Travel & Tourism Technology Trends

Michelle Peluso, CEO of Travelocity focused her talk on improving the user interface for consumers of travel products. The presentation was the first of an excellent series of presentations by top brand executives. Here is a summary of her presentation and my commentary from the PhoCusWright Conference 2007 in Orlando.

Ms. Peluso’s opening comment was that the collective travel user interface needs be bigger and bolder, but that I believe she was referring to the need to provide more overall experience for the end consumer, rather than simply providing an interface to purchase travel products. She continued by pointing out that:

1. Economy – Load factors are at all time high. Home mortgage crisis is resulting in reduction in discretionary income.
2. Customer satisfaction – Research indicates travel customer service is declining. Most travelers view IRS as more satisfying than dealing with airlines.
3. Suppliers, OTA, and Airlines are not as competitive as many initially thought. Customers are more sophisticated and are visiting different sites because they are looking for a different value proposition. 46% start at supplier and book with supplier. 42% start at OTA and book with OTA. Therefore, the research supports that people are not jumping between sites as much as people originally thought. Therefore, there is great value for suppliers to be in the Travelocity channel. Channel shifting has tailed off, therefore, there is huge opportunity to work together to improve customer service.

OTAs and suppliers need to realize that they need more tools to help travelers to dream and plan and then save the information so that they can book the trip later on. More technologies need to be put in place that allow consumers to share and save ideas with others. Ms. Peluso stated that travel is social so there is a Travelocity component that will be integrated with Facebook.

The lynch pin to success has to be more customer service. What do we do to improve customer service? Provide consumers with more tools and information, better maps and messaging so that consumers can get the information that they need in order to meet schedules and everyone one has to get better at supporting their customers.

For example, Travelocity’s pro-active alerts have resulted in higher satisfaction. To that end, Travelocity also has excellent data that can be shared with suppliers to improve supplier communications with travelers.

Randy Petersen from Webflyer.com asked Ms. Peluso how Travelocity is dealing with mistake fares. Ms. Peluso stated that Travelocity has developed an early warning system that alerts when pricing is off by a particular average from their historical value.

Steve Hafner from Kayak.com asked whether Travelocity is like Expedia ( ie. Big), Priceline (ie. Well Managed), or Orbitz (ie. Small but with Big ambitions). Ms. Peluso indicated that Travlocity is focused on investing in convergence of technologies across the board. She believes that price is only one part of the equation. Although this didn’t directly answer the question, she indicated that Travelocity is working on differentiating itself from the other players by focusing on overall value instead of pushing low fares and cheap hotels.

Mark Hoffner from Travel Abroard asked whether Travelocity is evovling from a transaction base to a social base. Ms. Peluso answered that Travelocity is focusing on trying to find ways to improve the customer experience regardless of why they are at the site. For example a business user will have a very different experience then the leisure traveler. This ties in with her earlier comments about providing overall value and extending the business model to include the dream, plan, go, and reminisce components of the travel life cycle.

Bill Furlong from Escapia.com asked how OTAs get more specialized content (ie. long tail product). Ms. Peluso noted that there is a big opportunity to bring this type of information into the Travelocity because they can’t and won’t replicate this information on their own since there is simply too much of this content and it is too cost ineffective to manage.

The presentation concluded with a few additional comments about Travelocity’s recent booking fee increase. Ms. Peluso again re-iterated that their belief is that if you add value for the customer, that the customer will be more willing to pay a little extra for that service. Providing the best customer service and the lowest prices is a zero sum game and is simply not sustainable for the long term.

* For more information about Michelle Peluso, take a look at this BusinessWeek.com profile.