Booking.com numbers broken out of Priceline results

Priceline released their numbers recently and I decided not to report on them originally. They were great numbers (even though losses widened due to litigation expenses) and analysts put up their expectations all over the place. In addition the numbers confirmed the pre-eminence of Priceline in Europe with European sales eclipsing US sales for the first time. The reason I did not report on it was because while this was a great story it did not add much to my other reports on the company. I had already commented on how they are getting it right in Europe and right in integration of Booking.com and Activehotels.com.

However the recent announcement of a new UK MD for Booking.com (Rachel Howes) has encouraged me to blog about the Priceline European results. The reason is that the report I found on Travelmole does something I have not seen from Priceline before - it breaks out sales for a brand. Specifically it states that Booking.com annual gross bookings are €1.2 billion on 12.5 million room nights sold in the 12 months to March 31. This is the first time I have seen a combined sales number for Activehotels and Bookings. Clearly puts them as the largest in hotels in Europe.

Important to remember that Booking.com charges no reservation fee or cancellation fee and takes nothing upfront from the customer. As a result there is likely to be a higher cancellation rate for Booking.com bookings versus other players. My guess is at least a quarter - increasing the total booked room nights with Booking to the 15 million room night level. I am sure that the cancellation rate it is a highly tracked metric and should have a team on it working on product and marketing ways to reduce it.

UPDATE - received an email from a Priceline representative who noted that Priceline have broken out European results in their reporting for the last few quarters. This is correct. The difference I was making was between highlighting "European results" and "highlighting brand results". I had assumed that European numbers had included the sales from the Priceline branded European sites (ie Priceline.co.uk) and not included sales on Booking.com branded sites (including Activehotels.com) generated from customers outside of Europe. I have asked for clarification on whether or not the Booking.com numbers from the above are the same as European numbers or if there was a difference. Will let you know when I hear back.

In defence of Qantas

I am well known for my comments on how Qantas needs to work on improving its customer service, get its Video On Demand system to work, correct the branding and business strategy for ReadyRooms and other comments best described as constructive criticism. However I do not agree with the harsh criticism coming out of a report from Australian consumer watchdog magazine Choice.

The Survey was based on responses from 4,000 subscribers to Choice magazine and has the following comments in the summary:

The surprise result was that Qantas — the national carrier and the airline most survey respondents had flown with — was rated the least satisfactory airline for international travel and the second least satisfactory in the domestic market. [my emphasis]

Newspapers that picked up the story carried even more harsh commentary. The Sydney Morning Herald said

The public's perception of Qantas has sunk so low that a survey by the consumer advocacy magazine Choice has given the carrier the lowest ratings for leg room, value for money, in-flight service and food of any major airline serving Australia. [my emphasis]

News.com.au was even tougher declaring

QANTAS has been forced to defend its customer service after being voted the worst international airline in an Australian survey [my emphasis]

I am a top tier Qantas flyer and would love them to make product improvements in how attentive the staff are, the speed of responses to requests for assistance on board, the ground staff's attitude and the "cost" for free frequent flyer tickets. Particularly I want a return to a customer service culture rather than a process culture. However to call them the worst of the international airlines (even with the qualifier "major") servicing Australia is simply untrue and a misrepresentation.

For a start the survey only covered 7 airlines - Singapore, Emirates, Cathay, Thai, Air New Zealand, Qantas. Yet all of the news coverage sounded definitive in declaring Qantas the worst. Simply not true. There is no contest in picking Qantas over scores of major airlines that fly to Australia but are not included on this list including United, Korean, Asiana, Gulf Air (though they just wound up Australian services), ANA, JAL and more.

Secondly even if you focus on just those on the list, the comparison is not fair. Thai and Malaysian have amongst the most cramped seats in the sky with terrible in-flight entertainment. All factors being equal (which means no significant price difference), no one of sound mind would fly with them over Qantas.

Finally the survey itself has been conducted with flawed methodology. The responses where voluntary and by means of filling in an insert to a magazine. There was nothing to ensure that there was a reasonable demographic split in the results. Most likely few if any of the respondents had flow more than two of the airlines in the list and the majority had only flown Qantas. Therefore you have a self selecting sample size that has experienced only a limited range of the products being sample. The effect was that there was a outpouring of anti-Qantas angst and little in the way of balance consumer feedback.

In defence of Choice, they acknowledge this a little in their summary section saying

We can only speculate that the difference in results beween that survey and CHOICE’s might be due to ours having an Australian rather than international base, and a tendency for people to have high expectations of their national carrier and so to be particularly critical of it.

Even with my defence of Qantas in this post there are important conclusions that Qantas should draw from this report. Though the survey is flawed, the conclusions over stated and sample size too small - the fact that 4000 people wrote in to say they were annoyed that Qantas does not deliver what they promise but still fly them is an important indicator of what could happen to Qantas if more competition is introduced. Qantas plays a dangerous game in simply relying on the size of its frequent flyer membership to measure loyalty. Surveys like this - while flawed - can provide a window into pent up consumer demand for change and improvement.

Oh and shame on the media organisations for falling for this beat up.

For $10.5 billion you can rule the world part 2

In part 1 of "For $10.5 billion you can rule the world" I talked about the impact on the online trave industry of Google, Microsoft, Yahoo, AOL and WPP undertaking a combined $10.5 billion acquisition spree in online advertising. At the end of the post I reach out to online marketing guru Mike Potts of e-interactive to hear his thoughts. has sent through some comments in the new part 2 of this article here. As part 2 in this story here is what Mike has to say...

Google is the “superpower” and looks to remain that way in the mid-term at least. Looking at the online marketing results of my travel clients who are spreading marketing spend across a few important media, Google PPC wins hands down from an ROI perspective. Add to this the ease of managing the campaigns from both an agency and in-house perspective, and the ease of integration of Adwords into Google Analytics, and the combination is all but astonishing.

The major impact for all industries - travel included - is that it should bring more powerful marketing tools to the market for everyone to use.

Google seems to repeating patterns of old, and everyone else is just playing catch-up:

• Google Step 1 - build in-house solution, or acquire a bad one and release an “okay” product; and
  
• Google Step 2 - figure out what the market really needs and go and buy someone else to support that.

There a now three clear examples of this strategy at Google:

• Google video followed by the acquisition of Youtube (so far a pure media land-grab rather than tech acquisition perhaps)
• Acquisition of Urchin which became Google Analytics V1, following by the acquisition of MeasureMap which became the awesome Google Analytics V2 (or perhaps V1 squared)
• Google Adsense followed by the DoubleClick deal (or perhaps Adsense squared)

As far as Google is concerned it continues to make previously high end technology and media space available to many more smaller companies and I wouldn’t be surprised to see this repeated with DoubleClick’s ad serving and tracking technology. Imagine, for instance, that a small online travel agent could judge Adwords ROI or earn money from Adsense on the basis of ads SEEN (and not clicked) but where that user still made a purchase later (TV style). The “view based” advert ROI metric is well used by DoubeClick as a way of realizing value from ad campaigns.

On a practical level, my travel clients are desperately trying to find ways of finding new users for their sites (outside of Google), and these acquisitions should make entities like RealMedia and aQuantive (and their media placements/markets/technology) more readily available to smaller businesses. Lets hope the ROI’s lives up to Google levels.

Madame BOOT speaks - please save Tuscany

My wife - Madame BOOT - has taken over the blog. Demanding that a word be blogged in the direction of the campaign to save Castelfalfi. If the Sydney Morning Herald and others are to be believed, the entire Tuscan village of Castelfalfi has been bought by TUI. They plan to convert the location into a Tuscan resort for the German market. A ToscanaWeld if you like.

The small village is around 10 square kilometres of land and is reported to have cost around €250 million. Apparently title comes with everything in the village except the church. It will be able to serve 3,200 guests at a time. Travelling to Tuscany to hang out with 3,000 Germans seems strange enough. I wonder want sort of food they will serve: sauerkraut pizza; pesto flavoured bratwurst; or litre steins of chianti.

Madame BOOT is Italian and is throwing pasta at the walls at the thought of a Tuscany theme park - Germans or no Germans. What next: Irish bars in Florence (yes - already there); a Mexican restaurant in Rome (yep - they have one); a McDonalds in the Vatican (there is one less than 500 meters away at Roma Aurelia); or an Ikea in Milan (there are two).

The fact that Starbucks has not yet made it to Italy gives us all hope.

Note - can't find a mention of this deal on the TUI website but the SMH is crediting the Guardian so will assume is true for now.

UPDATE - The Upgrade: Travel Better blog has found other great example of a tour operator buying up a piece of one country exclusively for guest from other country. In this example a US operator Secrets Resorts is aggressively marketing their American themed bars and hotels located in Mexico and the Caribbean. You will see from the TravelWeekly article that they leave no hotdog unturned to ensure that the holiday experience is as American as possible - more like home than home. Reminds me of the Simpsons episdoe - "Thirty Minutes Over Tokyo" where the family visit the Americatown restaurant in Tokyo. Unfortunately here it is no joke.

Inside American Express' Centurion (Black) Amex card

Great article in Upgrade:Trave Better with an even better link. The original story is a discussion about whether or not having a Centurion or Black Amex card entitles you to automatic upgrades (the answer to which is that the Centurion card gives you automatic top status on a number of airlines which may lead to upgrades). The best part of the story is the link to a poorly laid out geocities page with detailed information on Centurion offers from around the globe.

Why is it so interesting to have insider information on an Amex card? The answer is because the Centurion/Black Amex is the top tier card and is very exclusive and secretive. You cannot apply for the Centurion/Black card, you have to be invited...and you have to be rich. The qualification details are not published but assumptions are that a spend of more than US$250k per year on a Platinum card is required. The upfront fees measure in the thousands of dollars year. As you well see from the Centurion Card geocity page the benefits vary country by country but basically you get:

• Top tier status and lounge access with a major carrier
• Top tier with a series of hotels
• Concierge services including booking travel and guaranteed seats/tables
  
• Travel insurance
• Limo collection and drop off from/to airports; and
• A very sexy titanium card, luggage tags and packets of marketing materials

Check out the link and see how the other 0.1% live.

UPDATE - Lots more information and commentary on the Black American Express card here at the Black Card Forum (reg'd required)

Wotif and ninemsn part ways

Australian accommodation powerhouse Wotif.com and the local MSN JV ninemsn have parted company after 9 months. They launched a promotional deal in September last year (as I reported here) which was probably Wotif's largest marketing spend to date. The official announcement to the Australian Stock Exchange of the end to the deal (here is a link but will require registration) does not go into the details. My guess is that the transaction flow to Wotif did not justify the spend on a direct response basis. This is typically the case with a big portal buy from a travel company. There are few if any of those deals that can be justified on a pure transaction return basis. As I said in my initial reporting, advertising buys on portals are for "branding" purposes (ie you spend more than you make in direct response). Does not mean that the deal is no good, just that you have to be in it for a brand spend, not direct marketing spend.

Generation Y are loyal - just not in the way you want them to be

Another TravelWeekly story caught my eye (have been at home sick so have had plenty of time to surf and read). In this article Gregg Hopkins of Softbrands declares that there is no brand loyalty online for the younger consumers (also called Generation Y). He says

“This is the first true ‘web generation’ of travellers who have used computers all their life...As a whole, they ignore offline points of sale and have no brand loyalty.”

I don't agree. I think there is loyalty it is just a different kind of loyalty. There has been a lot of talk in marketing circles about different approaches to brand and therefore loyalty. Let me talk through these trends to show why I disagree.

The traditional brand approach is where you design or target a brand at/for a particular demographic or age group. As a person grows up marketers try to shift them from their current brand/product loyalty into the "older" demographic brand. This approach is applicable particularly in FMCG marketing and is epitomised in cosmetics industry where different brands target different age groups of women and seek to move them "up the brand food chain" as they get older. This approach to marketing is often called "Revlon Branding".

A new discussion is emerging around brands that try and stick with a demographic as that demographic ages by morphing the brand over time. This is being called "Harry Potter" branding. The brand (or wizard) gets older as the consumer (reader) gets older. The brand attaches itself to a generation and sticks with that generation. It provides different entry points for new generations such that each level of the brand (or episode or book) speaks to a different audience under the same brand.

The other type of loyalty and branding that I think applies to Generation Y is best described as "Night Club Branding". Generation Y are loyal, fiercely loyal but for very short periods of time. They attach their loyalty to the latest "thing" recommended by a friend or network and consume that brand almost to the exclusion of all others...until it is time to move on to the next one. Then they drop the first brand like and stone and take up the next one with the same ferocity. Hence the reference to the popularity of a night club. We have already seen examples of this online with the migration from Friendster to Myspace and now onto Facebook.

It is a mistake to describe this behaviour as meaning Generation Y have no loyalty to a brand, instead it means they are loyal in different ways. Night Clubs responded to this type of loyalty by creating different themed/branded nights or events and changing them regularly as they try to catch the next wave of loyalty. Websites targeting this group (including travel) have to be similarly adaptive if they want to attract and keep this group. It does not mean re-branding every six months. Instead it means building community and relationships that can be flexible and targeted all that same time- I did not ever say the answer was going to be easy.

Google, the travel verticial and Claire Hatton

As well as joining the $10.5billion online marketing splurge, Google has been investing in people.

Google have been launching a series of teams targeting the big SEM verticals - Technology, Finance, Retail, etc and of course Travel. This has been the case in Australia as well as elsewhere in the world. TravelWeekly is carrying an interview with fellow ex-Cendantite Claire Hatton who is the new Google Head of Travel for Australia and New Zealand.

Claire is a great catch for Google. She and I met up recently for lunch to talk about the old days and almost closed down the restaurant as our discussion around online travel, online marketing, meta-search, social networking, UGC, etc continued without end. She has already put together a strong team with more to follow I'm sure.

The great thing about the travel vertical in search is that almost every word is in play. In something like mortgages or credit cards there are a very limited number of words worth bidding for - "credit card", "loan", "interest rates", "money", "finance" and maybe a few more but certainly less than 20. However in travel every single word can have a correlation. Every destination word, every activity word, every place word, business words, leisure words, governmental words...all can have a travel angle, all are worth something to an online marketer. This is why you hear of finance companies with a hundred or so phrases under bid management and travel companies with millions.

As well as being a huge opportunity it is also an often misunderstood challenge for travel companies. With so many words to bid on a company cannot afford to take a lazy approach to SEM. Lazy approaches are where you either bid blindly on the main words (say Hotels in Sydney, Flights to London) and wait to see what happens, or outsource the whole thing to an agency and let them bid a little less blindly on main words and wait to see what happens. Internal systems are needed that track words through to conversion and customer acquisition, that can enable different measurable events (click, purchase, email registration) to be tracked and allow bidding in different keyword and IP address combinations. Just as important, smart people are needed.

Congrats to Claire on the new role.

A little taste of consolidation in the Australian market

Blink and you would of missed it (especially in the $10.5billion online advertising acquisition bonanza) but mainstay of the wholesale travel business in Australia - AOT ("hey the O is for Online not Outback, OK!") - gobbled up the little known NeedtoEscape and rolled it into its small but plucky stable of online travel assets including Travelmate (content and destination information) and needitnow (hotels). Here is the TravelWeekly pdf with the story.

Not quite sure what it adds to their offering as they already have supplier strength from their offline business, some online demand from needitnow and its partnership deals (like Sensis' GoStay - which as I said before is a white label of needitnow) and content traffic in Travelmate. I do not see that much in the NeedtoEscape offering that adds value but maybe it was so cheap a price that it was worth it.

From his quote in the TravelWeekly article Russel Farr (MD of NeedtoEscape) is joining our understatements of the year competition when he declared that the online [travel] market is "going gangbusters". With global online sales at $139billion a year, I wasn't sure. But now that AOT has bought NeedtoEscape "for an undisclosed sum" I am.

For $10.5 billion you can rule the world part 1

Google fired the first shot in the online advertising wars by buying Doubleclick in a US$3.1billion dollar frontal assault on the viewing habits and search data of consumers. Then Bang!Bang!Bang!Bang!, the rest of media (online and off) fought back.

First Shot Yahoo! bought the parts it did not already own of ad exchange network Right Media (think an eBay model for of online advertising - buyers/publishers and sellers/advertisers can trade clicks and pageviews in a open market) for $680 million.

Second Shot AOL buys ad serving AdTech and rolls in into its Advertising.com operation.

Third Shot Media and advertising giant WPP (trivia for the day - did you know that WPP stands for Wire & Plastic Products - nothing to do with media) bought SEM marketer, ad server and ad network provider 24/7 Real Media for $639.

Forth Shot Microsoft storms the beaches with a massive force of $6billion in cold hard cash to acquire aQuantive (Avenue A | Razorfish, Atlas and DRIVEpm).

UPDATE - Fifth & Sixth shots- Behavioural targeting gets serious with AOL buying Tacoda and Yahoo! buying BlueLithium.

Add all that to Google's deal and we have $10.5billion dollars in consolidation activity in an instant. However as Valleywag says all of these follow up deals were really defensive plays - Google is still the true superpower in this arms race. Valleywag also have a nice little diagram for you to put into a power-point to explain all this to your boss.

What does this mean for travel?

Good things for travel - it should add up to better targeting technologies. As SEM becomes more and more expensive travel providers need more and more targeted approaches to advertising. As the networks, search companies, ad servers and publishers learn more and more about consumers and find more and more efficient ways to target, then travel providers should be able to bring more of the web into play and improve marketing ROI.

Bad thing for travel - Google is already too strong. A travel provider that wants to compete simply has to give Google money. The stronger it gets the more compelled you are to give Google money. Of course there are alternatives (focus purely on SEO through amazing content or throw your money at the travel channel of media sites and hope something sticks) but paid search on Google is the main game. The more that Google, AOL, Microsoft, Yahoo! and now WPP can set themselves up as the gatekeepers for access to media then the greater the risks that their prices will rise.

But I think the Good outweighs the Bad. Google is the lead, but it always was and we are all developing strategies for managing this. Also, I don't think this truly makes Google, AOL, etc gatekeepers but if it does there are enough of them to maintain a competitive market and (as Paidcontent also discusses) there are other big players (ie ValueClick) and upstarts (Tacoda, BlueLithium, Eyeblaster, Adbrite, AdECN, Turn) to help keep the big guys honest.

Would love to hear the thoughts and comments from you other marketers out there (Mike Potts?) about this string of deals, consolidation in online advertising and the consequences for online travel.

UPDATE - Mike Potts of e-interactive has sent through some comments in the new part 2 of this article here.

UPDATE 2 - Sept 04 now it is more than $11billion to own the world with AOL buying behavioural targeting firm Tacoda for $275mm and Yahoo! taking on BlueLithium for a few dollars more ($300mm)

Video: Airbus A380 evacuation - 873 people in 77 seconds

Title of the video says it all. A trial evacuation of one of the new (maybe one day it will actually be ready) Airbus A380 airlines. I think Airbus is in real trouble with this airline with the delays in production and the bet that the future of the airlines industry is with size rather than speed, distance and efficiency. However having seen the airline up close during the Sydney visit, it is am impressive and amazing looking machine.



Not the video in German but I am sure you all know what the word "schnell" means.

Back next week - May 21

Dear All - am in the middle of a three day presentation session where I deliver a big project to a client. Will hopefully be back up for air an able to blog again next week. Sorry for the gap.

Hey - where did PriceGrabber Travel go and what does mean for the meta-search market?

Reader - Greg Morris - sent me a tip that shopping comparison site PriceGrabber.com has (with not a hint or announcement) shut down their travel comparison section.

PriceGrabber is a serious player in the comparison shopping game. According to Paid Content, they were founded in the boom (1999) and sold for US$485mm in Dec 2005 to Experian (no not Expedia, Experian). They are in the top leagues with (then) $60mm in revenues and (now) 11,000 merchants. Here is an Experian power point deck (in pdf form) if you want to know more.

Just before the sale, in Nov 2005 they announced the launch of a travel channel. The story went around very quickly: Gridskipper praised the integration with FlightStats; VerticalSearch carried an interview with Brett Snyder, the head of PriceGrabber Travel (most interestingly using the opening sentence that Shopping.com was leaving the travel sector); and the paper in pink - the Financial Times - even picked up the story. It seemed like all systems go for taking on the other meta-search providers I talk about so much in this blog.

Suddenly there is no reference to travel anywhere on the PriceGrabber site.

Three possibilities that I can think would cause this:

1. Execution - That PriceGrabber were simply no good at executing travel. It is clear they do comparison shopping well and Greg assures me (and Gridskipper agreed) that the engine was a good one. But maybe they were no good at marketing or promotion of this particular product. No way to know;
   
2. Brand - Could be that no matter how good you are at comparison shopping for "regular stuff" - electronics, clothing, music, books etc - the purchase of travel is too different a form of consumer behaviour to operate under the same brand. We know that Amazon's early efforts in online travel were a failure. We also know that large scale department store retailers have never been successful when trying travel. So maybe the brand of PriceGrabber just did not extend in the mind of consumers to travel; or
   
3. Meta-search is tough - I like the concept of the the meta-search model and there are rumours of profits at Sidestep and Kayak but it is way too early to call this a proven market and model. At the core it about traffic arbitrage - buying in traffic at a cheaper rate than advertisers will pay for referrals. There is plenty of room for error in execution but also the potential that there is not a wide enough natural gap between the untargeted search costs of Google and the targeted charges that meta-search needs to levy to survive. I don't believe that- I think the model should and will work but if a big brand and company like PriceGrabber can't do it, we need to stop and think about the market as a whole.

Most likely not one cause but all three. I don't think it should scare off people from investing in or using meta-search nor entrepreneurs from continuing to believe in their meta-search products but it does remind that brand selection, support and execution focus are critical.

Farewell PriceGrabber travel.

Flight Centre and PEP: Time to have a Rupert Murdoch moment

The Flight Centre deal with PEP is definitely back in action. I raised the potential of a new deal a few weeks ago. As you may recall - PEP made an all or nothing bid for the whole company which (like the Qantas buy out) seemed like a dead certainty until a particular shareholder (in this case Lazard) held out. Now the deal is back with a structure that does not require shareholder approval but gives PEP a big say in the running and gives current big Flight Centre shareholders a big dividend.

My views on Flight Centre are clear. They need to have a Rupert Murdoch like wake up. This is where the CEO of a large corporation turns to the senior execs and says "we missed the early signs of the internet but I am going to focus everything I do from now on to catching up". In Murdoch's case they caught up by buying MySpace, Photobucket, Rotten Tomotoes, IGN and more. Graham Turner, PEP and gang need to accept that they are late to the internet as a channel, accept that the internet is more than a side bar activity and take immediate acquisition and business transformation steps to join the internet revolution or wake up one day and find this newly restructured business losing more and more market share to online upstarts (Webjet, Travel.com.au and Bestflights.com.au) and online powerhouses (Expedia, Travelocity and Travelport).

GigaOM doesn't like the Orbitz IPO

Web, Tech and VC uber blog GigaOM has a scathing prediction for the Orbitz IPO, nominating it as the "Worst IPO of 2007" months before the actual float.

Concerns highlighted are:

• highly complex financial (caused by constant structural changes and acquisitions);
• the company will likely be making a loss at the time of the IPO;
  
• no voting rights; and
• the proceeds being used to pay down debt at Travelport rather than for capital, growth and investment.
  

Here is the full article from Kevin Kelleher at GigOM - worth a read.

The question raised by GigaOM is not "is Orbitz a great company?". We all agree that Orbitz it is (even Kevin agrees). It has a great business in the US and a hotel powerhouse in Flairview. The question instead is whether or not this is the right circumstance, structure and timing to float the company.

Thanks to fellow Travelport refugee Edd McArdle of Inside C who first sent me the link.

UPDATE - here is Valleywag's equally tough commentary

Helping airlines stay on top

Airlines dominate online travel in many markets. In fact in Australia, Japan, Ireland, Spain and many others the number one airline carrier(s) are also the number one online travel player(s) regardless of what measure you use (traffic, sales, brand recognition). My story earlier this week of Qantas' efforts in online hotels (ReadyRooms) turned me to thinking about what is it that airlines in this position of online market lead need to (and should) do to fight off the cashed up and hungry for expansion online agencies (Expedia, Travelocity, Orbitz) and the scrappy, lean and very good at what they do "little guys" (Wotif, Venere, HRS, Flairview).

The simple answer and the one that most of the airlines seem to be following is simple do more of the same. First, provide dirt cheap fares that are online available online and market the hell out of it. Second, partner with someone (either external or if you have a "holiday" division, internal) for complementary products (hotel, car) and point some traffic at those areas for some extra revenue. This is a good strategy but pursuing it unmodified will not guarantee success.

Here are three things that I recommend strong online distribution airline players do to sure up their position. The first for revenue, the second for loyalty and the third for focus:

1. Cross Sell of Complementary Product: But not through a third party (Ryanair and Expedia style) and not through the holiday or vacation division of the airline (Qantas and ReadyRooms style). Instead they need to invest in a true independent but in-house hotel business one that lives by the principles and processes that have made the "little guys" (see above) so successful - hotel flexibility in rates and availability, product focus and online product managers living and breathing their channel. Leaving it to someone else leaves you open to the expansion plans of someone else. Leaving it to you holiday division means that the hotel contracting style and results mirrors the less flexible world of wholesale. Either way you do not end up with the inventory and pricing you need to beat the little guys. Just as important you need to match the big guys in putting cross sell in the purchase path through both dynamic packaging and shopping basket style. Both of these things mean investing seriously in the complementary product;
   
2. Customer rewards beyond price: Web only deals and lots of them drove customers to Airline websites but with the OTAs now using API connections and screen-scraping to provide customers with the same inventory, the airlines need to expand their offering to customers. Use content, loyalty concepts/miles, customer service and bonuses (all the stuff that OTAs do) to open up another front in retaining customers; and
3. Channel management and structure: Stop treating the online channel as...well...just another channel. Make it a separate business in itself. Put the person in charge, truly in charge such that they never have to enter into a debate over cannibalisation of other channels. Turn the site into a business that is independent of the airline's other sales activities.

Do none of these and these airlines might stay on top but do all of these and they definitely will. Would be interested in your thoughts for other things successful online airlines can do to protect their gains.

TripAdvisor rolls up and ends up with SeatGuru

Expedia's TripAdvisor (yes.. Expedia owns TripAdvisor...) has gone on a roll up rampage buying 5 content/community players smartertravel.com and bookingbuddy.com; TravelPod.com; Travel-Library.com; and one of my favourite traveller tools SeatGuru.com (according to Hotel Marketing). I think this is a smart move. The model for community/traffic based travel media companies has moved beyond a "one brand fits all model" to a market where consumers are seeking information from a variety of different sources. The synergies are obvious - central ad sales, hosting and management while keeping a low cost production/editorial team. I am assuming here that TripAdvisor will maintain the separate brands and community and not try to do integration crazy (which is soooo 2003).

UPDATE - TripAdvisor/Expedia is not done yet. May 07 announced acquisition of Cruise Critic adding another vertical. Expect more to follow

ReadyRooms: Ready with site but not Ready on brand

I have been asked to have another look at ReadyRooms - Qantas' hotel only play designed to take on Australian online hotel behemoth Wotif.com. I had given ReadyRooms a hard time in the early days of the blog because the .com URL version points to the strangest landing page ever (at the very least it should redirect to the Australian version seamlessly). That criticism still stands as the problem still occurs. However I am prepared to re-look at the the site with fresh eyes.

Summary - There is clearly progress in product, functionality and features but I feel there is still an identity crisis at ReadyRooms. The site/business is stuck between the airline, the holiday division and the website owners. To be a success it needs to be allowed to come out from behind all three and operate as a independent business that can take advantage of the scale, size and reach of Qantas.com while being free to build its business, brands and products independently. In a position where it can attach this incredibly lucrative market with the same vigour of Wotif and HotelClub/RatesToGo in Australia and eventually Priceline, Venere, HRS, etc in Europe. Now that Qantas management is no longer distracted by 11 billion other things they can spend some time giving this business a little bit of focus and a little bit of freedom.

The Positives

1. Big city content: Though the content/inventory is only Australia and NZ there seems to be a very good spread top level inventory in major cities. By that I mean chains (3-5 stars) and a few independents thrown in. I haven't done a full price comparison but the ad hoc checking shows that pricing is within reason compared to competitors;

2. UI: The user interface is clean and straight forward. There is a good balance between information and quantity of hotels. I often think that sites like Wotif.com go over the top with the number of hotels on one page - making it hard in a large city to step back as a consumer and sort the large number of responses into a quantity that makes it easy to choose. There are a myriad of surveys that show that if you give consumers too much choice they leave with nothing. Qantas's new ReadyRooms interface looks to have a good balance in this area. The purchase path is as you would expect - I like the use of tick box options for common requests like double room and non smoking; and

3. Home Page: They are making great use of the promotional spots on the home page. The balance between catchy/attractive photos and actual deals is good and enticing.

The Negatives

1. URL: As above still dont have the .com address working properly;

2. Secondary cities and international: Patchy availability and limited choice in secondary cities compared to competitors and nothing outside of Australia and New Zealand;

3. Brand: Qantas appear to be confused as to what the brand should be for ReadyRooms. If you look at the home page there are logos and references for Qantas, Qantas Holidays and ReadyRooms. When you keep all three brands on the page it significantly reduces the chances of building up ReadyRooms as a separate brand. This is important because each of Qantas and Qantas Holidays have a very different brand meaning to that being put forward by ReadyRooms. Qantas equals flights [full stop]. Qantas Holidays equals family holidays to top international destinations. If you want ReadyRooms to mean "Dont go to Wotif, come to us" then you have compete for the same type of customer experience. That is a customer looking for a hotel, just and hotel and nothing but a hotel. If you drag in too much of the Qantas and Qantas Holidays brands (as strong as they are), the "just a hotel crowd" will go looking somewhere else.

4. No Cross Sell: There is no hotel cross sell in the purchase path of an airline ticket on Qantas.com. It does not need explanation that the best first strategy Qantas have for growing ReadyRooms is to aim for the sorts of attachment rates that the big three OTAs (Expedia, Travelocity and Orbitz) are enjoying in the US (15-40%). This can only be achieved with a cross sell and packaging. Qantas should build this as a priority.

EU Phase 2 look should cost Travelport money but not a deal

The EU is planning a Phase 2 investigation of the Travelport (Galileo) and Worldspan merger (here is the Travelmole article. This does not mean that the merger will be blocked as it is really just the equivalent of the Competition Commission saying "hmm...let me think about it". It does however create a headache for Travelport as the cost of submissions and approvals just went up - somewhere in Brussels there is a partner in the EU practice of a big law firm rubbing his/her hands with glee. It also delays synergies and strategic plans causing more costs and pain.

I would be surprised if the Commission ultimately decides to reject the deal. While their initial analysis is right that this would give the combined organisation a powerful number two status in the European GDS wars but that does not mean what it used to mean 10 years ago. There is so much inventory now being booked off GDS such as through low cost and full service airlines direct online, hotels online through extranet based intermediaries (just look at the killer results coming out of Priceline in Europe) and even the interactive tools that the wholesalers are using. Being dominant or strong in GDS should not be the concern for competition that an siilar analysis in 1995 would determine. If the European Commission can clear the MyTravel and Thomas Cook merger then would be strange to make a stand here.

This should make it almost a certainty however that the Commission will want to have a phase 2 look at the Pegaus/Wizom deal. More joy for regulatory lawyers.

Guest editors wanted - the BOOT is expanding

I am having a great time writing this blog. I hope you are enjoying reading it. I want to do more with the blog and have found the guest editor experience with Mike Potts to be a fantastic way to expand the BOOT message. I hope you agree. I want to take this to the next level and find other editors that know more about exciting markets like Germany, France, Italy, India, Japan, China...heck even Canada. So if you are a self appointed expert in the online travel markets in these or other exciting countries then I want to hear from you. Send me an email with a sample post about a incident in your market. Please adhere to the following:

• Posts no more than 500 words;
• Pick a snapshot story about your market - am not looking for a summary or history of the market to date, rather a piece of commentary on a current event;
• Send the post in the email with formatting and in an attachment with no formatting so that I can easily cut and post into blogger. If you want links included please put them in;
• Include a 20 word introduction on who you are. If possible include a link to your blog, profile, company, site or something on the web that can tell people more; and
  
• Be in it for the long haul. I am looking for people that want contribute regularly and help me grow the BOOT into a destination for insider information and commentary.
  

I can't guarantee that I will post your submission and if I do I can't guarantee it will be edit free. However if I do post I will praise you and link to you like you won't believe. There is no money involved but if you want to join me I look forward to your submission.

Travel blogs are the new Business Strategy 101

Along with his post on Expedia guest editor Michael Potts of e-interactive sent along another post for me to published. You will find it below. I am flattered by it and (as I am shy by nature) a little unsure of whether or not to publish. But this is a blog so I will publish and let you the readers decide. Here is what Mike had to say...

I went to see a potential new client today in Barcelona, a small but successful online travel company, Engrande. The guys at Engrande are smart and aggressively targeting a quickly developing online European market (selling low cost hotels, B&B's and hostels through city specific websites) - and use The Boot as one of their key points of market reference.

In fact this shouldn't be surprising given the depth of great content that Tim writes. What was surprising was the fact that John Erceg, CEO, placed such significance on the content of a blog. It struck me like never before how educational and powerful a simple blog could be. There was a time when Business Week and The Harvard Business Review were THE points of reference, but this position certainly appears to be tenuous especially given the accessibility of such a lot of good content.

The article that John wanted to speak about is entitled "Lastminute.com speaks and I agree a lot, a little and not much (all at the same time)". His query related to where his organization fitted into the analysis of both The Boot and Lastminute.com CEO Ian McCraig. Clearly Engrande is not a "scale" operator, and doesn't fit with the idea of a "niche" business, the two areas of success mentioned by Ian. In fact Engrande seems to be a convincing argument that the "market specialists" detailed by Tim can experience considerable growth and success through smart search engine strategies and a clear product pitch.

Offline business publications, be afraid - very afraid!

Expedia Spain, too little too late or better late than never?

Expedia has announced its Spanish launch. Expedia went first to the UK and Germany but then slowed, entering France after its competitors form the early days (Lastminute and eBookers), taking a softly softly approaches to the rest of Europe. The strategy was successesful as a lot of money was thrown by the competition in smaller markets while Expedia proved itself a winner in the UK through focus. However the question remains whether they have been too cautious and waited too long for Spain. I asked Euro online travel expert, BOOT guest editor and honorary Spaniard Michael Potts of e-interactive to give us his thoughts. Here is what he had to say...

I'm a bit confused about this post, because I don't know whether to write either:

• The online travel market in Spain is buzzing, and at last the great bastion of online travel has come to this great country.or
• Nothing has really happened, except that Expedia has started pushing the PPC bid levels on Google and Yahoo up as they try desperately to deliver the volume and market share that their US bosses want to see.

So, why my confusion? Well:

I have been waiting for Expedia to launch here for 2 years - it means that the market is mature enough to support their demanding targets for success, and in other developing markets Expedia has been the explosive catalyst that made the entire online travel market go crazy.

BUT there are three reasons why Expedia will have to work harder in this market than they may think

1. Spain is different - the Spanish are more price sensitive than most Europeans and although they use the internet (a lot) to research travel, buying it online is a different thing entirely. Expedia is a lot of things but it is not cheap;
   
2. The "marketing" market is relatively mature in Spain - there doesn't appear to be a lot of partnership agreements, PPC undervalue, affiliates or cheap bus ads freely and easily available. These have traditionally been ways that Expedia has quickly gained traction in other new markets; and
   
3. Iberia.com, and some very mature OTA's already exist in this market - Iberia.com accounted for 70% of all online travel transactions in 2001 and is still a massive player in Spain. eDreams.es, Rumbo.es and Viajar.com all seem to have steady growth and market experience and hotel-only players Booking.com, HotelClub.com and RatesToGo.com are also strong here.

Clearly its not going to be plain sailing for Expedia. Whereas in Italy, for instance, they moved early, captured some great marketing agreements and set the bar for competitors to follow, they are too late to the party in Spain.

Good luck Expedia, Spain needs you, I'm just sorry it took so long.

This is not a blog post about ???.com relaunched as a travel site

As everyone else got their first overnight my time, I am not going to add to the PR bonanza that the new owners of the URL of dotcom boom, burn rate and bubble burst poster child ???.com are enjoying with the launch of a travel mashup/social network - so you will have to guess the name.

Pegasus, Wizcom and the attempted rise of GDS New Entrants (GNEs)

You don't need me to tell you that Pegasus bought Wizcom. If you do, here is BTOnline's report and here is the Internet Travel News Report. You also don't need me to tell you that this means that a supposedly fiercely competitive two horse race is now a co-operative ride in the country. Where there was once two mechanisms for a hotel connecting to the GDS' without going direct. There is now only one. I have been thinking about the angle to put on this. My natural (and historic) angle is to focus on the Travelport elements. To link all of this to my commentary around Cendant becoming Travelport becoming Blackstone and being sold off (see this index).

Instead I see it as a good opportunity to talk about the GNE vs GDS debate. Again you probably don't need me to say that GNE stands for GDS New Entrant. For years it was thought that it was not possible to replicate the infrastructure of the big GDS' - most of which was borne from years of tech investment in airline rez systems. GDS' are some of the biggest and most complicated computers on the planet making the tech side extra-ordinarily expensive. On the revenue side, the business model and therefore the "rivers of gold" like profits is under threat. So (the thinking went) surely there this no way to build a new in GDS or GDS like product in a profitable/sustainable way.

In the last year or so, the GNE's have emerged - led by G2 Switchworks and ITA Software - trying use different forms of connectivity (APIs, xml and other web forms) to provide the same/similar connectivity services of the GDS without the huge infrastructure cost. As they are starting from scratch they are trying different (read cheaper and less complicated) business models than the "I charge you, then give lots to the agent" model of the GDS.

Let's assume that this new model gets traction. Combine this with the enormous power of other non-GDS channels to agents for hotel access and bookings such as wholesaler web platforms, meta-search and plain old Internet sites with xml connections everywhere and in-house dynamic packaging and it could mean that the effect of Pegaus having the main key to the GDS door will be lessened over time.

This is a big assumption to make for now as the GNE model's success is by no means guaranteed. There is not even certainty yet whether they will be able to grow out of the North American market. I have more to learn about it to comment further. If you have some inside knowledge about the GNE market please post a comment. If you work in the sector send me an email and we can organise an interview. For a little more background their is an interesting piece (video and pdf) here with reps from Worldspan, Accenture and G2.

Sprice.com - more meta-search in Asia

First Fare.net raised an amazing amount of money (more than US$10mm), then they merged with Coelis of France (OK both things happened at the same time but lets assume they were sequential as it adds to the story) to create Sprice.com. Now we have the Sprice launch in Asia Pacificto take on Bezurk. The new site (Singapore based ULR) looks like all that you would expect from Meta-search. Simple options for searching air, car, hotel etc from multiple sites. The interstitial also looks good and informative - counting off the sites that are being searched, the results from each one and the time that will be needed to complete the search. So good start - money in the bank, good home page, simple search and nice interstitial.

However I don't like the search results page (am looking at the hotel one here). They have adopted neither the list approach of their forebears (in both meta-search and "normal" travel) where you display the hotels one on top of each other or the grid approach of the "middle grounders" (ie single product focused players like Wotif.com and RatesToGo). Instead they have a combination of the two - a list that goes right to left, five to a row with three columns (have a look). That's fifiteen hotels stacked on top of each other in a supermarket shelf like fashion. I don't like it because the dominant feature is the hotel photo (if available) which given the size looks like a generic building and certainly does not produce a differentiator that draws me to any particular property. Descriptions do not appear in the first set of results. The photo pops up (and descriptive text appears) once you hover over a hotel but I think consumers will find the initial search results confusing and hard to digest.

They also need a few more suppliers connected - the dominance of Octopustravel, HotelClub and AsiaRooms means in effect a lot of the shopping is coming from the same inventory source. Am sure more content/inventory deals will come so the more pressing issues is the search result page.

Good to see another comparative search player in the Asia Pac market but Sprice and senior Asian exec Sandor Bakalis have work to do to be competitive.