Dennis Schaal over at Tnooz broke the story that Kayak is launching a program called Kayak Private Sale. In a post titled "Kayak gets clubby with exclusive hotel deals" he revealed that Kayak is planning on launching exclusive deals. These deals will be negotiated directly with a property and made available for Kayak exclusively. A few days later Dennis had an update in his post "Kayak exclusives to include flights, hotels, vacation packages" including confirmation that these exclusives would extend to flight and packages as well as hotels. Bookings will be at the supplier site based on a click/referral from Kayak.This is a very interesting step from Kayak - but not for the reasons you first think. In the words of PhoCusWright boss Phillip Wolf one of the hallmarks of Kayak's success was that it was a "zero percenter". That is a site where zero (or near zero) percent of the site content is controlled or produced by the owner. The main disadvantage of being a zero percenter is that you don't control inventory, price or the customer experience. The main benefit of being a zero percenter is the dramatic operational cost advantage you have over an online retailer. No need for a supplier contracting team as a small biz dev team is enough to secure content. No need for a fulfilment team as the supplier/advertiser takes the booking. No need for a customer care team as the supplier/advertiser talks to the customer. This saves millions in costs. This is how you can be one of the biggest travel sites on the planet but with less than a 100 staff (last time I heard).
But (as I said in my comment to Dennis' first post) signing and managing exclusive deals takes time and a team. Call it a revenue management team or a hotel market management/contracting team. Either way it is a group of sales and revenue professionals who need to talk weekly/daily to suppliers. In the OTA world this means local market people - lots of them. Plus if you are going to load exclusive deals you are going to need to talk to consumers when those deals are not what they are supposed to be. This means more people which means higher cost. All of this adds up to a significant operational and cost change for Kayak
I am looking forward to seeing how this plays out. Am I missing something?
13 comments:
Tim - What if Kayak has an agreement with a 3rd party to handle all of these logistics (i.e. rate negotiation, customer management etc)? I think this is a smart move to monetize the traffic they already receive. Essentially making money off their brand/traffic.
I do agree that it might not be worth the risk, if they do it all in-house.
@Viney - is a good point. But I dont know of many operators that would be happy to negotiate an exclusive deal on behalf of one distribution partner. Especially where the booking is being taken by the supplier rather than the operator. If they could find someone then the next challenge would be one of margin and model. Typically Kayak is charging suppliers on a per click basis. For Kayak to use an operator, then the operator would need to be prepared to shift models as well. It is possible that they have found an operator so in need of business that the operator is willing to do anything it takes to get business going.
being a near zero percenter im always surprised when i hear how many people ota's etc have. when you break it down like that its understandable.
what come to mind, is the consumer experience having two modes & price parity.
what supplier is going to give kayak a better deal than that give expedia in the US or Wotif in AU?
unless kayak is adding something value adding rather than price.
@Steve - all good points. Thanks
Interesting to note that Drew Patterson - one of the original management team from Kayak - left recently to start up a company called Jetsetter.com which provides exclusive access to insider travel deals by invitation only to signed up members. Sales are limited time offers while availability lasts.
Perhaps Steven Hafner did not appareciate competition.
Is this what Travelzoo do?
@Anon- Travelzoo deals do not have to be exclusive (I think)
Great!
Private Sales in travel is going to take off in 2010 in my mind. One of the first players in this arena seems to have a good footprint in Europe already ==> VoyagePrive.com
@Guillaume -do you know how voyageprive are negotiating the deals?
Hi Tim,
Yes they just deal directly with operators, providers. VoyagePrive has some staff spread across markets with local knowledge about where consumers are likely to be interested to travel to.
Have seen offers from Kayak, Jetsetter as well as Tablet Hotels private sale - so far Jetsetter has the edge with compelling pricing. Kayak shows 23% discount for one private sale hotel - not going to get it done in this economy. Plus photos blurry. Really entertaining watching a commoditizing meta-searcher try to add value.
Hi Tim,
I run a private Sales website focused on Hotels in Europe. My website is www.hotelyo.com
I strongly believe that there is an important niche market for private sales in travel.
We are able to negotiate hotel deals 30% off BAR. Our aim is to help hotels to sell unsold rooms and to help travellers to travel more. If you need more info, i am happy to have a chat with you.
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