TripAdvisor Sessions: Talking to TripAdvisor VP Adam Medros about Trip Friends and living in a Facebook world

It has taken me a while to type it up but I wanted to share with you my interview with TripAdvisor Product Vice President Adam Medros on their (now not so new) Trip Friends feature that allows review and destination surfing on TripAdvisor to be combined with Facebook social search features.

If you have not come across the Trip Friends product yet, it allows you to connect your TripAdvisor search to your Facebook network. Practical results are an ability to see who in your network may live, have visited or have knowledge about a destination. This data comes from Facebook friend's profiles and Cities I've Visited "pins". Targeted questions can be asked and answered combining the mass crowd input of Tripadvisor's UGC information and the sociograph responses of a user's Facebook friends (for more on the product see the Tnooz review).

The BOOT is full of stories from me about the evolution of online travel from a transactional activity to a recommendation and inspiration service. You will have seen my interviews with various inspiration and discovery start-up CEOs (Triporati, Joobili, Tripbase, LikeCube) as well as my general posts on the Travel Discovery & Inspiration sector. In part 1 of my discussion with Medros of Expedia's TripAdvisor we discussed discovery, inspiration, product development, lead generation and having to live in a world ruled by Facebook (part 2 here). Here are the details of the discussion

BOOT: How long did it take to build the feature?

Medros of TripAdvisor: TripAdvisor does weekly releases covering 10 or 12 different projects at any one time. We have a building and launching mentality. It helps that we are a content company, not not transactional based as transactional sites need to be much slower and more careful in their launches. This feature took 5 months of work. Some was working through the detail of how it would work – some rewriting code as Facebook changed their feed. 2 weeks before launch we had to rewrite the private messaging functionally because of changes on the Facebook side.

BOOT: What are the future plans for the feature?

Medros of TripAdvisor:There are a couple directions we want to take the product

1. Big Picture – pushing on working more closely with partners in the industry to talk to travellers and users that helps plan a better trip to add advice from experts to advice from Facebook friends;
   
2. Mobile - We re-launched our mobile site in Dec 2009. Want to add this feature to that platform. Currently getting more than 2 million users a month on mobile; and
   
3. Network effect – expanding the buckets of things consumers can share with each other.

BOOT: What is like being tied to Facebook? Must be hard and challenging to give up so much control to them?

Medros of TripAdvisor: Without a doubt (a challenge to be tied to the Facebook experience). The benefits are clear but also a number of dependencies we have to manage:

1. General dependency: What would we do if Facebook build their own travel Q&A product? We can't worry about it as we can't stop something like that happening and it would go against public claims by Facebook to be independent;
2. API dependencies: Facebook have a tendency to change features and the API often. For example app notification went away and was never replaced; and
   
3. Downtime dependency: What happens if the Facebook API has downtime? Figuring out how to message to users when there is latency coming from not you.

Despite this we need Facebook. We tried to build a version of Trip Friends on our own a few years ago – did not take off because consumers did not want to maintain another social network.

BOOT: Do you think Facebook is or will become a place for consumers to do transactions?

Medros of TripAdvisor: Facebook (the platform) is ready but users do not think that way just yet. Have yet to see any real interest in transacting on Facebook other than within games. Good innovators dilemma. Is like the early days of Google. Both Facebook and Google are going to get closer and closer to the lead generation side of marketing through delivering people to sites that can transact.

BOOT: Any thoughts on letting hotels participate - to get involved like they can in responding to reviews?

Medros of TripAdvisor: Starting to think about that. TripAdvisor serves two sides of the trip equation. The user side of recommending and the industry side as well. Hoteliers should be able to contribute to trip planning experience. As long as users know the bias of the advice. There is room for us to take this functionality and add advice from experts as well as friends.

In part 2 I talk to Medros about the differences between the sociograph and the tastegraph.

What are your early impressions?

EveryYou: Wharton on Mobile Networks and E-Commerce getting personal

Madame BOOT is a long time consumer of the Knowledge@Wharton series. She has pointed me to this short but interesting post titled "In the Age of Mobile Networks, E-Commerce Gets Personal". The piece talks to how mobile networks will be an enabler or micro targeting. How the next generation of services such as 4square will be key to retailers be able to target consumers with individuated deals and "transform how people shop". Is the BOOT's recommended read of the week.

For more background on this - my concept of EveryYou can be quickly described as "micro-targeting at scale". The detailed definition is

“The development of a specific and targeted recommendation of one based on the unique combination of desires, needs and interests of each individual at any moment in time”

This theory I am working on says that we have reached a state of computational power, data collection levels and social trend in favour of interaction and information sharing that retailers will be able to target offers not only at individuals but at the different versions of each individal that appears at a particular point in time.

Hatton of Google on Mobile and ITA

Claire Hatton - Google's Industry lead for Travel, Local and Government in AU/NZ - spoke last week at the Asia Pacific Aviation Outlook Summit. In the speech she had a lot to say about mobile and a little to say about the ITA deal.

On the mobile web Hatton's advice was clear - if you do not have a mobile strategy including an app, then get one. She said (and confirmed via twitter) that "mobile searches on some search terms are higher than on PC for Google in Japan and Indonesia.". In some critical Asian markets half of the internet connections are via mobile. She conceded that iPhone was the largest platform but reminded the audience not to forget about Android. Google are claiming that they are "activating 160k android devices a day".

This has translated into consumers engaging in simultaneous consumption of media. True multi-media. Hatton quoted a Nielsen stat that 49% of Australians are online at the same time as they are watching television.

On the ITA deal she was more circumspect. In her defence, the ink is barely dry on the contract. While she would not say what Google intends to do with the product, she was very clear on Google's rationale for making the acquisition.

"because we believe the flight search experience is not good enough"

Understandably she would not be drawn on what the product would look like but did say that it would improve that qualified nature of click throughs to supplier and intermediary sites. Indicating that the likely pressure will be more on other meta search companies rather than OTAs.

As a side note. Later that day an industry insider told me that Google would not be able to bring the ITA functionality to Asia any time soon. They told me that that ITA product does not have the net fare connectivity to be competitive in air search in Asia.

BOOT in Hong Kong on Virgin Atlantic (Aug 2-6)

I am on the road next week in Hong Kong. Flying Virgin Altantic. Am on a very useful ticket with the day flight sector in premium economy and night return in Upper Class. New seat review coming soon. Let me know if there are any readers in Hong Kong interested in meeting up.

Follow #APAOS for updates from Asia Pacific Aviation Outlook Summit. BOOT on stage at 2.35pm

I will be speaking and tweeting today (Thursday) from the Australia Pacific Aviation Outlook Summit 2010 at the Four Seasons hotel in Sydney (Travel Technology & Distribution day). I am on stage at 235 pm on The role of airlines and distributors in the “inspiration funnel” and will be back at 440pm on a panel for Leveraging social media to create customer interaction and brand awareness

If you want tweet coverage of the conference then track the hashtag #APAOS. I also recommend following @winglets747 and @sam_lindner for their coverage

Liz Savage (EGM Commercial) of Virgin Blue on the difference between Euro and AU Air markets

For part of today I was at the Australia Pacific Aviation Outlook Summit 2010. Highlight speaker of the seasons I listened to was Liz Savage the (relatively) new Chief Commercial Officer (now Executive General Manager Commercial) of Virgin Blue. Ninemsn is carrying the traditional news part of her speech around DJ's determination to carve a space in between the hard core low cost of Tiger yet steal premium customer share from Qantas. She announced a desire to double DJ's share of the corporate sector from 10% to 20%.

Savage's background (linkedin profile here) was with easyjet and Monarch. She took some time in her speech to share three key differences between the Low Cost/New World Carrier market in Europe and Australia. They are:

1. Number of competitors and low cost carriers: Compared to her time in Europe, Savage was intrigued to discover how concentrated market share was in Australia. This lack of competition was particularly acute for Savage when it came to LCCs. Europe is filled with point to point low cost carriers. Savage mentioned that her previous employer - Monarch - was a medium sized carrier (some 30 aircraft and 100 routes) but was also a profitable airline and of size enough to compete. In Australia, no matter how you measure the market, there a very limited number of competitors - on an absolute scale and relative to Europe;
   
2. Number of secondary airports: Savage reminded us that the success of Ryanair was in no small part due to the use of secondary airports. In Australia there are virtually no secondary airports, forcing low cost and new world carriers to sit with the same airport cost base as the full service/premium carrier(s); and
   
3. Need for an international network: European LCCs can survive and prosper on the back of point to point short haul. But given Australia's distance and market, a carrier must says Savage have an international network (either directly or a virtual one via alliances).

Great to get a new view on the Australian market. Any other major differences between the Euro and Australian air markets?

The BOOT at Asia Pacific Aviation Outlook Summit 27-30 July - Sydney

I will be speaking this week at the Australia Pacific Aviation Outlook Summit 2010 at the Four Seasons hotel in Sydney. The conference runs July 27-30. Day three of the conference (July 29) is the "Travel Technology & Distribution day".

Also speaking on the Tech and Distribution day are:

• Richard Noon (CEO Webjet);
• Claire Hatton (Head of Travel, Government and Local for Google);
• Steve Sherlock (MD Oodles);
• Shashank Nigam (SimplyFlying) and
  
• Martin Symes (CEO Wego)

I am in two sessions

Solo at 235 pm on

The role of airlines and distributors in the “inspiration funnel”

* What are the four phases of online travel?
* How consumers get from an idea to going away and making a booking
* The role of airlines, tourism authorities and OTAs in the inspiration funnel

and on a panel at 440 on

Leveraging social media to create customer interaction and brand awareness

* Making better use of existing channels vs investing resources in newer distribution avenues
* How well do suppliers understand the value proposition of social media?
* Brand management through social media
* Integrating User Generated Content into the booking path

Hat tip in advance to Martin Collings of the Shearwater blog who first introduced me to the role of airlines in the bow tie/inspiration funnel.

With hotel rooms from $999,999 thank goodness breakfast is included

Screenshot of web version of Booking.com newsletter. Says "Don’t miss out – Top destination vacations from 999999". Thank goodness you get breakfast included at that price.

Tnooz: Consolidation and M&A activity in Asia

Post live a Tnooz titled "Keep an eye on Asia for next wave of major online travel consolidation". In it I discuss how the three powerhouses of Asia - Rakuten, Wotif and Ctrip - have spent the last three years acquiring companies in Asia, Europe and America as they try to develop growth outside their respective home markets of Japan, Australia and China. I end with a prediction that

"there is more [M&A activity] to come; that we should expect to see more deals by these companies in the next three years. I would also not be surprised to see one of these companies make a major play through a big ticket acquisition in either Europe or America."

Full post here

TripAdvisor - what did they buy and when

Here at BOOT central we are trying to keep track of the acquisitions and subsidiaries of Expedia’s Tripadvisor. In earlier posts on this we tracked simply by way of a list of acquisitions in reverse date order. With what looks like two deals a year to monitor I have decided to expand the list with some more details. Here is an extensive list of all of the acquisitions made by Tripadvisor since joining the Expedia family.

Company	Sector	Date of Acquisition	Description
HolidayLettings	Holiday rentals	24-Jun-10	UK based holiday rental company (is not HolidayRentals owned by HomeAway)
Kuxun	Meta-search	30-Oct-09	China based meta-search. Kuxun means Cool Information or Smart Information
Flipkey	Holiday rentals	July 15 2009	Boston based holiday rental company
OneTime.com	Deal Search	1-Jul-08	At time of acquisition claimed 5 mm uniques and 30mm page views. One estimate puts deal at $85mm. Onetime do not like being called a metasearch company
Virtual Tourist	Social network	(same deal / company)
Airfarewatchdog.com	Deal Search	2-Apr-08	Site that monitors airline deals especially in low cost carrier sector
HolidayWatchdog	Review Site	1-Feb-08	Hotel and holiday reviews with some deal searching – UK based. Travolution rumour that price GBP9-10mm
Cruisecritic.com	Review Site	25-May-07	Cruse ship reviews and deal search
IndependentTraveller.com	Destination Content	(same deal / company)	Destinations content and information. Includes brand Family Vacation Critic
smartertravel.com	Destination Content	9-May-07	Destinations content and information
Travel-Library.com	Destination Content	(one deal buying Smarter Travel Media)	Also includes brand Frequent Flyer.com
bookingbuddy.com	Meta-search		Booking search
TravelPod.com	Blog Platform Social Network		Platform for travel reviews and blogs as well as networking
SeatGuru.com	Review Site		Reviews individual seats on aircraft to help with picking seat assignments
Everytrail.com	Trip planning	3-Feb-11	Trip planning service focused on mobile platforms

Have I missed any? Official Expedia Inc listing is here. Yes – Expedia owns Tripadvisor (you wont believe how much traffic I get for the question “who owns Tripadvisor”).

Business Traveller Tip: Seven Tips for Travelling in China

Have just returned from a 13 day business trip covering greater China (China itself, Hong Kong and Taiwan). For the latest in my series of business traveller tips I present to you “seven tips for business travelling in China”:

1. Present your business card properly: The western way to hand over a card is with the card in the left hand and shake with the right. The polite Chinese way to hand over a card is with the card presented name forward held by the thumb and forefinger of both the right and left hands. By holding the card in two hands you present the card in a courteous way and give the receiver a clear chance to review and confirm your name and title. You should similarly receive presented cards by accepting the card with two hands;
2. Don’t discount the local 5 star properties: China is full of western five star hotels from Starwood, Accor, IHG etc. The temptation when on the company dollar is to stay at one of these safe (and beautiful) properties. However there are also some excellent local 5 star properties and chains. On this trip I stayed at the Taipei Park hotel in Tapei and the Taiwanese owned Les Suites Orient in Shanghai. Both fantastic properties. I also visited scores of local properties and came a cross a number of gems. Research the local 5s before picking a place to stay;
   
3. Lean a few words of Mandarin. Get an app or download a podcast (try the one minute Mandarin series) and learn a few phrases like hello, thank you and my name is… Easy to do and easy to impress with;
   
4. Leave room in your bag for shopping. The shopping is incredible – especially the range and price for toys for children and the cost of tailored shirts. Keep some space in your bag because you will be tempted to buy something. If a regular traveller then forge a relationship with a tailor (I recommend Jantzen. If you go there tell them I sent you);
5. If you leave the hotel, get “the card”: The concierge will have a card with the name of the hotel and directions designed for taxi drivers. Take it with you whenever you leave the hotel;
6. You will need a VPN to be social: General Chinese mainland internet connectivity blocks Twitter, Facebook, Blogger and other social networking and UGC sites. Not all the time but most of the time. Connecting to the Internet through your corporate VPN will probably get you around the Great Wall filter and allow you to be as online social as you like; and
   
7. Be adventurous with food: The Chinese food of China is different to the Chinese food of western Chinese restaurants. There is a greater range of food and regional variation. Be adventurous. Try different things – you will be surprised. This trip I tried and enjoyed baked fish head (two regional versions), chilled jelly fish, glutinous rice stuffed dates, fried oyster omelette, sweet cabbage soup and braised sea cucumber (think long jelly fish). As well as enjoying the less adventurous but delicious roast duck (three different regional variations) and stir fired eggplant (again three variations). I enjoyed all of it except the sea cucumber. But am glad I tried it (see the photo above of me eating). If you are interested in how much Chinese food has changed in getting to the West check out the site the Fortune Cookie Chronicles

Do you have any other tips for making the most out of of a biz trip to China?

Google and ITA: deal confirmed, BOOT was right, read what the pundits think

While I was minding my business on a work trip in Taiwan, teams of Google lawyers were dotting i's, crossing t's, cutting cheques and making rich people of out of the founders of flight search software company ITA. Overnight Tnooz carried the story that the deal was done for $700mm. This makes it Google's fourth largest acquisition (behind Admob, Youtube and DoubleClick). At risks of self indulgence, the BOOT first broke the rumour that Google was planning a push into travel meta-search.

With the deal done it is time for the pundits to pontificate analyse. Kevin May at Tnooz central has quickly collected the thoughts and analysis of five (and counting) Tnooz nodes/pundits including me. You can catch all of our thoughts and feelings on this deal over here.

Here is what I had to say at Tnooz

In my view the Google/ITA deal is a response to two challenges Google is facing in search generally and travel search in particular

1. Search is no longer the number one activity online. Social networking is. Part of this is the rise of networking but part of it is that search continues to operate in an environment where one site has the answer. Where you type in a search term and Google points you to the one site with the answer. Search queries are becoming more complex and more open ended. The answer to an open ended search query is unlikely to be found on one site. Google knows this is especially true for travel. It knows that it risks losing travel open ended travel search queries to social networks and meta-search. China is a great example of this trend with social networking planning a greater and greater role in travel search and discovery activity. Google knows they need a means for showing multi-site answers to search queries; and
2. Meta-search is building loyalty. In the early days of meta-search, the business model was almost pure traffic arbitrage (I discussed this back in 2007). Meta companies bought traffic off Google for one price and sold it to suppliers and OTAs for another. Meta-search profitability was determined by their ability to buy clicks from Google cheaper than they could be sold back to OTAs and suppliers. But in the last year or so meta-search has started to built loyalty and alternative marketing channels. To generate direct brand traffic and affiliate partner referrals in particular. I have heard reports from a number of meta's of dramatic increases in customer loyalty and direct traffic. Kayak themselves spoke of this phenomenon to me as early as 2008 just after the sidestep deal. To combat meta's growing loyalty Google clearly felt the pressure to bring pricing and the details of offers one step closer in search results

While the deal may help Google solve these two challenges - in presents Google with two new challenges

1. Competing with customers: Meta and other travel search companies spend a lot of money with Google. So too the suppliers and OTAs. There will be a fear and concern here from all of these Google cheque writers the Google might be planning to go direct and cut out more and more of the intermediary market; and
2. Execution and retention: Travel search technology is very very complicated. This is proved by Google's decision to buy rather than build. But each time a company makes a buy vs build decision they open themselves to the challenge of retention and execution within the acquired company. Once you have made very rich people at the core of the asset that you have bought - you need to work very hard to either keep them engaged or train up your old organisation to know everything there is to know about the new one.

More analysis and commentary over at Tnooz.

[reminder my views are mine alone and not the views of Orbitz or HotelClub]

Recommended Read: Role of social networking in Chinese online travel market

I am on a business trip to China so have been reading up on research on general and online specific travel trends. There is a lot of information out on the Intertubes but much of it is buried deep on disparate sites- and is often contradictory. Thanks to a tweet from Chloe Lim I came across and economist article collecting a selection of the better research links. The story is an Economnist piece called “Travelling with a little help from friends “. It is the BOOT recommended read of the week.

Summary from the story is that more than any other market, the online China is turning to social networking to drive retail purchasing behaviour including travel.

It quotes from:

• Travelport’s China Online Travel Survey;
• Nielsen and PATA’s China Outbound Travel Monitor 2009 (pdf);
• PhoCusWrights “The Emerging Online Travel Marketplace in China” (ehotelier extract here); and
• CNNIC stats collected on BizReport.

Full Economist story here.

If you want to round out the China story with some inbound information, thanks to Roy Graff for pointing me to the CNTO’s page with inbound travel statistics.

Australian Online Market for Short-Lets and Holiday Rentals: Interview with Occupancy.com joint-CEO Justin Butterworth Part 2

A deal merging two of Australia's online short let/holiday rental distribution companies to form Occupancy.com has prompted a series of posts here are the BOOT. In part 1 of this series I shared with you my discussions with Occupancy co-CEO Justin Butterworth (pictured) on the size and mechanics of the market. In this part 2 I will share my conversation with Butterworth on the merger deal itself and what’s next for the sector.

The deal

The deal to merge TakeABreak and rentahome.com.au, two of the four main players in the Australian holiday rental accommodation market, was hatched in Nov 2009 and signed in December. Butterworth is not talking how much but has admitted that the deal was all share deal (no capital raising). An assessment was made between the two companies as to relative size and grow rates to determine how much of the combined entity each would get (again not disclosed). Rentahome has maintained its office in Sydney's Moore Park and Butterworth's co-CEO Craig Davis will stay in the TakeABreak office in Canberra.

They have completely integrated the back end systems to allow for on inventory platform system to cover all 20,000 properties. The interest twist to their integration is that they have maintained the different login screens and supplier interfaces. Different inputs but one system. Butterworth told me that there was less than a 10% overlap between the two brands. The limited cross over was because Renathome had focused on the short let metro market whereas TakeABreak was focused more on regional and rural holiday accom.

SEO rankings drove the deal as much as inventory. Butterworth told me that SEO marketing is the “cornerstone of the business”. He told me that cross linking between the two brands is expected to drive a 30% uplift in SEO traffic for the combined group. Once the email lists are deduped he expects the combined group of subscribers to be greater than 400,000.

What’s next for the company and industry

This deal has not generated the press that it probably deserved. Though the bulk of the booking value and revenue remains with the properties, my calculations on the online short let/holiday rental market size show that Occupancy number 2 in terms of bookings generation in a battle that includes subsidiaries of Fairfax, News Corp and Yahoo7!. The specific challenge for Occupancy will be to achieve number one spot in the face of this competition.

For the whole of the online short let/holiday rental sector there are three general challenges:

1. Live vs non-live: Consumers are looking for instant confirmation when they book online. Occupancy is the online one of the majors that offers live inventory but only on a proportion of its properties (Butterworth is not saying what percentage). It is clear that this is a challenge for all the players;
2. Product certainty when no uniform standards: Star rating systems in the hotel sector are constantly open for criticism for bias and lack of uniformity. The position is much worse in the short-let/holiday rental sector. There is no uniform independent service that customers can go to for comparing the quality of different properties. Butterworth and Occupancy are trying to deal with this through their Rental Guarantee. This outlines the checks that they do on a property. It provides a validation on the details in the description matching the property but the industry is still missing an easy mechanism for property comparison (hence challenge 3); and
3. Building profiling and recommendation engines: you would have seen me write often on the future of online travel being around targeted and individuated recommendations (my EveryYou concept). This is particularly the case for a sector like this where there is such a variety of product is some many secondary rural and regional destinations. The challenge is to be build a combination of technology and human solutions to help guide people to the right properties and destinations.

That all said, the variety and uniqueness of the product offerings within the short-let/holiday rental sectors goes a long way to compensate for theses challenges and is the reason for the growth of a health intermediary market in Australia.

BOOT in Taiwan, Hong Kong and China

The BOOT is on the road for a long business trip. 12 days on the road in 4 cities taking in Taipei, Hong Kong, Beijing and Shanghai. If you are in any of those cities let me know.

Thanks to foodiebuddha for the photo via flickr

Australian Online Market for Short-Lets and Holiday Rentals: Interview with Occupancy.com joint-CEO Justin Butterworth Part 1

A war is brewing in the alternative accommodation sector in Australia. It is a war that generates a lot less press and pundit attention than the OTA and online hotel battles that consume so much of my time. But the battle for supremacy in online distribution of holiday homes, short term rentals and B&Bs is getting exciting. The latest salvo was the announcement that online corporate/short term rental specialist rentahome.com.au and holiday rental merchant TakeABreak merged to form Occupancy.com.

I had lunch recently with former rentahome.com.au boss and now Occupancy joint-CEO Justin Butterworth (pictured)to talk through the deal, the market and what's next for the online accommodation industry. In part 1 of this post I will share with you our discussions on the online market for short-let/holiday rentals in Australia. In part 2 we will look into the deal and what’s next.

The online short let/holiday rental market

It is a gross but reasonable generalisation that the online accom market is broken up into three sectors. Three sectors that overlap in sharing customers and suppliers but are distinct enough in their offering to be treated differently:

1. Mainstream Online Hotels Market: Led by Wotif but with HotelClub/Orbtizdisclosure), Expedia, Agoda/Bookings and Chain supplier direct sites making for a very competitive business. Online hotels market in Australia is between $1.5-2 billion a year and growing 15-30% (depending on the research firm);
2. The Holiday Park market (please don't call us trailer parks, you wont like us when we are angry): This market is dominated by supplier sites. Big4 is an example. Late to online we have heard claims of 25% of the business is online but no research on market size; and
3. The Holiday Rental sector: After this deal there are now four major players in Australia competing in a $500mm market (see below). The newly formed Occupancy group, the Fairfax owned Stayz . the Realestate.com.au (REA.AX) owned Realholidays.com.au and (at the listing level) the Yahoo7! owned TotalTravel.com.

The short let/holiday rental market is dramatically fragmented compared to the hotel market – goes without saying. Butterworth mentioned that a BIS Shrapnel report on the Holiday Home market in Australia which estimated 500,000 holiday home properties in Australia. Around 200,000 of those are available for regular short let. The rest being private holiday homes that are not regularly rented out.

Butterworth and I tried to figure out the size of online short let/holiday rental market. From our lunch time back of the envelope work we put the size of the Australia online holiday rental/short let market at between $450-500mm. This makes it a quarter to a third the size of the online hotel market. I have arrived at this number through combining two calculation methods – top down and bottom up.

Top down – start with the size of the total market and work downwards

We started with the 200,000 in available stock and assumed an average weekly rent of $1,000 and occupancy at 50%. This sets the full market size based on inventory story is $5.2 billion. Butterworth thought that around 10% of the market is online making a market for short let/holiday rentals of around $500 million.

Bottom up – start with the bookings generated/referred by the major players and work up

Here is what we know about the top players. I had to make a series of assumptions but I think the range is reasonable.

Player	Bookings Generated For Listed Properties	Source/Calculation
Stayz.com.au (Fairfax)	$160mm	At NoVacancy told us they were generating 160k bookings per year (assuming $1,000 per booking). In 2008 told us $100mm
Occupancy	$150mm	Occupancy joint-CEO told me they are generating $300mm in enquiries to properties per year but is not disclosing the percentage that are confirmed. Will assume 50%.
Realholidays.com.au (REA/News)	$45mm	Real holidays is 1% of REA’s AU revenue (pdf). AU revenue ~$150mm per year (pdf). Therefore Realholidays revenue $1.5m per year. If this was a hotel business, $1.5mm in revenue would mean $15mm in bookings generated. Sounds low so times 3. In 2009 claimed 359 paid subscribers and 22,304 listings (pdf)
Others including TotalTravel (Yahoo7!)	$90mm	Assume top 3 have 80% of the market
Total bottom up estimate	$455mm

Combining the top down and bottom up approaches gives us an online short let/holiday rental market size in Australia of $450-500. With the merger putting Occupancy.com’ estimated $150mm year putting them at #2 in the market to Stayz’s $160mm but not by much. Butterworth told me that Hitwise traffic data would put Stayz further ahead of Occupancy than my booking estimates would argue. He believes that Stayz has a lower conversion rates from enquiries. This would make sense as Stayz is likely to get much more unqualified traffic than Occupancy due to the referral of traffic from Fairfax Digital properties.

Much like online hotels, there are different models in the short let/holiday rental sector. The Stayz model is the listing model. Properties pay to be listed on the site. Occupancy.com operating on a booking fee model. Occupancy.com collects net rates and grosses up by the booking fee. Guests can process payment with Occupancy or pay the property direct (who remit booking fees to Occupancy.com). It is clear that the vast majority of the bookings are being paid offline with the property.

The market sizing proves that the online short let/holiday market in Australia is a substantive and growing market. The Occupancy merger puts a lot of pressure on Stayz as the combined volume has closed the gap to Stayz. But Fairfax, News Corp and Yahoo7! are tough competitors. I am looking forward to seeing how they respond. If the war wasn’t intense already, foreign players also have their eye on the market. US giant HomeAway (more on them here) have put up an Australian holding page at HomeAway.com.au – a clear indication of a push into the market. Expedia’s TripAdvisor have bought another holiday rental firm (Holiday Lettings) to add to Flipkey (already in their stable). No surprises. With a $500mm market to fight for, it is to be expected that many more companies will join Occupancy in this battle for short-let/holiday rental customers.

Tnooz: part 2 of mobile post on interoperability and multi-tasking

Part 2 of my Tnooz post on the mobile revolution is live. Post is called Part Two of Two – Two missing pieces from the mobile revolution jigsaw. In it I interview a number of people on the impact that poor app interoperability and limited multi-tasking is having on the mobile revolution. People interviewed include

• GlobalMotion Media (creator of Everytrail) founder and CEO Joost Schreve;
• Appolicious’ vice president of product, Dan Hont; and
• Point Inside CEO Kevin Foreman

check it out here.

part 1 is here.

Airlines Tweets in one list

Have created a new twitter list with most of the major airline official twitter feeds including all the skytrax winners and the top 20 global airlines.

You can follow it here

Tnooz: The need for App Search to drive mobile revolution

Latest Tnooz post is live. The post is called "Part One of Two – Two missing pieces from the mobile revolution jigsaw".
In this one I am looking into the mobile revolution. I look into how the rise of the mobile device is being driven by the rise of the app. I share some start up activity in the areas of app search including Appolicious. Check out the full post here.

Two great information pieces on Korea

I have had the good fortune to visit Korea twice for work in the last nine months. It has been fascinating getting to understand the market more and work on strategies and plans. In my quest for more information on Korea in general and the online industries in particular I have come across two articles that may interest you.

First - an article on search engine marketing in Korea via SearchEngineWatch and Michael Bonfils called "Search Around the World: South Korea". The first paragraph has the hook - South Korea has three search engines ahead of Google and "the highest CPC prices in the world". Local sites Naver, Daum and Nate have beat Google and Yahoo so badly that the two search giants are fighting to see which of them can claim 3 and which can claim 4 percent market share in search. G and Y have all but given up doing it on their own with Google providing Daum and Nate with their paid search and Yahoo! doing the same for Naver. If you are interested in how search is different in Asia then this is a great read.

Second - a collection of 5 essays on Korea from the McKinsey Quarterly called "South Korea: Finding its place on the world stage".

The first essay by Stephen S. Roach and Sharon Lam of Morgan Stanley examines the South Korean economy. A highlight for me was their reasoning behind the South's rapid recovery from the Global F'n Crisis. They credit an ability by the economy to hit a middle ground. Not trying to compete with the Chinese on price and not trying to compete with the Japanese on quality. Rather finding a price/quality balance not found in products from the two Asian eco-powerhouses.

The second by Christopher Graves of Ogilvy looks at South Korea the brand talks about how South Korea has broken away from the "Hermit Nation" history through World Cups and Olympic Games but still needs to do more to establish the brand identity that benefit neighbours like Japan.

In the third Richard Dobbs and Roland Villinger of McKinsey take a different look at the economy with particular focus on the rise of the services sector. Concluding that for the next level of growth and any chance of achieving Japan like levels of GDP per capita the South must dramatically increase the size of it's services sector

For the fourth essay Shen Dingli of Fudan University outlines "Four steps to prosperity for Korea" including an interesting discussion on how to turn North Korea into an economic asset.

In the final chapter former Economist editor Bill Emmott discussing Korea's geographical advantages as a cross road between China, Japan and Russia. Drawing (possible strained) parallels between South Korea and Italy.

Both are worth a read for their commentary on Asia as a whole as well as Korea.

thanks to yeowatzup for the photo via flickr

WITovation at WebInTravel 2010 Singapore October 18

I will be attending the WebInTravel conference in Singapore October 19-22 alongside the ITB Asia event. One of the sub-events at WebInTravel is the WITovation Entrepreneur's Bootcamp.

Is a great place for start-ups to meet with online travel executives, practices their pitches and network with other start-ups. Three finalists from the Bootcamp will get to pitch during the main conference.

If you a start-up interested in participating then check out the registration and entry details here.

Mentors during the day will include

• Me
• Andrew McGlinchey, Head of Products, Southeast Asia, Google;
  
• Brett Henry, Vice President Marketing, Abacus International;
  
• Hrush Bhatt, Founder, Cleartrip, India;
  
• Loh Lik Peng, hotelier and restaurateur, Singapore;
  
• Martin Symes, CEO, Wego (pictured);
  
• Morris Sim, Co-Founder and CEO, Circos Brand Karma;
  
• Timothy O’Neil-Dunne, CTO, Lute;
  
• William Bao Bean, Partner, Softbank China & India Holdings; and
  
• Wu Hai Founder & CEO, Orange Hotel Group

More details here

Tnooz: Zoombu introduces door to door search

Latest Tnooz post is live "Great way to search yet five big challenges for door-to-door site Zoombu". My thoughts on UK travel search start up Zoombu. Their product is one of the first to do “multimodal door-to-door search”. Check out my interview with founder Rachel Armitage, thoughts on the product and challenges they face. Full post here.

Water Skiing Aircraft - video

Sure we now know thata- but can a plane water ski??? Must watch video of the Flying Lions Aerobatic Team "water skiing" in South Africa using four T6 Harvard Aircraft.



Hat tip to my Dad for sending me this link

Qantas In-flight Video Kills Virgin Atlantic Money Shot

Yesterday I flew Auckland to Sydney on Qantas. Playing on their in-flight video was the new Roman Polanski movie Ghost Writer. This movie contains one of the now ubiquitous airline product placements. This one is a doozy.

It starts with Ewan McGregor enjoying a scotch in an amazing looking lounge with no mention of the brand - though clearly the Heathrow Virgin Atlantic Upper Class Lounge. Then it quickly moves to McGregor sitting very comfortably in a beautiful herringbone seat being served by a lovely looking stewardess while both are bathed in red/purple hue lighting. Again no mention of brands but clearly a Virgin Atlantic Upper Class Seat. Then it is time for the closing shot. The sweeping music filled mid shot of the airline filling the sky and filling our screens with the Virgin Atlantic brand. The VS brand money shot. But that is how it plays out in the cinema not on a Qantas flight. No way. As the grainy blackberry photo below shows the money shot is blurred out, the tail is a generic red smudge rather than a bright and embolden declaration of the Virgin brand . Can't blame QF for the mid-air editing - it is a natural reaction to blur out "unsavoury" images from an in-flight video.