In 2007, Long Tail economics brought a plethora of niche strategies to what has truly become a global travel industry.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 amidst ongoing consolidation—even as new Travel 2.0 startups emerge. Consumers are doing more travel-related activities online than ever before, resulting in both more ways to connect with them and a mighty battle for their attention.

Each January, PhoCusWright takes stock of where the industry has been and where it’s going. In the spirit of the new year, below is a sampling of the trends that PhoCusWright analysts believe will transform our industry in 2008:

Mobile Gets Connected—Finally!: Industry pundits have been touting the promise of mobile travel for years, and 2008 will be the year that promise 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.

Consolidation Continues: Consolidation often comes along with periods of travel industry innovation, and 2008 will be a model year for both. Likely consolidation targets include areas where multiple service providers offer undifferentiated services and where growth is stagnating, emerging markets where successful travel startups are likely to be gobbled up by larger fish (read: India), and niche sectors that require mergers in order to reach critical mass.

Social and E-Commerce Approaches Converge: 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 to drive growth, providing critical mass and incentive for travel companies to develop applications.

Metasearch Comes of Age: Just when some had started to question whether metasearch 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 metasearch needs.

Media-Based Pricing Shakes Things Up: PhoCusWright 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—don’t be surprised to see a second online travel agency making a similar move in the coming year.

These trends are discussed in much greater detail in PhoCusWright’s article, “In With the Old, In With the New”, one of many publications available to PhoCusWright’s Global Edition subscribers. The Global Edition is a syndicated research service featuring an efficient feed of business and competitive intelligence for the corporate and leisure travel, tourism and hospitality marketplace.

PhoCusWright is launching a study on The Future of Mobile Travel—one of the trends listed above. The study will leverage in-depth interviews and surveys with suppliers, online travel organizations, GDS and technology providers and corporate travel organizations to uncover key trends and opportunities in this emerging space.
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