WTM Pegasus Sessions: What’s next for Pegasus?

Fifth and final in my series of posts coming out of my interview with Michael O’Connell of Pegasus at WTM (Senior Director – Global Partnership Development).

Michael told us (not surprisingly) that Pegs has no plans to enter the air distribution market. However we should expect to see them launch products focused on land activities in the near future.

WTM Pegasus Sessions: Chains – we got ‘em – but getting the best rates is a matter for you

Fourth in my series of posts coming out of my interview with Michael O’Connell of Pegasus at WTM (Senior Director – Global Partnership Development).

The last area we talked about was chain hotels and Best Available Rate (BAR). The background to this is easy and quick – ever since the rise of the merchant model, hotels (especially chains) have been trying to use best available rate guarantees as a tools for driving consumers to hotel direct sites as opposed to online intermediaries. This has been to the benefit of Pegasus as chains with central rate control have been insisting that intermediaries access inventory through a Pegasus or similar direct connect link rather than via direct to property discussions. But it has also been a challenge for both chains and intermediaries as not all of the properties adhere to the chain rate rules – especially in the case of consortia and brand groups (such as the Pegasus owned Utell).

My question to Michael was a short but direct one – “What role should Pegasus play in helping to secure true BAR from chains – especially those consortia that do not have full brand control?”. His reply “Pegasus is about bringing the two [chain and intermediary] together. We are not structured to get the rates from hotel (ie “a Pegasus rate”). This is always a discussion with the hotel. We don’t control the commercials between the hotel/chain and distribution.”

This answer is to be expected. Pegasus is a connectivity mechanism not an operator. However the success of BAR push of the hotel chains is dependent on the chains ability to enforce it at the property level - something that is not being achieved at at level that co-operative intermediaries need. This is not Pegasus' problem to fix it is one of the chains, consortia and intermediaries to work on. Pegs for now can sit back and enjoy the boost in bookings from the chains BAR push.

WTM Pegasus Sessions: Too much information, so much shopping and eventually somebody buys something

Third in my series of posts coming out of my interview with Michael O’Connell of Pegasus at WTM (Senior Director – Global Partnership Development).

One of the challenges facing Pegasus mirrors by theory around the next phase of online travel being about consumers confronted with too much information and needing help and guidance in finding answers questions like “where do I go next?”

Pegasus is being confronted with this in dramatic increases in search volumes, especially from meta-search and optimisation tools. Some involved look to books ratios of 300,000:1 that is a conversion rate so off the chart that if you were at an online retail company you’d either fire you head of marketing or product or both. This is happening because Pegasus gets pounded in a meta-search request not once but potentially dozens of time per search. If you imagine that a meta-search provider is connected to 40 or so retailers and half of them are access the same rate for a chain property through Pegasus you can see than duplicative searches are inevitable and place a burden on Pegasus’ systems.

Pegasus is trying to deal with this in two ways. Firstly by doing deals directly with meta-search providers to lessen the load or at least manage it more efficiently. Part of this is to help the meta-search companies decide which hotels to search through which distribution connections including Pegasus. This should hopefully reduce some of the bursting that comes from meta-search companies. Secondly by using this as a very cheeky opportunity to encourage the meta-search companies to drive this traffic and the Pegasus owned hotelbook booking site rather than the string of competitors that will then pound Pegasus multiple times. The hope being to sell meta-search on using hotelbook as a proxy for all chain property searches. Has a nice ring to it if efficiency of search is your main criteria but am not sure that the CPC hungry meta-search providers are going to buy it.

WTM Pegasus Sessions: Merchant vs Retail – customers don’t care but hotels do

Second in my series of posts coming out of my interview with Michael O’Connell of Pegasus at WTM (Senior Director – Global Partnership Development).

I don’t need an introductory paragraph to tell you about the rise of the retail model in online hotel sales. In the online travel world immediately after 9/11 and Expedia’s acquisition of Travelscape the push for all online hotel retailers was merchant, merchant, merchant. However the retail model is back and in a significant way. Not only with the rise of European and Asia based retail model companies such as the amalgamated Booking.com, Venere, HRS and Hotel.de in Germany and Rakuten and others in Japan, but also with the efforts of the GDS companies to extract Best Available Rate promises from hotel chains.

I talked this over with O’Connell and expressed two interesting points of view

Firstly he believes that consumers do not really care which model so long as they can book the room they want at the price they want. Arguing that the choice of model is a decision made by the retailer and the hotel based on considerations other than what is more desirable to the consumer. I thought about this a lot and am torn right down the middle. This premise is supported by the continued success in Europe of both merchant and retail model players. Further there are plenty of markets where paying up front has played a historical role in travel purchasing. However on the other side in the world of online consumers having “too much information” in booking travel, trust plays such a huge part in a consumer deciding to whom they will give their credit card number. That said, I am confident that more often than not a consumer looks at both merchant and retail sites and makes their purchase decision more on the basis of rate, availability, cancellation requirements and trust than on whether you have to pay upfront or at the hotel.

The other area we looked at was which model the hotel’s preferred and why. O’Connell’s view was that hotels clearly prefer the retail model because there is no payment collection issue and the hotel has a greater chance of establishing a relationship with the customer – effectively “stealing” the customer from the retailer. Therefore the rise of the retail model is more due to the economic good times and shift in power from the retailers to the hotels than specific model decisions made by retailers. On the former point I have always seen the merchant model as being just as beneficial to the hotels as the retail model. While the retail model removes collection issues the merchant model drastically reduces cancellation rates and shifts the fraud and credit card process fee burden to the retailer. But I agree that the hotels are dictating the growth of retail driven by the strong global hotel demand. Merchant will survive and grow in a prosperous times but should/when the market softens then merchant could become dominant again.

WTM Pegasus Sessions: RezView Next Gen to kill the need for a rates cache – but Pegasus needed to buy to make it happen

I had a chance at WTM in London last week to meet up with Michael O’Connell of Pegasus (Senior Director – Global Partnership Development) and briefly Mike Kistner (EVP and COO). O’Connell was keen to tell me about the plans that Pegasus have with their rewrite of RezView, called RezView NG (for next generation). I was keen to talk to him about a few trends in online hotel distribution. In this post will cover our discussion of RezView NG. Will cover our conversation over a series of posts.

The rewirte of RezView came from the acquisition by Pegasus in May 2007 of GuestClick. The aim with the relaunch was to update the platform, consolidate the two older version of RezView into one product and allow for improved functionality in areas of pricing, distribution and real time connectivity. One integrated platform based on more modern web technology (ie the magic ajax). All good aims. It seemed strange to me at first that Pegasus needed to buy a company to relaunch its core product – as opposed to build in house. Kistner made two points in response – first that the technology was not completed when they bought GuestClick. It was “about 70% ready”. This gave Pegasus enough of a product to get a jump in development without being too far advanced that Pegasus could not make the changes it needed to have the product meet their aims. Secondly, they were aware that they needed a big jump in the product. They needed a product that was unencumbered by any legacy issues in the current product. As Kistner put it the GuestClick product was “not perverted by commercial realities. It [GuestClick product] was a technically pure implementation of a CRS not changed to meet the needs of any one customer”. In other words – a fresh start.

Migration will start in Q1 in 2008 and take about a year. The main upside for distributors (ie online hotel retailers using Pegasus) is that the NG product will have an pushed based version for pricing distribution trough UltraDirect. This means less of a need for a cache and I am assured will meet the aim of dramatically increases the accuracy of rates in the first search for all players. I am sure you will join me in a round of “finallys”.