PhoCusWright Predicts Strong 2008

What's new in technology and marketing? The research company PhoCusWright has released a sampling of its view of trends in the travel industry in 2008. In the past year, so-called "long tail" economics brought a plethora of niche strategies to what has truly become a global travel industry, PhoCusWright says. All signs point to a dynamic and highly competitive travel marketplace in 2008.

Opportunities are wide open, and private equity continues to transform the industry amid ongoing consolidation-even as start-ups emerge, according to PhoCusWright. Consumers are doing more travel-related activities online than ever before, resulting in both additional ways to connect with them and a mighty battle for their attention.

In the year ahead, PhoCusWright sees the following: 2008 will be the year that promise of mobile travel booking is realized. Apple's iPhone makes it clear that smart design can make rich content accessible on smaller mobile devices, and a confluence of factors will make application development highly appealing, the research firm says.

PhoCusWright also projects that consolidation will continue, most likely in areas where multiple service providers offer undifferentiated services or growth is stagnating, in emerging markets where successful travel start-ups are likely to be gobbled up by larger fish (read: India) and in niche sectors that require mergers in order to reach critical mass. 2008 will be a model year for both consolidation and industry innovation, the research group says.

In addition, PhoCusWright says online social media and e-commerce will converge-but not without a few growing pains. The marketing potential of these networks makes their commercialization inevitable. Initiatives like Google's OpenSocial, aimed at enabling developers to create applications that will work on any participating social network, will help drive growth, providing critical mass and incentive for travel companies to develop applications.

Just when some had started to question whether meta-search would ever live up to the hype, 2008 may see this technology getting the jolt it needs to go mainstream. Innovative new entrants such as Farecast and the planned merger of Kayak and Sidestep are likely to provide the increased press and consolidated consumer power that meta-search needs.

PhoCusWright had wondered in previous years why online travel agencies didn't adapt their business models in order to capitalize on all their search traffic. In late 2007, Expedia took a bold first step, announcing a new pricing model that blends transaction pricing with media pricing. Other online travel agencies will be watching Expedia's business model experimentation closely, so don't be surprised to see a second online travel agency making a similar move in the coming year. Visit (GD)

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