Iris Concise Digital Disruption & the Travel Industry

Presented by Ben Gill, February 2014

Contents 1. Digital Disruption 2. Travel trends 3. Trends that could affect hotels 4. What’s next?

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1. Digital Disruption “Changes enabled by digital technologies that occur at a pace and magnitude that disrupt established ways of value creation, social interactions, doing business and more generally our thinking” (Riemer, 2013)

.

Unveiling of the new Pope in 2013

Unveiling of the new Pope in 2005

The world is changing fast

Digital Disruption is everywhere

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The greats are falling

Blockbuster’s timeline

1985: First Blockbuster store opened in the US

1998: Netflix was founded

1999: Blockbuster IPO, valued at $4.8 billion

2003: Netflix posted its first profit, earning $6.5 million on revenues of $272 million

2006: Blockbuster was valued at $500 million

2008: “I’ve been frankly confused by this fascination that everybody has with Netflix… Netflix doesn’t really have or do anything that we can’t or don’t already do ourselves.” - Blockbuster CEO

September 2010: Blockbuster filed for bankruptcy in the US

January 2013: Blockbuster went into administration in the UK

6 (Fast Company, 2010)

Mobile is exploding

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Traditional PC shipments to decline 11% in 2013, while tablet shipments increase 68%

(Gartner, 2013)

In 2014, there will be more than 2 billion smartphones globally (Forrester, 2014)

We’re now in the “Age of the Customer”

(Forrester, 2011)

2013/14: Amazon ASOS TripAdvisor Netflix

2. Travel trends

Technology is the most important trend affecting the travel industry

Key trends in travel

1. Mobile

2. Metasearch

3. Peer-to-Peer businesses (the “sharing economy”)

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10 (Hotel News Now, 2014)

1. Mobile is king

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Mobile travel bookings are projected to comprise over 25% of the U.S. online travel market in 2015, up from 2% in 2011 (Phocuswright, 2013)

45% of hotel guests travel with two devices and 40% with three or more (Tnooz, 2013)

2. Metasearch is disrupting the OTAs

2012/2013: Metasearch was so hot • Priceline bought Kayak for $1.8 billion

• TripAdvisor launched its own metasearch

• Expedia invested in Room77 and $632 million to take a 62% stake in Trivago

• Google integrated flights to Google Maps

“Metasearch absolutely exploded on a year-to-year basis” – Expedia CEO (2013)

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2014: It’s time for Multi-model Search

Google has already begun incorporating flight search into its driving directions in its Maps tool in some of its markets. Startups like Rome2Rio have added point-to-point price estimates to their tools, while startups like Wanderio and GoEuro are gaining share in their markets

But Google is taking over the travel world…

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The integration of Flight Finder and Hotel Finder into Google Maps means they can own the entire customer journey.

3. Peer-to-peer travel sites are growing rapidly

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• Avis bought Zipcar for US$500 million in 2013

• OTAs are now listing properties from Airbnb, HouseTrip and HomeAway

• TripAdvisor now has more than 500,000 vacation rental properties listed, in

addition to its 758,000 hotels and B&Bs

Rental accommodation Tours and guide services Car sharing services

3. Trends that could affect hotels

Threat: Peer-to-Peer accommodation

• 4 million guests had used Airbnb by the end of 2012

• By the end of 2013, it was 10 million!

• > 550,000 properties worldwide

• They expect to outnumber IHG and Hilton hotel rooms in 2014

16 (Tech Crunch, 2013)

Opportunities: metasearch & mobile

17 (PhoCusWright, 2013)

Last minute bookings Concierge apps Daytime only rentals

“For work, rest and rendez-vous...”

65% of people who book a hotel room within 24 hours of checking in do so from a mobile device (Expedia, 2013)

Build a digital bridge with your customers and engage with them before, during and after their trip.

4. What’s Next?

The 2013 Gartner Hype Cycle for Emerging Technologies

19 (Gartner, 2013)

Emerging technologies relevant to travel

20 (Gartner, 2013)

expectations Gamification

Augmented Reality

Biometric authentication methods Volumetric and Holographic Displays

Autonomous Vehicles

Speech-to-Speech Translation

Big Data Content Analytics

Virtual Assistants

Quantified Self

Electrovibration

Affective Computing Prescriptive Analytics

Mobile Robots

Natural-language Question Answering

Wearable User Interfaces

NFC

Virtual Reality

Location Intelligence

Predictive Analytics

Speech Recognition

Emerging technologies to get excited about

21 (Gartner, 2013)

expectations Gamification

Augmented Reality

Biometric authentication methods Volumetric and Holographic Displays

Autonomous Vehicles

Speech-to-Speech Translation

Big Data Content Analytics

Virtual Assistants

Quantified Self

Electrovibration

Affective Computing Prescriptive Analytics

Mobile Robots

Natural-language Question Answering

Wearable User Interfaces

NFC

Virtual Reality

Location Intelligence

Predictive Analytics

Speech Recognition

Summary

Technology will have the biggest impact on the travel industry in the immediate future

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It will disrupt (and destroy) But also create many new sources of

revenue for those that can adapt

Any questions?

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Get in touch: ben.gill@iris-worldwide.com

References

Euromonitor (2013): World Travel Market Global Trends Report 2013

Forrester (2014): Predictions 2014: Mobile Trends In eBusiness

Gartner (2013): Gartner's 2013 Hype Cycle for Emerging Technologies Maps Out Evolving Relationship Between Humans and Machines

Hotel News Now (2014): Venture capitalists spot 3 tech travel trends

Phocuswright (2013): European Online Travel Overview

Riemer (2013): What is Digital Disruption? (Part 1)

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Appendix

Technology definitions

26 (Gartner, 2013)

Technology Definition

Affective computing Affective computing technologies sense the emotional state of a user (via sensors, microphone, cameras and/or software logic) and respond by performing specific, predefined product/service features, such as changing a quiz or recommending a set of videos to fit the mood of the learner.

Electrovibration Electrovibration is based on an effect in which touch receptors in the skin can be duped into perceiving texture. Electrical charges simulate the feeling of localized vibration and friction, mimicking shapes, textures and contours (such as the feel of a keyboard key or a button) on touchscreens on tablets and other mobile devices or product surfaces

Volumetric displays Volumetric displays create visual representations of objects in three dimensions, with an almost 360-degree spherical viewing angle in which the image changes as the viewer moves around.

Quantified Self

The Quantified Self is a movement to incorporate technology into data acquisition on aspects of a person's daily life in terms of inputs, states, and performance. Such self-monitoring and self-sensing, which combines wearable sensors and wearable computing

Prescriptive analytics Prescriptive analytics is the area of business analytics (BA) dedicated to finding the best course of action for a given situation. Prescriptive analytics seeks to determine the best solution or outcome among various choices, given the known parameters.

Speech-to-speech translation Automatic translation

Predictive analytics Predictive analytics describes any approach to data mining with four attributes: an emphasis on prediction (rather than description, classification or clustering), rapid analysis measured in hours or days (rather than the stereotypical months of traditional data mining), an emphasis on the business relevance of the resulting insights (no ivory tower analyses) and (increasingly) an emphasis on ease of use, thus making the tools accessible to business users.

Technology definitions

27 (Gartner, 2013)

Technology Definition

Big data High-volume, high-velocity and high-variety information assets that demand cost-effective, innovative forms of information processing for enhanced insight and decision making.

Gamification The use of game mechanics to drive engagement in non-game business scenarios and to change behaviors in a target audience to achieve business outcomes. Many types of games include game mechanics such as points, challenges, leaderboards, rules and incentives that make game-play enjoyable. Gamification applies these to motivate the audience to higher and more meaningful levels of engagement. Humans are “hard-wired” to enjoy games and have a natural tendency to interact more deeply in activities that are framed in a game construct.

Mobile robots A mobile robot is an automatic machine that is capable of movement in any given environment. Mobile robots have the capability to move around in their environment and are not fixed to one physical location Mobile robots are also found in industry, military and security environments. Domestic robots are consumer products, including entertainment robots and those that perform certain household tasks such as vacuuming or gardening.

Natural-language understanding (NLU)

Natural-language understanding is the comprehension by computers of the structure and meaning of human language (e.g., English, Spanish, Japanese), allowing users to interact with the computer using natural sentences.

Gamification The use of game mechanics to drive engagement in non-game business scenarios and to change behaviors in a target audience to achieve business outcomes.

Wearable User Interfaces Wearable computers and their interfaces are designed to be worn on the body, such as a wrist-mounted screen or head-mounted display, to enable mobility and hands-free/eyes-free activities.

Content analytics Content analytics defines a family of technologies that processes content and the behavior of users in consuming content to derive answers to specific questions. Content types include text of all kinds, such as documents, blogs, news sites, customer conversations (both audio and text), and social network discussions.

Technology definitions

28 (Gartner, 2013)

Technology Definition

Virtual Assistant A virtual assistant (VA) is a conversational, computer-generated character that simulates a conversation to deliver voice- or text-based information to a user via a Web, kiosk or mobile interface. A VA incorporates natural-language processing, dialogue control, domain knowledge and a visual appearance (such as photos or animation) that changes according to the content and context of the dialogue. The primary interaction methods are text-to-text, text-to-speech, speech-to-text and speech-to-speech.

Augmented Reality (AR) The real-time use of information in the form of text, graphics, audio and other virtual enhancements integrated with real-world objects. E.g. Blippar and Aurasma apps

Near Field Communication (NFC)

Contactless payment technology enables payment transactions via a contactless chip embedded in payment cards, tags, key fobs and mobile phones.

Virtual Reality Virtual reality (VR) provides a computer-generated 3D environment that surrounds a user and responds to that individual’s actions in a natural way, usually through immersive head-mounted displays and head tracking.

Biometric Authentication Methods

Biometric authentication methods use biometric characteristics or traits to verify users’ claimed identities when users access endpoint devices, networks, networked applications or Web applications.

Location intelligence Location intelligence (LI) is a business intelligence (BI) tool capability that relates geographic contexts to business data.

Speech recognition Speech recognition systems interpret human speech and translate it into text or commands. Primary applications are self-service and call routing for contact center applications; converting speech to text for desktop text entry, form filling or voice mail transcription; and user interface control and content navigation for use on mobile devices, PCs and in-car systems. Control of consumer appliances (such as TVs) and toys is also commercially available but not widely used.