May 10, 2011

The TED Conference produces many exceptional ideas worth sharing and the one by Rory Sutherland explaining “intangible value” could be a beacon for the travel industry. By coupling his concepts with the recent Online Travel Alliance semantic and ontology initiative, the industry could use data to drive innovation and profits in a new direction.

Intangible value transforms the known and the normal into the unique and the extraordinary. We know it’s more than a Boeing 737, Ford Focus, Sealy mattress when the brand experiences of Southwest, Avis, and Marriott are added. And value, both tangible and intangible, must be added and maintained in order to develop loyalty, growth and profitability.

The travel industry has a history of adding value by making the discovery and purchase of its products and services fast and focused. Viewed through the lens of technology, we can see how shopping and buying travel products have changed over the past 40 years. Large volumes of perishable inventory, with real time consumption and variable pricing was the ideal product to be managed by new and affordable mainframe computers of the 1970’s. Data was structured and processed, then widely distributed to a highly informed network of professional agents who took the data and enriched it with their personal knowledge and intimate relationship with the traveler.

[see this article as published at Tnooz.]

As we know, the PC and Internet disrupted the ecosystem and helped transform much of the business into a self-service, always-on, multiple choice, zero friction vending machine. The buying process got simplified into the travel troika: time and place differentiate by price. By presenting countless pages of data structured this way, we have convinced consumers they are buying interchangeable commodities. Even one of the newest search agents, Hipmunk, differentiates by an “agony” rating that reports process issues, not brand value or product differences.

So when you combine this product attribute troika with self-service ease and convenience, then offer huge volumes of choice, who could resist the belief they made the best buying decision.

There’s no push back, no supplemental suggestions, nothing to enrich or add value, no visible differences in what you just bought.Semantic technologies and a travel industry ontology can become the enrichment, differentiation, and brand value tools. Semantic technologies are able to add a level of “reasoning” that allow computers to offer solutions better tailored to the travel purpose and search objectives rather than just the search words. A business trip, family vacation, bereavement fare, and alumni reunion all represent different travel activities with a cascading decision tree and value of different types of travel options.

Unifying these travel options among and across trading partners and third party entities can be most efficiently accomplished using a travel ontology; defined at Wikipedia as “a formal representation of knowledge as a set of concepts within a domain, and the relationships between those concepts.” In other words, the words like “family vacation” have exact meaning and can be used in precise ways relative to party size, presence of children, types of activities, etc.

An ontology is used to describe a domain and may be used to reason about the entities within that domain. While the “knowledge” is necessary it’s the “reasoning” that generates huge value.

With knowledge and reasoning come product differentiation and channel segmentation. A searcher could be characterized as a “frugal spender” having downgraded from First to Business class, choosing a standard room, and renting a compact car. The person renting a higher priced mini-van might be “big & tall” and thus be willing to pay extra for premium or exit row seating and a king size bed. These and many other characteristics can be gleaned from behavioral ad targeting, loyalty profiles, data vendors like RapLeaf, or by simply asking.

Once collected, this traveler profile can be passed among trading partners using industry standard ontologies or unique “synthetic” categories defined by two or more companies. A synthetic category might be “alumni reunion” with certain attributes promoted at certain sites as if it were a package deal; specific details could vary by channel and trading partner with minimal programming or development resources. In fact, once adopted, the ontological foundation could yield far higher development efficiencies than other types of structured data processes.

The end result could be an enriched buying experience driven by customer needs and desires rather than product availability. Using semantic technology will permit companies inside and outside the travel industry to talk the same language and have the computers reason a superior and tangible value.

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