web 2.0 Social, Cloud, Mobile SOcial LOcal and MObile (SOLOMO) revolution Consider the traveler (or client) at the heart Tackle every (travelers niche needs and their specific point of views (long tail) Avoid GDS (disintermediation), avoid … Travel Agents New marketing concept Born in 2008 that leverages Internet, Web 2.0, cloud and mobility GDS Travel Agent TMC/OTA Internet Search / Compare Copyright © William El Kaim 2014 39
  39. 39. Customer at the HEART! Copyright © William El Kaim 2014 40
  40. 40. Travel Ecosystem is based on API The new digital, networked, real-time society forces us to start thinking and acting as an ecosystem. Ecosystems are developed using platforms to glue services via API and funds to encourage startups and partners to hook in Source: PWC, Exploiting the growing value from informationCopyright © William El Kaim 2014 41
  41. 41. SITA API https://www.developer.aero/Boarding-Pass-API/Copyright © William El Kaim 2014 42
  42. 42. Expedia Affiliate Network API http://developer.ean.com/Copyright © William El Kaim 2014 43
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  44. 44. Travel Ecosystem needs Digital Platform Company core services Sovereign IT API Auth Commodity services CRM, social network, etc. API Auth Connected commerce ecosystems & related digital marketing API Auth ? Product-As-A-Service Pay as you use Craftsmanship & Legacy Digital Platform omni-channel personalization advertising social Copyright © William El Kaim 2014 45
  45. 45. CitizenGate http://www.citizengate.com/Copyright © William El Kaim 2014 46
  46. 46. https://www.airbnb.co.uk/business-travelCopyright © William El Kaim 2014 47
  47. 47. RouteHappy Copyright © William El Kaim 2014 48
  48. 48. Travel Ecosystem requires BigData • The shift from a world of static reporting (aggregated data on cubes) to a world of predictive and intelligence services (generated value from data in multiple ways) is Now! • Rise of predictive information through cards • Leveraging both data at rest (stored in a database) and data in motion (data stream in real time) is the new normal. • Real Time Data And Algorithm Providing Value Now! Historical Data Live Data Live Dashboards and Tracking systems like Pre and Post Ticketing, Early compliance and fare check. Big Data: Data Mining, Reporting, and Benchmarking, Forecasting Forecast Data Ad-hoc advanced analytics or for pro-active information generation through information cards (like Google Now!) Copyright © William El Kaim 2014 49
  49. 49. Google Flight Explorer https://www.google.com/flights/explorer/Copyright © William El Kaim 2014 50
  50. 50. Airports Misery Map http://fr.flightaware.com/miserymap/Copyright © William El Kaim 2014 51
  51. 51. Train Misery Map by CrowdSourcing http://www.raildar.fr/ Copyright © William El Kaim 2014 52
  52. 52. Ecosystem, platform but also … Platform and Cloud Fluid Experience SoLoMo Copyright © William El Kaim 2014 53
  53. 53. Capitaine Train vs. Voyages-sncf Fluid Experience Copyright © William El Kaim 2014 54
  54. 54. http://www.google.com/hotelfinder/ Fluid Experience Copyright © William El Kaim 2014 55
  55. 55. The 4th Revolution – Travel as a service and Mobility Web 2.0 SOLOMO, Meta- Search, Ratings Pervasive access and usage of information pushed to people and connected objects: Open Data, Big Data, User Generated content, multimodal planner, etc. Mobility information natively supported in Calendar app, Operating System, voice activated virtual assistant, TV. Travel booking is now commoditized and offered by Retail and eCommerce online shops Local and domestic transportation offer challenged in real time by customers and usage New business models are emerging for renting vs. sharing vs. owning, impacting the transportation industry as a whole. GDS Travel Agent TMC/OTA Internet Search / Compare TaaS Mobility, Multimodal, real- time crowdsourcing Copyright © William El Kaim 2014 56
  56. 56. No one should ever forget the lessons of the previous travel industry revolutions New business models and new usages will emerge and new entrants will steal market share. Copyright © William El Kaim 2014 57
  57. 57. Fourth Revolution in Travel • All the disruptions forces will act to commoditize the travel industry and to make it pervasive (a kind of uber distribution through microservices). • Alibaba launched Alitrip & Amazon will resell hotels in 2015 • Travel As A Service (TAAS) will disrupt the ecosystem and today's alliances. • Concur being bought by SAP is the most visible example of that trend • We also see TMC buying/building technology companies (like Runzheimer buying ProcureApp or Serko buying inCharge ) instead of more booking volumes. • Travel will also be integrated in mobile Operating System (Apple iTravel, Google Now and search and Microsoft Travel), in calendar app (Tempo offering a good example of what could be done today), in TV, etc. Software will continue to eat the world Copyright © William El Kaim 2014 58
  58. 58. Alitrip from AliBaba Copyright © William El Kaim 2014 59
  59. 59. AlgoFly Latest French Metasearch Copyright © William El Kaim 2014 60
  60. 60. Capitaine Train https://www.capitainetrain.com/ Copyright © William El Kaim 2014 61
  61. 61. Apple PassBook JauntedCopyright © William El Kaim 2014 62
  62. 62. Traveler journey before Source: World Economic Forum/The Boston Consulting Group analysis Copyright © William El Kaim 2014 63
  63. 63. From Travel to Mobility: Multimodal & Door to Door • Travel today is more than just station to station; it is about door-to-door connectivity, thus giving rise to new market players offering integrated various modes to travel. Copyright © William El Kaim 2014 64
  64. 64. From Travel to Mobility: Multimodal & Door to Door Copyright © William El Kaim 2014 65
  65. 65. Mobility: Multimodal & Door to Door • Multimodal is a way to combine metro (subway), train, bus, bicycle, walk or car to go from one place to another. • The other terminology used is "door to door", in that case, you have to add taxi and black car (car with chauffeur). • Some important distinctions should be noted when speaking of multimodal search: • Planning vs.. Booking: some routing includes prices some not • Routing could be based on actual timetables or only on approximate ones • For example some do not use actual timetables (they use information like: 'one train every hour' and might then be wrong by up to an hour), most others do. • Multimodal is emerging mainly due to the high speed train network, but also to reduce CO2 emission. So they are generally also taken into account as search parameters. Copyright © William El Kaim 2014 66
  66. 66. Rome2Rio – MultiModal Search http://www.rome2rio.com/ Copyright © William El Kaim 2014 67
  67. 67. https://citymapper.com/ Copyright © William El Kaim 2014 68
  68. 68. Copyright © William El Kaim 2014 69
  69. 69. Scout http://www.scout.me/appCopyright © William El Kaim 2014 70
  70. 70. Google Now! Copyright © William El Kaim 2014 71
  71. 71. http://corp.smartaxi.me/ Copyright © William El Kaim 2014 72
  72. 72. Citroen Multicity http://www.multicity.citroen.fr/Copyright © William El Kaim 2014 73
  73. 73. Multicity is powered by Moviken Source : MobilicitéCopyright © William El Kaim 2014 74
  74. 74. Daimler Mobility Services Moovel Platform GottaPark Copyright © William El Kaim 2014 75
  75. 75. Resources Claudine O'Sullivan http://www.claudineosullivan.com/ Email : info@claudineosullivan.com Copyright © William El Kaim 2014 76
  76. 76. Twitter http://www.twitter.com/welkaim SlideShare http://www.slideshare.net/welkaim Linkedin http://fr.linkedin.com/in/williamelkaim Blog http://www.reimagine.fr/ Copyright © William El Kaim 2014 77

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