Emirates First class video

First attempt to embed a video in the blog. Video here of Emirates first class - Wow! You can actually close the "door" to your seat.


This Airline Has Everything! - video powered by Metacafe

Not all conversions are created equal

Interesting little piece reported by e-tid (registration required) on conversion rates for different search behaviour. Concludes that - not surprisingly - users of general search engines are poor converters when searching with generic terms (I assume such as a destination name), especially when compared to those customers using a suppliers name in a search. Comscore Media Metrix has more on the study in their press release. This confirms my belief that you can no longer look at conversion as one number in business planning and tracking. It has to be worked on a channel basis. That is looking at conversion from each source of customers - PPC, direct marketing, email campaigns, affiliate referral etc. It is also important to find ways to capture where a customer was first introduced to a site differently from where the customer ultimately was led to purchase.

A billion here a billion there and pretty soon your talking Cendant

Finally accounting confirmation of what we all knew - you can't turn 7 into 4.3 without impacting the bottom line. Cendant has taken a charge of more than a billion dollars (US) to reflect the difference in the book value of the Travelport assets (the sum of the acquisition prices less any earlier adjustments such as the write-down of ebookers) and the sale price to Blackstone. The good news is that Travelport is now clear of all of that baggage and can focus on growing the business in anticipation of likely breakup by Blackstone. The bad news is that this is the last we will ever hear of more than $2.7bil in wasted shareholder money and missed opportunity. It will become nothing more than a footnote in US corporate history (and an under-read blog post here).

Jetstar's big gamble

News all over Australia of Jetstar's announcement of it's first international service to Bali. Demand was so high - promotional fares from AU$169 - that it brought the Jetstar site crashing down.

Will be interesting to see how customers react to having to pay extra for food, blankets, movies etc.

"In-flight entertainment kits - including portable video on demand and headsets - will cost another $10, while so-called "Comfort me" packs -with a blanket, pillow and amenity kit - will be charged at $7 each."

Some of these flights are 7 plus hours long. What will Jetstar do if people either do not pre-book food or bring their own. I can see these great scenes where customers try to get on with camp stoves and cup-a-noodles. "Madame - put down the cheese sandwich and step away from the porta-cooker..."

Shades of green and blue or a combination of earth, sea and sky

Eyefortravel are quoting Travelport sources as describing the new logo as

"symbolis[ing] the three key elements of travel—earth, sea and sky, but also embod[ing] the continuous integration of the company’s core businesses—Orbitz, Galileo and GTA; moving together in a forward motion"

OR - its a mash of blue, green and greeny blue triangles that were hastily put together while trying to get Blackstone to take the conglomerate over as quickly as possible to save the spin-offs of Wyndham and Realogy.

Also - who signed off on the phrase "moving together in a forward motion". Yuk!

That all said, I think Travelport is a good name for the group. It and Trip.com were two great brands at the former Cendant TDS that lost application as their sites/business units were replaced with larger/better acquisitions (ie Orbitz).

I also think that ironically green is the right colour - Blackstone knows money and started the first phase of a predicted breakup through the issuing of bonds to help clean up the balance sheet and finance the leveraged buy-out of the group.

Webjet's big numbers - profits up, charges too

SMH is reporting on the latest announcement from Webjet. Expecting full year profits in the A$3.2-3.4 range and cash reserves of A$23.1 (mainly for the S8 option sale). I am not impressed by the claim that "this is 330% above last year" as happiness is a low base. However I am impressed with their focus and profitability and even more impressed that they continue to attract customers even though they are charging more than A$20 in service fees on domestic fares. Their TSA technology is great at aggregating different carriers into a screen but it is still based on the same pricing and availability as going direct to the supplier or any of the other aggregator technology sites (travel.com.au and flightcentre.com.au for instance), none of whom charge anywhere near $22.75 (service charge on today's search on Webjet). The airlines charge nothing beyond credit card fees and travel.com.au and flight centre are in the A$6-7 range. I don't begrudge Webjet charging whatever they want but am impressed/amazed that customers are paying it.

Zoo in the Dog House

Travelzoo results are out. Fantastic, amazing, huge, great, sales up 77%, income up 42% - stock plunges 14%. Proof again that internet stocks are "priced to perfection" with no room for missing targets.

Groping for Group

Groople is starting to generate some buzz for targeting online group travel. They recently appointed Mike Stacy as CEO. Mike was also part of the Cendant/Travelport machine, initially heading up marketing and sales at Cheaptickets.com before leading efforts to integrate Orbitz after that acquisition. Stacy says that group is a $40 bil market not online yet. A number of sites have purported to offer group but it had always ended up in an email to the customer care centre to be fulfilled offline. Keep a watch on Groople to see if they (1) automate this and (2) make a stand-alone business out of it. The first is a big challenge but I think the second even more so. We have seen a lot of new and reborn second tier online travel business emerging in this latest internet flurry. Making new products into a stand-alone business will not be easy.

Zuji marketing screws up - or it is something worse?

Received this in an email as marketing material from Zuji today at 4.23pm on Wed 19th July heavily promoting a great fare "from $1,296++" with "Airline of the Month" Virgin Atlantic. I am being very specific on the time and date I received the email because if you look at the fine print the

"Offer [is] available until 21 July"

This gives the customer just shy of 31 hours to book at this price (assuming it is good until midnight on the 21st). We all know that fares like this are looked at by people on Thursday and Friday of a week, discussed with the other half on the weekend then booked on the Monday. This makes this fare all but unavailable to every normal shopper.

It could be that this is just a screw up by Zuji marketing. However, the darker reading is that this could be an "bait and switch" - using a low fare to entice customers and then sticking them with a higher fare. Am tempted to not give Zuji the benefit of the doubt here. Bait and switching is not only illegal in Australia it is also stupid behaviour. It pisses off customers, wastes your marketing efforts and is just plain annoying for everyone. Here's hoping (if your Zuji) that it is just another screw-up.

Sensis is partying like its 1999

Seen in the streets of Sydney yesterday were outdoor campaigns promoting GoStay.com as Sensis continues its offline marketing strategies for new online businesses. So while Wotif expands into affiliate deals, Webjet (tries) to launch new products and Lastminute.com.au/Travel.com.au hired a new GM Commercial with extensive online experience, GoStay print more books and posters. Gostay will be gone in a moment if they do not wake up to marketing online businesses 2006 style rather than 1999 style.

Bloomberg on AU online public companies

Interesting read from Bloomberg here. In classic Bloomberg style is more factual than analytical but gives a nice summary of some of the key online public companies in AU including the travel guys Wotif, Webjet and Travel.com.au.

When getting to Brisbane is neither getting to Sydney or for that matter Brisbane

I think I jinxed myself. Fog has rolled in again in Sydney, closing down the airport and condemning all incoming flights to time on the ground in Melbourne and Brisbane. In my case – Brisbane. There was a tortuous moment in our flight at 6.45am Sydney time (with about 60 minutes to go to get to Sydney) the pilot announced that there was fog in Sydney and that we “might” have to turned to Brisbane. He was going to give the weather until 7.10am to clear. If at 7.10am we felt the plane turn right it meant we were not going to make it home anytime soon. You could see the whole plane sweating over the clock. Each minute that passed, the agitation built and the clock watching intensified. Then at exactly 7.10am the plane turned right, Sydney became further away and the plane let out a collective groan. Now I am in bad shape – left New York 23 hours ago and am still hours from home, but there are those on the plane worse off. There are some poor bastards on this plane whose ultimate destination is Brisbane. Why are they poor bastards – because they are not allowed to “deplane” here. For some technical/safety/blah blah reason a diverted plane cannot let people off. These guys have to wait on the ground in Brisbane with the rest of us, then fly down to Sydney where we will have to wait in the air with the other planes for a landing spot, clear customs wait for a connecting flight back to Brisbane, fly back and finally make it home. It doesn’t make me feel better that there are those worse off but am looking for some good news.

UPDATE - took 39 hours door-to-door to get home

Sam dams with faint praise

Forbes article on Sabre/Travelocity with an interview of CEO Sam Gillard. In response to a question about whether or not Sam and his family found a good deal on Travelocity for their vacation he says

"I think I got a good deal relative to what I could have gotten anywhere else"

What happened to CEOs screaming the benefits of their products from the rafters? I can see the new Travelocity marketing campaign now - cut to a gnome sitting on a milk crate saying "Sure we're not perfect, but heck, who is"

What if you had to spend some marketing money

Wow!. Wotif have announced the spending of marketing money in securing a deal for a co-branded page on ninemsn (Australian version of msn). This is a big step for Wotif. It is simultaneously the first white-label/co-brand affiliate deal that I know about and is one of the first up-front marketing campaigns (ie not direct response). I assume here that ninemsn has not waived it usual up-front changes - they are not famous for revenue share deals. Makes it clear that new channels and marketing campaigns will be part of Wotif's post float strategy.

Blah Blah - online travel is huge - blah blah - big numbers

New Forrester report showing that Euro online travel is big. One third of the projected Euro 263bil total online spend will be online leisure travel. e-tid says a bit more here. I love data but am over hearing large numbers covering large numbers of countries.

Travelport owner Blackstone has more cash than God

Newswires are now reporting that Blackstone (new owner of Travelport) has increase their fund through a capital raising round of US$15.6bil. It goes without saying that this is a mountain of money. This makes Blackstone is the biggest private equity group there is. Interesting home for Travelport to find itself and confirms my suspicion that a break-up will be the likely outcome.

New Yahoo! Trip Planner

Yahoo! have quickly followed Sheraton into the user generated content/community approach to online travel with their new Trip Planner. Pay more attention to the attempt to take on Expedia's Tripadvisor than the user generated content angle.

Here is what Forbes has to say about it.

Why Qantas annoy me

Am on a trip to the US for work and like most am compelled to fly Qantas because United offer no alternative, especially as the planes are 50 years old but younger than any member of staff. I feel like I should be standing up and offering them a seat.

I hate the United/Qantas duopoly flying to the US. The AU government confirmed again recently that they would not be granting any rights to Singapore, entrenching the duopoly further. I remember the incredible double speak of the minister as he justified the entrenchment of an anti-competitive arrangement as being in the best interests of the consumer. Here I am as a consumer and I am outraged that I have no choice. Now I find out that the Kangaroo route is going to be even further deregulated; effectively no limits on flights. There are more than 30 airlines to choose from on this route from the fantastic (Singapore, Cathay, Virgin, BA etc) to the ridiculous (Royal Brunei). How does the government make this decision on one hand but leave us with no choices when going in the other direction? Here is how the minister (Warren Truss) justifies this

"The economic modelling work [on the Pacific Route] that we have done suggests that the benefits of an airline such as Singapore entering that route would be very, very small to the Australian tourism industry,"

Must be the first time in history that a conservative government economic model showed that more competition would have no positive impact. Presumably Truss clutches his chairman’s club membership and hopes no one notices the inconsistency.

Without competition Qantas take me for granted. For example they announced with much fan-fair and mutual back-slapping that the new Qantas in-flight entertainment would be launched. This would be a revolution – they proclaimed – as Qantas would be offering video and audio on demand. Let put aside that Cathay, Singapore and many others have offered this for years. Instead I am going to focus on the fact that this new service – NEVER WORKS. I have flown 4 long haul sectors with Qantas since the announcement and on each sector the service has failed to work. The program works something like this - flight reaches cruising, staff turn the system on, over the next hour everyone on the plane selects a movie, this crashes system, staff reboot system, over the next hour everyone selects a movie, this crashes system, staff switch off system. Four times this has happened. Took me 4 hours to Syriana – which given how complicated the plot is made it is impossible to follow. On this current trip they have just given up on this leg and retuned to the old entertainment system that forces you to survive the long sector in two and half hour blocks with movies starting at random times.

If Singapore flew the Pacific route it would bring prices down, service up and maybe convince Qantas to install an entertainment system that works, employ staff that smile, serve meals within 3 hours of take off and stock magazines put out after the Labor government lost power. And the punch-line – I get of this flight and have to connect on an American Airlines flight.

New Travelport corporate site and logo

Hot on the heels of the announced sale to Blackstone comes a new corporate website for Travelport. Not a lot new there yet but looks like it is still in beta.

AAA monopoly tactics working

AAA Tourism pressure is working as Quickbeds have announced through Travelweekly not only the removal of the self ratings of hotels but dropping them to the bottom of the sort order. I think this is a step to far. While AAA has the legal right to force the removal of the stars from hotel they cannot compel a site to take away another rating system. Quickbeds (and others) should have more strength and faith in their product people and support accommodation of good quality. AAA should rely more on this brand and standing and less on its monopoly legal rights.

Expedia continues holiday push in UK

New site launch for Expedia UK with different look and feel to the US and other sites. This and other functionality changes such as split payment is continued evidence of their attack on the tour operator market.

Simon Nowroz to head Cendant B2B Asia

Just heard that Simon Nowroz has been promoted to take over from Mark Rizzuto as MD of Asia for Cendant B2B (mainly Galileo and GTA). Mark's move home is a loss to Cendant but Simon is a super-star and deserves this opportunity.

Webjet and hotels online - Now I agree that it is a new site as they forgot to get the dotcom address

Brilliant. I have criticised Webjet for claiming that they were going to launch a new hotel only product - bookabed - as this product was more than three years old and failed at the first attempt. Now Travelweekly are reporting that it truly will be a new site as someone at Webjet failed to secure the rights to the bookabed.com leaving Webjet with just bookabed.com.au. We can now look forward to a truly "new" product at lotsofbeds.com. Big challenges ahead for lotsofbeds to join the strong players challenging Wotif - lastminute.com.au, RatesToGo.com, needahotel, readyrooms (assuming their URL works) etc. To have a chance, Webjet will have to execute flawlessly including getting URL registrations right.

Social networking - Sheraton Style

Starwood has re-launched the Sheraton website with a social networking flavour, looking for customers to add their stories and interact with the brand online. If properly executed this is a superb brand move by them. The hotel chains initially fought back against third party distribution by emphasising price parity. This was not the right move as it was treating distribution partners as the enemy, turning the marketing battle into which distribution channel the customer should use rather than which hotel the customer should stay at. Customers don't think in terms of distribution channels. They make decisions based on emotions around "is this a good deal" and "will it be a nice place to stay" not "disintermediation pricing plans by the hotels are now beginning to work and therefore there is value in booking direct again". Too many times I heard from hotel marketing managers that customers are focusing on the latter. Instead I have argued that hotels should be focusing their online and marketing energies in building a brand and personal relationship with customers. This will drive their long term success much more than simply fighting it out with distribution partners as to where a booking is made.

Travelmole and eyefortravel have more.

There definitely is another boom

Good article from SearchEngineWatch on New Players in Travel Search providing background to Farecast and FareCompare. They work differently to the old school meta-searches of Kayak and Sidestep. These sites try to go deeper into fare schedules and pricing - joining flyspy in attempts to enhance fare transparency . RedHerring does it's second piece in as many months on e-Travel. Unfortunatley I can't find this online so you will have to buy the 26 June issue - look for the "e-travel Second Wave" article. Great table outline the VC investments in the meta-search travel companies and market share shifting away from Expedia to Travelocity and Priceline.

Big Webjet quarter- happiness is a low base

Webjet announced a good quarter. Total travel for the financial year to June 30 was AU$172mm (US$129mm). A 100 plus percent increase looks good but when it comes to growth "happiness is a low base". It is the FY07 year that will truly show whether Webjet will be able to develop sustained growth. They are betting on their new re-launched hotel play and yet to be seen improved packaging.

Skytrax votes are in

BA topped the Skytrax annual airline awards.

Their top 5 is
1. BA
2. Qantas
3. Cathay
4. Thai
5. Emirates

My preferred are:
1. Singapore Airlines
2. Cathay Pacific
3. BA
4. Qantas
5. Air France

This list always starts more debates than it finishes - except the universal truth that there should never be an American airline anywhere near the top.

Selling Cendant Travelport - Turning 7 into 4.3

Congrats to Cendant on selling TDS/Travelport to the renowned private equity firm Blackstone. Forbes called the price/deal "adequate". FT says the the price is "no knock out". Considering the state of the assets, the price on the deal is well described as adequate/OK as the earnings multiple is better than Sabre's, hence the congratulations. However, I would use harsher terms to describe the state of affairs that led to this being the best price of the assets. It is publicly known that the Travelport business was built over the course of 5 years and more than a dozen acquisitions costing $7bil. Simple maths shows $2.7bil is lost value. Should provide the remaining Cendant entities with tax credits as well as cash to help with debt. Blackstone are the masters and finding that lost value. Two possibilities from them, a turn around and flip within 3 years or a break-up and separate sale. I'm betting on a break-up.

UPDATE 1 - Travelmole comment
(login required)
UPDATE 2 - Redherring
UPDATE 3 - e-tid with a collection of comments from newsites and papers (registration required but free)

Bullish analyst report on Priceline

Morgan Stanley have put a bullish analysts report for Priceline according to Forbes. Expedia, Travelocity and Travelport look too far ahead for Priceline to catch up but this does not mean that there are not great profits to be made leading the second teir. Especially if they continue to get it right with integration of acqusitions.