Crosscutting: Innovation x Travel & Leisure
Culture Cut: Travel agents have been helping travelers get from ‘a to b’ since Thomas Cook (TCG) founded the modern travel agency in the 1850s. Functioning as market makers, travel agencies survived for decades as the only mass outlet for airlines, cruises, and hotels to distribute and sell their products. The internet changed the role of the travel agent and their business model overnight. Now consumers are the travel agents - researching and purchasing travel products, and sharing these branded experiences through social networks and media.
Commerce Cut: U.S. travel market (e.g., airline, lodging/hospitality, car rental, cruise, tour, travel agency sales, vacations), annual sales are conservatively $270-$300B. The online travel agentindustry (OTAs) is a highly concentrated market dominated by four brands who control 97% of the category activity: Expedia (EXPE), Priceline (PCLN), Orbitz (OWW) an, owned by Texas Pacific Group and Silverlake Partners, which owns the Travelocity brand.
Travelocity is the second or third largest OTA with 2009 annual revenues of approximately $10B+. The category has grown through acquisition; Travelocity buying Lastminute.com, Europe’s leading independent online travel group, and Zuji.com, an Asian market OTA. Expedia owns Hotwire.com, and Orbitz owns Cheaptickets.com.
Crosscutting: We travel through different Cultures to discover and make connections we otherwise couldn’t make being limited by geography. Traveling is the nucleus of social media - we travel, experience, meet new people, and then return and report to anyone who will listen. Humans don’t need brands or instructions to find new experiences or adventures; consumers gain insight and make decisions in large part, based on what other people say. Most of us move in the same direction and we use social media and networks to stay on the path that Culture is pursuing.
Brand Opportunity: As Travelocity reviews its advertising strategy it should consider a singular focus that leverages one brand mark and identity. I think the gnome, while incredibly successful as an awareness tool, has lived its useful life. Travelocity provides a consumer benefit inherent in its name, but you’d never know it because it gets drowned out by the gnome, William Shattner, and the guy in the hovercraft. Of the four OTA brands Travelocity is the only one with travel in its brand name. Travelocity needs to get consumers to add "locity" every time they say ‘travel.’ I think there’s more room to travel in connecting the brand to the user.
What is the consumer experience and engagement model for Travelocity’s mission: committed to being the traveler’s champion - before, during and after the trip, providing the most comprehensive guarantee?
Market Risk: There is very little differentiation in the business models, value propositions and creative strategies of the top 4 OTAs. They all sell exactly the same product at generally the same price, exactly same way.
Be wary of Google’s (GOOG) foray into travel but appreciate their failures as a case study. Natural search begins with Google. Seventy-three percent of travelers search an average of 10-12 times before they book. And using Google products creates a natural preference for its ecosystem of adjacent experiences - maps, photos, video, the ‘local modules.’