Priceline talking Asia and growth but still quiet on Agoda results

Three articles/posts this week with information on Priceline's strategy for Asia. They are all good reads and I recommend them to you. Playing to my bias for comments on Asia/Australasia, I poured through the posts to look for details on Priceline's investment in Agoda and plans for Booking in the region. Unfortunately Priceline continue to closely guard the details on Agoda's performance.

The three posts are:

• Tnooz's Dennis Schaal "Priceline CEO on metasearch swan song, private sales, Expedia, Asia strategy";
• Reuters "Online travel bookings shift overseas"; and
• seeking alpha's "Priceline.com Inc. Q4 2009 Earnings Call Transcript"

Key extracts are:

• Priceline likes the dual strategy of brands in Asia - Agoda and Booking.com according to CEO Jeffery Boyd (Schaal's post)
• Two thirds of Priceline's bookings are non- US. "We expect to have higher growth in the international markets, from new markets like Asia that are less well-penetrated and are currently enjoying higher levels of economic growth," Boyd said. International bookings were up 81 percent in the fourth quarter compared to 20.6 percent in the US. (Reuter's story). In the same story Expedia's Khosrowshahi said that said he expects non-U.S. bookings to account for at least half of Expedia's business within five years, up from 37 percent currently. He went on "We're aggressively investing in China and Australia, India and Brazil,";

• There are lots of details on the quarter's numbers bu very slim pickings from Boyd in the earnings call on Agoda (seeking alpha) on Agoda. Boyd is very tight on the message of growth but will not be drawn on details.
  

1. "International gross bookings benefited from growth in new markets, growth in hotel supply and results from Agoda";
   

2. "Agoda also reported improving growth rates resulting in an improved merchant growth rates on a consolidated basis.";

3. "gross booking growth rates improved for Agoda"; and

4. "with respect to Agoda, we’ve consistently seen their business do well in Asian countries outside of China and India in particular, that’s been their focus. Thailand is a big market for Agoda."

First Class is dead. Long Live First Class.

10 years ago last month(January 2000) British Airways changed business class flying forever when they introduced the lie flat business class seat. I am sure that the revenue management team putting together the pricing and yielding plan for that launch did not realise that 10 years later they would be causing the death of first class. The launch itself completely changed the pricing for the standard 3 class airlines. In the early nineties (with the old Business Classes) the general rule for pricing between Economy, Business and First was "double double". Business was twice the cost of Economy. And First twice the cost of Business. But with flat beds stripping out seats, the pricing had to change. The rule went from "double double" to "by four by one point five". Sydney to Europe in economy was a $2,500, Business by 4 at $10,000 and First by 1.5 at $15,000. The gap between the price of Economy and the price of Business grew too great to withstand the Global F'n Crisis.

Today Qantas announced (during the publication of their results) that they would spend $400mm refitting most of the fleet to eliminate first class in all but 12 of its A380s.

On Jan 26 this year Air NZ announced their new plans for class configurations. They announced a revamped business, high end premium economy and the first efforts at beds in economy class. It does not include a first class (Upgrade:Travel Better blog post here on the announcement).

I therefore conclude that First Class is on its deathbed. My prediction is that within the next 3 years (by end 2013) all but the most luxurious of carriers that have flat or near flat Business Class seats (ie everyone bar Emirates, Qatar, Etihad and maybe Singapore) will follow suit and remove First Class from their configurations. That will leave Business as the new First with a huge gap to Premium Economy and smaller gap to Economy. In effect having moved from a 3 class airlines product to a 4 class airline product to a 2.5 class range of product.

But the change will continue. I predict that over the course of the following 7 years (starting in 2013 and ending in 2020) the seats in premium economy will start to lean a little more, then be spaced out a little further, then go a little flatter, then have their own lounges and check ins and finally an airline will announce Krug being served in "Business Class". We will realise that Airlines are back to the "natural order" of front of the plane with flat beds, middle of the plane with large, very comfortable seats and the back filled with grouchy people wondering why they signed up for the "enhanced transportation techniques" afforded by economy class.

In other words we are witnessing the end of First Class....until they rename Business, flatten out Premium and we go round again. Do you agree?

PS - if you like stories and analysis on the life, death and opulence of first class travel check out Shashank Nigam August 2009 post on SimplyFlying called " Singapore Airlines A380 Suites – A Class Beyond First or a First Class Branding Debacle?".

thanks to x-ray delta one via flickr for the photo of a 1959 707 first class on board lounge area

AsiaRooms: TUI A&D division generates no profits in Q4 of 2009 but AsiaRooms conversion on the improve

Here at BOOT central we try to collect and collate information on Asia's online travel companies. One of those we are tracking is AsiaRooms, the Pattaya based online hotel company owned by the European travel giant TUI. As reported last year AsiaRooms is incorporated into the LateRooms part of TUI.

In May 2009 I managed to collect some information about the performance and results for the TUI Online Destination Services group - which included AsiaRooms, LateRooms, Hotelopia, Hotelbeds and a dozen offline destination brands. The group was renamed the TUI Accomodation and Destination (A&D) division in the second quarter of 09. With the new name comes with a slight realignment of brands and sub-divisions into the following.

B2C Division: LateRooms and Asiarooms.
B2B Division: Hotelopia, Hotelbeds, Holidays Services and TUI Espania
A&D Specialist Division: Intercruises, Aeolos, Pacific World, TUI China

I read this as a greater separation of the operations of the combined LateRooms/AsiaRooms and the other "online" businesses of Hotelopia and Hotelbeds. While the focus of the BOOT is on the B2C group it is worth noting that the A&D section of TUI is big business generating more than £552mm per year in Revenue and more than 8,000 employees. (one page pdf factsheet on the A&D division here)

Last week TUI published their results for the quarter to 31 Dec 2009 (pdf here). From it we can collect another little piece of information on the online activities of TUI and AsiaRooms turnover. Here's what the announcement says

"The A&D sector reported an underlying operating result of £nil (Q1 09 profit £1m) due to foreign exchange translation losses. Profitability in our Online B2C business improved due to better conversion rates in Asiarooms following its switch from a merchant model to a commissionable model. This was offset, however, by reduced volumes in our Destination Services business in Spain."

In one paragraph it is only AsiaRooms out of some dozen or more brands that gets a mention. Nothing specific enough for us to tell whether or not AsiaRooms is profitable or not but they are celebrating conversion improvements. Any other information you have on AsiaRooms?

Tnooz: getaroom thoughts

New post from me live over at Tnooz. Titled "GetARoom: three question marks over the model but one reason the company will succeed". Getaroom is the new business from Hotels.com founders Dave Litman and Bob Diener. They had taken a twist on the opaque model with consumers not knowing the full price until after they have been charged. My thoughts on this model over at Tnooz.

BOOT eyefortravel interview: search, mobile, social networking, innovation, Asia and more part 2

Part 2 of pre-conference interview with with Ritesh Guptaof eyefortravel in the lead up to the TDS conference in Singapore April 28 & 29. Part 1 here.

Question - Can you provide an insight into how does search differ for mobile phones vis-a-vis PC? What according to you are the striking differences?

BOOT - The easy answer is location. A phone knows so much more about your current location than a PC. This gives mobile a huge advantage over PC search in servicing an immediate requirement. But there are challenges here too. A mobile can assume too much about a location. Just because I am travelling in Tokyo does not mean that I want the answer to the question to be in Japanese. The other challenge for mobile is that the platforms are still not uniform in display. Thankfully we are down to a much smaller list of mobile browsers/operating systems that previously but still there are differences between iphone, windows mobile, blackberry, palm and symbian which call challenges in display. This is where apps come in as content providers are trying to get around the browser and device compatibility by using apps to control display and information management to consumers.

Question - The progression of technology and innovation in the travel industry continues at a quickening pace and Asian countries are closing the gap on their western counterparts. What according to have been the major developments in this context in Asia?

BOOT - Innovation is always driven by local requirements and demand patterns. Therefore there are examples across Asia of markets driving product development well ahead of the US or Europe. India leads the world in online bus ticket sales and low cost carrier and traditional carrier display integration. Japan leads the world in online hotel bookings via mobile phones. China leads the world in call centre same day hotel bookings. The mistake many make in planning for innovation is to look to the technology first rather than the business need. As I discussed in this post the secret to innovation is as much about timing, social readiness and execution as it is about a great technology idea. Therefore the major development in Asia that is driving innovation is not a technology one it is a attitudinal shift and market maturity. A display of confidence within the Asian travel industry that dedicated market specific solutions can be put together to target customer needs rather than simply copying what the global OTAs are doing in Europe and America.

Question - What are you most looking forward to at TDS Asia? Who are you most looking forward to meeting at the event?

BOOT - Conferences are always about people watching and meeting. That is what I am looking forward to. The best person you meet at a good conference is the person you weren't expecting to meet. Someone you did not know that you needed to know - if you know what I mean :).

SEO rules - why have a top 7 or top 10 when you can have 59 things to do to improve your SEO

As a blogger I know that nothing drives retweets and inbound links like a good top x list of reasons why something is something. For example my post on the three lies that the travel industry keeps telling consumers was my top trafficked post for August 2009. Normally the list is kept at less than ten because the aim of the post is part informing the reader and part driving traffic. I came across a article last week that broke the rules on keeping the list at less than 10 - therefore hurting their chances at retweeting and inbound links but compensates by being a genuinely informative read and well worth being a recommended read of the week.

The post is "59 SEO Ranking Factors" from Joe's AdBlog. It contains what it says it contains - a list of the 59 factors that influence your site's organic search ratings. There is nothing flowery or engaging about the writing in this post but this lack of wordsmithyness (how's that for a made up word) does not detract from the value of this content. This is a great info source and worth you taking a look.

Thanks to Danard Vincente for the fantastic image (via flickr)

BOOT eyefortravel interview: search, mobile, social networking, innovation, Asia and more part 1

I have just completed an email interview with Ritesh Guptaof eyefortravel in the lead up to the TDS conference in Singapore April 28 & 29. Here is part 1 of our exchange (part 2 here).

Question - Do you think predicting user preferences is the biggest unsolved problem in online travel? How do you assess the integration of social search into online travel?

BOOT - I am a strong believer that all companies in online travel should be focusing on understanding users and working on predictive and recommendation engines. But it is a mistake to come at this from just a user preference angle. The trap that companies are falling into is thinking that consumers are still asking "closed" questions. Questions that can be answered with an easy or direct response. Questions like "how much for a flight to new york?, "which hotel should I stay in in Rome?". These are the questions consumers asked for the first 15 years of online travel. Now consumers are also asking open ended questions like "where should I go next?, "what is a good place to go this weekend?". Questions that require a more detailed answer and therefore a very detailed understanding of not only the preferences of the user but also the relationship between those preferences and the destinations available and the different versions of the individual that is searching (my concept of EveryYou). Social networking's role in this is the role that word of mouth has always played in marketing and travel purchases. A force that can be instrumental in a consumer's purchase decision which can be influenced, prodded, supported but never controlled. The difference between Social Networking marketing and word of mouth marketing is just speed. Social network is word of mouth at the speed of light.

Question - Today Google's algorithms are still quite a bit of a black box for professional search marketers. The semantic web should make it more efficient to create and manage online campaigns, because there will be less left to algorithmic interpretation. How do you assess this viewpoint?

BOOT - Google has won search - game over. There are countries were they are weaker (Japan, Korea, China for example) and products where they are weaker (local search and business listings for example) but let's not kid ourselves about who has won search. That said, "old search" is about providing a single destination as an answer to a question. Regardless of the search term, Google only presents a list of single answer destinations. If an answer to the search request is found through information from a combination of different websites then Google (or any search site for that matter) do not have the answer. The other constraint on Google and old search is the limited scope for incorporating and merging the latest up to date with results with older more trusted results. Google has been experimenting with incorporating real time search in their results (example here) but they have not yet figured out how to establish authority in real time search or change the display to be more than an never ending stream of updated information. The Semantic web should be part of the solution here but I still feel we are a while away from implementation because we have not figured out new rules for authority and new methods for display. Maybe Google have but there are just not saying yet!

Question - Google, which last year had introduced a new experiment on Google Labs called Google Social Search, has added a social element to Google Images. With Social Search, Google finds relevant public content from your friends and contacts and highlights it for you at the bottom of your search results. What is going to be the next big thing or trend in social search engine marketing?

BOOT - If you agree with my comments about that marketing of social networking is just like marketing through word of mouth but at the speed of light then the next big things in social network marketing are finding ways to adjust word of mouth marketing to a faster/instantaneous medium. The basics of word of mouth market are trust, interest and relevance. For a consumer to be prepared to share a product, idea, story, service etc with a friend they have to trust the source, be interested in the item/thing and think that it is relevant to others in their circle. Social network marketers need to have these three human elements at the centre of each campaign. The mistake that I see so often is jumping to a technological solution to marketing on social networking rather than the human elements. We can see this in the constant screw ups at Facebook with privacy as they launch new privacy crushing rules and products to give marketers access to customer data. My advice is to turn to the technology second and the human elements first. Establish trust then make something relevant and interesting. If you do, consumers will follow. The final thing to remember as a marketer in social networks - and the 21st century for that matter - is to accept that you have limited control over what your customers will say about your brand. The response to that lack of control is communication and discussion (ie engagement) not defamation, litigation and IP laws (ie stupidity).

Question - This year, we have already seen a couple of significant moves from Apple and Google towards mobile advertising. How do you foresee the impact on search and social media via mobile phones on the travel industry?

BOOT- Up until recently I have been a mobile denier. Mainly because every year since 2000 has been THE year that mobile would take over PC as the place for online action. Google's purchase of AdMob is the turning point. Not because when Google does something it means we have to take a trend seriously but because it means we know have non-transactional revenue streams for mobile activity. The problem for mobile has been that people stop at the credit card entry point. For a variety of reasons people that are completely comfortable putting their cc number into a PC or giving it to a bartender covered in tats and piercing in the off-line world have hesitated when asked to give it to a mobile phone. With Google betting on mobile advertising we have a biz model outline. A means for content and transactional companies to make money in mobile. That is the step that has been needed - more that the continued roll out of smart phone technology and more than the expansion of social networks.

more in part 2

ad:tech: BOOT pre-conference interview video on social networks, mobile, ecommerce and more

BOOT will be live at ad:tech in Sydney on March 17. As part of the lead up I did an interview with ad:tech chair Jenny Williams. Here is a link to a blog post by Jenny on the session I am speaking on and a three minute video interview of me.

Session and registration details are here.

Steve Sherlock of Oodles: the search for funding and the deal with Wotif that almost happened

Car rental search site Oodles is part meta-search, part travel agent and part loyal program deal search site. The classic meta-search part is the ability for consumers to search multiple sites in one go. The travel agent part is that Oodles collects commission on paid bookings (when customer pays car company) not on a per click meta-search basis. The interesting loyalty program part is that if you give your Airline or Car frequent flyer number to Oodles, then they will add to the search results specialist loyalty program deals. Means that a person who is both a Velocity frequent flyer (Virgin Blue), Qantas Frequent Flyer and Hertz Gold Club member will see an integrated display including special deals from Europcar (Virgin partner), Avis (Qantas) and Hertz as well as other deals from Thrifty. This is a great and - as far as I can tell - a unique offering in car rental and meta-search generally.

I was talking about Oodles today with Founder and MD Steve Sherlock. Steve and Oodles are in the middle of a search for a new round of funding. In a true web 2.0 fashion Steve is blogging his way through the experience in series of "diary of an entrepreneur raising capital" entries over at the anthill website. Included is a story about how Oodles was almost acquired by Australian online travel giant Wotif.com. It is an interesting series of diary notes and a recommended read.

I like the different angle that Oodles has taken from others. Allows consumers to see a display of a combination of inventory (loyalty program discounted and regular) that I have not seen on any other online travel site. Oodles already have the car rental traffic lead in Australia so appear to be executing well. The challenge for them is the constant start-up problem in Australia - finding the funding to continue to feed the growth.

Tnooz: The blurring lines between transactional and non-transactional sites

My latest post for Tnooz has is live. Title of the post is "Non-transactional travel sites are chasing the online agents on unique product hunting – but can it work?". I write about how content sites are starting to negotiate directly with suppliers for unique product offerings, trying to directly challenge the major online travel agents. Mentioned in the post are Kayak Private Sale, TripAdvisor Business Listings, Voyageprive, Jetsetter, Dealbase and Totaltravel.

You can read the full post here.