Pegasus has a mission - Michael Kistner is the new CEO and RezView NextGen is the Product

News out today that Pegasus has a new CEO with the promotion of Michael Kistner (previously COO). He takes over from John Davis. The press release links the transition to the launch of the RezView NextGen reservation system. I had a chance to speak to Mike on Feb 18 this year about the impending launch of the Next Gen System.

During the interview he was very passionate about the product. Stressed the time and effort it took to integrate the acquired GuestClick (who provided the basis for the new technology), mapping the new technology to each of the interfaces supported by Pegs to commencing the sale cycle to technology wary and tired hoteliers. I did not get the feeling that he was betting the company on this product but almost.

The piece that all of us are looking forward to the most (Pegasus, hotelier sand distribution companies) is the rate refreshing improvements that will hopefully eliminate the need for a cache or at least dramatically increased accuracy in the cache. Kistner told me that the company is determined through this to protect itself and the reservations systems of the hotels/chains from the dramatically increasing numbers of searches coming out of the meta-search companies. Look to books as high as 500,000 to 1. Staggering numbers.

The part that is the biggest challenge is that Kistner committed in our interview to have RezView NexGen fully rolled out within a year and a half. This means closing down the old product toward the end of the year. Big tech roll out job, big sales job and big expectations from the industry. The Pegasus Board is backing him to do it.

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”.

EU Phase 2 look should cost Travelport money but not a deal

The EU is planning a Phase 2 investigation of the Travelport (Galileo) and Worldspan merger (here is the Travelmole article. This does not mean that the merger will be blocked as it is really just the equivalent of the Competition Commission saying "hmm...let me think about it". It does however create a headache for Travelport as the cost of submissions and approvals just went up - somewhere in Brussels there is a partner in the EU practice of a big law firm rubbing his/her hands with glee. It also delays synergies and strategic plans causing more costs and pain.

I would be surprised if the Commission ultimately decides to reject the deal. While their initial analysis is right that this would give the combined organisation a powerful number two status in the European GDS wars but that does not mean what it used to mean 10 years ago. There is so much inventory now being booked off GDS such as through low cost and full service airlines direct online, hotels online through extranet based intermediaries (just look at the killer results coming out of Priceline in Europe) and even the interactive tools that the wholesalers are using. Being dominant or strong in GDS should not be the concern for competition that an siilar analysis in 1995 would determine. If the European Commission can clear the MyTravel and Thomas Cook merger then would be strange to make a stand here.

This should make it almost a certainty however that the Commission will want to have a phase 2 look at the Pegaus/Wizom deal. More joy for regulatory lawyers.

Pegasus, Wizcom and the attempted rise of GDS New Entrants (GNEs)

You don't need me to tell you that Pegasus bought Wizcom. If you do, here is BTOnline's report and here is the Internet Travel News Report. You also don't need me to tell you that this means that a supposedly fiercely competitive two horse race is now a co-operative ride in the country. Where there was once two mechanisms for a hotel connecting to the GDS' without going direct. There is now only one. I have been thinking about the angle to put on this. My natural (and historic) angle is to focus on the Travelport elements. To link all of this to my commentary around Cendant becoming Travelport becoming Blackstone and being sold off (see this index).

Instead I see it as a good opportunity to talk about the GNE vs GDS debate. Again you probably don't need me to say that GNE stands for GDS New Entrant. For years it was thought that it was not possible to replicate the infrastructure of the big GDS' - most of which was borne from years of tech investment in airline rez systems. GDS' are some of the biggest and most complicated computers on the planet making the tech side extra-ordinarily expensive. On the revenue side, the business model and therefore the "rivers of gold" like profits is under threat. So (the thinking went) surely there this no way to build a new in GDS or GDS like product in a profitable/sustainable way.

In the last year or so, the GNE's have emerged - led by G2 Switchworks and ITA Software - trying use different forms of connectivity (APIs, xml and other web forms) to provide the same/similar connectivity services of the GDS without the huge infrastructure cost. As they are starting from scratch they are trying different (read cheaper and less complicated) business models than the "I charge you, then give lots to the agent" model of the GDS.

Let's assume that this new model gets traction. Combine this with the enormous power of other non-GDS channels to agents for hotel access and bookings such as wholesaler web platforms, meta-search and plain old Internet sites with xml connections everywhere and in-house dynamic packaging and it could mean that the effect of Pegaus having the main key to the GDS door will be lessened over time.

This is a big assumption to make for now as the GNE model's success is by no means guaranteed. There is not even certainty yet whether they will be able to grow out of the North American market. I have more to learn about it to comment further. If you have some inside knowledge about the GNE market please post a comment. If you work in the sector send me an email and we can organise an interview. For a little more background their is an interesting piece (video and pdf) here with reps from Worldspan, Accenture and G2.