The US$1.2 trillion global travel industry is accustomed to innovation. New technologies have sparked imaginations and spurred thousands of companies - from startups to established businesses - to create the means to better serve suppliers and travelers.
NB: This is an analysis by Caryn Smith, research analyst with Phocuswright
But innovations also mean challenges - in the form of disruptions and transformations to the industry - and result in successes and failures along the way.
Since 2008, Phocuswright's Travel Innovation Summit (TIS) has provided a platform for industry visionaries to promote their ideas globally, gaining new partners, customers and suppliers in the process.
And they've received monetary support - to date, 153 TIS innovators have realized more than $1.3 billion in funding and acquisitions (excluding IPOs).
Travel Innovation in Context
While many innovations are found in emerging and established businesses, the number of startups (and level of investment in these new companies) can be considered a proxy for the level of innovation in an industry.
Between 2005 and 2013, the travel industry attracted more than 700 startups and more than $4.8 billion in investment .
Travel innovation is manifest in
- new business concepts
- distribution patterns
- sources of content
- approaches to customer service and customer engagement
It emerges from confronting industry challenges such as
The 2014 TIS Innovators
- suppliers with expiring inventory
- fragmented supply
- complex travel planning
- travel cost and management concerns
- health insurance issues
- intricate revenue management processes
- distribution channel battles
- addressing the needs and expectations of global travelers
Participants in the 2014 TIS represented a diverse mix , addressing key market challenges and opportunities while leveraging advanced tools and technology.
The 2014 TIS innovators include 11 startups, 11 emerging and 10 established companies.
Geographically, 50% are US- based, 28% are headquartered in Asia Pacific, 19% are based in Europe/UK and 3% are from the Middle East.
Seven of the innovations focus on B2C applications, with the remainder B2B, B2B2C or hybrid models.
Compared to the 2005-2013 startups profiled by Phocuswright and used as its proxy for innovation, the 2014 TIS innovators have a stronger focus on four vertical categories
- itinerary planning and management/inspiration
- insurance/brand protection
- ground transportation
On the other hand, they focus noticeably less on categories such as air, hotel and private accommodations.
Relative to the horizontal categories represented by the same startups, TIS innovators have a stronger focus on four categories:
- data analytics
- brand and data protection/insurance
- retail shopping
Advertising, peer-to-peer, rich media/video and mapping solutions are notably absent among the innovators, while search, mobile and social networking/user-generated content are less visible compared to the broader group of startup companies.
Content and deals are at or about even.
What can we expect from the 2015 innovators? Judging by the audience response at the 2014 event, we might see increased emphasis on big data and new school innovations for old school channels.
Switchfly conducted a survey of what Americans expect from the travel booking and planning process in 2020. The survey found that, by 2020, 72% of Americans expect travel to be personalized while 14% still plan to book travel through a travel agent. The survey also found that 18% expect to talk to a robot they believe will be more helpful than a person.
Will 2015 be the year robotics innovators join the stage?
Even if robotics begins to take center stage, innovators will certainly bear in mind that we humans are still the customer: Never underestimate innovations used to make consumers' lives easier.
And if we find innovators with improvements to solutions we have seen before, they should consider the words of General Catalyst's Joel Cutler: "If you're going to do something someone's already done before, you'd better do it 10 times better."
Either way, we can be certain that TIS 2015 will offer another day of absorbing, applauding and, in some cases, questioning some of the travel industry's newest ideas and innovations.
NB1: This is an analysis by Caryn Smith, research analyst with Phocuswright. It appears here as part of Tnooz's sponsored content initiative.
NB2: Innovators take the stage at Phocuswright’s European travel innovation event of the year. Attend to catch the action.
NB3: Ideas image by Shutterstock