Wednesday, April 18, 2007

Building and keeping scale in Travel 2.0

No need for me to write an introductory sentence justifying a post on the explosion in the number of sites trying to muscle into the TripAdvisor market by developing content, information and destination sites. You will have seen my interview posts with Travelgator and Global Travel Market/AsiaTravelMarket concluding with my thoughts that this is part of a phenomenon where online travel customers are asking "where can I go now" as compared to the earlier questions of "do you have the cheapest fare" and "I want somewhere to stay". These series of posts have resulted in a number of start-ups contacting me for advice on how to succeed in this phase.

Here is the general advice I gave to one recently that I wanted to share with you.

The advantage of this content/destination site model is the lower cost base compared to the online intermediaries/agents (be they full service or product specific) combined with the new sites being able to jump straight into this new wave. The challenge is that not only do these new entrants have to build scale but they have to keep a hold of that scale. There are few (if any) online intermediaries that I can think of that achieved scale (large number of bookings) and then lost it. took a back step but then recovered, stalled (but then don't think it every really hit scale) and Travelocity struggles/ed in Europe (until it bought Lastminute) but I think it is fare to say that no agent that has achieved scale has lost it. This is not the case for social networking/content based sites. For example Friendster crashed in the US (though is recovering through attacking Asia) and blog search innovator Technorati seems to have hit a traffic ceiling. The story here is that advice, networking and search do not produce the same loyalty as a retail (Google being the one exception).

So to succeed these content/community based sites need to innovate and brand build ahead of the customer. Building one hook to bring them in (ie like an OTA would with a good deal) and hoping more of the same will keep them wont work. They will need to keep adding more and more hooks to catch the same customer again and again. That can be challenging and expensive but needs to be in the launch planning.

1 comment:

HelloMcFly29 said...

Hey Tim, welcome back from your trip. I hope it was a good one. It’s interesting to see travel sites do exactly what you were talking about. A lot of sites are starting to add content to their site to supplement their travel search functionality. A few sites that have really made a leap are and Both sites have become the staple of my travel search. And both allow you to see what others are saying about a specific destination. Very handy tools indeed. I believe it will be interesting to see what happens next in the online travel space.