Monday, May 26, 2008

Last minute model is on hiatus - but is it dead? Wotif to go 365 days

This logo on the left is a relatively recent version of the Wotif.com logo. Two simple things in the logo - the name and the model. Clear indication of what Wotif is all about - "28 days of great deals". But here is a copy of the new logo that has justed started to appear. Can you spot the difference - and I am not referring to the change in colouring. Rumours have been running around for Australia for weeks now that Wotif is going to be abandoning its last mintue model and moving to have inventory available 365 days per year.
When Wotif first launched it was only 14 days out. Then in 2004 they extended to 28 days. Now a couple of months after entering into the full service business with the acquisition of Travel.com.au, Wotif is on the verge of abandoning a big tenet of its brand - last minute deals?

I have been thinking about this for the last few weeks and wondering if this is an indication of a wider trend that I have been watching. I had been noticing that Lastminute.com's hotel growth was coming from its secret hotels, not last minute purchases. I could not help but read about Booking.com's continued growth in Europe - the sense I get (no data to back it) is that there is nothing particularly last minute about this non-stop growth. Other players have been extending their booking windows also. Finally - despite softening in the US economy and high oil prices it is still boom time for hotels. With occupancy rates so high, hoteliers seem less and less interested in seeking help for last minute distribution. Bring these together and it looks like until we see another change industry dynamics there is at the very least a hiatus in the last minute model. But I am not convinced that the model is dead, another shift in demand (read continuing economic downturns) and hotels will look to last minute again and the distribution houses will be right there to pick it up. Meanwhile - look for the Wotif goes 365 press release very soon.

What do you think? Am I right in sensing a movement away from last minute distribution of hotels? If so do you agree that its just due to the economic environment or there a more fundamental shift here.

UPDATE - thanks to a reader that sent through an ASX filed presentation from Wotif. From 8 May this presentation is an update given to brokers. It includes on slides 9 and 31 commentary that 365 day inventory is "in development" and "coming". Also updates on travel.com.au and AsiaWebDirect. You can find a copy here

11 comments:

Anonymous said...

Well spotted, Mr Boot. I believe it was always only a matter of time before wotif went year-round, and modified their booking interface accordingly to something like asdoo.com's simple 365 day booking calendar.
Looking forward to the official announcement and the release of the new calendar design.
Wondering which channel managers will be first to update?

Jonathan said...

It was only a matter of time.

Only offering 28 days of availability has its benefits, however these are purely of a marketing nature (stresses urgency and implies added value).

As soon as the lost profits from sales made >28days out exceed those made from the increased conversion brought about limiting the time frame, they were bound to change tactics.

The fact that many other sites are offering "X months of last minute rates" no doubt pushed them to make this change also.

Anonymous said...

Knowing that LM growth has been coming from Secret Hotels looks like inside information to me and commercially sensistive. You might want to be a little careful with information like that.

Tim Hughes said...

This is a very strange comment Anon. There are scores of public comments from Lastminute hotel contracting people at conferences about the success of secret hotels. There is blogger commentary on this as far back as 2006. The importance of secret hotels for Lasminute is hardly a secret. If if is supposed to be one then Lastminute is not doing a very good job keeping it one as their staff talk about it constantly. I reject outright any imputation that I have on this blog or anywhere else written anything that I am bound to keep confidential.

Anonymous said...

And 365 days at 10% commission rates I understand - rumour only mind. That could be a category killer...

What will be interesting is how much business they attract beyond 3 month lead times when they go over to 365 - any ideas? I will place my bet at somewhere between 10% - 15%.

Anonymous said...

is tony smith out there ?

Anonymous said...

No im not and leave me alone... im currently Roaming Free

Anonymous said...

Tony's spruiking the farm to anyone with loose change in their pockets, but whats that got to do with Wotif going 365?

As has already been said, just a matter of time...

I'm also eager to see their interface and how they train the consumer to look beyond the first screen they see. I think most of their bookings will be within 40 days of travel still too for some time yet unless they come up with a clever promotions strategy to really push the long lead bookings.

Anonymous said...

Hotels will always utilise the distressed inventory model, whether that be as they were originally intended in low demand periods or as just another distribution channel in high demand periods.

People shop on Wotif for 3 reasons; because it’s generally the last 3rd Party to have stock available, they’re perceived as cheap and the booking process is easy. 2 of these factors are nullified with the introduction of >28 inventory (available stock and cheap rates; everyone has them if the hotels practice parity). Where does that leave them? It’s no longer a distressed inventory site, it’s just another distribution channel with an easy booking process.

The big thing here is that the distressed inventory model by it’s very nature has the potential to de-value purchases made outside of the 28 day window. If this occurs, Wotif’s current value proposition to the consumer could be severely tarnished.

They’ve obviously done their market research, however it still seems a little risky to me.

Anonymous said...

The last comment raises some good points - however just as consumers were trained onto Wotif, possibly they can be trained off with savvy marketing and esp if packaging starts to make an impact on these channels.

Vicki said...

After reading this it prompted us at HotelsCombined.com to further research this issue.

www.hotelscombined.com/AboutUs/Press/LastMinute.aspx