TRAVELtech: the travel industry against the applicance industry

TRAVELtech continues. Rod Cuthbert the CEO of Viator gave a great presentation earlier this morning. He have very few slides, instead relying on pictures of destinations and activities to tell his story.

A number of these photographs showed the tough side of consumer travel from the extremes of pictures of terrorism and panic to images of the drudgery of never ending lines at airports filled with despondent people wishing they were on holiday rather than going on holiday. From this he talked about how hard it is becoming for a consumer to travel. The uncertainty of arrival times, the challenges of travel in economy class, the need to varying degree to limit what you can carry on board etc.

When travel becomes hard, he argues, people start to look at their discretionary spend and think of alternatives outside of travel such as LCD screens, new generation games consoles and home cinema sound systems. Have no data to back this up but I agree with him. Travel used to look only to other forms of travel for competition (international versus domestic, retailer vs retailer, supplier vs supplier). Not sure what the solution is or how we open up our marketing to fight the Harvey Norman, Best Buy or Dixons of the world but it reinforces the need to keep the purchase and consumption process simple for consumers.

TRAVELtech: Hotelscombined - bringing meta-search and affiliate marketing together

TRAVELtech continued. Yury Shar gave a little more insight into meta-search and his company Hotelscombined. My earlier profile of them is here.

The interesting point from his speech today is not that he is generating good traffic - though he is with 450,000 visits per month. The interesting story is that his number one source of traffic is affiliate program. He shared that 38% of traffic is coming from a network of 1,500 affiliates (here is an example bellhop.com.au). Search is still critical with SEM ranking number two at 34% and SEO third at 20%.

I was working on the assumption that paid search and to a lesser extent SEO would dominate the traffic feed for meta-search. With no data backing it up was assuming that these would be responsible for 80% of traffic for a meta-search provider, not the less than 65% that Hotelscombined generates. Congrats to Yury of building this great affiliate network.

Yury also passed on this four tips for search engine optimisation marketing efforts:

1. Give yourself time - it takes 18-24 months for a start up to "prove" itself to Google as a legitimate content provider;
2. Design the site - design the site for both consumers and search engines. The site needs to be specifically designed to be shopped and indexed by Google. As he puts it - it is easy to design a site with great content that Google cannot be "seen" by Google;
3. Register and open a Google Webmaster account; and
   
4. Design a long term link strategy - Does not mean building fake links or becoming a hard core "black hatter" but working on links and traffic generation through content optimisation has to be part of marketing plans. For example making sharing of and imbedding of links by customers and easy thing to do.

TRAVELtech: Interview with Travel.com.au CEO Adam Johnson

TRAVELtech continued. Interview on stage with Adam Johnson the CEO of Travel.com.au the operator of both Travel.com.au and now the sole owner of Lastminute.com.au.

Couple of interesting metrics and number from the interview:

• The are now profitable (measured on monthly numbers). Recent full year financial results showed a loss but now profitable on a monthly basis;
• Expecting 30-35% topline and bottom line growth for FY08 - TTV of $130-140mm;
• Marketing spend will stay around 2.5% of TTV. All of this online, 80% of it likely to be on SEM;
  
• 15,000 hotel bookings per month; and
  
• 500k subscribers to newsletters on both brands.

He is very conscious that the area they need to work on is less around brand and traffic but conversion. Would not share numbers but admitted to be behind competitors on converting traffic into booking. As he says "need to focus on utility" around pricing, functionality and product.

Travel.com.au are celebrating their 10th year this year. They were one of the first in the world to do international flights online. Not that this is much to brag about. As Adam joked, "In the early days we had 100% of the online international fares market. All two of the bookings made were made with us."

TRAVELtech: the fourth phase of online travel - "too much information"

More from TRAVELtech. I talked some months back about my theory about how the short history of online travel can be broken up into three phases. For a quick recap here is what I said

Phase 1 (1995-2003) – I know where I want to go, find me the cheapest price.

Consumers treated online as a price based flight business. They knew exactly where they wanted to go from and to. All they wanted help on from an OTA was price. Not information, not help, not recommendations, just price.

Phase (2000-2006) – I want to find a deal on where to stay, can you help me with rates, availability and advice.

Consumers gain in confidence and cheap hotel deals flood the Internet. Consumers now begin asking OTAs for limited advice on finding and booking of accommodation.

Phase 3 (2005 – now) – what do I do next, where should I go next.

For the first time ever the consumer starts to ask an open ended question of the Internet. Instead of the specific questions of phases one and two where the consumer knew most of what they wanted to know - consumers gained the confidence, tools and networks to ask for advice from OTAs, "the crowd" and the Internet at large. "What do I do next?" Content started to drive traffic and sales like never before. Best available rates and set pricing from suppliers made it harder for the OTA to offer deal advantages.

In my presentation today at TRAVELtech I talked about my thoughts on the future of online travel - phase 4 going by my timeline. Here is what I said.

Phase 4 (2009 and beyond) - Too much information

Consumers begin to feel overwhelmed. They are searching sites with 50k, 100k and maybe 200k hotels (though a comment here says that the sites like HRS claiming 200k hotels are exaggerating a little). There are review sites with 20 million or more reviews. Social networks are producing hundreds of friends with thousands of recommendations. Emails, RSS feeds, SMS suggestions and more are flooding into consumer inboxes. Too much information!!

The challenge as we head into this phase is to take all this information and build a coherent story for consumers. My expectation (and hope) is that this will produce a return to the need for customer loyalty. For online retailers making a connection with customers that they keep through the development of loyalty programs - be they actual rewards, good deals, community building and other marketing and product activities.

The reason to care about this history is that it helps us in planning our products and marketing plans for the future. One of the downsides of a maturing industry is that growth in the traditional markets (US and EU) takes more work and greater innovation. One of the upsides is that we now have a history to look to in preparing of the next trend.

UPDATE - you can find a copy of the presentation here.

TRAVELtech: The true cost of booking an airline ticket

First of my posts from the conference TRAVELtech. Have been listening to Tim Russell (MD of Amadeus Australia).

Tim made a very good point when looking at the costs of booking an airline ticket online. He presented research indicating that at a dollar charging level the cheapest place to book a flight is usually the airline’s own website where there is normally only a small credit card fee but no booking fee. Call it $0-$15 per booking. In the middle of the cost spectrum there is the online and offline agent where there are fees and charges ranging from $10-$30 per ticket. Finally At the end of the spectrum there is the full service Travel Management Company (TMC – corporate travel agent). These providers can charge upwards of $50-$60 per ticket.

On the crude measure of dollars per ticket, the airline direct site is the cheapest. However, Tim brings in the great point that when assessing the cost of booking we should really also be considering the time cost is searching and completing the transaction. When this is taken into account the cost spectrum is turned on its head. The TMC booking takes the least amount of time – say 15 minutes, the time it tkes to make a phone call to a dedicated agent. Next comes the online agent who can display multiple carriers in one place making searching faster. Finally the airlines direct site takes the longest – more than an hour because of the need to search more than one supplier before taking a booking.

Including these measures it becomes a neck and neck race between the cost of TMCs and online agents with airlines coming third.

If you are booking a leisure flight for the family and have all the time you need then time does not come into account but certainly in the corporate area there is a huge time difference between the different travel booking channels. Goes part of the way to explain the success of Webjet in Australia despite the huge fees they are charging.

So you own an airline and a plane crashes - what is the first thing you should do?

If you are China Airlines the answer is paint over the company logo on the side of your plane to hide your identity and hope no-one notices.

Here is the before shot

Here is the after shot

Thanks to the Consumerist and MSN News/Mainichi Interactive

The BOOT at TRAVELtech in Sydney

Quick reminder that I will be speaking at TRAVELtech tomorrow. I think you can still get a ticket. UPDATE- now sold out. I am on in the morning speaking with:

• Peter Smith, General Manager, Zuji;
• Tim Russell, Managing Director, Amadeus Australia; and
• Rod Cuthbert, Chief Executive Officer, Viator.

Here is a little taste of what I am going to talk about tomorrow:

• my view on the history of online travel (teaser here);
• the likely outcome of the battles between meta-search/content providers and retailers for customer loyalty (teaser here); and
  
• my thoughts on Australia finally embracing the air intermediary model (teaser here)
  

If you are already attending then I look forward to meeting you during a break.

SMS from out of the blue. What should I do?

A friend of the BOOT and industry insider (not called Tim) received a text message yesterday from a phone number that neither or us recognise that said "Tim have made an offer to buy out ????.com" where ???.com is a city specific destination site owned by a private equity firm. I am keeping the actually URL a bit quiet as there is some sort genuine secret mistake that occurred and this SMS was meant for me. The carefree blogger in me wants to shout about this and add it to my mini deal list but the corporate professional in me is hesitant to tell the world (or my 200 or so readers) in case there is something more here that I should know about. So - dear reader- what should I do? Tell you all about this mini-deal or wait to see if this is an important miss-sent work SMS?

Spirit Airlines CEO crowned technology and customer service superstar

The CEO of Spirit Airlines - Ben Baldanza - is the lead candidate for our tech loser of the year award. If the Consumerist and other blogs are right Mr Baldanza pressed reply all to a email instead of regular reply. The person on the other end of the email who was not supposed to receive the reply was a customer with a complaint. Mr Baldanza's reply to the customer service agent who was supposed to receive the email was

Please respond, Pasquale, but we owe him nothing as far as I'm concerned. Let him tell the world how bad we are. He's never flown us before anyway and will be back when we save him a penny

Not sure what displays more genius - bashing the wrong key on outlook or being so dismissive of annoyed customers.

Full text of email is here

Groople was first to Group but is now having to innovate to keep up

One of the first companies I blogged about was group booking specialist Groople. In posts on them and other targeted booking providers I have mused about how it will be challenging to obtain and maintain scale focused on a very niche section of the market. Themarket has also become very competitive for group travel with the likes of TripHub also entering the market (here is my interview with John Pope of TripHub).

You will recall that TipHub enables groups of people to share information about about a trip. In a recent announcement Groople are planning similar planning abilities such as clone itineraries, themes for groups and event scheduling. TripHub may have followed Groople into the group market but Groople is now following TripHub into social networking.

More little deals - 10Best buys Content Works

In another sign that I should be looking more and more at the little deals and that the market for big acquisitions in the online travel space is limited, reports from PaidContent that destination and activity information site 10Best has bought The Content Works. Dollars kept quiet. No quotes from any of the executives such as CEO Brice Bay. Looks like a distribution play by 10Best. Designed to give them more business to business distribution and increase the customisation options for their content.

Little deal updates and staff movements

Have been caught on the blog talking about the big deals more and more such as Rakuten's big profit from Ctrip, Sabre & Amadeus in a tie for non-air sales and the collapse of Flight Centre's multi-billion dollar buy-out. Time for a couple of smaller deals.

First an announcement this week that Travel Publishing group Questex Media Group has snapped up "Five Star Alliance". Five Star Alliance (foundered by Cal Simmons and Eric Koefoot) is a listing service devoted to luxury properties. Not convinced that a simple listing service targeted at a particular price/quality can survive without a twist - something different to just listing. Maybe this is the hope in tying up with a media company. If you want an example of a price/quality site with a twist see Tablet Hotels which has a range of search options that match the thought process that a luxury hotel hunter goes through.

Second announcement from alarm:clock was further recruitment efforts at stealth mode start up Travelmuse. There has been little out of this start-up to date other than general claims around improving the booking process and sharing experiences. But they are now up to a team of 5 having added ex-Peerflix CTO and ex-Hotwire staff member Cyril Bouteille.

What do Yododo, mipang, tuniu and cn0km.com have in common?

Yododo, mipang, tuniu and cn0km.com are some of the leaders in Travel 2.0 services in China according to the China Web2.0 Review blog. Yododo is a travel planner and info site. Mipang is a social network. Tuniu is a travel portal with Digg style voting features. Cn0km is a destination wiki/info site.

This is one of those nice web moments where I have not been able to look into sites like these because of my language inadequacies so can simply point you all to someone who has done all the hard work.

Originally found the link on the China Industry Travel Blog.

UPDATE - Claude at Les Explorers blog has an interview with Yododo CEO Marriane Miao here

TripAdvisor finds $3million dollars to buy Facebook App - Where I've Been (maybe?)

A few months ago developer Craig Ulliott was panicking because he had 400,000 users bombarding his little Facebook application - Where I've been. Not only are there now 2.3 million people with the Application but Craig and the rest of the group (if there is a group) now find themselves rich and members of the Barry Diller travel empire due to a sale to TripAdvisor for $3million (according to TechCrunch). UPDATE - TechCrunch is now saying that this deal is not yet done - just under discussion. UPDATE 2 - Here is TripAdvisor on News.com calling the acquisition untrue and Ulliott saying that there is no deal (yet) but that he is "exploring all avenues to maximize the value and usefulness of our product". Sounds like discussions have stated but note finished.

The application lets you share with your Facebook buddies where you have lived, worked, travel and (obviously) been in world. It is simple but effective. It has none of the stickiness and addictiveness of Traveller IQ test from (now stable mate) Travelpod. But its fun to work with.

Provides further evidence of TripAdvisor's plans to expand into different brands and expand their traffic base beyond the core review site.

If you are on Facebook and want the App, you can find it here.

Back on the blog Friday 17 Aug

Am working, travelling and sadly attending a funeral. Back Friday

The BOOT in Melbourne at HSMA

The BOOT will be live and in living colour in Melbourne on Wednesday 15 August at the Hospitality Sales & Marketing Association event - Managing the Internet Sales Beat. Event details here if you would like to attend. Other speakers at the event include Ryan Rae, Head of Global Markets Wotif.com, Jon Marshall, Ecommerce Consulting and Michael Hausen Tourism Victoria.

Rakuten and Ctrip part company and commence battle

Japanese online powerhouse Rakuten Travel has announced that it is selling its 20.3% stake in Chinese powerhouse Ctrip for $575mm - pocketing more than $470mm in profits in three years (Reuters). Good deal. Rakuten was the largest single shareholder. Profit is not the only motive. Rakuten has been pushing its own brand in China for a at least three years. The natural expansion plans for Rakuten given its inventory and regional location has been into Korea and China. It was only a matter of time before that Chinese expansion saw Rakuten (the brand) battling head to head with Ctrip. The challenge of course in China is the one I discuss often - the fact that "online travel" really means "call centre travel" meaning that it is not a clean and easy expansion of the current Rakuten model. Not a simple matter of more hotels in China and more translated pages. But with $470mm in profits in the bank you can buy a lot of seats in a Chinese call centre.

Couchette airline style

I never believe an airline mock-up of a possible plane layout. I will only believe my eyes when I board the plane and see the truth. But there is a cute idea coming out of Lufthansa according to News.com.au to have couchette style sleeping in economy class seats for the Airbus A380. You can see the plan for three by three stacked beds from the picture above. I am sure there are a 101 safety reasons why this will never happen.

UPDATE - Air New Zealand is also seeking a PR push through announcing its "contemplation" of sleeping pods. I still do not believe any of this will happen.

Sabre and Amadeus joint venture - then there were two?

Hot on the heals of the imminent approval of the Galileo and Worldspan merger is news of a Sabre and Amadeus joint venture. But don't get too excited this does not mean we are down to two GDS companies as the JV is for non-air product only according to Travelmole. Unclear to me how that will technically work but given the quantity of non-GDS ways for consumers and travel agents to book non-air would be surprised in the competition authorities rejected the deal.

UGC vs Editorial. What's better? What's the balance? What's more 2.0?

A debate is going on about content and Travel 2.0/Web 2.0. What is better at providing recommendations and information - the crowd or the specialist? TripAdvisor has proven that that crowd has power. Millions of people with millions of points of view producing a searchable and understandable review mechanism. But Web 2.0 is also pushing back on the size and difficulty of listening to the crowd. This has produced plenty of sites that believe that editorial is now critical - for exampl human search start up Mahalo is producing dedicated and editorially driven guides.

The crowds eliminate the errors of a editorial statistical sample of one but there is a point at which UGC is too hard to navigate. Ever tried surfing YouTube? Just going to the YouTube homepage with no plan in mind and looking around for something to watch rarely produces entertainment. Compare that experience to going to Break.com or Digg Videos where an editor or technology backed by the community has produced an easy list to tell you what they think you should watch. There are less videos on Digg and Break, and you may not like the ones you see, but you can be certain that you will find easily something to watch that does not involve a cat or an idiot miming Justin Timberlake.

Travel reviews and content are similar. As much as I shift from giving Lonely Planet a good and a bad time for their online activities there is a sense of comfort and certainty you get from reading a Lonely Planet story or recommendation. This comfort comes from their brand, their readership but mainly from their editorial rigour. They send someone to everywhere they review and they send them back again and again. This is the pure editorial model. The positive of it is that trust is already established and time and energy is spent maintaining that trust. The downside is that it is less reactive. The editorial based product sometimes misses updates because its research or publishing cycle is...well.. by definition a cycle and not immediate.

In the wisdom of the crowds model you throw as many human beings as you can at a problem/issue/thing/wall and hope that the accumulation of knowledge produces the right answer and that the right answer can be filtered by those looking for it. This is what TripAdvisor does and there is a point at which for every hotel they have their is a terrible review (room sucks, staff awful, never again), a brilliant review (love it...oh my God I love it) and a whatever review (it was ok, kinda, sorta, you know). I discussed this my "Who you callin' ugly post" about Travelpost.com.

As with all these things it is about balance. You need the crowds to give you the immediacy of updates and the statistical spread but you need the editors or trusted uber user to help you sift and order the information. This has problems of scale (how do you balance controlling quality across a huge range of destinations and information) and openness (to be an editor involves cutting out some of the crowd - a crowd that can get ugly when you cut them out).

My thoughts on how to balance this are the same as for a transactional site/intermediary that has thousands of hotel/supplier options. In the early days of hotel/air intermediaries there was discussion that as some point a limit to the number of choices would arise. How could a consumer possibly look through 10,000 hotels, then 20,000 hotels, then 30,000? Now people like HRS and hotel.de are claiming 200,000+ hotels. The answer is more than better search technologies. It is combing technology, merchandising/rev management smarts and user reviews to generate sort order biasing. This is the approach that content companies need to follow. Match UGC with editorial biasing.

This thinking came to me in an email exchange with a startup pitching itself as the review/information site that has found the balance. The email exchange was with Jim Johnson Vice President of Product Management of LocalGuides.com - itself a spin off from a local search company called LocalMatters. The LocalGuides site is a site that wants to provide...well...local guides. Detailed information on destinations about activities, restaurants, hotels etc. Jim and I had a very interesting mail exchange on the how they would find the balance. Here is what he had to say...

"Our approach to Local Guides has been to seed the site with the key editorial content to provide users a starting point to iterate based on their own local expertise. The interesting transformation is the community has used the tools to create a personal publishing platform (think blogging on steroids) in ways beyond what we originally thought. Guides have been created around making sushi at home, best concert venues and how to get out of the doghouse with your wife. We expected more top 10 restaurants’, hotels and bars to be the norm. The distinguishing focus on Local Guides is in its “personal local publishing” orientation; rather than aggregating all user’s content into one summary view of a business or place, it supports each user’s unique views as “guides”, and builds community around exploring, sharing and relating to “individual voices”. While sites like TripAdvisor, while highly useful for opinion aggregation, we aim to retain the opinion and viewpoint of each individual. Somewhat more of a “reporter’s view”, if you will."

Their view is that the editors set up the framework, provide the basic facts and guidance and then let the crowd fill in the detail with more freedom than you see on TripAdvisor. It is hard to provide much commentary on their approach and whether it will work as the site is in beta - though I would call it very early beta maybe even alpha as there is a lot more content that they need (editorial or otherwise). I like the idea but not sure if that will provide the balance I have discussed. If you give the crowd too much control you risk looking like the comment list in a popular video on YouTube.

Been a bit of a long post but would be interested to hear your thoughts on getting the balance between the crowd and the editor.

You thought online travel was cutthroat...

There is a big three in online travel - Expedia, Orbitz and Travelocity. In Africa there is also a big three - the Buffalo, the Crocodile and the Lion. This video does nothing to bring these two groups of three together in any meaningful way but it is amazing to watch. Kill, be killed or find a bunch of mates to save you.

EzRez EzMoney ToughBusiness

White label provider EzRez has announced a fund raising round of $15mm led by Canaan Partners and with pieces thrown in by Azure Capital and "existing investors". Not sure what the "existing investors" part means. Startup Capital Ventures partner John Davison is on the board already and they list EzRez as a portfolio company, however they have not put their name to this round.

EzRez have been very active in the online white labelling space. The initial white label moves in online travel were dominated by B2B versions of online agencies such as Expedia's WWTE or online versions of offline operators such as GTA's Octopustravel.com. However neither of these or other players like them were able to offer a technology style solution that allowed the distribution partner to either add inventory not contracted by the white label company or to request bespoke hosted layouts. This left a gap for EzRez (and competitors like TopDog) to steal clients and build a business despite lacking the scale in both supplier turnover and developer numbers of the OTAs.

There are been early success globally but also in my home market - Australia - with Qantas spin off Jetstar using EzRez for their packaging options. But even with these success and $15mm in the bank this is not an easy sector. EzRez has to constantly find the space between the online agents and the traditional distribution/connectivity companies (GDS and Switch). Simultaneously staying ahead of the OTA white label/affiliate providers on the technology elements that I mentioned above and staying ahead of the GDS' and Pegasus on contracted inventory and web display. It is like being David against two Goliaths but at least having a little bit more than a sling.

UPDATE - stated reason for the fund raising was to "drive product development and interenational growth to meet the increasing blah blah blah yadda yadda". The other sides of the story that I hear from anonymous industry insiders is that they have had to be a bit more radical that this stock phrase sounds by throwing out their old business plans and change the focus. This includes physical changes such as the well known shift in location from Honolulu to San Francisco and funding the not so well known round of redundancies. It also involves a change in the business model. The early days of the model had a lot of focus on mid and back office operations support for clients/distribution model. The new variation is focusing much more on web services/distribution and UI syndication. That is - less of the mechanics behind the scene to bring supply in and manage bookings, and more of the aggregation and distribution of different supply sources with flexible UI for delivery. Complex differentiation but think about it as less an end to end booking engine and more an aggregation engine.

It can not be said definitively whether a change in model is a sign of panic or genius. But it is further proof of the challenge that the EzRez' of the world face in making a business out of the gap between OTA's and traditional distribution companies.

The Airline Industry - Lawyer Style

In my series that did not mean to become a series, I am going to add this story my recommended links for those trying to keep abreast of the cruel and unusual punishment that is inflicted on the US air consumer. This update comes from travel lawyer Al Anolik (via mytravelrights.com via inFlightHQ). Anolik draws attention to Rule 240 which are the filings that each US carrier makes to the DOT on what your rights are if your flight in the US is cancelled or delayed. The beauty of course is that very few of the airline staff know their own rules. So Anolik and mytravelrights have provided an easy to access and print out list of the Rule 240s for each of the major US carriers. His advice is simple, when flying a carrier take their Rule 240 with you and politely bang it on the desk of the airline counter if they try to offer you something less during a delay.

UPDATE - have a claim that Rule 240 is dead and its ability to save you is now a myth from the 20th Century.

UPDATE 2 - Christopher Elliot is saying that rumours about the death of rule 240 are exaggerated. Post here on four secrets about Rule 240. Thanks to Consumerist.

Be Nice. Really Nice. All the time.

Madame BOOT speaks...
Article in the SMH about Qantas, fresh from its publicly humiliating failed PE bid, is planning to restructure by splitting the business into 4 distinct units. I'm so over the restructuring and the decentralising and the change management programs, really business strategy is a lot faster and simpler than that. Be nice to your customers. That's it. Just be nice.

Bezurk is sooooo Business 2.0

The future of Business 2.0 may be uncertain but the Time Inc publication has survived just long enough to give a great wrap to Asian meta-search company Bezurk. Bezurk joins high profile and mega-funded players like Joost and Rebtel in the "Business 2.0 It's a Web, Web 2.0 World", their measure of the best of the non-US sites to watch. Well done Martin, Craig, Ross and team.

BusinessWeek on online travel in Asia (with a China bias)

Nice read from BusinessWeek called "Asian Tourists Love to Click and Go". Interesting fact that I took from it was.

In China...Ctrip and eLong enjoy a combined market share of 72%...

We all suspected as much. Of course the article does not talk about how most of what is online in China is actually offline but still interesting.

Flight Centre and PEP: This time it is really over

First Australasian private equity giant Pacific Equity Parnters (PEP) wanted to buy all of Flight Centre. But shareholder Lazard said "No".

Then, PEP and the Flight Centre founders came back fighting with a new proposal to give PEP control of 33% of the business - a proposal that did not need shareholder approval.

Now the word on the street (or stock exchange in this case via e-travel blackboard) is that this deal is also dead. This time the deal died not at the hands of an errant shareholder but at the hands of the founders. Seems the founders commissioned an expert's report from Ernst & Young that valued the company at more than was being offered by PEP. In business stock exchange announcement double speak the Chairman Bruce Brown is quoted as saying

“While the creation of a leveraged joint venture had the potential to deliver significant benefits to FLT and its shareholders, it was also a highly complex and costly transaction, and the value proposition has become considerably less attractive for shareholders as a clearer picture of the costs of the transaction has emerged,”

No idea what that means. This one sentence has those great "stock" phrases "creation of a leveraged joint venture" and "value proposition". Wouldn't we all love it one day to see a Chairman say "the financial terms were crap and we think we can do it better alone".

Regardless of the way they phrased it, I do not believe that Flight Centre can do it alone. As I said before this highly successful business needs a business model rewrite. It needs a clear and unambiguous refocus on Internet distribution. I was asked once how a shareholder would be able to tell that the Flight Centre management was taking the Internet seriously. My answer was a quick and simple one - you will know that Flight Centre "gets it" online when the Chairman announces:

1. That a new Head of Online has been appointed, reporting directly to the CEO with direct control over all brands online, free reign on how to market and promote those brands and with a fund of money to invest in large acquisitions;
   
2. That a target for online sales has been set at [some big number like 20%] of turnover by 2009 (maybe 2010); and
3. That Flight Centre is embracing the need to be a technology company. Setting up a team of developers (or buying a development shop) devoted to online only activities, reporting to the new Head of Online.

That is - separate online from offline, make online growth the number one target of the business and embrace the geeks needed to make it happen.

If history is a guide this is not the type of announcement we could expect out of Flight Centre under the current management or structure. They will need another private equity deal or other structural shake-up to provide the drive for this change.

UPDATE - News reports are that the PEP is very unhappy with this decision (no surprises). The amazing part from the report is after PEP and Flight Centre working on this deal for what must be more than a year, the SMH is reporting that PEP and its advisers found out that the deal was dead with only 20 minutes notice before Flight Centre send the obituary to the stockmarket.

UPDATE 2 - Am trying to understand the Flight Centre Board machinations that led to this deal being killed by Flight Centre. Specifically - who on the Board was pro the PEP deal and who was against it. From my original post it seemed that the Board was behind Chairman Bruce Brown when he said the deal was a dud. But he update with news reports indicating that PEP has almost no warning of the deal being pulled indicated that there were some senior execs/Board members that were as surprised as PEP was.

A quote from CEO Graham Turner (in August 24 2007 Travel Today quoting an AFR.com report) confuses things even more. He says

"The shareholders have been the big losers in this [the failed bid]...I suspect Iwill be proved right in two or three years when shareholders could have got a serious dividend or buyback as well as retained significant equity in the company."

This indicates that Skroo is unhappy with the failure of the bid and means that Flight Centre's top boss and largest shareholder does not agree with the structure of the company. Weird.

Who's coming to Australia next?

Often it is the job ads the give you the best guidance as to who is launching where when. There was an advertisement in this weekend's paper for this role

General Manager- Global Internet Media Company - Australia Launch!

A unique opportunity exists to launch a new venture for one of the world’s leading online media companies. This NASDAQ listed company, headquartered in New York, is experiencing significant growth and is well positioned for expansion into the Australian market.

The General Manager, Australia will be responsible for launching the business, winning and maintaining key accounts as well as the online consumer. This appointment requires an entrepreneurial leader with a passion for new media and the travel sector....[MORE]

I have a very strong suspicion as to who this is but have a little bit of inside knowledge that I promised not to reveal. What do you think, what's your guess? Either way - interesting to see the Australian market having reached a new stage where a media/advertising supported travel business model is attractive enough to support expansion plans.

UPDATE - the cat is out of the zoo, the role was for Travelzoo and ex-Lastminute.com.au Hotels GM Brad Gurrie got the job

The Airline Industry - Wharton Style

Did not mean for a series to develop but it has. First I pointed to the Economist talking about the ills of the US aviation industry (esp customer service) and then NPR. Now a good read from Wharton called "Feel Free to Move About the Airport: Turbulence Continues to Roil the Airline Industry".

The article continues the list of horror stories for delays and customer non-service but in Wharton style tries to find the reasons (beyond Airline stupidity). Reasons discussed include:

• The hub and spoke system being at fault because it is not a scalable and small shocks at one airport effect everyone;
• Over protective bankruptcy laws making airlines inefficient;
• Simply the record demand levels;
  
• Antiquated safety rules slowing down take off and landing (such a prohibition on being within 20 miles of a plane that took off before you);
  
• The lack of an economic penalty for bad service and delays meaning then is no incentive to improve; and
• Limited access for better run and more customer focused competitors.

Agree with all of these. Thanks to Madame BOOT for sending through the article.

If you love a list of hotel sites, you'll like (and hate) TOP 100 HOTEL SITES

Found this site while surfing around. Claims to be a list of the "Top 100 Hotel Sites". List is generated using

The URL of every Hotel site was found in multiple internet searches and the amount of mentions of site's addresses is used to generate the rating. Hotel directory and travel guide. Includes information on tours attractions, restaurants, hotels reservations, travel jobs and more.

Whatever. There are some really bizarre rankings here. TripAdvisor is number one, Orbitz three, Booking.com four, Hotels.com five and Expedia six - all of which sounds find. However stuck at number two is myswitzerland.com, which undermines the whole list. Missing from the list are Wotif, HotelClub, RatesToGo, Rakuten and probably many more. Can't say either way if this is run by legitimate enthusiasts or just a link farm...and don't care. If you ignore the rankings and order, it provides a decent list a lot of the main (but also the minor) online hotel players.

The Internet in a tube map

Japanese based design agency iA have put out what they call a "Web Trend Map". Using the eye catching mechanism of a tube/subway map they try to visually track the "200 most successful websites on the web, ordered by category, proximity, success, popularity and perspective". Can't see how this improves your thinking or planning but sure is interesting to look at and worth a few minutes of your time. As it comes out of Japan it has a much more global feel than any other trend documents that I have seen. Travel companies Expedia and Rakuten get a mention. Unclear why Rakuten gets a mention but the equally large Booking.com and Hotels.com do not but who cares as it is fun to look at anyway.

The BOOT goes Old School at an ATEC industry lunch

Has been a long time between drinks but your BOOT correspondent attend an "Old School" industry event today. I went along to the ATEC NSW branch meeting and lunch. ATEC is the Australian Tourism Export Council - the industry group for supporting and promoting the inbound tourism industry in Australia. A place/group for Government, Inbound Tourism Operators (ITOs) and Suppliers to meet and promote the industry.

As an event it is not a usual place for an online retailer to spend time. The talk at the event is typically about issues that do not often cross my mind such as "series growth", scheduling of famils, brochure placement and cursing airline capacity constraints and actions (OK maybe I do the the last part). What was on interest was that since my last "traditional" industry event was not just the the increased talk about online retailing and the challenges face by that but of the impacts of dynamic pricing, direct connections, flexible allotments and advanced revenue management techniques. This should indicate a change in the whole industry but the vast majority of this talk was coming from the suppliers (especially hotels) and not from the ITOs and intermediaries. Clear evidence of the continued shift in power back to the hotels in the traditional industry brought about by the overall economic good times. and that the Internet industry is mature and finally changing the way the traditional industry works and operates.

SMINTair - Smoker's International Airways. This has to be a joke...please be a joke

Not sure I am reporting a funny, mad anecdote or falling for a scam but here is a link to SMINTair's website. While we have seen business class only airlines and low cost bucket shop airlines, SMINTair's claim to fame is to be the only all smoking airline. They claim to be on track in applying for a licence but also have a lot of jobs to fill. Here is their main promise to customers

As the World's first airline re-allowing their guests to smoke, SMINTAIR is entering many uncovered niches in aviation, designed to give the traveller maximum pleasure out of their flight experience. SMINTAIR spends more than three times the amount usually invested on passenger's nourishment. Signature recipes created by internationally renowned chefs will make each meal a feast. Charming and beautiful flight attendants in uniforms designed by famous couturiers are there to take the very best care of you. Every two years, a new designer will be elected to keep the uniform design á la mode. SMINTAIR is currently talking to potential sponsors offering luxurious merchandise. Everything from caviar to clothes and smoker's utensils to jewellery will be offered for free consumption or at special duty free prices during our flights. Main sponsors will also be able to host events aboard our third aircraft, displaying their latest fashion or merchandise, thus taking SMINTAIR in-flight entertainment and service to new levels.

Has to be a hoax. Please let this be a hoax. On my knees praying that this is a joke.

When search becomes proactive and biased

New branches of search appear almost daily. Beyond the standard search of Google the online travel industry has had to adjust to meta-search, review based search such as TripAdvisor and advertising led search players such as Cheapflights. Recently web personality and serial entrepreneur Jason Calacanis added a new version - people powered search. In his well funded start up Mahalo, Jason and his team use scores of editors and interns combined with feed technologies and user community driven responses to generate the search responses. The pitch being that this will dramatic reduce spam and black hat behaviour in general.

Why should the online travel industry care? If Mahalo or people powered search gather strength then their traffic will be diverted to pages such as this one on Mahalo called "How to Book a Cheap Hotel Room". Jason is already impressed by the amount of traffic and exposure this page is getting. From a consumer perspective this article offers good advice. From an intermediary/online agent perspective it is scary. Not because it gives the consumer good tips. If you are a good intermediary and good online retailer you should not be scared of informed consumers. Rather it is concerning because as hard as they have tried at Mahalo to back up their recommendation with good research it is not conclusive. For example, Accor is missing from the list of hotels that offer a best rate guarantee, there is no mention of the regional meta-search sites (ie Bezurk or Sprice or Hotelscombined) and nothing about the price advantage for packaging hotels with other goods.

That said, there is no need to worry too much about this new form of search as the traffic generating power is not yet proven and has a lot to do to be proven. I have received one link so far Mahalo and that was from the catch all/backup Google results. Valleywag are (true to form) very scathing on the traffic potential for Mahalo.

Human based search is trying to beat Google and meta-search on quality rather than quantity. However humans cannot help but be biased in making quality assessments.

UPDATE - Have added a How To for cheap booking flights as well.

Quicky on fare comparisons for FastCompany

With Red Herring and Business 2.0 near death we turn to Fast Company to try an keep us up to date with the business side of the new economy. Here is a quick snippet from them on the new trends in fare tracking. In this brief piece FC tries to sum up the differences and value propositions of Farecast.com, FareCompare.com and recently boosted by $2.3mm in funding Yapta. Interesting and quick read.

Cheapflights in Australia - but this is not open territory

UK flight meta-search leader Cheapflights has announced and launched a holding site for an Australian version of the business. The Australian version of Travel Today claims the site is beta but as there is no booking engine it yet in place it is clear there is still a lot of work to do if they are to meet the planned end of year launch date a launch date next year.

Cheapflights is the first of the global players to announce a meta-search launch in Australia. Kayak and Sidestep have made European moves but are so far silent on Asia. Bezurk is the only local player targeting Australia. Sprice have an Asian business launched but have lost out on the chance for the Australia URL (currently owned by an Australian based Asian grocery store).

That does not mean they have a first mover advantage or guaranteed meta-search product lead in Australia. By the very nature of the Australian market all of the major online air players (Webjet, Travel.com.au, Flight Centre, Expedia and Bestflights) have built there domestic (and trans-Tasman) air businesses around meta-search principles. As neither Virgin-Blue or Jetstar (the number two and three domestic carriers) participate to any meaningful degree in the GDS', the only way for the local full service agents to access their inventory through screen scraping and API based aggregation technologies that result in the booking actually being made directly with the carrier. In many respects the whole of the domestic online intermediary air business is already a version of meta-search. Welcome to the party Cheapflights.

Also of interest from the article is they are already quoting the pricing for the Australian offering - AU 70 cents for a click on a short haul route and AU 81 cents for a long haul route. Though there is some confusion on this number as they are quoting 81 cents as equalling GBP 81 pence. My guess is that the 81 pence is right - making the long haul click price closer to AU$2.

UPDATE - made some minor changes to the launch date note above based on comments from (I think) an insider at Cheapflights.

TripHub Interview – another approach to group travel (and outlet for ex-Expedia staff)

UPDATE - unfortunately for the company, TripHub is no more. Quote from the TripHub Blog as to "what happen".

"There is no single, simple answer to this question. Certainly we made mistakes, and unfortunately we were impacted by factors beyond our control including the current economic environment and state of the travel industry. We came close to realizing a different outcome for our venture but, as the saying goes, close doesn't count. At the end of the day, despite a well-received, market-leading product and early success with strategic partners such as Orbitz and Alaska Airlines, we simply ran out of money to continue executing on our vision. We continue to believe there's a rich opportunity to improve the travel planning experience and, while it's no longer our destiny, we look forward to watching as others carry on down the path we helped to pave."

Original Post

I have mused in the past about the new players launching and obtaining funding with a focus on group and MICE travel. The main angle of my discussion in those earlier posts was about the challenge that a product specific site has in capturing audience attention fast enough while staying ahead of the well funded big guys and keeping costs low. This first came up in my discussion of Groople and then Asdoo. Now the latest that has come across my email box is TripHub.

While Asdoo and Groople have approached the group market by going direct to suppliers and seeking to negotiate super commissions based on volume and F&B contribution, TripHub is instead building a networking, co-ordination and information collection tool that allows informal and private of people to research, track, book and distribute information on a trip. It is part mash up (ability to bring different bits of information together in one place), part wiki/blog (different people contributing comments, information and ideas) and part affiliate and meta-search network (providing links to different providers with different booking options).

Distribution comes under its own brand and site but the main strategy for distribution is to provide white labels for partners.

The company launched in March 2006 but came to my attention recently from an number of angles. They hit the news with a white label deal with Alaska Airlines and most recently a deal with Orbitz. However it was an email exchange with VP of Marketing John Pope that helped form the basis of this post

By being a facilitator/information exchange, TripHup is giving up the supplier control (and therefore potential product margin) available to someone like Groople or Asdoo however TripHub wll have a much lower cost structure, simpler implementation and more destination coverage.

I put a few questions to John Pope, the VP Marketing for TripHub. Here is the email interview in full providing insight into the company, the product, the model and results so far.

The BOOT on the Company - I see that Paul Goodrich is on the Board and Rich Barton is an advisor. Is there anything you can tell me about VC interest in TripHub? Did either of Madrona Venture Group or Benchmark put in any money in and if so how much?

John Pope replies: Madrona Venture Group is an investor along with our founder & CEO and private individuals. Benchmark is not. Josh Herst, our founder, worked for Rich in the early days of Expedia. He hired me onto the Expedia team in 1996 and that's where we got a start together. Michael McGinn joined TripHub in March 2006 and also, coincidentally, came from Expedia and worked with Rich. We have not publicly disclosed the amount of financing raised but I can say that we are a very capital efficient company with only 6 FTE and a handful of contractors. Paul Goodrich led the round for Madrona. There are a few more details here.

The BOOT on the product- What are your thoughts about the need for a social networking element. For example do you plan to add your own social networking features (ie bringing together people of common interests that do not know each other) or will you prefer to either let people form that own trip groups with people they know or build applications into other social networks (ie Facebook)?

John Pope replies Our strategy to date has been to focus on what we call "existing social networks". Your friends, your family, etc. The majority of trips we see on TripHub are trips with friends, weddings, bachelor parties, family reunions, and membership organizations like club/teams and religious groups etc. These are not conducive to inviting random people. Certainly extending the TripHub tools into other social networks (i.e. Facebook as you suggested) is an interesting strategy and one that we're considering. In time, we do intend to expand the services to work even better for shared interest groups where trip members may not know each other but have a common bond through an interest, lifestyle, what have you. Stack ranked we are targeting friends & family groups; membership organisations; shared interest groups; and unmanaged and small business.

The BOOT on the model - In group travel, the perfect world as a planner or organiser is to earn enlarged commissions because of not only the volume generated but the likelihood of contributing to the F&B and other revenue streams of the hotel. If I read your model right you filter most of the bookings though the partner. While this keeps your operational costs low it denies you access to this enlarged commission. Do you have plans for your own booking engines and supplier deals in the future or are you happy working with just an affiliate/advertising model?

John Pope: We do not believe in re-inventing wheels. There are more than enough booking engines. So we're focused on the communication, collaboration, and sharing aspects of planning trips with others. Our low overhead does help the ROI of our affiliate/advertising model. But that's only part of the story. We have a two pronged business model. Private label fees provide an additional revenue base. Orbitz is our third private label partner, with Alaska Airlines and People to People Student Ambassador Programs (a leader in student travel - not available for public use) being the other two. We are talking to a number of others and our partnering strategy will continue to be to work with a select group of market leaders across the travel and media industries.

The BOOT on the early days - Any early metrics you can share with me such as number of groups organised or trip home pages built

John Pope: Thousands of groups have used TripHub to date. Group sizes average about 9. Of course, we expect exposure to the Orbitz customer base to significantly increase adoption. We've published some of our early learnings here:

I like the functionality of the site. A trip home page can be set up in a few easy to follow steps and it is simple for friends to add comments and content. By avoiding direct supplier negotiations they are keeping their operational costs low.

However, on the challenges front, they have what are now my regular comments on the issues that content based company have with loyalty and innovation (have discussed at length loyalty in content based businesses here, here and here).

In addition they have a challenge in early scale. As I say their monetisation model is based on advertising and affiliate commission rather than commission. That puts them in the early days in the role of traffic arbitragers. Needing to play the search and affiliate traffic generation game in a very mechanical and technical way to ensure that they can generate clicks cheaper than they can buy them. This means either being very patient or spending money.

NB - I edited a very small amount of John's response to me to reflect that I was not attaching any of the documents from our exchange and some other inconsequential elements. None of these amendments are material or even that noticeable but in the spirit of open blogging I am letting you know

The Airline Industry - NPR Style

I recommended a link last week to an Economist podcast on the Airline industry. This week I have a story from Scott Simon of NPR's Weekend edition. While light in tone and filled with humour this piece proposes an interesting link between the perpetual rescuing and protection of bankrupt and debt laden airlines in the US and the horrendous customer service and acts of deceit (such as discussed here). If airlines can be inefficient and so bad at what they do, resulting in debt piles and losses that are borne by the economy, yet can still fly and can rely on the protection of the government and regulation, then there is no incentive for them to work hard to retain and please customers. Anyone who has sat on a US tarmac for hours (like me), had luggage lost and no-one care (like me) or spent time talking to a customer service person who clearly does not care if you ever fly again with the airline regardless of status (like me) would surely agree.

The podcast is good for a laugh and worth a listen.

No reason except it is Friday and it is my blog

Absolutely no business or thematic justification for this video...but I can't help myself. Am blaming it on being a Friday and 25 years later it is still funny

Will even give it a tag (and the proper Italian one at that)

UPDATE - have been asked what the Italian connection is (and therefore the only minor link to the wife inspired Italian themes in this blog). The composer of the original song was an Italian called Piero Umiliani. Here is the Wikipedia entry though they do not use the Italian spelling of the song title.

Sidestep can't stay out of the news - what will be next

Sidestep seemed very comfortable for a long time being a pure meta-search company (is arguable that they invented the model). The economics were simple - buy traffic from GYM (Google, Yahoo, MSN) cheaper than you can sell it to advertisers who will come to the site because you can deliver highly qualified traffic. However somewhere something started to break in the model, most likely this was that PPC costs for the best of the travel keywords were becoming too expensive. Traffic had to be acquired in cheaper ways. So Sidestep has gone on and acquisition and content deal blitz-a-thon.

The latest is today's announcement of the acquisition of travel social network TripUp (here is the paidContent story). TripUp has all the usual features of a social network around travel - reviews, videos, photos, community, interest matching etc. What it does not have is a way to search and book travel.

Rolling up all Sidestep's recent activity now they:

• own a social network;
• own a blogging/review platform (Travelpost);
• have a content deal with Frommers;
• have a blog content feed from RealTravel; and
  
• another round of financing banked.

That means content, distribution, meta-search and money. There are also very strong confirmed rumours of profitability.

So what is next for them? Not sure if it is time yet for a sale. To extract the most from their valuation they probably want to have a longer period of earnings growth. But I expect them to continue with content and distribution acquisition through either buying more companies or further licence and affiliate deals. On the product side there is more international expansion to do. I am also sure they are contemplating more in the area of video and photos (Hotelsbycity for example). To round off the speculation, what about a technology buy. Something that would improve their ability to push contextual deals in automated forms - think Google Adsense but for travel deals.

Non-Travel blogs I read

Have been asked a few times what is the best way to keep up to date on general (ie beyond travel) online news. Have added a new blog roll on the right with the top news blogs in my RSS/news reader covering general Internet, VC, search, online and media industry news. The sites are

• Valleywag - Gawker Media's trash talkin', no holds barred silcon valley insider gossip blog;
• alarm:clock - constantly updated feed of who invested what in whom;
• paidContent - Rafat Ali's great insider blog on media, venture capital activity and (as he says "the economics of content")
• TechCrunch - the new Red Herring. Michael Arrington's must read technology and online deal tracker blog;
• John Battelle's Searchblog - search engine expert and blog advertising network boss John Battelle provides continues open access to the word of search marketing; and
• GigaOM - Business 2.0 columnest and Internet trend spotter Om Malik and team add a lot of great commentary and crystal ball gazing to the deals of the moment.

There is nothing revolutionary about this list. These are the well known top of the Internet industry blogs. If you want a picture of what is going on in the wider online space then add them to your subscription lists.

The Airline Industry - Economist Style

Interesting little podcast here from the Economist speaking to Paul Markillie the author of their recent report on the aviation industry.

Couple of points from the interview

• On the whole the industry is carrying $200 billion dollars in debt;
• It was a fantastic year for turnover with more than $473 billion in revenues however this generated only a a profit of $5billion for a net margin <1%;
• Continues the hype build up on the Beoing Dreamliner on fuel efficiency and the supposed increased consumer comfort from the carbon fibre hull;
• Asian aviation market will be bigger than US domestic by 2010; and
  
• The airline industry is unique in that it is a mature industry but no one carrier owns more than a few percentage points of the market. This is of course caused by the the obsession of nations to restrict ownership and consolidation. As Markville notes

"as the result you have an industry that brought the world globalisation but has been unable to globalise".

What a staggering industry. Such a critical part of the model world, employs so many people, pays such high salaries for executives and generates so much for the media industry through advertising revenues, yet is such an inefficient and poorly structured industry.

Worth eight and half minutes of your time if you enjoy tracking the airline industry

The Dead Herring?

We could be on the cusp on the end of an era in online industry / ecommerce publishing. Valleywag, the Silcon Valley gossip and insider blog, has been running a series of posts in their Deathwatch collection on the possible death of former must read Red Herring. The latest posts from Friday talks about contractor staff being pulled, potential eviction and more. Previous posts looked at missed publications and serious cash flow issues.

Back in the bubble days this was the top venture capital and tech business publication there was. It was required reading for anyone hoping to stay informed on trends in capital flows, business models and competitor activity. I recall issues that were hundreds of pages long. So big that the binding could not hold them together, with pages falling out all over the place. It broke all the big stories and for markets in Europe and particularly Asia it allowed you to look into a virtual time machine to see what the business models of the eFuture (ie in the US) were going to be.

Will be sad to say goodbye if the deathwatch proves true but not unsurprising. The magazine is a poor comparison to the bust days. Now it is a sad looking flip through magazine that it little more than a pamphlet. The stories have all be broken before on Techcrunch, Valleywag, alarm:clock, GigaOM and Paidcontent.

UPDATE - the news is getting worse and worse for new economy business magazines. The NY Times is reporting that Business 2.0 may be joining Red Herring in the magazine emergency ward and will be soon shut down. Falling advertising revenues and stagnant circulations are the reasons quoted - though in truth these are the symptoms of the changing media consumption discussed above. Om Malik who has written for both Red Herring and Business 2.0 is very sad about the possible closure of the magazine. He has an interesting post on that and his experiences at Red Herring here.

UPDATE 2 - 1 August Valleywag is reporting that Business 2.0 may be back from the brink

UPDATE 3 - 4 Sept TechCrunch is reporting that it is all over for Business 2.0. October will be the last issue and Time will not sell to another publishing house

Speaking at TRAVELtech August 28

If you are interested in hearing me put the BOOT in in real life then come join me at the Traveltrend.biz event TRAVELtech 2007 on August 28 in Sydney.

Here is the official blurb on my presentation

Putting ‘The Boot’ Into Online Travel. Industry commentator, former venture capitalist and industry executive, Tim Hughes, takes a look at the crazy world of online travel, providing opinion, analysis and some predictions on where the industry is heading and which business models are best equipped to survive.

Not sure about the word "crazy" but will definately give you all the insight you'll ever need.

When does a 24 hour delay equal a 2 hour delay? When an airline is doing the maths.

Thanks to my younger but more worldly uncle David for sending through a link to this article from the New York times that tells the sad sob stories of delayed passengers from a new and air rage creating angle.

The main thrust of the article is that once again airlines are being dodgy with their reporting and the truth (remember our friend stranded on a Delta flight for seven hours). He is the jist of the article. The on time statistics are all wrong

because these statistics track how late airplanes are, not how late passengers are. The longest delays — those resulting from missed connections and canceled flights — involve sitting around for hours or even days in airports and hotels and do not officially get counted. Researchers and consumer advocates have taken notice and urged more accurate reporting.

Researchers at the Massachusetts Institute of Technology did a study several years ago and found that when missed connections and flight cancellations are factored in, the average wait was two-thirds longer than the official statistic. They also determined that as planes become more crowded — and jets have never been as jammed as they are today — the delays grow much longer because it becomes harder to find a seat on a later flight.

That finding prompted the M.I.T. researchers to dust off their study, which they are updating now. But with domestic flights running 85 to 90 percent full, meaning that virtually all planes on desirable routes are full, Cynthia Barnhart, an M.I.T. professor who studies transportation systems, has a pretty good idea of what the new research will show when it is completed this fall: “There will be severe increases in delays,” she said.

I will never understand why airlines think that lying to passengers is a good marketing tactic.

Travelpod Traveller IQ test - a great piece of marketing/a dangerous addiction

Travelpod (the Travel blogging platform recently acquired by TripAdvisor - see CEO interview here) have put out a highly addictive Facebook application/game. In the game you have to race the clock to pinpoint where on the globe various cities and locations are.

It meets all the criteria for viral marketing apps - easy to use, fun, good but not excessive branding, easy to share and you keep wanting to go back to try one more time. In other words (unlike the recent Jetstar marketing effort) it keeps consumers happy and wanting more.

If you have a Facebook account (and are prepared to lose lots of time in addictive play), the go here to download the app. If you don't have a Facebook account then...well..go to Facebook.com and get one.

Thanks and curses to Kevin May at Travolution for sending me the app and condeming me to hours each evening searching for Bamako, Mali.

Jetstar promotion - if you do this, this, this, that and pay more then we'll do something for you

Jetstar is Australia's third domestic carrier - the low cost off shoot of Qantas. They were launched a few years back by Qantas to fight the increasing market share gains of Virgin Blue. While Virgin Blue have broken a number of the low cost carrier rules with lounges, flexible tickets, fixed seating and more, Jetstar has proven itself to be an old fashion low cost carrier with no arranged seating and flying to secondary airports (who even knew Australia had secondary airports). Virgin Blue have been doing as much to fight Qantas at the top of the market with service as they have to fight Jetstar at the bottom with prince. It has found DJ (Virgin Blue two letter code) stuck in the middle.

To continue the squeeze and prove their pedigree in the price competition, Jetstar have launched a new fare guarantee campaign. They guarantee to double the difference if you find a lower fare. Great idea for a campaign - right? Should generate good press and help build up the price credibility story- right? It would, except in a classic low cost carrier move (and Qantas move for that matter) the terms and conditions are so rigorous and ridiculous that it is more likely to annoy customers, than win them over.

This is what you have to do to claim your "double the difference"

1. Find the lower fare
2. Call the Jetstar call centre - making sure there is availability in the competitors fare and ONLY ONE CLASS of Jetstar fare
3. Departure of the lower fare must be within one hour of departure of the compared Jetstar fare
4. Wait for Jetstar to verify
5. BOOK THE MORE EXPENSIVE FARE WITH JETSTAR
   
6. Then A VOUCHER voucher for a subsequent purchase will be sent for double the difference VALID FOR ONLY SIX MONTHS.
   

Who the hell in the marketing department thought this would be a good deal for customers. You have jump through a series of hoops to prove that Jetstar is more expensive, then you actually have to buy a more expensive ticket to get vouchers that have a very limited time of validity. Jetstar can avoid liability by simply closing out a class of fare. Price guarantees are simple - find a more expensive fare and we'll match it or give you x% off. Easy. When you make marketing promises that are complicated and painful for consumers they will inevitably have the opposite effect by generating bad experiences and word of mouth.

When does lastminute.com not own lastminute.com?

A while back I introduced international readers to the joint venture running Lastminute.com in Australia. At the time Lastminute.com.au was majority owned and operated by Australian pubic company Travel.com.au. I discussed that the privatisation of Sabre (owner of Lastminute.com) meant that Travel.com.au had the right to put the joint venture to Sabre. It was expected by all - me included - that this is exactly what they would do, with the result that Sabre would own the operations of Lasminute.com.au and Zuji.com.au in Australia. However, in a twist that I did not see coming, Travel.com.au has instead waived the put right and bought out Lastminute.com's share of the venture to become the 100% owners of the brand in Australian and New Zealand (here is the stock market filing pdf).

According to the filing the price was $4.75mm (half now, half later). This values the Lastminute.com.au business at $19mm versus the total market cap of TVL at $32mm based on today's close. Announcement was after the close so will have to wait until tomorrow to see what the market thinks.

Produces a fascinating outcome where other than general brand guidelines, Lastminute.com will have no operational control or influence on the Australian business as it goes head to head battling with the Zuji operation. The challenge for the Travel.com.au management and board is that they will have to look outside of the online travel industry for a potential buyer of the business should they ultimately seek to delist as part of a trade sale as it is highly unlikely that any global online travel company other than Sabre would want to operate a Lasminute.com branded business.

Venere.com - unravelling the numbers behind the success

Venere.com's results and performance have recently become a very secretive affair - you could could call it the European online hotel misterioso. There was no doubt about their success and growth from their general presence in Europe and feedback from customers and hoteliers but since 2004 we have heard little in the form of concrete performance metrics and results.

For background, Venere is one of the older online hotel players - having established itself in 1995. The founders -Matteo Fago, Renata Sarno and Gianandrea Strekelj- took some funding earlier in 2000 and 2001. However recently they sold down their their holdings, bringing in private equity firm Advent International - who took majority control at the end of 2006 through it's Italian director Filippo de Vecchi.

Up until 2004 they published on their site their turn-over under the heading "Key Figures" shown here below
You can see more than a million room nights and Euro 100mm in turn over. Since then the information flow has dried up....until now.

The Relations blog has posted an informative interview with Venere.com's SEO Manager, Susan Geraeds. Well worth a read.

Interesting facts out of the article are:

• 9,000,000 unique vistors per month;
• 16,500 contracted hotels;
• 4,500 international destinations;
• 160 members of staff;
• over 350,000 hotel reviews;
• affiliate program with 3000 partners, an offline travel agent program with more than 1000 travel agents;
• hotels do not pay commission on no-show bookings; and
  
• no booking fees and no cancellation fees

No update on turn-over and room nights. However clear evidence of growth and success. Assuming that growth rates for 2005 and 2006 were in the same range as that for 2003 to 2005, the current turnover is likely in excess of Euro 200 million on 2 million room nights but will have to wait for another interview or leak to unravel the mystery more.

UPDATE - June 07 PhoCusWright European Online Travel report (have to subscribe to get it) puts the Venere.com 2006 turnover at EUR290mm. If true it means little to no slowing in their growth last 3 years.