Greetings from the Happy Booker!

Travel is not a dull industry -- just in case you were wondering.
Witness some recent industry moves:

• Travelocity implemented its new flight shopping interface, Flight Navigator, which merchandises airline flights -- an industry first. Travelocity also signed a plum new customer -- American Express -- in what can only be described as a "If you can't beat 'em, join 'em" strategy.

• Expedia, meanwhile, rebranded its in-hotel kiosk desks, which sell destination tours and activities, as Expedia!Fun, and beefed up its hotel content and functionality.

• Delta Air Lines overhauled its domestic fare structure and made Delta.com its focal sales point for these new fares.

• Marriott enhanced Marriott.com with functionality that lets guests pre-order room service or reserve other hotel services before they arrive at their hotel.

• Both American and United, recognizing that best-rate guarantees work with travelers, joined Continental and Northwest in offering these guarantees for domestic tickets bought via their Web sites.

• Several US network airlines began processing bookings through G2 Switchworks, the new travel distribution system.

Differentiation starts by recognizing who will respond to these efforts -- the customers who will be on the leading edge of additional revenue.

A good group to start with are quality-focused travelers, or QFTs. They account for 21% of US leisure travelers and 27% of US business travelers. And while some buy premium products, like business-class air or club-level hotel rooms, they're not all fancy. QFTs focus on overall value. They're less likely than others to use price as their primary purchase criterion, but they're far from pushovers -- QFTs are more likely than other travelers to shop around when buying travel.

Supporting this desire to differentiate is the free fall in the number of brand-loyal travelers. The number of US business travelers who view themselves as brand-loyal declined 20% from 2002 to 2004 -- among leisure travelers, it fell a whopping 26%. Tried-and-true tricks, like loyalty bonus points or upgrades, aren't going to cure this puppy. Instead, travel companies must embrace a new approach to marketing that my colleague Hellen Omwando created -- it's called symbiotic loyalty, and it is based on emotive, social, and dynamic connections between customers and companies. It's some of the finest research Forrester has produced and is a fantastic read.

There's no shortage of innovation in the travel industry -- after all, this isn't an industry for slackers. We expect to see the pace of innovation increase throughout the year, as GDSs respond to the challenges posed by new entrants like ITA Software and G2, as technology allows companies to do more with their Web sites and kiosks, and as travel firms start exploring what role tools like instant messaging can play in their customer communications.

While that certainly means I'll have no shortage of topics to research, I want to be sure I'm writing what's of interest to you. Please feel free to email any research suggestions to me at hharteveldt@forrester.com. It's always a pleasure to hear from you!

With kind regards,

Henry H. Harteveldt

Research Referenced In This Issue Amex/Travelocity: If You Can't Beat 'Em, Join 'Em (36144) IAC Reclassification Will Help Travel Units Soar (36177) Symbiotic Loyalty (34253) The Quality-Focused Traveler (35567) Travelocity's New Flight Navigator Soars (35794) Trends 2005: Travel Distribution (35555) Trends 2005: Travel Web Sites (35741)

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