Lead Analyst - Luke Bujarski
Take a look at the latest Apple Maps app to understand the company's evolving ambitions in travel and tourism. Maps has gone a long way from its bumpy 2012 launch, and Tim Cook's public apology explaining why Google Maps no longer came installed on iPads and iPhones. Fast forward three years and Apple has made some significant improvements to its mapping feature that very clearly point to the company's deepening relationship with travelers.
The platform's content - i.e. business listings, transit, and traffic data - has dramatically improved (hotels thanks to Booking.com). Smartly designed recommendation icons give users a completely new way to explore and refine search results for restaurants and things to do nearby. How Maps interacts with the rest of iOS has also changed for the better; controlling both the hardware and software will become a significant advantage for Apple.
Ample business listings are important, but without consumer generated reviews Maps would be just that - a navigational tool rather than a customer engagement platform. Yelp is a big part of this equation. Apple leans almost exclusively on Yelp for its reviews in the U.S. market. Yelp would also benefit from more loyalty and commitment from Apple, as it makes strategic moves in Europe. There's also the less tangible albeit present compatibility in brand identity and leadership style that could make these two a good team.
Transforming the in-destination experience
Smartphones make it easy to navigate from point A to point B. Now they also tell us where to go. One swipe right from your iPhone (iOS 9) home page and you get to the new Siri suggestion feature. Options include recent contacts and apps, but also places nearby, organized around neat categories such as restaurants, coffee, shopping, and gas stations:
Click on any of these icons and Apple Maps will automatically open up and plot out your nearest available options. This "Nearby" feature is a great tool for locals (especially big city dwellers) and a game changer for visitors unfamiliar with local terrain. Opening the Apple Maps app reveals more recommendation categories to choose from, including a green themed travel icon:
This category format is essentially an extra layer on top of Maps normal search feature. Searches based on keywords alone ("restaurants", for example) often produce mixed results displaying everything from bars to diners to five-star establishments to grocery stores. These new suggestion categories are much more targeted and curated. Press on the "Food" icon and the categories expand even further into groceries, fast food, coffee shops, bakeries, and more. Clicking on the green travel icon produces these results:
Press the hotels icon and the populated results will look similar to this:
The biggest criticism over Apple Maps has always been content, or the lack of it. This has improved dramatically over the last year, especially for big cities. In addition to more business listings, public transit schedules and route recommendations (at least for New York City) are now available on Maps. Apple Maps users now outnumber Google Maps for iOS users.
Apple has also been bulking up its business listings inventory over the last couple years. In 2014 and 2015, the company partnered with these companies for business listings data: Acxiom, DAC Group, Das Ortliche, and last but not least, Booking.com. Apple also absorbed a few mapping tech and design studios to help out with the project. Companies like Mapsense, Broadmap, and Embark were picked up to help with projects like the popular Apple Maps flyover feature.
Apple and Yelp make a good team
Apple would be wise to push for closer ties with Yelp. Its Maps feature relies almost exclusively on Yelp for its reviews of restaurants, hotels, and other local services. Building up its own reviews inventory would take time; Apple doesn't seem interested in doing so, either. Users that want to leave a business listing review on Apple Maps get redirected to Yelp.
An acquisition by any one of the numerous suitors eyeing Yelp could also put Apple Maps in a vulnerable spot. Yelp would be a nice-to-have for a Google or Facebook or Alibaba or Rakuten. But Apple's relationship with Yelp, through Maps, is much closer and symbiotic. A Yelp sale to Google would pose the biggest direct threat to Apple. Tim Cook and team would clearly want to avoid a scenario where Yelp gets absorbed into powering Google apps exclusively.
The good news for Apple is that Yelp CEO Jeremy Stoppelman rejected purchase offers from Google and Yahoo. Yelp and Google have had bad blood over search rankings and how that impacts traffic to Yelp. Teaming up with Apple also makes sense for Yelp because Apple Maps currently uses other review sites for their European users - TripAdvisor and Booking.com among them. Closer ties with and loyalty from Apple would bring Yelp closer to the European market, something that the company has strategic interests in. The company acquired its biggest European rival Qype back in late 2012 for USD 50 million.
With Yelp stock prices slumping and a shaky outlook for equities markets globally, teaming up with Apple makes more sense. It would be a hefty acquisition and counter to Apple's typical go-at-it-alone strategy. But with the growing strategic importance of Maps as an integrated function of iOS, Yelp could be worth the investment.
Flights and Hotel Bookings Could be Next
Maps, for both Google and Apple, are becoming a core touch point through which these companies interact with the travel consumer, because maps allow the user to visualize the entire trip from start to finish. Apple already has a business listing partnership with Booking.com. Building out a hotel meta search feature similar to the one available on Google Maps would be a natural next step.
Flights will also eventually become integrated into Apple Maps. If paired up with Maps, a meta search flights engine would offer big potential upside for relatively little investment. Apple could build a proprietary application and plug it into maps with relative ease. In addition to driving, walking, and transit directions, Maps would offer a flights option for those trips involving longer distances.
Apple's journey into travel has only begun. The company has too many different travel consumer touch points to exploit and too many revenue opportunities to ignore. Everything from hotel and air distribution to inspiration, payments and reviews, in-destination activities and more. As travel and mobile computing converge, Apple Inc.'s role in travel will expand (in case there was an doubt).
The core advantage that Apple has over the likes of Expedia or Priceline or Uber is that Apple owns both the hardware and the software. Apple gets to control how these apps and its own branded solutions integrate and interact within iOS. All of these companies will start to bump heads more regularly, as the travel industry consolidates. Owning the hardware and operating system on which the competitive battle wages will play to Apple's advantage.
In a way, Apple has taken the reverse journey into travel by attacking the in-destination challenge first. Maps will give it a leg up on this critical and hotly contested piece of the travel consumer journey. It's something that Priceline, Expedia, and TripAdvisor are now scrambling to figure out. Arguably, Apple is ahead of the tours and activities pack with Maps. Any small tour operator or local shop owner targeting tourists would be wise to make sure their listing pops up in the right Apple Map categories.