Tim Hughes puts the boot into the highs and lows of the online travel business (with an Australasian/Asian bias) with some blogging about consuming and loving travel thrown in.
Yes it is interesting to notice this but honestly Australia is a small market and a $1m spend will take long time to produce ROI? what do you think ?
I like the idea. It is creative and speaks to the ways in which people are looking for interactive experiences around travel. The challenge (and this is where your ROI point is correct) is all about execution - how do they build scale? For example - Sidestep just bought Travelpost who have "500,000 reviews, photos and blogs". Planit is starting from scratch, with distribution assistance only from an Australian based company. Let's give Webjet the benefit of the doubt here as the idea is right but let's also leave them (and their shareholders) with a big warning about how important scale is in a UGC/social networking site. They will have to get the planning, execution and marketing not just right but near perfect.
Both points are interesting & both points are valid, great idea as social third party reviews are always better than PR speak. Simple, why dont they just license a bigger players IT, eg www.Igougo.com, recently purchased for $600m. Started 5 years ago in a NYC appartment. they are looking for ASPAC JV's. Same effect, bigger pool of people and best off all, you get change from $1m
Thanks for the good comment. I agree that as part of their planning for this project they should consider using the scale built by another network. They could do this through a JV or through licensing in the content. They need a plan that says within gives them 100,000 pieces of valuable content fast. If they can't get that level of scale within a year through organic then the plan is flawed. 100k may seem like an arbitrary number (because it is) but it provides a great test for the business plan.
I realize I'm quite late to comment on this, but where does the $600 m number come from for the purchase of Igougo? As far as I know the number wasn't made public and in all honesty, it seems steep, especially since the sale was back in 2005 and prices weren't what they are today. At that price, that would put igougo at over 1/3 the price of YouTube and let's be honest, a stretch by any estimates. I'd guess more around the 60m mark or under; although it's still a lot of money :)
Agree that the $600mm number sounds high but I have not sources to confirm what the right number is. Anon - if you are out there somewhere can you give us some basis behind your number?
Hmm, I didn't get notification of your comment Tim?! I did a bit of research and here are two articles that I think definitely put the 600 million number to rest. More likely under 10....From Sabre Holdings Q4 earnings report (http://internet.seekingalpha.com/article/25821):" As a reminder, we consolidated the IgoUgo business into Travelocity during the third quarter, which put a $4 million drag on Travelocity operating income for the year. "From a google groups thread (well argumented, but long URL - http://groups.google.com/group/misc.business.consulting/browse_thread/thread/b0049636fe6d592c/a52645740750130f )" I know recently IAC acquired Tripadvisor and sometime last> year Sabre Holdings acquired IgoUgo.> I posted a couple of weeks ago asking about any details on> the Tripadvisor deal and the answer was really fascinating.> Any ideas about how IgoUgo was evaluated and how much> it was acquired for?First of all, make it a habit to research SEC filings whenever you havea question concerning finances of a publicly traded company. If it'sanywhere, it's in the company's annual report (form 10-K).In this case, however, this approach doesn't quite work; Sabre's 200510-K lists two acquisitions in 2005, SynXis ($41 million) andlastminute.com ($1.2 billion). This probably means that whatever Sabrepaid for IgoUgo was immaterial (accounting word for "too small tomention"). Sabre's 2005 10-K also lists acquisitions made in 2004 and2003; the smallest acquisition mentioned, that of Sweden-based RMRocade in 2004, is $15 million. So my guess would be that IgoUgo wasacquired for significantly less than $10 million.Jim Donnelly and Tony Cheng, IgoUgo founders, had this to say on thesubject: ...over the past few years we've tossed around many big ideas for IgoUgo but lacked the resources to implement them. With the financial backing of Sabre, however, IgoUgo.com promises to grow into the site we've always known it could be. This acquisition affords us not only access to Sabre's extensive distribution channels and content sources, but also the funds to pursue longtime goals like faster site performance and the development of new kinds of content. http://www.igougo.com/about/sabreAquisition.aspNote that site performance is cited a problem that couldn't be solvedby any means other than acquisition by Sabre, which probably means thatprior to the acquisition IgoUgo was growing out of its existingInternet infrastructure, but couldn't afford an uprgade... Not a goodposition to be in when negotiating a sale, and another sign ofrelatively low purchase price...Second, valuation of a growing company is a complicated exercise.Structuring an aquisition is even more complicated. Very few peoplewill tell you any details, especially since pre-acquisition discussionsare usually covered by confidentiality agreements."Hope the comment comes through looking ok.
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