Location-based tech tracks -- and sells -- to travelers

— -- Befitting an airline headquartered near Silicon Valley, Virgin America turned to the smartphone to promote the opening of its new hub at San Francisco International's Terminal 2 in April.

Known for its social-media initiatives, the airline encouraged customers to announce their presence at the terminal by digitally "checking in" using Facebook and Foursquare, a mobile application.

People atop its "leader board" were given status icons — "Ground Crew" to "Navigator" to "Captain" — and would be eligible for awards, such as store coupons and flight discounts.

Virgin America is one of a handful of travel companies that are early adopters of location-based mobile technology that monitors people's whereabouts and delivers their spending and travel habits.

The travel industry is hardly alone in salivating at the new sales opportunities made possible by a large segment of people who are willing to broadcast their whereabouts. But with their expertise in capturing the business of people on the move, hotels, airports and airlines view the location-based technology — or hyper-proximity marketing, or geo-tagging — as the next important marketing frontier, particularly in targeting young, hip customers.

That it taps into a long-held assumption that people are more open to new ideas and suggestions when they're on the road adds to the appeal.

"Mobile technology can significantly affect the bottom line," says Dan Gellert of Gateguru, an airport guide map that's using the technology to deliver airport deals to travelers. "The accuracy of information and communicating with travelers in real time can drive a significant amount of users in the direction that (vendors) want."

In short, the travel industry wants to know where you are — preferably, at all times — because you may be buying things where you are at this very moment.

Privacy concerns

Tracking people comes loaded with a host of privacy concerns. More than 60% of respondents in a 2010 survey by Microsoft said they were concerned about location-based profiling.

"Your mobile phone will become the device you use to interact with the world around you," Thomas Husson of travel research firm Forrester writes of the technology. "This will raise growing concerns about risks to lose personal information or to share location information with people and organizations you don't want to have it."

Delivering convenient services and good deals would help travelers overcome the fears, he says.

Few travel companies are sure of long-term benefits even as they muddle through the new technology, which ranges from simply linking Google Map views of nearby hotels to partnering with smaller tech companies that specialize in the segment to deliver coupons and alerts.

Only about 4% of adults have used their smartphones to tap into location-based social networks, such as Foursquare and Gowalla, a Forrester Research assessment in December found.

"Companies seem to be struggling as to how else they can apply this technology," says Chuck Sullivan, Hilton Worldwide's senior vice president of global online services.

Looking for likely buyers

Still, the technology's marketing promise — providing the location and a better idea of what travelers may want at any time — has been too tempting for hotels and airlines to resist.

The travel industry is also betting that people who broadcast their location through digital check-in are more likely to buy.