More thoughts on UGC and Editorial content drawn from VFM Leonardo deal and email from AboutAirportParking.com

Editorial vs User Generate Content (UGC) has been a big theme here at the BOOT. Recently I discussed the great start but missed opportunity in the BAHighlife.com launch (editorial content). Earlier in the year I looked at a half a dozen companies using different approaches to UGC (not all of which are successful).

I had cause to think about this again today on the back of a press item and an email.



In the press (Hotelmarketing.com) I read that VFM Interactive Inc and Leonard Media BV have combined to create one of the largest databases of images and travel media content. The new company will (creatively) be called VFM Leonardo. No clear picture yet on how management and services will be combined. The part of the story that is interesting to me is trying to decide are these companies coming together from a position of strength - trying to sure up and own the rich media side of the hospitality industry. Or - are these companies in a panic? Are they having their business models destroyed by the generic photo sites like Flickr and travel specialist sites like the bed jumpers at Hotelsbycity.

I have not heard of any series declines in Leonardo's business so will assume the former theory for now. I also believe that there continues to be a business model for professional/editorially driven content to be supplied through B2B distribution. Suppliers and intermediaries need a trustworthy source for content and are not yet ready to trust the user 100% or have the means for filtering and searching (easily) the mass of UGC that exists. The company could open up to UGC but needs to keep very tight control. So tight that it might as well stay professional.

So at this end of the spectrum we have a mid-large corporate entity with a million pieces of professional content, needing to stay professional.



At the other end I received an email from Erik Budde, the founder and CEO at AboutAirportParking.com. As the name suggest AboutAirportParking is targeted at providing a directory of all the places you can park near an airport. I am a traveller that is constantly looking for ways to avoid the absolutely scandalous charges that the Macquarie Bank owned Sydney Airport are charging for parking. I get the need for this product. Erik recently bought out the other owners/investors in the site and relaunched in June this year. There is some leakage outside of America in the site but basically it is US only with 500 parking lots at 100 airports (according to Erik).

I like this site. You can search and (sometimes) book airport friendly but cheaper parking, indexed by distance, facilities and maps. It is a site that needs editorial management to set up the index, manage and prioritise content and associate travel resources. But this is a site perfectly suited to and calling out for huge doses of UGC. Erik has started this (see page for Crowne Plaza Hotel Airport Parking) but the potential is so much greater. Erik admitted to me for instance that they are trying to expand internationally but having trouble collecting data. Regarding Australia he said

"We recently added Australian airports, but I confess that we've had a harder time collecting that data and it's been less of a priority so far."

This is where the mass of frustrated and web obsessed Australian travellers (there are others like me I keep telling myself) can become unpaid biz dev heads and content writers. Starting with an editorially managed core but allowing more user interaction, tips and reviews would serve AboutAirportParking.com very well (a la TripAdvisor). Am sure Erik is already aware of this.

I wrote a post last year called "UGC vs Editorial. What's better? What's the balance? What's more 2.0?". Conclusion from that was that to succeed in content you need to "match UGC with editorial baising."

These two examples confirm my thoughts here. You?

Election Break - I'm no stats expert but my guess is that CNN is calling Maine a little too early

With three votes counted they are predicting an Obama landslide!

Ctrip may rule China - but that's not stopping Rakuten from trying

I posted last week on the Chinese market, particularly the dominance of Ctrip in "online" travel sales. A complementary story appeared this week in Hotelmarketing.com (add to your RSS feed immediately if not already there) on Rakuten Travel's plans for China.

Rakuten Travel is the number one online travel company in Japan. This makes them a big player globally. With gross bookings in excess of $1 billion in hotels, Rakuten is easily a top ten online hotel company, maybe even sneaks in as number 5 behind the "big four" of Expedia, Orbitz, Travelocity and Priceline (in terms of hotel sales online).

China is big play for Rakuten as it is the natural largest next market for them. It is also a market they have a lot of knowledge about. Up until August last year Rakuten was one of Ctrip's largest shareholders, owning some 20% of the company. At the time Rakuten disposed of their Ctrip stake I said that there was probably two reasons for the sale: the profit on the sale; and to free up Rakuten to take on the Chinese market all by themselves.

There is a lot more background in the Hotelmarketing article which I suggest you read. If you are sitting in Europe dismissing this as another Asia story by Tim I urge you to reconsider and keep a little eye on Rakuten and the number two Japanese palyer Jalan/Recruit. Why? Because both are billion dollar plus players that are looking outside of Japan for places to expand and grow.

What's a better idea, entrip, Conference Bay or TripFilms? Depends who you ask.

WebInTravel hosted a "Start-Up Pitch" session. Much in the form of a very scaled down TechCrunch50, this session saw a short list of three companies engaging in a strict 5 minute pitch to a judging panel made up of investors and venture capitalist. The three finalists in the pitch were

- entrip. a travel organisation company based in India. Presented by founder and boss Anthony Hsiao. This company is trying to be the ultimate in travel organisation mash-ups. A way to bring together all of the elements of planning, tracking and sharing a trip. It ha as UI that enables a traveller to plot on a map where they are going and then have automated links to content, information, booking profiles and a place to store and share. Planning sites are gaining traction recently. GoPlanit and TripIt have been passed members of the TechCrunch50 (interview with GoPlanit here and TripIt here). entrip's difference is in its UI. By using a map based approach entrip gives the user a very different approach to planning and booking. The site has just started so there are challenges ahead fro Hsiao and the rest of the team but is a great beginning.

- Conference Bay is trying to be the eBay/Priceline of conferences. A market place that gives conference organisers and opportunity to distribute their tickets on name your own price/auction model. A clearing house for conference tickets. The theory being that every incremental ticket is pure profit for a conference organiser given the high sunk costs. I see the market here but the challenge is that conference organisers are very wary of open up any channel that promotes discounting. To get a conference up and running it is critical to get people booking early rather than waiting for deals and the last minute. That said, with economic doom and gloom all around us this might be the perfect time to be an aggregator of the potentially dropping demand for conferences.


- TripFilms was the final pitch of the day. The pitch was led by Jim Donnelly (founder and former boss of the now Sabre owned IgoUgo). Jim is an investor in TripFilms, the TripFilms founder and boss is his ex-partner in IgoUgo (Tony Cheng). Jim's pitch was a direct one. TripFilms is IgoUgo but in video. A place for the creation and distribution of high quality destination and travel videos.

Who won? entrip pulled the "people's choice award" by wining the popular vote from the audience but TripFilms secure the title by winning over the judging panel. The panel was impressed by the pedigree of the founders of TripFilms (they had already built and sold a company) as well as the immediacy of the business model around video content. On Conference Bay the panel expressed the same concerns I have above. For entrip, the panel loved the site but belived there were a lot of challenges in getting the distribution right.

What's your vote?

Official WIT version of the story here.

More on CWT France to move from Amadeus from Sabre

Quick update on recent post on CWT France moving their GDS contract from Amadeus to Sabre. An industry insider from Europe sent me a few info pieces to add to the rumours around this migration. Story is that the migration has been in the works since as early as late 2006 - under the secret project name "Project Score". There have been commercials issues for the delay from then until know but (as is often the case) there are some technology issues. Looks like there was/is some work to be done between Sabre and SNCF that has been problematic. This all conjecture and innuedo but adds to a great story.

Any Amadeus or Sabre officials out there wish to comment?

One year later - a BOOT rumour comes true. Carlson Wagonlit in France (starts) to move from Amadeus to Sabre

The world of GDS is never that fast moving so it is probably no surprise that a GDS rumour that I spread in July 2007 has taken until Oct 2008 to come true. Back then I predicted that Amadeus would lose Carlson Wagonlit in France to Sabre. Well that "Scoop" is now confirmed as true (here is French news story from earlier this month). Of course in saying that the article says that the deal is "still not official" but that "testing is about to start" (my translation) .

This aritcle is about 4 weeks old. Anyone out there have access to something more recent?

WebInTravel: Makemytrip and Yatra talk India online travel with PhoCusWright – very dismissive of Expedia and Travelocity

Ram Badrinathan of PhoCusWright hosted a panel at WIT this year with Yatra CEO Dhruv Shringi, Makemytrip CEO Keyur Joshi and Phanindra S the CEO of online bus ticketer RedBus.

As Ram described it, India is just entering Web version 1.0. This is characterised by similar concepts we saw in the late nineties in the US and Europe:

• lots of start up and entrepreneurial activity;
• focus on flights; and
• commission driven business (rather than media or merchant model).

However, there are a couple of big differences in the Indian version of Web 1.0. A couple of highlights:

• Air is not the only transport game: While flights are the high profile business to look at, there is enormous activity in ground transport – rail and road. RedBus claim 20% of the bus market is now booked online. Indian Railways in the largest online travel business in Asia (according to Ram) measured by transaction numbers. However in both cases the average booking value is very low – measured in the tens of cents;
• The OTAs and LCCs play nice: Unlike the battles in Europe and the US between low cost carriers and the online travel agents, in India OTAs such as Makemytrip and Yatra are critical to the distribution of LCC inventory. According to Ram’s research, 10-15% of the low cost carrier volume in India is coming through OTAs.
• Localised but English: When western companies expanded across Europe the key guideline was to localise as much as possible – language, look’n’feel and product. In the case of the Indian OTAs the best way to reach the target market of middle class Indians is to keep the product in English, not in one of the many local languages. This is not true for the lower booking value RedBus but very true for the full service providers; and
• Hotels need dramatically more technology support: It took a long time and arguably the economic after effects of the 9/11 attacks for hoteliers in the US and Europe to be convinced of the need for online distribution. The barrier was to convince them to join the channel, the barrier was not technology. In the case of the Indian market technology is an issue. Indian hotels tend not to have the CRS, PMS and Internet connected architecture that you expect to see in a US/Euro hotel. Yatra are approaching this problem by building a property management software suite and giving it away to hotels. Naturally it comes with means to connect to Yatra but the suite also stands alone as a property management system (according to Yatra’s Shringi). Nice idea.

The local players are not alone in exploring Web 1.0 in India. I asked from the audience what impression Expedia and Travelocity where making in the market. Both recently launched in India with localised approaches (in English) that match the expansion approach each has adopted in Europe.

Yatra’s Shringi and Makemytrip’s Joshi were dismissive of these efforts by Expedia and Travelocity in India. They very confidently claimed victory for the big local players (I presume including Cleartrip and Travelguru) over the global giants. When I put this to Jens Uwe Parkitny of Expedia later in the day (new Managing Director-Distribution, Asia Pacific), his quick reply with a smile was “that is exactly what they [competitors] said when we entered Germany and France”.

What’s next? If the trends of Europe and America apply then we should see the large local Indian players move into hotels and cross sell, frenetic consolidation and investment activity, PPC cost inflation and the arrival of the of the media model. Fun times ahead.

FYI - Ram has just published a very good report on the Indian market for PhoCusWright (costs money).

WebInTravel: Ctrip has more than 50% of the Chinese online travel market. But is Qunar the bigger online business?

At the WebInTravel conference last week Siew Hoon hosted a panel with ctrip Director of Biz Dev Alfred Chang and meta-search company Qunar's CEO Fritz Demopoulos.

Chang of ctrip dropped some very impressive numbers into his presentation including:

• 8,000 employees (4,000 in call centres)
• 28,000 hotels in 134 countries
• 6,000 hotels direct contracted (90% of volume)
• 1mm room nights monthly, 1mm air reservations monthly, 30,000 passenger trips in packages monthly; and
  
• (most impressively) 54% market share of online in China (see pie chart below copied from his slide

But (and this is a comment I have made before), online in the China market does not have the same definition as we would use elsewhere. Online should mean "no touch". Where the transaction is completed without the interaction between the customer and the intermediary at a people level. In the case of ctrip - 80% of there transactions are conducted purely through the call centre. This is not even web referred (ie search online but complete by phone). This pure offline call centre stuff - where the consumer dials ctrip and completes the whole transaction via the phone. There is nothing wrong with this, ctrip is a highly profitable and growing company. It is just important to know what it means to be online in China.

Next to ctrip's Chang was Fritz Demopoulos of Qunar. They are Chinese largest travel meta-search and content company- claiming more than 20 million montly users. The qustion I posed and we dont have a clear answer for is "if Qunar is 100% online and ctrip is only 20% online, then doesn't that make Qunar the largest online travel player in China?". We don't have an answer because clearly ctrip is a bigger company and Qunar is in the less mature business of online media. But it again highlights the interesting nature of the online/offline travel market in China. The bigger website (Qunar) is the smaller business.

Does building for cusomers = building for search: Google responds

I did a post yesterday at WebInTravel on my belief that online travel companies end up designing their products around search result and that this is not necessary compatible with designing the produce with the consumer in mind. Claire Hatton - Google's Head of Travel in the Asia Region posted a response. Thank you Claire for joining in the conversation. Here is her comment in full

Hi Tim,

I usually don't comment on posts but I feel the need to give you the Google perspective on this one. Of course there are technical requirements such as clear structures and hierarchies that websites should include, so that any search engine can find and index your content.

To rank well in Google, site owners and businesses need to make their pages for users. We use hundreds of different signals to rank webpages. The reference to links and structures really just scratches the surface. Google has changed a lot and improved its ranking tools since PageRank was invented in the 1990s. Focusing only on links and other traditional SEO techniques is not the way to improve your site's rankings - in fact, building pages for search engines and not users is, in my experience, a surefire way to deliver a website that consumers don't like and that will not rank well.

What will drive good search rankings - and I have seen this from my experience working with travel companies - is making pages that consumers come back to, talk about, link to or reference, send to friends and generally enjoy using. In this sense the comment about url's is important - a consumer needs to be sure they are going to a relevant, trustworthy site.

We make all of this clear in our Webmaster Guidelines within Google Webmaster Tools, which are valuable resources for people building websites. Anyone who is interested can find them here: www.google.com/webmasters/tools/

WebInTravel conference: I hate that we have to choose between the customer and Google (organic search)

Today at WebInTravel Phillip Wolf and Ram Badrinathan of PhoCusWright had a round table discussion on a number of industry issues.

The first statement Phillip posed to us was

“What is best for a consumer in a website’s design and functionality is not the same as what is best for generating the best search engine results”

My answer is that this is true. When a product/marketing team for an online travel company sit a room talking about future plans (as a purist) you would want the number one thought to be “what will be best for our customer”. Unfortunately the pressure of search drives us instead to ask “what does Google need for the best organic results".

A consumer focused proposition is around choice, service, trust, price, interaction and answers. A search based proposition is around links, content , indexing, technical format and my favourite word “uniqueness”. These are no in absolute conflict but there are not the same and require a different mindset. I worry that the second mindset (search focus) is overwhelming the first (consumer focus). This pushes us to grey and (near) black hat activities harming and distracting us from the consumer experience.

I am being naïve to think that marketing and product teams will read this post and refocus away from search to the consumer. Search is just too important for that to happen. Throughout time companies have had to adjust their products away from consumer need to the marketing and distribution environment. Witness continued DVD distribution of movies over fears of download encryption and piracy. Going further back look to the victory of VHS over Beta-max despite the acknowledged technical superiority of Beta-max. It is only natural therefore that search would dominate our thinking. But it worries me. I am a consumer purist and am concerned about the unstoppable trend to design products around search compliance and maximisation rather than consumer maximisation.

What do you think? Are targeting for search and targeting for consumers incompatible?

WebInTravel. Next week. See you there.

WebInTravel Only days away. Oct 21-22 at ITB in Singapore.

On day one I am joining a session with Phillip Wolf and Ram Badrinathan of PhoCusWright. We will be talking the industrying apart and putting it back together.

Later in the day conference boss Siew Hoon Yeoh and I will be running the WIT Challenge - firing questions and issues at top exes from Abacus, Wego, Yahoo!, T2 Impact and PhoCusWright.

On day two I am moderating a panel with the top reps for for Agoda, Wotif, Zuji and Expedia. The big guns from the biggest online companies in the region.

Great event. See you there.

Expedia may not be dead but it looks like Ryan air wishes they were

In March Expedia and RyanAir agreed to be best friends. They announced a partnership with Expedia to take over from OctopusTravel reseller Needahotel as the land provider on RyanAir.com. At the time of the announcement I recalled a story from 1999 when I was working for Expedia and on a conference panel with RyanAir CEO Michael O'Leary. At the time RyanAir was so convinced that all online travel would be sold consumer direc that he turned to the crowd and said

"Expedia's Dead"

With that kind of background, the deal was never going to work. 19 months later the deal is on its death-bed. RyanAir have announced that they are terminating the deal next month (it is not dead just yet) saying (according to CNN) "Expedia has failed to make payments according to the pair's contract terms". A fight to the death?

Travel Content, Ad Sales and Consumer Engagement: BAHighlife.com and the Content Model

Posted earlier this week about British Airlines putting online all of their in-flight mag content (Highlife). Post and comments produced a response from the Reactive (the developers of the BAHighlife site). Paraphrasing it said - "thanks for the suggestions, we are working on those ideas for phase 2" (full text here).

I am glad that BA are listening and am thrilled to receive the response from Reactive. But I still worry that the approach is that community, sharing and booking are "new features" to be added later rather than the core of the strategy. The difference in thinking is whether or not the strategy is to

"use content to drive traffic, generate revenue and then build features on top"

vs

"use content to build community, build brand and link all elements to the customer experience"

In the first you measure success through the eyeballs generated and revenue gained through ad sales. In the second you measure success through the engagement of customers, time spent on site and the ultimate bookings revenue. I get the strong sense that BA in the Highlife online project is falling for the allure of the first rather than the long term customer ownership benefit of the second.

Don't get me wrong there is a lot of (good) money to be made off eyeballs. Media companies have been making billionaires off eyeballs for decades. In Travel there are also fortunes to be made from eyeballs as I have talked about here and here. But if you are chasing eyeballs then you are a no ifs, no buts, media business. Travel suppliers and (to a lesser extent) travel intermediaries need to think very carefully about turning to the media business as a business plan. Sure there is money in eyeballs and ad sales but the main aim of a travel company is to sell travel. The best way to use content to sell travel to punters is to draw the consumer in and keep them in. Don't send them to someone else, don't let them search for some other way to book or purchase, don't let them think about an alternative. Instead the travel retailer needs to live and breath drawing the consumer into the brand, the idea and the desire to search, to engage with you and to give you (the travel seller) their money.

BA should be thinking about BAhighlife.com not as a content/media business that needs community features but as a customer engagement tools that will lead with engagement and a drive for planning and booking (with some ad revenue on the side).

What do you think? Should travel retail companies and suppliers be creating media only business with their content or using their content to drive brand and bookings?

Video - 24 hours of global airline traffic in one minute + twleve seconds

enjoy!

Affiliate Marketing - with the "world ending" will it be more or less important

Interesting piece by Elisabeth Osmeloski over at SearchEngineWatch called "the New Era of Travel Affiliate Marketing". She briefly discusses three topics:

• Size of Travel online affiliate market;
  
• Changes in the landscape; and
  
• Impact of Social Media to travel affiliate.
  

Worth a read.

BA opens highlife website. Good start. But much more needed

Read in newmediaage that British Airways has launched a dedicated content website - BAhighlife.com - based on the years and years (35) of content from their inflight magazine highlife. This is a great move by BA. Other than the website architecture and support this is a very low cost means for BA to generate organic traffic from travel searches. Assuming they have indexed the content properly (and from my initial glances it looks like they have) they will also be able to generate traffic outside of pure traveller review searches (ie in sport, entertainment etc). Good move by BA.

But the launch here is still a dramatic under-utlisation of a enourmous amount of good quality editorial content. Once a consumer lands on a article/page at BAhighlife.com this is what they can do with it:

• read it;
  
• email it; or
• bookmark it.

That is it. If BA wants to make the most out of this then the customer should be able to:

• Share: share with social networking site (digg, facebook, reddit);
• Comment: make comments, join in a conversation about the article;
• Find more: find other related content selected by consumers, from the same author, about the same destination;
• Save: save favourite stories on a profile page or trip plan page;
• Use: use all information gather to build up a trip plan; and
  
• Book: have contextual links to relevant trip itineraries.

In other words build an interaction and community service that drives brand and bookings rather than a news service that adds a little bit of traffic and ad sales rev.

Good start. More needed.

People Move: Former Travel.com.au CEO designate Chris Meehan joins mobile company Comtel

I reported back in April that Chris Meehan (Travel.com.au CEO designate) was leaving travel.com.au and lasminute.com.au shortly after the completion of the acquisition by Wotif.com of Travel.com.au. Just read a press release that he has joined Australian based mobile phone company ComTel. Here is the press release. Congrats to Chris.

Ever wanted to ask questions of PhoCusWright, Abacus, Wotif, Wego, T2 Impact, Expedia and Yahoo!?

Well now you can! I am co-moderating a panel on day one at the Web In Travel conference in Singapore (Oct 21-22) along with conference boss and industry commentator Siew Hoon Yeoh. The session is called "the WIT Challenge" (full programme here). Siew Hoon and I will be firing questions at a fantastic panel including the following:

• Ram Badrinathan, Senior Director, Research, PhoCusWright Inc;
• Brett Henry, Vice President, Agency Marketing, Abacus International;
• Robbie Cooke, CEO, Wotif;
• Martin Symes, CEO, Wego;
• Timothy O'Neil-Dunne, Managing Partner, T2 Impact; and
  
• Ken Mandel, Vice President & Managing Director, Yahoo! SEA.

Also expecting a representative from Expedia to be confirmed very soon.

Do you have any questions you would like to ask this great collection of industry insiders. Feel free to put your questions in the comment section of this post. I will take the best of the best with me to the conference. Include your name/company and I will mention you (if)when I read out the qustion.

Webjet vs Wego: sometimes an OTA is better than meta-search

Steve Sherlock of Oodles sent me me a email pointing out a very interesting quirk that can give OTAs a functionality advantage over meta-search. Typically I would have thought that top notch meta-search are going to be better at delivering customers to the top fare combinations versus OTAs. The OTAs would have the advantage in packaging, customer rewards, content and community and other retail elements but that meta-search would have the lead in the search and user friendliness.

But in the Australian domestic market the airlines have structured their fares in such a way that they are very user unfriendly for meta-search. The results list is full of all the fares you would want to see on a typical Australian domestic city pair (say Sydney/Melbourne) but you have to book the outbound and return separately. There are two click offs prompted by the metasearch. Here is a shot from Wego to show you what I mean



Clearly this is something on the airline side, not within Wego. Meta-search results are dependent on their source material. Since the vast majority of domestic in AU is sold as one way segments then a meta company needs two searches and two separate results to produce a fare. The bulk of long haul is still defaulted to return so they have different value. I suspect this may even be a deliberate limitation that the airlines are using to drive customers back to the direct sites of Qantas, Virgin-Blue, Jetstar and Rex.

Webjet are the largest Australian OTA (by gross bookings). They have found away around this problem through the design of their underlying technology (called the TSA or Travel Services Aggregator). They are able to capture all of the segments from multiple carriers. The customer's card is collected once and then sent to all of the points of charge. For a multi-carrier fare this may mean that the card is charged three times (once by the first carrier, once by the second and a third time by Webjet for the fees) but the consumer has only had to enter the details once. In the battle between Online Agents and Meta-search, when it comes to domestic Australian flights it seems to be advantage OTAs.

Anyone out their from Wego or Webjet care to comment - would love to do a follow up post with your views? Anyone else know of similar consequences in other domestic markets?

Update - please read the response in the comments from Ross Veitch, Chief Product Officer at Wego.com

Disclosure - in the past I provided some consulting services to Wego. The work is finished but I remain a long term fan.

The BOOT Recommends - The Observatory Hotel Sydney

I have just spent the loveliest of weekends away at the Observatory Hotel in Sydney. Located in Sydney's "historic" Rocks area, this Orient-Express hotel is one of Sydney's finest. [side bar - You have to put the word historic in quotes when describing the Rocks as it is embarrassing to say that for white Australia all you need is a 150 year old building and suddenly it is historic. The current Rocks is little more than a tourist trap shopping area, albeit with fantastic water views.] It is not often that I do reviews on the blog but when I am very impressed with a property I am drawn to write about this (happened earlier this year after I visited Luton Hoo). The Observatory is at the top end of luxury in Sydney without the "international" reputations of say the Harbour Shangri-la, Westin, Sheraton on the Park or Park Hyatt.

First to the decor and feel of the hotel. At the Observatory they have managed to deliver in the fit out and staff an unlikely balance between modern, relaxed and what I can best describe as traditional old Europe. The staff are attentive but not stuffy, the fit out is floral and "country club" in nature yet very modern in facilities and function. Rooms are of a fantastic size and very quiet despite the noisy city and harbour bridge being only metres away.

I liked little touches like a complementary car ride into the city (if needed), that they recorded the reason for my stay (10th anniversary) and congratulated me and the wife on arrival and the supplying hot chocolate and herbal tea options with the turn down service.

Two small areas of criticism. The Pool is a great size and the health club facilities impressive but the area is busy, full of people, noisy and peak times and therefore only relaxing out of hours. The Globe bar area is charming and relaxing, with very attentive staff. However breakfast service was a little tardy. I think more staff are required to make sure customers are not left waiting longer than is reasonable at $40 for the continental breakfast. But these small quibbles are only worthy of publication because of the lengths I had to go to find them. A great stay and now on my list of recommendations for high end leisure and business travel to Sydney.

Disclosure - my stay at the Observatory was on my own dime but I was granted an industry rate and upgrade.

WebInTravel conference - pre conference interview with the BOOT

Siew Hoon Yeoh's WebInTravel conference is now less than three weeks away. October 21-23 in Singapore alongside the Asian ITB event.

I am presenting at the event as well as moderating a couple of sessions. Full agenda is here. Siew Hoon has recently published a pre-conference interview with me in the conference newsroom. It builds on the themes from my post "Financial Collapse. George Bush in charge. We're all doomed!". Here is the begining of the interview

At times like these, when the news is all bad on the financial front, there are the pessimists who see doom and gloom and there are the optimists who see silver linings behind every dark cloud.

You could probably put Timothy Hughes, who will be speaking at WIT this month, more towards the optimistic camp, albeit he is a pragmatist as well.

Asked what he thought the financial meltdown in the US would mean for travel and tourism, the vice president-commercial, Hotelclub,com and the blogger behind BOOT - The Business Of Online Travel, said, “The news will be bad. Money will dry up for investment in start-ups and people in affected industries will think twice (three times and more) before pulling out he credit card.”

But, being the optimist, he added, “We (the industry) have survived worse and the consumers have rebounded from worse and continued to travel. I blogged about this just recently pointing out that the US travel market bounced back from 9/11 within a quarter. Same for Hong Kong and Macau post SARs. Humans love to travel and will come back with a vengeance. However the industry can’t just wait for them (the consumers), we need to keep re-inventing.”

more at the conference site here....

RedHerring likes tripJane at lot, TechCrunch 50 a little but I have not idea what they do

RedHerring is the tech boom magazine who's death keeps being reported and yet somehow managed to survive. Every now and then I check in on the online version to see what is happening. In keeping this week's (accidental) start-up theme at the BOOT, I came across the list of the Red Herring North America 100 from back in May 2008. This is their list of the top 100 start-ups in North America. Lots of good pedigree here as past winners include Google, Yahoo!, Skype and YouTube (with a little glitch around Netscape).

Much like TechCrunch50 I could only find one travel company on the list - tripJane. tripJane was also a finalist in the TechCrunch50 - being part of what they called the demo pit (ie not on the main stage but out in the foyer on a card table).

No details on the tripJane website on what they do. Something about social networking, purchasing and planning - which we have heard before. Here is the Crunchbase profile for a little more.

At lot of time has passed since the May RedHerring awards. Anyone out there from tripJane want to share with us what you do.

Promise next week to leave start-up land the get back to the more regular feature of this blog - whining about Qantas covering general industry trends.

GoPlanIt - interview with COO Jimmy Ku on the day the Dow imploded

It is start up interview and profile week here at the BOOT. Earlier this week we talked with Yen Lee of UpTake about how he felt cashing a $10,000,000 cheque moments before the Dow went into (the first of many) freefall(s). Then I posted an exchange with Our Explorer CEO Dave Cunningham about his efforts to match tour guides with lost tourists.

Today I had a chance to speak with GoPlanit COO Jimmy Ku. You’ll recall that GoPlanit was the only travel company to be part o the high profile start-up competition TechCrunch50. My earlier profile of them is here.

Discussions around money

On any normal day our interview would have focused on GoPlanit's plans to move from beta to a full release, how they would generate traffic and thoughts on balancing editorial and user generated content. Unfortunately this is not a normal day. On this day Washington degenerated into a $700 billion game of “I like George Bush less than you do” driving the Dow down 778 points (check out this interactive graphic on nytimes.com tracking the decline of the Dow with the counting of the nae votes– registration required). Unsurprisingly it meant we spent time talking about GoPlanit’s plans for raising their first full round of funding. As the Crunchbase profile states and Ku confirmed GoPlanit have raised $500k in seed capital. This is enough to support current efforts and the team of 7 but Ku admits that they will need more.

Thankfully for GoPlanit the profile boost of Techcrunch50 participation has opened a huge number of doors as they look for funding. As Ku put it Techcrunc50 guaranteed me “days of back to back meetings”. But even Ku admits that the horror on the Dow going to make it tougher. “Anyone not scared [about the Dow decline] is probably lying” said Ku “but good products will still make money and VCs will still invest in those that can succeed”

Discussions around traffic

It is too early for Ku to share any traffic numbers with us but we did discuss GoPlanit’s marketing tactics. As expected the focus will be on SEO through user and editorial content. GoPlanit needs to take time to develop each destination it is planning to launch through connecting tot a “respectable source” of content and information, building out the links to providers and setting up the framework for attracting user generated content.

Sidebar - While discussing this I noticed that both TripIt and TripAdvisor are bidding on the keyword phrase “planning a trip” (as you can see in this poorly cropped photo image).



This seemed odd to Ku. He said (and I agree) that you want to attract the people looking for a destination not someone generically searching for a trip planning tool.

Discussions around the founders

The idea behind GoPlanit is best drawn directly from CEO Steve Chen’s presentation at Techcrunch50. In short the founders separately experienced the pain of trying to organise large holidays. In Ku’s case he found himself as the designated organiser for group holidays with friends. In CEO Chen's case it was in organising his honeymoon and his general experiences post a career with Accenture as an event organiser in the Bay Area. Chen and Ku are also joined in the founder club by CTO James Chen, most recently of CNET, Rotten Tomatoes and HotorNot.

My take

I like the idea and as with many start up interviews with travel content/tool companies, if they can generate the traffic, then the ad revenue will follow. The CPM rates and advertising desire for good consumer travel eyeballs is strong enough to survive this economic Bush-wacking. The challenge is raising the money to support the product to attract the eyeballs on a day no one can get $700 billion from the US government.

Related News

• TechCrunch story on a site upgrade at the Microsoft backed PlanetEye;
• TechCrunch story on impact of the credit crunch/implosion on VCs and Startups; and
  
• Jason Calacanis on "the Startup Depression"
  

Our Explorer - pitching to be "the eBay" of tour guides

Recently a contact introduced me to Dave Cunningham the "Chief Exploring Officer" of Our Explorer. Our Explorer is an online market place for tour guides - not books, but physical people. Local accredited tour guides register for the service and build a profile page setting out their expertise and prices. Consumers come on the site, select a destination and then are provided with lists of guides that are experts in that location. Tours can be booked directly on the site. Guides have the capacity to lodge their professional qualifications. Fellow consumers can also leave testimonials in a classic eBay trust building activity. Our Explorer takes a 10% cut from the guides - no transaction fees for the consumer.

This is a great idea. I get the value proposition to consumers here. Giving consumers access to truly local guides - an alternative to just riding the generic tourist bus.

The biggest challenge that Dave and the others at Our Explorer have is that they are in the classic "Fax Machine" business paradox. The great fax machine problem was that everyone could see the benefit of a fax machine but is was useless unless their were lots of them. You would only buy a fax machine if the person you wanted to sent a fax to also bought one. In other words, in the early days of the fax machine you need to take a leap of faith that other people would buy one too. In the case of Our Explorer, the guides have to join first, taking a leap of faith that the customers will come. Our Explorer need a critical mass of guides to generate the customer interest. They need to generate that critical mass before the consumers were ready to book. It is not a chicken and egg story where you debate which came first - in this case lots of patient guides had to come first.

Cunningham thinks he is there. He claims to have cracked the 595 guide mark and adding 89 a month. I don't know if that is magic number to hit critical mass - but it sure is fantastic start. Lots of great potential here in affiliate marketing, especially if they can develop an API to feed this into the booking path of travel transaction sites.

If you are interested in a little more colour, below is an email interview exchange with Cunningham. What do you think about this business?

BOOT - Where did the idea for Our Explorer come from?

Cunningham - it came from a trip in South America I did with another of the founders Anne McDonnell. We had the services of private tour guides in Peru, Bolivia and Mexico. The first thing we noticed was that the type of tour guide you got on the day was out of our control as the hotel or local travel agent just provided them. Perhaps there would be a personality clash, you may share nothing in common or the guide may be of poor quality. So we wished we could book private guides in advance. Second thing we researched while talking to the guides is they all just got business from travel agents, at 30% commission - I knew we could get them worldwide access to travellers on the web for lower cost. We agreed it was an opportunity to take commercial.

BOOT - Tell me more about the background of the founders

Cunningham - Me [JPMorgan investment banking for 3 years, Founded a Chinese Real Estate company for 5 years. Overall Chief Exploring Officer] , Jean Liu [Expertise in Web Marketing for Chinese companies and now heads up the marketing efforts in China for OurExplorer - based in Shanghai. Ray Walsh [is a computer science graduate and leds the technical direction and strategy for the site development and growth] Anne McDonnell [Project manager in Investment Banking - Heads up the relationships with our suppliers - tour guide acquisition strategies]

BOOT - how hard is it to launch a destination, sign up guides?

Cunningham - Getting the critical mass of 500 tour guides initially was very tough as when you ask the tour guide to register we have zero traffic to the site. But partnerships with several tourist guide organisations around the world really helped us to the 500 tour guide point. Now we get over 80 organically registering per month as the value OurExplorer give them is now clear.

BOOT - How much money have you raised and who from?

Cunningham - the project has been financed internally by all the co-founders thus far. No external fund raising required as we believe in this project and the upside some much.

BOOT - What do you need to do to the product to take out of beta?

Cunningham - OurExplorer needs to implement 5 more enhancement features e.g. improved messaging system and restructuring to increase conversion rates etc

BOOT - What's next?

Cunningham - OurExplorer goes live in Chinese to the high growth Chinese travel market at the end of October.

UPDATE - Joris of AKOPSO www.akopso.com posted a comment below wondering about how Our Explorer goes about selecting guides and the need for official licences. The comment is below and here is Cunningham's (of Our Explorer) response sent to me by email.

As OurExplorer displays tour guides from all over the world it is sensitive that the specific licences and requirements for licences varies from country to country. Therefore when a tour guide registers their services on OurExplorer they upload their licence only when they feel it is appropriate and required for the specific tour they offer. Of course, a visiting client can request to see a licence copy from an OurExplorer tour guide at any time.

Uptake - near perfect timing on the second round of fundraising

Last week I carried the story of UpTake taking in a second round of $10mm to bring total amount raised to $13.95mm. In original post I wondered aloud why they had needed to raise a second round so close in time to the first round. Unfortunately due to some overzealous spam filtering in my gmail account I did not receive a reply to this pondering from Uptake CEO Yen Lee in time before the story was posted. That said, it looks like Yen's timing on this round could not have been better. Uptake announced the raising on September 16. September 17 the Dow closed down 450 points or more than 4%. In other words it seems they managed to close the deal moments before the recent round of AIG and Lehmann led shocks that are almost certain to dry up start-up company investment funds. Companies post this dark week on Wall Street are going to find it much harder to raise money as investors hunker down and wait for more clarity (or queue up from free tax payer funds as part of the bail out bonanza!).

As to valuation - Yen below says that "the valuation was very fair" and "we didn’t necessarily need to raise the round ". This is usually code word for an "Up Round" (where the valuation is higher in Series B than Series A). But is doesn't sound like the valuation was dramatically increased.

Finally Yen is on the hunt for talent (see interview below for details). With money in the bank and people in under-funded business looking nervously at their bosses this should be a good time to recruit.

Below is a slightly edited version of my email interview exchange with Yen that should have gone with the original post. If you want some background here my earlier interview with Yen.

BOOT -Who joined the Round?

Yen - Trinity Ventures led the round and Shasta Ventures, who led Series A, co-invested. Trinity has been looking at online travel for many years without pulling the trigger but they were really excited about our business model and specifically how we would solve the consumer acquisition challenge. Specifically, how our technology approach allowed us to create an infinite number of niche pages (e.g. Monterey romantic hotels) to dominate the torso and tail on SEO.

BOOT - How much and at what valuation?

Yen- We aren’t disclosing specific terms other then to say we raised more then $10M. Referring in advance to my answer to Q7 below, we didn’t necessarily need to raise the round now, so the valuation was very fair.

BOOT - What are the plans for the money? What about international destinations and non-eng languages?

Yen - ... building a search application is not for the faint of heart – nor is it cheap! Especially since we make the investment to not just spider all the travel content we can find but also to structure it. Despite the strong progress we have made, we think we are just getting started, so most of the money will be for continued product development. We are absolutely committed to helping consumers globally with their travel decision making. We don’t know the specific timing of when we venture outside North America although we will have a better estimate by end of Q1, 2009.

BOOT - If people are part of the plans (ie recruitment) what are the main areas that you need to attract people? Has hiring become slightly easier recently with economy downturn?

Yen- Yes, headcount is the lion’s share of our expenses and will continue to be as we scale our offering. Are you offering me a soap box to help with recruiting? Then ... we are continuing to look for engineering talent. Specifically more problem solvers on each of our three technology layers. We need engineers with domain knowledge in spidering the web and mining unstructured data, natural language engineers with experience parsing text to extract sentiments, and data warehouse developers who have built multi-stage data processing pipelines. We also need engineers who have built ranking algorithms and contextual targeting solutions. Finally, we need application and UI engineers.

Silicon Valley is really a little micro-economy unto itself and the increasingly tumultuous macro-economic conditions haven’t affected our little corner of the world – YET. While there is certainly more candidates out there now, it has less to do with the macro-economy then the number of engineers and others from Silicon Valley stalwarts like Yahoo, eBay and even Google who are looking for opportunities to show what they can accomplish in a nimble, focused environment. We are also seeing more candidates from the earlier generation of vertical search companies that generally just reprocessed already structured data and therefore found it challenging to differentiate and get market traction.

BOOT - the Site was constructed around organic search marketing. Any need with this new money to expand into spending money on market (paid search or otherwise)?

Yen - Nope. We are growing 30% month on month and have no plans to deviate from our successful playbook.

BOOT How are monetisation plans going?

Yen - We have been pleasantly surprised by the number of consumers clicking on paid leads. We certainly haven’t emphasised that on our site, but the consumers tell us we offer them all the information they need to decide whether that hotel or attraction is a good fit, so checking rates and availability is the natural next step.

BOOT Series A was just a couple of months ago. Why the need to raise again so soon?

Yen- We didn’t necessarily to raise now, but there is an old adage that the right time to raise is when you don’t need the money! And our decision was made easier given the shaky macro economic environment, our confidence that we have proven our approach works and we are ready to scale, that we have known the Trinity Ventures team for a long time and wanted to work with them, and that they made a very fair pre-emptive offer.

Financial Collapse. George Bush in charge. We're all doomed!

Lots of people are asking me about financial crisis. Two types of questions I get asked. The first is "how did this happen" and the second "is the travel industry doomed as a result"

On the question of "how" I have just read an article that gives the best explanation I have come across. In today's online version of the New York Times, Vikas Bajaj writes a great piece called "Plan’s Basic Mystery: What’s All This Stuff Worth?". In it he goes deep into the strange asset/securitisation products that were put together by Bear Stearns, Lehman etc and caused this whole mess. Worth a read (login required).

Despite the madness of these products and chaos that has resulted from their collapsed I am convinced that the Travel industry will not only survive this crisis but will come out the other end thriving. You might call me an optimist but my view is based on history.

The travel industry in America bounced back from 9/11 in a quarter. In fact the whole online merchant hotel business (and retail for that matter) was created out of the ashes of that tragedy. Hotels gave cheap rates to Expedia, Travelocity and Orbitz etc. Expedia completed its acquisition of Travelscape and soon after bought HRN/Hotels.com.

In Asia, the whole business ground to a halt during the SARs crisis. Hong Kong and the region around it could not pay travellers to come visit. Now Macau is the centre of the gaming and Asian hospitality market. Bali has suffered through two horrific attacks and proposals for bizarre religious laws. Yet manages to survive and fight back each time.

In Europe London and Madrid also suffered horrific attacks in recent years. Yet still the customers flock to Spain and UK the for holidays and breaks.

Travel has survived tragedy and shocks before and will do so because at the core humans love to travel. But the secret to survival is reinvention, not hiding and hoping to ride it out. Growing through 9/11 came from reinventing online hotel distribution. SARs from reinventing the Asian hospitality industry. To get out of this Wall Street induced melting Bull will require the industry to once again find efficiencies in distribution, marketing and supply management. Mobile anyone?

Note - an observant reader (ok my mother) has pointed out that my melting "bull" reference doesn't work given the obvious udder on our molten friend above.

thanks to my number one anonymous commentator for the photo

BOOT Presentation at Eyefortravel Asia Pacific (with audio)

Back in July I was the Chair at the Eyefortravel Asia Pacific Sales and Marketing in Travel conference. I also gave a presentation.

Here is the audio file if you would like to listen

Here are the slides if you want to see them

If you not bored of hearing me speak there is also yesterday's 10 minute podcast interview with Addison Schonland.

The BOOT on an IAGlbog Podcast - Don't Panic

Addison Schonland of the Innovation Analysis Group and their podcast series interview yours truly today. We talked about the state of the online travel industry given the market turmoil and up and down bounce of the oil price. About 10 mins long and have a listen. You will here me as the eternal optimist.

Casino Economics: Wynn EBITDA per room per day is higher than their ADR

I am becoming more and more fascinated by the economics of running a Casino. They are the largest hotels in the world, yet the hotel is clearly a mere means to the end of making money from gambling, retail and entertainment. I was looking at Wynn a presentation at given at a Goldman Sachs Conference in June. Below are shots of two of the slides. Look at the Average Daily Rate for Wynn for Q1 2008 - $298 (comparing very favourably to Bellagio and the Venetian). Then look at the slide on EBITDA per room per day. Wynn lists their EBITDA per room per day at $378. Read it again. At a property with an ADR of $298, the business can generate an EBITDA of $378 per room per day. Amazing! Have I read this right? The revenue from gaming (and to a lesser extent retail and entertainment) makes the room revenue seems all but irrelevant. What a business!

ADR Slide


EBITDA per room per day slide

Better late than never to go dancing with Matt

I am about 10 million or so views behind the rest of the blogosphere in posting the dancing Matt video. A reader made contact and insisted I put it up. In case you haven't seen it, it is absolutely fantastic. Surprisingly moving. Can't decide if my favourite is the DMC in Korea, the Huli Wigmen of PNG or zero gravity over Nevada. Watch it

Uptake takes in another $10 million in a Series B with Trinity Ventures and Shasta

Uptake (nee Kango) has announced a series B fund raising round of $10 million lead by Trinity Ventures (early investor in Starbucks) and including Shasta. UpTake blog post here. TechCrunch story here.

You will recall that Uptake is doing review meta-search. Indexing all of the user and editorial content on hotels and destinations.

This makes total raised to date $13.95mm after the series A announced back in July of $3.95mm (led that time by Shasta) but I now hear was closed in December 2007. I have an email exchange going with the Uptake PR people so hopefully will have some additional comments from CEO Yen Lee very soon. Am particularly interested in marketing plans, people plans and the need for a second round so soon after the first.

BOOT hits a thousand subscribers. Only another 999,000 to go

The BOOT has hit a speedometer moment of 1,000 feed subscribers. The number has been fluctuating by as many as 100 a day (something to do with when people access their RSS readers) but am very happy with the results. That said, this week TechCrunch hit a million so definitely need to put things into perspective.

GoPlanIt - the Travel representative in the TechCrunch50

The second annual TechCrunch50 conference is over. This is the start up demonstration conference organised by web-celeb and CEO of Mahalo Jason Calacanis and uber blogger Mike Arington of TechCrunch. The conference profiles 50 web/tech start-ups, which compete for a $50,000 prize.

This year's travel nominee/competitor (there only ever seems to be one) was GoPlanIt.

GoPlanIt is a trip planning site. Enabling consumers to add activities, trip itineraries, maps and commentary to a trip plan. Naturally it comes with reviews and social networking/sharing/mobile access elements. It's difference from a "standard" web 2.0 planning site is that you can hit the PlanIt button and have a trip itinerary automatically recommended and built based on the behaviour of other users. This of course can then be modified and edited. The only downside is the that it takes time to build up the necesary history nad connections. Hence the service is currently only available in America. Here is the TechCrunch review/profile.

Being the travel nominee for 2007 was a great kickstart last year for TripIt. Since being part of TechCrunch50 they have raised another round (including an investment from Sabre). Just recently announce that the CEO of Mozilla Corporation (John Lilly) joined the TripIt board. Just this week king of the blogs Robert Scoble asked his readers/twitterers which online travel services they used. TripIt was mentioned again and again in the replies. You can re-read my interview with TripIt CEO Gregg Brockway here.

You can see a video stream of the GoPlanIt presentation here by CEO and founder Steve Chen and the presentation of the eventually winner - Yammer (TechCrunch Profile)

Lastminute has a turnover in the region of Euro 2 Billion (Guardian)

Historical piece by Zoe Wood in last weekend's Guardian on 10 years of lastminute.com. Have a read if you want to reminisce about London during the dotcom gold rush. But here is the important paragraph on the gross bookings numbers for Lastminute.com - especially as we have not seen a public result from the now private Travelocity for almost 2 years.

"McCaig [Lastminute CEO] is pleased the company is no longer beholden to the public markets. Sabre has since been bought out by private equity firms TPG and Silver Lake Partners. Lastminute.com has a turnover in the region of €2bn (£1.6bn) but McCaig refuses to be specific." (my emphasis)

The TSA marked you as a terrorist? Then simply change your name

Great story over at Upgrade: Travel Better (Mark Ashley's industry blog) about Mario Labbé - a Canadian that found himself in the infamous Homeland Security black book, ensuring that he spent hours with customs officials everytime he crossed the US/CA border. Solution - he changed his name to François Mario Labbé. Problem solved. Check out the full story here.

XL Collapse: 1700 staff carrying 2.3 million passengers

I have one little angle to add to all of the stories circulating on the collapse of UK Tour Operator XL Leisure Group. This part of one of the BBC stories on the collapse summarised for me the biggest problem facing traditional tour operators - more so that increases in fuel prices

The group, which carried 2.3 million passengers last year, has 1,700 employees worldwide.

That is one employee for every 1,350 passengers carried. Any of you out there working of an online player will know that that is is an extra-ordinarily small ratio compared to the numbers enjoyed in the online sector. For example Expedia lists 7,150 employees on the back of 13 million transactions a quarter. Sure the average booking value of a tour operator will be higher than a OTA but the tour operator model simply requires too many employees for new economy survival.

UPDATE - received a note from Timothy J O'Neil-Dunne of T2impact. Pointed out that once you add up all of the charters for all of the 5 legal entites (for example Air Malta) the the number of passengers is closer to 3.9 million pax for 2007 (According to published data). As Timothy points out that actually compares well to other airlines. He quotes United’s current numbers at 130 employees per plane.

Thanks to R82 Photography over at flickr for the photo.

Alitalia Deathwatch: Administrator Fantozzi says the airline is running out of fuel

Alitalia's death has been called too many times for the pall bearers to be called up just yet. But this time is sounds more serious that any other occasion. The Air France/KLM buyout seems dead, Berlusconi's rescue plan appears to be nothing but hope and prayer and now we hear from the banrupcy adminstrator Augusto Fantozzi that "There are difficulties relating to the supply of fuel which could put some flights at risk" (c/- the BBC). Fantozzi put it even more dramatcially in a quote in an AFP report

"Up to tomorrow (Sunday) we have guaranteed flights, but not on Monday because no-one will supply us with kerosene [fuel],"

If you are holding Alitalia tickets then make sure you have insurance and a back up plan. My guess is that we are going to see a death and rebirth along the lines of Swiss Air becoming SWISS and Sabena becoming SN Brussels not the fade from view of the likes of Pan Am and Ansett.

thanks to matt.hintsa over at flickr for the photo

The BOOT on a temporary pause - work is calling - back Sept 15

All - work is all consuming at the moment. Lots of travel, 2009 planning and more. Am going to take another week off the blog. Back on Sept 15.

BOOT is on the Road: In London Sept 1-5 - UPDATE

All - looks like work commitments are going to keep me from being able to meet up today (Tues) or tomorrow (Wed). Hopefully next time. Thanks to all that expressed interest.