Holiday Break and Wishes - Back Jan 8 (or so)

Merry Christmas, Happy Hanukkah, Seasons Greetings, Happy New Year etc. My best wishes to all for the break. Hope you have a chance to have some time off to rest, play and catch up with friends and family. I am going to take a little break from posting (unless I can't help myself). Am aiming to be back on the blog around January 8 (maybe 15). It is looking like a beautiful summer in Sydney so I plan to enjoy myself.

Thanks for being a reader over the last six months or so. Thanks to the comment posters for adding to the experience and keeping the volume of Travelport posts in check. And thanks to those other bloggers that have shared the link love this year including Travolution, Hotel-Blogs, dottourism, HotelReview, Social Media on the Fly, our Spanish friends Megustaelturismo, Go Man Go and even those crazy sploggers that somehow think they can make money out of stealing my posts and surrounding them with gibberish (here's an example).

All the best to you and yours and see you in 2007

Farewell Netus

I have been spending the last twelve months deep in the Internet venture capital world working for the News Ltd funded VC firm Netus. Has been a great year working under e-industrialist Daniel Petre and working on some of most exciting areas in new media. However I have realised over this time that my career goals no longer sit with corporate development and investment areas which dominated so much of my early career as a lawyer. Instead, I crave a return to the challenge and buzz of managing a large team of people with a P&L/revenue focus that was (up until recently) my main focus. Naturally I will stay in the Internet arena but on the operational side rather than investing.

It has been great to come to this realisation but once I did, sadly, I had to resign from Netus. I will take the next few months off to work on a few private projects and rest on the beach with my kids before announcing my new plans. You can stay in touch with me through my BOOT email address or my linkedin profile.

Planes, Trains and Accor-deals

Another inventory/supply deal for Bezurk has been announced. This one with Accor. I have talked in the past about how content deals should be the main focus of Bezurk - and all meta-search players - ahead of the more sexy/apparently appealing distribution deals. This is a particularly good inventory provider to have access to as Accor have been holding back inventory from a lot of the online companies. The margin is likely to be terrible (10% range) but it will give Bezurk a differentiation versus other players.

On the eve of the announcement of the deal I ran into Founder and CMO Craig Hewett on the train. He is looking confident and should be pleased with the state of the product.

Travelocity could get distracted looking out the Window

Hoping to cash in on the... Trying to generate traffic through improved SEO... Giving their editor-in-chief a place to... Improve customer loyalty through putting a face to the brand...

I don't know why but Travelocity have launched a blog called the Window Seat. I get the business model based on generating huge amounts of traffic and the great SEO boost from large amounts of user generated content and reviews as captured in Sidestep buying Travelpost, Expedia when it bought Tripadvisor and Travelport's (original plans) when it bought asia-hotels. I also believe you do a lot to improve your relationship with your customer's when they can see behind the scenes in of the business through a corporate or CEO blog such as Tripadvisor's fantastic blog on actual customer queries.

But I do not see the benefit to Travelocity in setting up a generalist, editorially driven travel blog. The general travel blog is one of the top three crowded blog spaces on the planet (next to porn and tech). Sure Travelocity have a good writer in Amy Ziff but there are well established players here such as Gridskipper and uber blogs like RealTravel that collect together the blogs and commentary of others so Travelocity is entering this space late.

It is not just second mover status that makes me question this strategy, it is that by definition Window Seat cannot speak to all or even a majority of the huge customer base of Travelocity. The chances of Amy or her team writing anything that more than 5% of the Travelocity customer base is interested in is near zero. That has nothing to do with Amy's writing ability it is because there are just so many Travelocity customers from so many different countries - each with different ideas, plans and needs around travel - that it is impossible. Travel itself is a big category, combine that with hundreds of thousands, if not millions of different customers and you do not have a chance to target them in a single catch all blog. Travelocity would have to replicate the travel section of the local bookstore or newsagent to get close - with a blog for each of the major areas (backpacking, cruise, VFR, adventure, romantic, gay & lesbian etc...).

This is why UGC is so fantastic because each viewer/user/reader can find the other viewers/users/readers with the same interests without having to wait for the journalist to get round to it.

I like the look of the blog and I enjoyed this little piece on Venice but Travelocity should be spending its blogging time and energy helping IgoUgo catch up with Tripadvisor not musing on the fat content of pre-prepared food.

What is a frequent flyer worth?

If Qantas does go private - what will the new owners do with the frequent flyer program?

When frequent flyer programs became popular in the 80s in the US and 90s in Australia it was seen by airlines as a means for reducing price competition. The hope was that you would lock in a customer in such a way that it would take significant price differences for them to shift to another airline. The advantages were obvious. The disadvantage was that it also made customer acquisition a little harder. Pretty soon every airline had a program up and running, it made it easier for each Airline to retain it's customers but harder to steam customers from another airline. If Airline A wanted to steal customer from Airline B it had to drop its prices dramatically or carry over the tier status of the customer to convince the customer to abandon years of miles and free booze in the lounge. Frequent flyer programs in competitive markets began to lock in the market shares of the players - strangely enough reducing competition. You can read more about this fascinating phenomenon in the book Thinking Strategically.

In Australia Qantas does not have this problem as it killed off its main frequent flyer competitor - Ansett Airlines. Virgin-Blue has just recently abandoned the Low Cost Carrier "code of conduct" that prohibits frequent flyer programs and launched one (Velocity) in late 2005. However the gap between the death of Ansett and the launch of the Velocity program allowed Qantas to not only grow its program dramatically but establish the Qantas Frequent Flyer program as the dominant rewards program in Australia. All airlines have made money selling/sharing points with alliance partners and other travel providers (hotels, cars etc) but Qantas have turned it into an art form allowing partners as diverse as real-estate agents, financial services providers, retailers, wine clubs, telecoms companies and more to buy points/miles and provide them to customers. It became possible to rack up hundreds of thousands of miles needing to eat a single airline meal.

There is now enormous financial value in the buying and selling of miles for Qantas (and other airlines). Canadian airlines actually spun off its whole frequent flyer program in July 05, Aeroplan, a business that is valued at the time at CAD$2bil (now about $900mm) based on 4.8mm members.

With the plan to privatise Qantas, questions are being raised about whether or not the soon to be new owners will want to spin off parts of the company such as catering, cargo and the frequent flyer program. Qantas are assuring their frequent flyers that it is "business as usual" including sending out a dedicated email to that effect. But with a value range of AUD$400mm to $2 billion (Australian newspaper article) it is almost certainly at the top of the list for the consortium that will be sitting on a debt pile in the AU$10billion range.

So - should you rush off and book your frequent flyer seat? The answer is yes - but not because Qantas may spin off the program. The answer is yes because there are simply too many frequent flyer miles in the world - including Australia. It is inevitable that over time the value of a frequent flyer mile will decline. Qantas re-valued the program about a year ago making it more expensive to buy international flight. They re-wrote the program in 2000 converting from kilometres to miles (effective 38% devaluation). AND - it costs of hundreds of dollars per "free" ticket.

As the Economist stated more than a year ago - it is like the printing of a currency by a failing state - the more the print, the less the value. So the more miles that Qantas sells into the market the more regular will be the "updating" of the program to find ways to reduce the value of miles. There is no need to use up miles just because of the sale of Qantas but my standing order advice is have to use up your miles on a regular basis. The winner is the person who had the most holidays not the one that dies with the most miles in the bank.

Here is a great post from a finance blog about other frequent flyer valuation activity in the US

Can't ingore $11billion

Have been trying to ignore the actual deal around the $11billion buy-out of Qantas as I wanted to focus my thoughts/rant on the Australian Government's constant screwing up of competition on the Pacific Route.

The story behind the deal is a simple/traditional PE deal - large US group (Texas Pacific Group) joins forces with with the Australian Millionaires Factory (Macquarie) and another Australian group Allco to de-list the Red Rat. I would normally say that owning an airline is a dangerous aim to have. The airline business is subject to constant out of your control shocks (SARS, War, Terrorism, etc), huge capital outlays for airlines and the number one cost element (gas) is not only variable but wildly so. However the Texas Pacific Group are good at owning airlines - they are credited with the turn around of Continental Airlines. Oh - and they now own Sabre. We always used to joke at Galileo that one way to protect segment fee margins was to own and airline...

eMarketer compares the numbers

I am usually bored by more reports of big numbers for the online travel biz as we really know all that we need to know in this area - the sector is proven, the sector is big. However will make an exception for eMarketer's comparative chart above as it gives a nice little summary of what each of the major research houses think about the US market. There is actually a lot of agreement between them. Estimating may become harder in the future if (as a result of both being/going private) Orbitz and Travelocity cease to break out their online sales.

50 of the best

Luggage on line have nice list of "50 of the best travel sites you probably never heard of". My favourite on the list has always been the Airline Meals site. I love this site - it is like a cross between food porn and trainspotting. Thousands of photographs and reviews of airline meals from the best in the world like SQ first class to the What The Hell Is That of Borat's favourite Air Kazakhstan.

The fantastic underground site not mentioned is SeatGuru - do not fly without looking here first. Shows you the layout of each of the major configurations of each of the major airlines - which seats to look for and which to avoid. Green for good, yellow for something to note and red for reach for the sleeping tablets. Even SeatGuru can't help you if you are flying Qantas to the US code sharing with American as you will end up on a MD S-80 aircraft, which as you can see here has nothing in Business Class that is recommended. Not a seat.


Thanks to Mark Fridgen's blog where I first saw the link to the 50 best.

Too busy looking at Travelport to see the money chasing Sabre

We were all so busy tracking the Travelport and Worldspan rumours that the hints around the possible privatisation missed me until today. Forbes (and many others) say that there are two PE groups bidding for the business in the $4billion dollar range. The stock price has reacted accordingly - up more than 10% at the time I type this. Lots of good assets inside Sabre - of course there is Travelocity and Lastminute - but also the small but successful Holiday Autos and the booming in the US Site59.

Not that it will likely weigh much in the mind of the PE bidders - their weakness is in the Asian online market. Zuji talks a good game with localised sites in many countries - Hong Kong, Singapore, Australia, New Zealand, Taiwan and Korea- but in each of those (except I think Taiwan) they are well behind the leaders despite years in the market and millions in marketing money. Mainly this is due to the product - both functionality and inventory - always being a step behind the competition. The single ownerships structure (as opposed to their early life under a dozen or more airlines) should help fix this however that will depend on them having the right management and almost flawless execution.

UPDATE - here is RedHerring's take on the announced deal. Thanks to Anon in the comments below for being the first to let me know of confirmation of the deal.

Qantas might go private but the Australian government lied ot the public

Australia has joined the private equity boom (especially in media) with the two largest TV network media groups, 7 Media and Channel 9 owning PBL, having combined with KKR and CVC Asia Pacific respectively. I am a bit late with the story on this blog, but the newest Australian candidate for going private is the Red Rat - Qantas. I am not known for my kind words about Qantas (for screwing up online, for charging a fortune for free travel here and for having no idea about customer service) but my largest and loudest rants related to Qantas have been the Australian government's outrageous defence of the pacific route duopoly.

You may recall my quote of then Federal Transport Minister Warren Truss when to defend excluding Singapore Airlines from this lucrative rout he said

"The economic modelling work [on the Pacific Route] that we have done suggests that the benefits of an airline such as Singapore entering that route would be very, very small to the Australian tourism industry,"

Now comes something even more stupid out of the mouths of Australian parliamentarians and an admission that Truss was making it up. Here is a quote from a Melbourne newspaper

...several Liberal MPs [government parliamentarians] have told The Age they believe the Prime Minister is more likely to embrace an open-skies policy if Macquarie and its national private equity partners succeed in their $11 billion takeover.

That is - that despite all claims of making decisions based on economic realities, the government would abandon its protection of Qantas on the pacific route if it ceased to be a public company because, well just because. If this proves true then it will go down as one of the greatest acts of business hypocrisy by any centre right/conservative government in living memory. If this becomes policy then Truss will be proven to have lied to the public earlier this year.

I am mad not just for the principle of the thing but because I/my company has to pay almost twice the per km cost to go the US than the UK while being forced to use an inferior product to market leaders Singapore Airlines, Emirates, Cathay Pacific etc. Just as before there is no justification in the pacific route duopoly and even less justification in believing a government that says that there is.

"Worldspan+Travelport=Gal-World" - how a search term became a company

First it was a strange rumour. Then it was a search term here and there. Finally it became a mountain (well a small hill) of traffic to travel blogs such as yours truly, Travolution and Travel.Beat. Now it is reality - Travelport (Galileo) has acquired Worldspan.

Interesting points from the deal:

• Cendant bought Orbitz in part because of the huge revenues that Galileo would gain from migrating Orbitz from Worlspan to Gal. Presumably part of the reason behind Galileo buying Worldspan is eliminating the litigation risk and migration cost that arose from that strategy - how serendipitous;
  
• Worldspan itself has been in some financial trouble. This deal will not simply be a case of cutting costs. The Worldspan and Gal products will both have to be kept alive for some time. Reviving Worldspan will be a enormous integration task for Gal; and
• There are lots of financial machinations behind the deal - an immediate recapitalisation of Worldspan and a $125mm loan to Worldspan. The item to keep a close eye on is the comment that
  

  The initial integration focus will be on consolidating technology and administrative operations resulting in near-term cost savings of approximately $50 million

  That is - a lot more head count to go.

But my favourite part of the deal is that it confirms that Google knows everything. There is no secrecy in M&A activity any more because the answers are all in Google's logs. If I can sit he with my tiny free tracking service and see that people with Worldspan and Travelport IP addresses are furiously typing in every combination of Worldspan and Travelport you can think of, can you imagine what could be gleamed from Google, Yahoo, MSN search logs by looking for combinations of company names.

Now comes the fun part - need to pick a new name for the combined company. "Worldport", "Travelspan", "Portspan", "Worldtravel"...all too corporate and boring. We need something fresh that speaks to generation Y - which is why I propose "Gal-World"....OK, maybe not...it probably wouldn't work too well typed in a search engine.

Thanks to Ed Silver who was first to forward the PR news to me.

UPDATE - e-tid are reporting that (registration required)

Worldspan will assume the Galileo name

Farewell Barney, Welcome Henrik

The unpublished rumours were true - Barney Harford is now the former President of Asia Pac for Expedia. After what must be close to 9 years with Expedia Barney will step down to be replaced by former head of lodging for Europe, Asia and everywhere not American, Henrik Kjellberg. Barney will retain his links to the firm through Chairmanship of eLong. Henrik inherits the few months old Expedia AU (including offline marketing plans), few days old Expedia JP and Australian, Japanese, Korean and Hong Kong versions of Hotels.com. With Henrik moving to Hong Kong ,will be the first time since 2002 that Expedia has had a VP or above level exec in the region. Congrats to both Barney and look forward to seeing you in Sydney Henrik.

Clock ticking on Priceline.com.hk/sg/tw

Enough of rumours - fact of the day is that Asian mega-company Hutchison Whampoa have sold the last of their Priceline shares. Hutch is the majority shareholder in the Priceline Asia operation (Hong Kong, Singapore and Taiwan).

The Reuters article says

"Priceline.com said it continued to do business with Hutchison Whampoa through a joint venture, Hutchison-Priceline in Asia"

but almost certainly this means that joint venture is on life support - soon to be put out of its misery. As I discussed earlier Priceline Asia has unfortunately been in trouble from the start, never living up to its promise in Asia. Priceline has not had much luck in Asia. In addition to the troubles of Priceline Asia, it's efforts in Australia went through a lot of money - mainly largest teleco Telstra's - under a different name (www.myprice.com.au - domain name now belongs to a car company) before shutting down moments after launch in a barrage of expensive post/early bubble bust redundancy payments.

Priceline should take this chance to close down its Asia JV and relaunch efforts under Bookings.com brand (I would have liked to have said the Activehotels brand but no more).

Record Traffic Day - thank you Worldspan and Travelport

The day is only half over and already I have had a record day for traffic to the blog. Nothing that is going to blow out the stats engines of Nielsen Netrating or Hitwise but enough to make me turn to my referral logs and try to figure out what is going on. There have been some links from fellow bloggers such as Guilliaume at HotelBlogs and Kevin at Travolution (thanks to both). However the area is which traffic is going bananas is search engine traffic around the following terms:

• worldspan + travelport
• worldspan travelport announcement
• travelport acquires worldspan
• galileo rumour
• worlspan rumour
• and so on....

Search traffic is hardly a definitive indicator of M&A activity but it sure is a useful buzz measure. I first 'felt' this traffic spike building last Thursday but today is exponentially higher.

Expedia in downtown Sydney

Expedia marketing in Australia has started to go offline. Picture below with charming scenes of female marketeers dressed in yellow, spruiking their hearts out to the lunch time crowds in Sydney's Pitt St Mall. Perfect opportunity for a caption competition. First prize is a year's free subscription to this blog.

Photo courtesy of Ted Szukalski, Digital Photo

Rumour of the week - Travelport is interested in Worldspan

ATW are reporting the underground rumour that Travelport may be interested in buying the struggling Worldspan.

Worldspan has long been the rumored target of acquisition by Amadeus, but the attention has now shifted to Travelport's Galileo.

I have no idea either way but the searches of "Worldspan" and "Travelport" in the same search entry are one of the leading drivers of traffic to my blog. Clearly someone/people are typing that a lot into Google.

Comedy break

Check out the Tripadvisor weird postings blog - here. Collections of wacko comment, typos and stuff you could not make up.

Sidestep content deals - a wider view

Quick follow on to posts on Sidesteps content acquisition frenzy including the Travelpost acquisition. Interest post here from fellow Travelport refugee Ed Silver on the paralells between that deal and the acquisition of Reddit by Conde Nast (Wired) and Google's buyout of Jotspot.

Expedia turns on Japan

Completely crushing my hopes of having an acquisition to talk about - Expedia have launched an organically developed Japanese site - Expedia.co.jp. Japan is arguably the hardest market in the world to sell air online as no-one has cracked a way to show a consolidated display from the two GDS's - Axcess and Infini. Expedia either haven't cracked it either or are still working on it so have launched with hotels only.

On the hotel side there have been two issues that have been hard for non-Japanese players to solve for a launch. Firstly that Rakuten Travel (Mytrip) charge hotels a low as 6.5% commission setting an expectation for the hotels on pricing for domestic demand and secondly how to load, sell and fulfil the traditional Ryokan inventory. Not sure if Expedia have solved these but congratulations are due in putting the site into double byte Kanji and in setting up a local fulfilment system.

Priceline to launch "Synergy.com"

Activehotels.com is no more - no it hasnt gone bust. It has shed its name in favour of Priceline stable mate Booking.com. Eyefortravel.com is reporting that they now have a common business model. It also says that the locations will remain separate and

"its websites will continue to be marketed with differentiated products".

The change is yet to make the front page of www.activehotels.com (at publications date).

I don't understand how Priceline plan to make this work. I have praised in the past their integration work and they have enjoyed the results with huge growth in online hotels sales in Europe. However it can only be a mistake to assume that you can market the same brand [Booking.com] to different customers with differentiated products. The only way to try and do this is that I can think of is to have different product or pricing depending on where a customer comes from (either by country or marketing channel). That never works online - as I have said before. Will have to wait for the site launch to see if Priceline can make this work - but I fear for them. Sounds like the word "synergy" and "costs savings" have been overly used across the board-rooms of Priceline Europe.

UPDATE - found an interview with Adrian Currie - Priceline CFO - from ITB in October. Talks about ActiveHotels and Bookings in Europe. Talks of successful integration but no mention of killing the Active Brand.

UPDATE 2 - in the Q4 2006 earnings call the CEO of Priceline Jeff Boyd talked more about the plans for the ActiveHotels brand in Europe. There is no intention of killing off the brand - rather the marketing focus will go behind the Bookings brand. I think that is a good balance. Would continue to caution against making the products inter-changeable to avoid the problems that best Expedia and Hotels.com when they first began to work on common inventory pools. But there does come a point when you have to balance the cost of marketing against the potential cannibalisation.

Webjet CEO cashes in

Webjet boss David Clarke has cashed in some of his shares to take advantage of the recent financial success and resulting stock price. SMH record of Australian Stock Exchange filing (registration required) says that David sold 1,938,226 shares worth AU$731,486. Congrats to David.

WAYN joins the boom

The Travel 2.0 boom is spreading to Europe. Where Are You Now (WAYN) has raised $11mm in a funding round that included VC groups but also Travel 1.0 entrepreneurs such as Brent Hoberman of Lastminute.com and Adrian Critchlow and Andy Phillipps, co-founders of Active Hotels (sold to Priceline).

Paidcontent are saying that WAYN are claiming 7 million subscribers across 220 countries.

This is the scale that new comers to content like Sidestep and Webjet's Plantit have to come up against in their plans to enter the social networking battle-ground.

.travel domain - I don't get it

Tralliance Corporation is the company pushing the roll-out of the ".travel" URL domain. Have scored a couple of coups in recruitment including hiring Daniela Wagner from OctopusTravel / Travelport. Daniela dragged GTA into the online era and grew Octopus to be the top hotel booking engine of airlines, so she knows a lot about online travel. She and Tralliance announced last month that they have 25,000 companies signed up to the .travel domain at $100 a pop (a cool $2.5mm in revenue).

That's a good start but I don't yet understand the compulsion for a travel company to have a .travel domain. Am sure most companies will buy the domain for their brand to stop somebody else (though a quick search shows that Webjet, Wotif and Expedia are yet to buy theirs - or at least switch on a referral). But aside from the defensive move it is not clear what the benefits area. Don't understand how having a .travel domain is better than having a .com, .co.uk, .com.au etc domain. You would never want to launch a business on the basis of having a .travel domain where someone had the same name under .com. The key for success then for Tralliance is to win support for their search product - search.travel. If this search engine gains traction then that could provide the positive reason for companies to support the .travel domain. Without it I see little benefit. Winning in search will also be hard work as Tralliance will be battling well established providers from Google at the top end through Sidestep, Kayak and Tripadvisor in the middle and Bezurk at the focused end.

Am not going to count out Daniela but am starting off very sceptical.

UPDATE - 16 July 2007 TravelWeekly are carrying the story that Ron Andruff the President of Tralliance and Cherian Mathai the COO will leave the company "pending finalization of certain agreements.". Which is later clarified to mean that their severance packages are still being formulated. The announcement has comments from Triallance parent company (theglobe.com) boss Michael Egan using very positive language about transition, growth plans and other improvements however as the annual report shows (and TravelWeekly quote).

According to theglobe.com's annual report, 25,200 domain names had been sold as of March. The company collects $100 a year for a dot-travel domain name.

That does not sound like a lot and fuels my continued scepticism in this business. To put this in perspective, Godaddy.com one of the world's largest domain name registrar services has more than 20 million URLs under management.

UPDATE 2 - here are HotelMarketing.com's comments.

I owe my traffic to elephants

I have recently installed a site meter. The part I love the most about it is I can see where my modest amount of traffic comes from, including the search terms in Google that result in a link to the blog. Today I received the greatest complement ever. If you go to Google.de (German version) and type in "price for an elephant" I am the top result. Clearly there is no better place on the planet other than the BOOT to advise Germans on how much to pay for an elephant. Brilliant!

Thank you Lonely Planet.

Webjet in living audio

Thanks to boardroom radio here is a link to an recent interview with David Clarke of Webjet. I have commented a lot on their hotel plans and expansion plans. In this case will let David comment

• Acquisitions - Talks about his acquisition thinking saying that they have "external advisors looking at possibilities". Quite rightly he is only looking in the online space and only at product ranges they don't have - ie not air. Says he has "no current target in mind".
• International - Also talked about thoughts on future of international bookings online. Believes that consumers will soon be able to booking multi-sector international fares with different airlines - like domestic.
  
• Hotels - Admits hotel business is very small but is confident of growth. "Will not be a material component of profit in the next six months".

Nothing on Planit.

Travelport still trying to shake a (now 2) billion dollar hang-over

Travelport's Q3 06 results are out. Net revenue is at $631mm - down from last quarter's $693mm. B2C net revenue was $193, well down on Q2 of $221mm - in fact on par with Q2 2005 results of $195. But that is not the story. The story is that there was a "Net loss of $1.2 billion which included a pretax non-cash impairment charge of approximately $1.2 billion".

Two big questions from this line.

Firstly - how are they still being laboured with the hang over of turning $7b into $4.3b? I thought it clear that his monkey was off the back last quarter?

Secondly - a non-cash impairment of $1.2 bil means that there is a net loss of $1.2bil means a zero EBITDA (actually -$1.3mm).

The answer in the first one is buried deep in the Q3 press release where they say

"the Company recorded a total impairment charge of $2.4 billion (which includes the estimate of $1.2 billion taken in the June quarter), representing the difference in the carrying value of goodwill of the Company’s B2C and B2B reporting units and the implied fair value of goodwill of those reporting units"

In other words - I called the "monkey off the back" too early. I went back to the Q2 results and listened to Q3 call to see if I missed it. I did not. In the Q2 results they estimated the impairment of $1bil but through the period of Q2 realised that it was double that. Ouch!

The second - appears to be legitimately put down to continued restructuring and business challenges. They say on the conference call that B2C (Oribit, HotelClub/RatesToGo, Cheaptickets and eBookers) are at break even. Presumably held back mainly by eBookers (see also the delay in role out of their new Orbitz backed platform).

Hopefully finally we can call Travelport free.

Travel video sharing sites - trying to fight off the porn like everyone else

Like the rest of the Internet world I have been tracking the phenomenon that is peer-to-peer video sharing and destination sites. From the gigantic (YouTube, MySpace) through the tussle in the middle (Metacafe, Break.com, ebaumsworld and Revver) to the targeted (Heavy). Only a matter of time before we saw the dedicated travel sites. First to come to my attention is Travelisitic. Founded by ex-MTV and ex-iFilm execs (MTV bought iFilm).

Site looks good - videos of white beaches, rolling hills, rushing waterfalls, ancient cities and (like every other video destination site), booze and soft porn.

You can tell from the monetisation efforts (lots of pre-roll video and good Google Adsense integration) and video quality that the founders know what they are doing. Will have a challenge in keeping out the porn and antics that are so popular on the other site while at the same time building scale but a great start.

On your marks, Jetset, go (well next year we will)

I have gone from feeling contempt for offline agents that have been slow to move online to almost pity. Clearly Flight Centre has made huge mistakes online (as we discussed here). Now we have a better one. Large Australian franchise network - Jetset Travel - have announced boldly a plan to "step up its online offering with the launch of a fully bookable website next year".

Unbelievable. Simply Unbelievable.

10 years after the launch of Expedia, 9 years after the float of Travel.com.au on the ASX, 7 years after the birth of comparative shopping engines with the launch of Sidestep and 6 years after the launch of Wotif, Jetset have announced that they will have a site up and running by mid next year. The CEO is competing with himself for understatements of the century when he says that Jetset is "late to market...and..to some extent playing catch up" and even better "The lack of a bookable online engine was my first priority".

That truly is like one dinosaur up to their nose in tar, with a tsunami, meteor and earthquake all on the way, turning to another and saying "next year I am going to grow an opposable thumb"

Here is the full article thanks to Travelweekly.

Another day another Sidestep content deal

First reviews, then blogs and now Frommer's for editorial content. If this continues, Sidestep could begin to rival Travelport for the most mentions in this blog.

Qantas speaks to me but manages to ignore me at the same time

I have just returned from an enjoyable lunch put on by FCM (Flight Centre's corporate travel arm). As you know I am a fan of good corporate agents - even with my strong history in online travel. They invited former Australian cricket captain Steve Waugh to speak. Very enjoyable lunch and talk from Steve. I even managed to win a copy of his autobiography.

Qantas was a sponsor of the event and a representative of their corporate sales department opened the event with a speech and general introduction. Now, keep in mind that this Qantas rep is speaking to a room of FCM clients. That is hard core road/air warrior travellers. Almost certainly everyone present is a top tier Qantas flyer. The Qantas rep spoke for 15 minutes on "what is happening about Qantas". He talked about the airlines they plan to buy, the battles they plan to fight with their unions and the costs they plan to cut. Also took a few minutes to complain about fuel prices and low cost carriers. I found this staggering. Here he is with a captive audience of some of the top individual customers of the business and not once did he say thank you. Not once did he talk about a commitment to the corporate travel, about quality of product and customer service...nothing about how he was going to make things better for us as top customers. It was like he was talking to a room of share holders, not customers.

To me this summarises all that is wrong with Qantas. They have become so bottom line focused that they have lost a sense of how to keep customer's happy. They have monopoly or near monopoly rights on key routes (especially the Pacific Route and the politician traffic out of Canberra) that they are not aware of the growing disquiet among their customers. If I was the Qantas rep at this luncheon I would have spent less time basking in the reflective glory of being at Steve Waugh's table and more time shaking the hand of every single customer in the audience thanking profusely and begging for feedback.

Fairfax adds Lonely Planet to hinted plans

A day of updates today with another titbit of information about Fairfax's plans. We already know that Zuji is the white-label engine (and that the engine needs work). Now the story is that Lonely Planet is providing the content. I presume that they will aim for the content to be more around good travel editorial and less on the size, cost and delivery processes for purchasing elephants.

Sidestep believes in RealTravel

Clearly the Travelpost.com deal we discussed early this week was only the beginning of Sidestep re-inventing itself. Today we have news that Sidestep will take a feed of blog and user generated content from RealTravel. These are both great moves by Sidestep. A comparative shopping engine cannot build loyalty the same way a full service provider can - by definition. Deep content not only helps counter this but should also increase traffic from SEM and SEO activity.

Ctrip pulls away from eLong, Ctrip investing in execs and staff

eLong.com, has announced some great numbers for Q3 with a 40 percent year-on-year growth in revenues to US$9.4 million. The bulk of this ($7.3mm) still coming from hotel commissions but air commissions are growing faster than hotels (47% vs 38%). Congrats to the company on a quarter of positive operating income ($215k) and I look forward to hearing what new chair Barney Harford and newish CEO Tom SooHoo plan to do with some $142mm in the bank.

eLong's good results came a day after a mixed by investment heavy announcement from CTRIP. Sales were up more than 50% year on year to a very healthy $26+ mm, increasing the gap on eLong. However net profit and EPS were dead flat. The blame falls on "compensation expenses". In their formal announcement there a series of comments like

• "Sales and marketing expenses...increased... due to hiring of new sales and marketing staffs"
• "General and administrative expenses... increased...primarily due to the hiring of additional staffs"; and
• "Product development expenses...increased...primarily due to hiring of additional product development staffs"

That is a lot of investment in a lot of staff.

The CTRIP and eLong battle is a look back in time at the battle between Travelocity and Expedia in 1999 and 2000 where Expedia took over Travelocity as the largest of the time. Though in the case it seems that CTRIP's lead is expanding and they are finding time to invest in people and product to go further. Am going to enjoy watching this battle.

Fairfax announces big play with few details

Travel weekly are running a story with big talk from Fairfax (huge Australian media company) on their plans for online travel. Fairfax made a very tentative step into travel when they acquired independent accom provider Stayz in December last year for AU$12mm. I always thought this a strange first move into travel. While I think the potential for the independent accom sector is great, Stayz did not have a particularly strong brand at the time and its technology is nothing special. There has been great interest in what Fairfax would do next. Now we know - well we have a bit more of an idea - well we have a little bit of a hint of a possibility.

According to Travelweekly, Fairfax will launch four sites in the next six months. The first is Hotelz. The quote from the article is that Fairfax and Zuji have entered into a "content deal". Unclear what that means but from the look of the hotelz beta site it involves a white-label booking engine. The site is in beta so can't be too critical yet but if they want to challenge Wotif, Lastminute, RatesToGo etc then it is going to need a better search functionality. Typing Sydney into the Hotelz search box and choosing Australia it still asks me for clarification - if I have chosen Sydney Australia, how could I possibly be thinking about Nova Scotia?

The engine url has regular references to travelpn.com - not heard of them before though judging by Alexa they provide white-label solutions for a number of airlines and Zuji. Could be an offshoot of Travelocity.

I like the Chutzpah and drive of Fairfax Digital travel boss James Cassidy claiming that "within 18 months it [Fairfax] will become a major force in online travel, even rivalling Wotif". However the basis for his claim does not stand up to scrutiny. He says “Wotif offers bookings within one month and only 30 per cent of the market book in that window,”. It will be a fatal error for Fairfax to chase the other 70% (assuming this number is true) as all of the money to date in online travel is in a booking window within one month. The sectors that are booking beyond that date are the least likely to book online.

I also caution them on relying too much on white-labels. Controlling product and inventory is critical to success in online travel. Telstra' s Sensis jumped into online travel through GoStay - a white-label of AOT's needitnow - and it has gone nowhere. My earlier comments on that are here. Rumours are Travelport is also remembering that lesson and unwinding its efforts to combine offline and online hotel contracting.

Who you callin' ugly?

Was asked in an email what I meant when I described Travelpost.com as "not the prettiest of sites" and thought I would share my response with all. I am enjoying watching the battle for eyeballs from review and shopping comparison sites. Clearly Kayak and Sidestep are leading the comparative engine battle (with a little bit of Bezurk on the side in Asia) and Tripadvisor, Away, Gusto and Travelpost taking on each other in the review market. As anticipated the distinction between these two markets (if there ever was one) is disappearing.

The review sites have a lot in common - search box at the centre top, highlighted reviews at centre and either banner space or sectional draw outs in the right hand page groups. The problem with most - and this is my main criticism of Travelpost - is that the contents of the middle or main section are determined either by timeliness of the review, broad (automated) assumptions about me based on my profile or IP address or general site popularity. In other words the community has chosen the layout of this valuable real estate. I do not think this should be left to the community or a full technical solution. In review/community based travel travel a person/producer/marketer should own the home page and merchandise it with the same professionalism that the full service sites employ. This is why Tripadvisor continues to lead the bunch - it has matched the community strength of content with the Expedia strength of monetisation and production.

My recommendation to Travelpost then is to take a more hands on approach to management of the home page. Combine the science of the analysing consumer data with the emotion of a good production team to deliver a home page that at best speaks to me as an individual or at worst I could find interesting in general sense (ie the content is good in is own right even if not targeted). Compare that to the current home page where the top of the fold is just a list of hotel reviews by date showing hotels and destinations that I do not care about.

PS - Posted a review on Travelpost while looking into this blog post. Here is my sample review. Not sure why but the text doubled on itself. Could easily been my fault but can't find how to edit it.

Do not pass the mini-bar, do not collect your laundry

Cute story of the week - a developer in a small town in Switzerland has converted the local 135 year old jail into a boutique hotel but has kept the jail theme. The Jailhotel Löwengraben was a prison right up until the end of 1998. Would not call this luxury by the photos but looks comfortable - in a quirky (maybe even kinky) kind of way.

Credit where credit is due - came across this hotel while looking at the latest Zuji AU newsletter.

Meta Search plus UGC = more than Travel 2.0

Continuing the trend of social networking - including my coverage of Sheraton's, Amadeus and Webjet's efforts (here and here) - Sidestep is buying review and blog site Travelpost.com. Here is the travelmole and eyefortravel reports. The Travelpost site is not the prettiest of sites but if the claimed 500,000 reviews, photos and blogs is true this is a deep, useful collection of content that will help Sidestep with traffic (from search engines) and conversion (by improving customer site interaction). Kayak are probably taking this deal as confirmation that their development of the "Forums" and "Buzz" features was worth it. As per yesterday this on the one hand confirms the merit of the idea of Planit for Webjet but on the other hand raises the execution pressure on Webjet (starting with the URLs) - especially where they are spending one million of hard earned shareholder dollars.

More plans for Planit

More details from the SMH on Webjets plans for PlanIt. I first discussed it here. Launch target is April. Plans to invest $1mm.

More great moments in Security

A two year old boy was stopped trying to board a plane in Dubai bound for Turkey because his name was the same as that on an outstanding warrant. Reminiscent of the spate of US mistaken identity cases. The beauty with this one is not only did the boy's name match the warrant but SO DID HIS AGE! No-one in the Dubai security forces questioned an arrest warrant with a birth year starting with a 2. Brilliant.

Europe marketing driving Travelocity (hard!)

Great results for Sabre/Travelocity this quarter - with strong gains in the European online business. All the news outlets carried the quote "best quarter ever". European business was up a third with EBITDA up to US$31mm (+66%). Travelocity had a terrible start in Europe. Arrived there late behind Expedia and the local Lastminute and eBookers then tied itself up in knots with a complicated relationship in Germany. I remember a disatrous TV campaign from 2000/2001 (can't find a link anywhere online) based around a guy needing a break. Bleak scenes of him stuck on the tube, in the office and at home. Nothing about it made people want to identify with him or the company. Not that identification is critical but the ad carried none of the humour of the current commerical.



The question for Europe is whether or not Lastminute acquisition (or the new ad!) was the sole cause of the turnaround or whether there were also integration and management decisions that played a role. We may need to watch a few more quarters before we know the answer.

Webjet want in

Well known that Webjet have a lot of money in the bank from their cash flow positive activities but especially the option buy by s8. Now they tell us they want to spend it on buying somebody. They want in on more that just the organic growth market. Best idea for them - buy a hotel player. Webjet need to have in-house inventory and functionality for cross selling their flights volume. White-label deals with HotelClub will not be enough. Spending some of their cash on a good acquisition would also help sure up the balance sheet to fight off a raider.

No longer Lonely Elephants

Thanks to to Anonymous for letting me know that according to the SMH the elephants trying for months to make it from Thailand to the new Elephant enclosure at Sydney's Taronga Zoo have finally made it. Never found an answer for how much an elephone costs but the price for getting 4 (maybe 8) from Thailand to Sydney - a heavy $50mm.

Essential Business Travel tips

Normally a business travel tip invovles how to get cheap WiFi, good international call rates and fast dry cleaning turn around without breaking the expense account. Today I simply have a video of the new Singapore Airlines first class. I could tell that this would make me a more productive business traveller and add enormous value to my employer but even I am not that good a liar. This is just excessive. It is just outrageous. It is a pure and utter waste of money...but...with God as my witness and bathed deep in shame....I want it!!!

Diller getting back into travel...nah...

Travelmole is reporting IACI cheif and Expedia Chair Barry Diller as saying that he is thinking about acquisitions in the UK online travel scene. Diller getting back into online travel through ICAI to compete with Expedia?...really?....nah....couldn't be. I bet he is just messing with journalists heads...but sure would be funny if I was wrong and be a good challenge for new Expedia UK boss Caroline Cartellieri.

eDreams - first up, last out

One of the very first European online players has finally found a buyer - sort of. eDreams management backed by US PE firm TA Associates has put together €153 million to buy out the other shareholders (ie 100% of the capital) – Doll Capital Management, Apax Partners, Atlas Venture and 3i Group, among others. e-Tid and eyefortravel have also picked up the story.

eDreams has been around since 1999 and was ahead of its time. When I first met them in 2000 they had decided to avoid a head to head battle with lastminute, expedia, ebookers and travelocity etc by focusing on advice, user generated content and uber advisors - cant remember exactly what they were called but something like "DreamGuides" - who would provide advice and commentary on destinations. They would also target the markets that the bigger guys were avoiding - Italy, France, Spain. All very Web 2.0 and all dependent on online advertising - of which there was very little. Even then they were looking for a buy from one of the big guys and by 2003 every single one of the big players had 'kicked the tires" at eDreams - at least twice.

At the time I was a big nay-sayer about eDreams. Online travel at that time was all about scale, technology and big marketing budgets. There was no room for content heavy advisory sites, especially in Europe. The battle was being won by whoever could sell the most air with a cross-sold/packaged hotel. eDreams was not an effective part of that battle but has managed to survive through it with reports of 300 million euros in turnover and earnings of 9 million euros.

The interesting part of the transaction is that the VC shareholders are getting out but the founders are staying. Can't remember exactly how much eDreams raised but it was at least 40mm euros so a LBO at this price is not a huge return for the original VCs. That all said - congrats to eDreams of surviving one and half booms where hundreds have failed.

Everyone's in India

Travelocity have already hired and head of India and rumours abound that Expedia is also looking for a in-country boss. The Business Standard also has a lot to say about it. If the article is to be believed then there is a strong chance that travelocity will choose the Zuji name for India - which I think is a mistake as it is a meaningless phrase in the Indian marketplace.

Must have been a busy week in New Dehli with everyone in town.

Someone has their eyes on Webjet

Two weeks ago Webjet sent out good news to the market that it was headed for a record quarter. Wednesday Webjet saw its biggest trading day ever with more than 10 mm shares changing hands and another 8mm on Thursday. Today is 3.5mm and climbing. The ASX asked Webjet to let us in on the big secret - who is buying and why - but Webjet says they have no idea who it is (ASX statement here - registration required). Stock rocketed from 34 to 42 cents as a result. No way is this just a reaction to good news. Someone is hunting for at least a strategic stake but maybe a magic 14.9-19.9% to get a board seat as a precursor to launching a full scale bid. Who could it be now knocking on that door.

Scroo goes private, pockets hundreds of millions and blames suppliers

Flight Centre was once the darling of the Australian travel industry, stock market and corporate culture watchers. They were expanding around the globe, growing at 20% a year and had established a city, village, country, family etc culture that was the envy of retailers everywhere. Somehow it all started to go wrong. First Ansett went bust, then Qantas pulled commissions, the wrong CEO was appointed, the push in the US was failing, 9/11, SARS, domestic downturn, Santa Claus was late, the Tooth Fairy decentralised purchasing and dropped spending by 20% and Dr Seuss inc stopped booking long haul.

As a result of all of this Flight Centre has decided to go private. To de-list and join the private equity bonanza. This will make the founders - especially Graham "Scroo" Turner - hundreds of millions while maintaining a lot of control (btw the staff are not happy). As part of the transaction Turner says that pressure will be applied to suppliers to improve the margin decline from reduced sales per store and airlines butchering of commissions.

That all sounds possible but truth be told I think it is because they have executed poorly online. For such a strong brand and company with such strong cash flows and supplier volume Flight Centre has done a terrible job building an online business. It is not like they haven't had the chance. Every single one of the big online travel B2B and B2C players have been through the Brisbane headquarters of Flight Centre (me included) trying to sell a solution for launching, enhancing, growing, molding, making etc Flight Centre online. Flight Centre was always receptive and keen but the culture that made them strong offline made them weak online. Their strength in incenting individual stores to think independently and drive sales in a decentralised fashion impeded the ability to create a centralised online sales function - stealing sales from the stores. Flight Centre was caught in the classic offline retailer dilemma - how do I grow online and not cannibalise offline. Well...you can't.. and they should have made that decision quickly in 2001 and gone on to dominate online travel in at least Australia. Flight Centre spent too long wrestling with this dilemma and thus ceded the online space to the Wotifs, HotelClubs, Webjets etc of the world. Purchases of Quickbeds and Travelthere were not aggressive enough plays and once bought were under invested in both in technology and marketing.

You can't doubt the power of the Flight Centre brand but they had the chance to learn from the mistakes of American Express in the US and Thomas Cook in the UK and take their huge brand online and own the market. Going private looks like a great deal for the Flight Centre management, a good deal for shareholders but it is an admission of the failures of the Flight Centre online strategy.

Singapore Seats - what a great way to fly

You have to see the new seats that Singapore Airlines is promoting for its Business Class re-launch. Wow!

This is a $360mm upgrade and will change the game for everyone. Check out the built-in computers in case you forget your laptop (or security puts in the hold)

Wotif is definately on the hunt

The rumours - first broken by the world beating Canberra Times - are clearly true. Wotif is looking to spend it their cash and capital on acquisitions. Traveltoday quotes COO Robbie Cook as saying that organic growth will now be enough, something I have been saying for a while (extract below). Breaking out of Australia for growth with (to date) just an English language product and limited white-labeling/affiliate engine capability has and always will be a challenge. The Australian market has a number of acquisition opportunities that can bring traffic growth to Wotif. However integration and product differentiation with junior acquired partners will be a huge challenge. Whatever you do, dont say the word synergy.

The human pop up ad

Received a good comment to my Ctrip post last week talking about the money flowing into China. It reminded me of my impressions of my first tourism visit to China in 1997 versus my experiences on a business trip in 2004. I was overwhelmed by the mixture of state control and outright hard core capitalism.

On my tourism visit I took two days to explore Guangzhou - the former Canton and nearest provincial capital to Hong Kong. Though a very large industrial city, Guangzhou has a number of large and beautiful parks and monuments. After half a day of sight seeing I noticed a trend - none of these moments or parks was dated earlier than 1949. I then upped the pace but no matter where I went all of that I could find was dated post communist revolution. There was commerce, industry and growth all around me but the cultural underpinning was all state controlled.

Contrast this to my first business trip. I was in Beijing for a Friday night and asked one of my local colleagues to take us out for a drink etc. She asked us where we would like to go. "Where ever the locals go" we replied. So she took us to that bastion of consumerist celebration TGI Fridays where "every day is Friday". It was here that I saw capitalism in the rawest form ever. Much like a bar anywhere else in the world, TGI's in Beijing has waitresses. However here each individual waitress is sponsored by a beer company. There was one in a Heineken t-shirt, one dressed in Corona, one in the green of Carlsberg etc. They all approached us on mass - jumping around the table promoting the benefits of each. Nothing lecherous or sexual but certainly employing forceful sales techniques. We ordered Carlsbergs and the Carlsberg waitress celebrated. It turns out that these waitresses work exclusively on commission. They share a piece of every sale they make - sell nothing, get nothing. As we approached the end of our beers they began to circle again looking to take a piece of the next round. Truly they were human pop up ads working on a CPA basis. We began to see more and more of this across China. Sales teams working exclusively on commission and therefore stopping at nothing to make sales - accommodation staff for eLong and Ctrip working the aisle of trains between Beijing and Shanghai handing out loyalty cards and dim sum staff bombarding you with food if (like some auction room from a romantic comedy) you raised your hand the wrong way in a conversation.

Made us "born and bred" capitalists look pathetic.

China pays up

Fresh from news about China Heating Up we see that Ctrip has committed to pay 30% of this years earnings as dividends. That is a large upfront committment for a you Internet company. Could be further proof that the China online general and online travel markets are maturing. Or maybe there are a bunch of investors that want money out of a relatively thinly traded stock.

Lonely times for Lonely Planet

Have always had in the back of mind how much Lonely Planet missed the chance to be the dominant online social network/content/destination site. They owned the backpacker market in the early days of the Internet and therefore arguably had the number one travel brand in the Internet demographic - I am assuming here that the young people backpacking and travelling in the early to mid nineties were also those discovering the early Mosaic/Netscape browser and opening their eyes to the world wide web. Even through the first boom period - 1997-2000 - everyone behind, in and around the bubble were travelling with a Lonely Planet book in their back pocket. Now in 2006 I don't know if book sales are up or down but I do know that the online hubs for information, reviews and comparative shopping are places like tripadvisor, kayak, sidestep, bezurk and blogs such as gridskipper not LonelyPlanet.com.

Lonely Planet made an announcement on one way to fight back - classifieds. An open network (craigslist style) for people to trade in travel services. Nice idea but this does not match the Lonely Planet brand story that I have in my head from my backpacker days - that no-one knows a place like LP does. It also opens itself for ridiculous posts and programs. I ran a simple search for what was on offer in my area (NSW, Australia) and came up with this. Love the humour but does not bode well for LP's online strategy.

In case the post is removed here is the text

WTB: Elephant (Asian or African) - NA

New South Wales

Wanted: price for an elephant. Later i'll want an elephant, but first i would like to know what an elephant costs. If anyone knows the price of an elephant, please contact me.

Don't worry about transportation costs, I'll work that out later.

No fly zone

Scores of stories are breaking of "regular" US travellers being put security check hell at US airports because their name matches that of someone on the "No Fly List" - a list meant to alert the Transport Safety Authority as to people considered a risk. Unfortunately the list is out of date and misses obvious candidates - like eleven of the people charged with the recent London bomb plot, all of whom were under survelliance for more than a year. There are 44,000 plus names on this list so the chances of cross over and mistake are enormous. Here are a couple

• Connecticut resident Robert Johnson is being stopped regularly because his name matches a former Black Panther and arms dealer
• Sixty-eight year old grandmother Mary McCabe now knows that she is on some kind of list but cannot find which one or why; and
• My favourite - 4 year old Sam Adams - a boy born after September 11 2001 is on the same list as 14 of the 19 dead 9/11 hijackers
  

I am not arguing for removing security checks in America. Both the Brits and Americans have a right and duty to be paranoid about airport security. However there is some madness involved in a poorly maintained list being at the centre of that paranoia.

A donkey on the edge (of search)

Had a "great moments in search" moment last week. I wanted to take the family away for the weekend. Specially wanted to revisit a cottage in the nearby southern highlands that, as well as being in a beautiful spot, has a small menagerie of farm animals that are good around kids (ie don't bite, kick or otherwise traumatise). These include a pig, cow and personality filled donkey called Hector. My 4 year old son cannot stop talking about this donkey - simply loved the experience of running up towards Hector's paddock with a carrot or two stashed in his back pocket. However I had forgotten the name of the cottage - no worries as Google has the answer. The top result from my first off search "southern highlands hector donkey" produced the answer I needed - Little Forest. Strangely no-one has yet placed a key word bid for this term.

Was a lovely weekend away with the family rested and recharged and the local carrot farmer's share price up 10% on the demand surge from our visit.

Not sure what to make of the fourth result in the search "Insurgency In Peru: the Shining Path" which goes on to describe the guerrilla war tactic of the donkey bomb (think suicide bomber but with a presumably unenthusiastically conscripted donkey) pioneered in southern parts of Peru.

Nothing to do with travel - but a great moment in Schadenfreude

As an Australian and former resident of London I have to post this video of one of the greatest stuff ups in English sporting history.

Maybe they just need the money for boring balance sheet issues

I mused earlier about Expedia's fund raising elements and wondered what hidden plans they had for spending all their cash. Exciting acquisitions and convoluted corporate dances played out in my head. However after having read some news today on Yahoo! Finance, maybe they simply needed the money as a back-up plan. The story has a dull financial element to it but let me try and tell the story

Expedia's falling stock price could have a snowballing effect. Not just as a result of sentiment turning against them but because balance sheet items may need to be revalued further impacting earnings results further impacting share prices. So What you say? What are you talking about Tim? Well news today from the Dow Jones Newswire says that Expedia's accounting of Goodwill gives it a value that is actually higher than Expedia's market capitalisation. In other words that Expedia values its goodwill as an asset on the balance sheet by more than the stock market values the whole company. Current market cap is ~ $5.3billion while goodwill is listed in its balance sheet as $5.86 billion.

Paraphrasing the Dow Jones article - this could force Expedia to revalue its goodwill - take a goodwill impairment charge to its P&L. That is bad as no-one likes to report hits to earnings. But there might also be further consequences. The article goes on to say that Expedia has to maintain a minimum share-holder equity level of around $5.36billion otherwise a covenant is tripped in its $1billion credit facility. This would block Expedia from drawing down from the facility and seek waivers etc from its lenders which will certainly cost money.

So maybe the debt raising was just a safety net plan by the CFO to ensure an extra reserve if their credit line dries up after a revaluation of goodwill. Understandable but dull. Would much prefer to see it spent on furious rounds of spurious acquisitions to give me interesting things to rant about.

Hotels.com throughout the ages

Great slide transition from Guillaume Thevenot's Hotel-Blogs.com showing the transition over time of Hotels.com. Shows in pictures the trends of content first with search on the side, then open searchwith tabs and options to eventually the importance now placed on promotion and merchandising. Thanks also to the Travolution Blog where I first saw the story.

Qantas keeps telling itself that it has online figured out

Couple of announcements from and about Qantas renewed my thinking and ranting about their online plans:

• This week they announced that they will be launching web check-in. I love web check-in, it gives you thirty more minutes for domestic flights allowing you to get to the airport 20 minutes before departure. How Web 2.0 of Qantas. Another example of Qantas ahead of the game? Nope. This is 367 days after Virgin Blue launched theirs;
  
• World Airline Entertainment Association awarded Qantas the award for "Best Entertainment for Inseat Systems". Another piece of valuable recognition for Qantas' technology lead? Nope. This has to be an at best random, at worst corrupt, award as there are a string of leading carriers with Video on Demand, Audio on Demand and Nintendo 16bit games in economy that work. All of which kick the arse of Qantas' fixed movie roll that starts 1hour after take off, forcing you to watch not only the legal disclaimer DVT video but also a channel nine news update that is a day out of date. Even if Qantas' VOD system worked it would be second rate compared to Singapore, Cathay, Virgin Atlantic and Emirates. SMH travel blog is filled with a disbelieving public aghast at Qantas receiving this award; and
• Qantas Travel has closed six travel shops across Australia in response to the shift in business to online. Should mean they have their holiday business under control and shifted online? Nope - as per my earlier experience
  

I have been a top tier Qantas frequent flyer for five years in a row and will likely be for the next five - which should mean that I love them. Nope.

Not another Travelport post

I am not going to say anything as I am over my former job and determined not to post so here is a cut and paste of parts of the latest story

"Travelport CEO Jeff Clarke has provided more details about the $75m-worth of cost savings first mentioned during last month’s Q2 earnings call with US analysts.....

...they relate to service contract renegotiations and identified headcount reductions

By category, Travelport expects to realise savings of $15m from telecoms, $45m from information technology and $15m of other general and administrative.

In terms of the headcount reductions, Travelport is ‘re-aligning staffing levels in IT application, development and maintenance’"

White label, agency label and change in the weather

If recent deal history is anything to go by it is going to be a White (label) Christmas

• Expedia does the full online white label for John Lewis (large UK dept store chain) - first major deal with a non-travel retailer or activity based site;
• Sabre launches a full travel agency white label tool for dynamic packaging, matching (maybe bettering- will have to wait and see) Galileo's Leisure product; and
  
• Zuji has been quietly putting together a collection of Asian white-label partners including taking over the Virgin Blue Holiday business from Spree holidays and a reverse white-label in all of market deal in NZ with Gullivers (where it is all Gullivers in the back end)

Most of these deals mean abandoning the traditional desires of the various players (customer acquisition for the online agents and segment fees for the GDS) for the raw activity of chasing volume. I applaud the creativity of all these guys in finding new models and distribution but it does not take a weather man to know that a change in model can mean that the growth in the existing one is going cold.

New Template - Label Searching

Have migrated the blog to the new Blogger Beta platform. It includes the ability to search old posts by labels/tag in the right hand navigation bar. Makes searching the archives and identifying themes of the blog much easier. Top two individual things I have blogged about are Travelport and me. Hmmm....

The dog is the new canary

In yea olden days a canary was used in a mine to test whether or not the air was toxic. When the canary died you ran. In the new economy the Dog themed start up is now the new canary.

The float and flop of Pets.com was the canary for the Web 1.0 era. They raised US$82.5mm at an IPO in Feb 2000 and were dead in less an a year. Cnet rates it as number 2 on the top 10 dot-com flops. Now BigDogsWelcom.com is online with tips and tricks on which hotels take large dogs.

They say

"Nearly 48% of travelers with pets travel with pets over 31 pounds, while 34% of those travel with dogs over 50 pounds,"

"Hotels are quickly realizing this untapped market and are adjusting weight limits to coincide with the growing market for large dog accommodations,"

Dont really care, so long as it remains privately funded the air is still clean. However, as soon as you hear of BDW raising any money - run.....