Wifi in the air - early reports on the experience on GoGo on Virgin America

I am not looking forward to the roll out of Wifi on aeroplanes. There is something safe and calming about getting on a plane and knowing that I am out of contact and can either focus on clearing old emails and work projects or simply taking a bit of time off before a busy week (or after a busy week). But the push to Wifi on planes is now inevitable.

Virgin America has just rolled out GoGo Inflight on its flights. If you are interested in hearing about the experience and feed back (which has all been positive). Check out the top ten things you need to know on Gizmodo or listen to the first 12 minutes of epsiode 170 of Twit where Ryan Block of gdgt talks about his experience.

thanks to blinder.donedat for the photo from flickr

Yahoo sells Kelkoo for Euro 100mm to Jamplant (UK investment firm)

Yahoo! bought Kelkoo back in 2004 for Euro 475. News out late yesterday that they have sold it for Euro 100 million to Jamplant - a UK investment firm I have not heard of. This a significant loss for Yahoo! both in terms of capital losses but also in functionality. On the positive side for Yahoo because after three good years in 2007 the business lost Euro12 million. I can see the short term benefit but in the long term I think Yahoo will regret exiting meta-search. French language news story here including a table showing the turnover and losses. TechCrunch story here including English language version of the internal email.

Back at Gate 64 in Hong Kong Airport

My flight from the US to Sydney is going through Hong Kong (don't asked). The LAX to HKG leg landed at Gate 64. Brings back some very disturbing memories.

Kayak CEO Steve Hafner on PhoCusWright Center Stage

Here is a quick list of quotes from Kayak CEO Steve Hafner that I Twittered during his PhoCusWright Center Stage Interview with Philip Wolf.

"Kayak's traffic was three times Sidestep when they bought them"

"The jury is out for the media model on retail sites"

"Bartels at Travelzoo has $80mm of revenue in their P&L. I want it. Of course they are a competitor"

"brought out a great mobile product a few years ago. Was used by 1000 people"

"next year will be talking about consolidation in OTAs (online travel agents), new faces at the top of some, cost cutting and site improvements. Can't believe how cluttered OTA home pages are"

Priceline CEO Jeffery Boyd on PhoCusWright Center Stage

Philip Wolf has just finished interviewing Priceline CEO Jeffery Boyd at PhoCusWright 2008.

Here is my summary.

On US v International

• Already have more than 50% of business outside of US (see Expedia CEO's comments from yesterday). The international hotel business overtook US in terms of size at the end of 2006; and
  
• International split is reflected in staff numbers with 1,600 total staff but only 340 in the US (but note another 6-700 more in outsourced US customer service).
  

On moving away from the opaque model and doing acquisitions in Europe

• Was an easy decision to move away from the opaque model and air reliance as the business was shrinking. Now down to less than a third of the business being the merchant model and the largest part of that merchant model is hotel;
  
• (not surprisingly) very happy with 2004 acquisition of Activehotels and 2005 acquistion of Bookings.com. There was some unhappiness at Active when the brand was dropped in favour of Booking.com but believes it was the right business decision. Boyd did not provide a direct answer to questions on whether he would expand the Booking brand to the US but did say "with a product in English and the strength of Google we can sell to anyone";

On Asia and Australia

• (again) very happy with Agoda acquisition. It generated $30mm in gross bookings in Q3
• Boyd was asked about the strength of Wotif in Australia. He reiterated that there is a lot of opportunity for more competition in Australia. Booking.com are opening an office in Australia with through "a person based in New Zealand" (I assume he means Agoda Chairman Adrian Currie Update - received a message from inside Priceline that Boyd was referring to someone else. Adrian Currie is based in NZ but is the Chairman of Agoda and head of Asia for Booking.com) .
  

On Mobile

• In the US - about service and support, not transactions for now;
  
• In the rest of the world - likely to be much faster to transactions on mobile; and
• Generally -"have a mobile site that is caveman in its advancement but are focused on it".
  

On the Year ahead

Paraphrasing Boyd he said the following: There will be a shake out in the coming year. Companies that are well capitalised and watch expenses will do a little better. The industry survived and grew post 9/11 so we will get through this.

The Renaissance Hollywood Hotel wants more money

I have been at the Renaissance Hollywood Hotel this week as part 1,000 people attending the PhoCusWright 2008 Conference at this hotel. I have tried to be a good guest - no unnecessary demands of staff, tipping everyone that looks my way. I asked very nicely to be able to check out at 3pm rather than the 1pm they offered. "I am sorry sir but that will be an extra $25 per hour" was the reply. "But, I have been staying here for six days as part of a very large conference, surely you can be nice to me and extend my check out for no charge" was my polite reply. "Can't help you sir, we have to charge $25 per hour" was the response.

Clearly they do not have to charge me anything. But it is equally clear that they want to charge me more and have no need to reward me for a long stay. I see this an being greedy. The Renaissance Hollywood should give me two hours for nothing after six days of paying. What do you think I am being too demanding?

PhoCusWright Travel Innovation Summit - Video of all of the presentations

Here is the video list where you can watch 13 minute presentations from the 32 companies from the PhoCusWright Travel Innovation Summit. You can select which one you wish to listen to. My pick of the top six are here. The six finalists here. You should also listen to YourTour, ekit, nileguide, planeteye, tripchill and travelbeen.

Expedia at PhoCusWright - quotes, facts, figures and mattress stuffing

Expedia CEO Dara Khosrowshahi has just stepped off the centre stage at PhoCusWright. Here are the highlights of his presentation and Q&A session



On Global Expansion

• 19 Expedia branded sites worldwide. Currently two thirds of revenue is in the US, one third international. Want this to be fifty:fifty in five years;
  
• Need to do a lot of transation. Plan to translate 500 million words in 2009; and
  
• 10% of revenue is Advertising based. Is growing faster than merchant/retailer business but do not expect it to take over from merchant/retailer business as the main reevenue source for the company.
  

On merchandising and market managing

• Launched Expedia Travel Ad - a way to hotels to bid for sort order placement (think Google ad words). Note as per earlier post Hotel.de have been doing this in Germany for a while; and
  
• Have 400 Market Managers (hotel) world-wide that are working to get hotels to recognise that deals are needed but saw potential for those deals to come from the Travel Ad bidding, additional loyalty points, add ons etc to maintain price.
  

On acquisition, capital and the market

• On Acquistions: When asked directly about who he would buy next Dara said - "we are going to keep our money stuffed in our mattress". Later "we don't think we will go on the acquisition trail in 2009". He went on to explain that with the state of the capital markets and the difficulties in access public capital sources (including debt) he wanted to keep his cash on hand to get through the next five years; and
  
• On Going Private: Simply - there is no capital available for anyone to take Expedia private.

On integration and the merchant/retail model mix

• Will keep the demand portions un-integrated (ie Venere brand remains). But supply side will be integrated. In other words will see Venere inventory (negotiated retail inventory) on Hotels.com and Expedia.com in a mixed model.
  

Anyone else get anything else from the presentation.

United on premium customers - not sure what will happen to demand in 2009 but am sure that premium customers do not make decisions based on price

I posted on Monday some thoughts about the premium air fare product and the downturn/crash/eco tsunami. On Center Stage at PhoCusWright is Tim Simonds the MD of Customer Strategy and metrics for United Airlines talking about the increased focus that United will be making on the premium customer. Simonds highlighted that in the US Air market the premium passenger sector represented 30% of revenue in 2007 but lept to 50% in 2007. He was open and honest that he did not know if the numbers would hold up in 2009 but premium will still be a core focus as "a very attractive part of the market".

It will hold up in his view because United is rolling out new product. He displayed this product to us - which looked like an Emirates, Singapore Airlines or Cathay Pacific advertisement from 2004 - so is only a revolution if you are looking solely and US based carriers. When asked on this point Simonds admitted that the product will not be as "good as foreign flag carriers. The first step is to be number one in the N.American market".

In response to this a mini revolution broke out on the Center Stage floor. Questions were asked about what this meant for United's commitment to non-Premium customers. Charlie Leocha of Tripso put it simply "Doesn't this mean that United abandoning the back of the plane?".

Simonds answer "we try to give a high level of service consistent with the level of value that each customer has paid. But agree the bar needs to be raised for everyone." To another version of the question he answered "we need to enhance economy plus but quite simply there is a large and increasing differentiation between economy and business."

In a follow up Simonds said that he thought this strategy was appropriate because (and this is the main point) " United do not see the premium customer as making decisions based on price." I am trilled to hear a US airline rep talk about lifting the level of service and experience but I do not agree that premium customers will not be making price based decisions. I have been a top tier Qantas flyer for now 8 years. Yet this year I flew more long haul economy that any time since 1999. Price is now a greater factor in my decisions that any time in my non-lawyer career. It will be a factor in 2009 for a large majority of premium flyers. US airlines need to register this and improve the "behind the curtain" products.

what do you think?

PhoCusWright: Model Blur - media and retail. Big deal for the industry but less for consumers

Philip Wolf is giving his opening monologue at the Centre Stage part of the PhoCusWright conference in LA. The second storm in the "Perfect Storm" is the merging of models in Travel between the media model and the retail model. The media model being eyeball focused, content companies that generate money from advertisers (think TripAdvisor and Away in the travel space, Yahoo!, MSN and online newspapers in the more general media space). The retail model is based on transactions direct with consumers (surely you don't need me to give you examples).

As part of the Philip's perfect storm analogy, these two models are coming together. Expedia has started doing Google Ad words, Partner Marketing is exploding on OTAs (TripAdvisor, Away, IgoUgo and the OTA sites themselves), companies like Hotel.de allow select/preferred hotels to bid for higher spots in the search results with increased margins (much like Google Ad words itself).

This is a big deal for the industry. Retailers embracing the media business is a signifcant and substantive business transformation (and one that I have said has to be executed cautiously and consciously). In a later session Jake Fuller of Thomas Weisel Partners said that while he expected much less consolidation in 2009 compared to 2008, if it does come it will come in OTAs/retailers expanding their media businesses.

But I think this shift is less of a big deal from the consumer point of view. The consumer is coming to online travel retailers and media companies with the same question and desire. Whether they come to a retailer or a media company they are still asking "where should I go and where can I get a good deal?".

My view - focus on answering the consumer question rather wondering which business model we are in or should be in. Answer the consumer need first and let that drive the product and business model needs.

PhoCusWright Travel Innovation Summit - Six finalists

My pick of the six finalists are here.

The picks by the Travel Innovation Summit attendees and finalists are:

• Wandrian
• Home & Abroad (Fogglight)
• TripIt
• Yapta
• iM@
• Triporati
  

My score two out of six.

PhoCusWright Travel Innovation Summit - my pick for the top six

32 companies spent today presenting at the PhoCusWright Travel Innovation Summit. Six get to move onto the Centre Stage sessions. The six will be announced tomorrow at lunch time based on anonymous voting during today's session. Here is my pick of the six (note have to pick two each from New, Emerging and Established Companies). In no particular order

Pick 1 - Uptake.com: I have spoken about Uptake before. They have built a meta-search business for travel reviews and built a search methodology that goes well beyond the tradditional capabilities of Google, Yahoo and MSN. [Emerging]

Pick 2 - Triporati: I have long been a fan of last.fm and Pandora. Both are music companies that have approached (respectively) a compunity and a genomic approach to helping people to discover new music (rather than search for known music). Triporati is doing the same for travel. Focusing on discovery rather than search through breaking down travel into 62 "DNA" elements and matching those against 1,200 destinations. [New]

Pick 3 - Dealbase.com: The test of innovation is an idea that no-one else thought of that has been executed well. The idea for deal base is a qualified lead generation business for OTAs and hotels. This is a new idea for the travel industry and the execution looks good. [New]

Pick 4 - Rezgo: A supplier and vendor matching system combined with long tail distribution management system. No other product in the 32 like it. [Emerging]

Pick 5 - Worldmate: The best of the mobile solutions I saw (but just). Very close competition with TripChill (see this post for more on mobile). Have given my vote to Worldmate (after a close debate with myself) due to its distribution deal with Nokia. Distribution is the hardest part for a mobile app. [Established]

Pick 6 - Fogglight: Home & Away have built a component based trip planning site builder. Enables travel companies such as hotels and tour operators to set up a whitelable sales operation of complementary product providers (ie a hotel building a web and packaging site using Expedia's white label solution). With acceess to content, a contact management system and more. [Established]

I will let you know what the vote is tomorrow.

Quick Break from the Spectator - how to make a profit flying BA to Argentina

Cute story from the Spectator. How to keep getting yourself bumped from BA flights to generate a profit and a long weekend in London. Not sure of the truth of it. The fact that the Spectator gave it a run should mean something but old media has been fooled in the past.

PhoCusWright: Trying to sort out the mobile options - TripChill, ekit, iM@, WorldMate

In my first post from PhoCusWright I highlighted a lot of the different approaches companies from the Travel Innovation Summit (and elsewhere) were taking. A slightly different story emerged when the conference turned to the companies focused on mobile tools. Four mobile focused companies have presented so far TripChill, WorldMate, iM@ and ekit.

Two groups emerged.

The Assistant: TripChill, WorldMate and to a lesser extent iM@ focus on giving consumers real time local information. TripChill and WorldMate impressed me with the real time ability to check the latest travel information associated with an itinerary around flight changes, hotel reservations and support information (weather, parking, driving options). Looking at these tools in action, I can finally see delivery on the promise that mobile has been making to online travel for ten years. The ability for a traveller to be able to seamlessly update and change trips based on conditions that can only be known through real-time connections is what we have all be wanting from mobile.

The locator and sharer: iM@ and ekit focus on the destination - what to do when you are there. iM@ is an adverting and offer driven business. Focused on pitching activities to travellers driven by destination and advertiser promotion. ekit is something else entirely. This (Australian based) company made it's start in international phone-cards and global SIMs. The product they displayed here was an innovative (and at times unsettling) travel journal product where GPS technology linked a SIM purchased from ekit. This SIM can be linked to an online travel journal (think blog). The travel journal can be instantly updated as to where to you are every time you make a phone call. That's right you make a call, the phone registers where you are and then posts to the travel journal your location and time of call. Posts can be enhanced with SMS text content, photos and more. This is the ultimate trip blog tool as it knows were you are but is also very scary because...well..it knows exactly where you are and what you are doing. I love the idea but feel very uncomfortable using it.

Looking at these four companies I feel like we finally getting somewhere with mobile in online travel.

thanks to William Hook on flickr for the photo

PhoCusWright: Trying to sort out the travel planners - Travelmuse, TripIt, GoPlanit, entrip, YourTour, NileGuide etc

Am at the PhoCusWright Travel Innovation Summit. 32 companies - mixture of start-up and mature companies- are pitching a new product in the hope of gaining industry support. We are half way through the summit and a theme is emerging very quickly around travel planning. No surprise of course. Again and again at non-travel internet events it has been the trip planner that has generated the buzz. Witness TripIt and the 2007 TechCrunch40 event and GoPlanIt at the 2008 TechCrunch50 event. Today at PCW we have already heard from TripIt, TripJane and Travelmuse (update and now YourTour update 2 and now NileGuide). At WebInTravel we also heard from entrip. Common functionalities are coming through each of these companies - the ability to integrate and add trip elements and content from other websites; the ability to share and build a network; and the ability to build a "living" itinerary with all elements.

The differences are just as stark as the similarities. Each of these companies (and others) are approaching the business from a different angle.


In the case of TripIt - the experience starts with using TripIt to combine the disparate itineraries that appear in email from an airline, hotel provider, destination service etc.

With entrip - the experience starts with a map. Consumers connect the points they wish to travel between and entrip provides (or facilitates) the content and booking functionality.

At GoPlanIt - the experience starts with a destination. Crowd sourcing and social networking elements recommend a trip itinerary including details on activities.


For Travelmuse - the experience starts with content. A regularly published online travel magazine that has morphed into a trip planning and sharing system.

With YourTour - the experience starts with traveller desired experiences . Building a trip recommendation based on the broad trip desires entered by the consumer.

Through NileGuide - the experience starts with the desire to build a guidebook for a destination. One document to replace the the myriad of documents that even the simpliest of trips end up generating.


And finally for TripJane - the experience starts with Facebook.



I was working on setting some criteria for judging which of these will be the most successful. Trying to set up a scoring or ranking system to judge on areas such as technology, UI, marketing, business model and people. I realised that if I continued with this thinking, then I was setting me up for a very complicated task (lots of work). Critically I quickly came to the realisation that this list of judging criteria was all but irrelevant because there is one success factor that is more important. I call it "survivability". It seems circular that the most important cirteria for success is the ability to survive but in the case of a travel 2.0 start ups that are content heavy I see the most important factor for success the ability of the company to survive for a the next two years. To keep the product up, live, growing, changing and adapting. Staying alive while the long path to consumer acceptance is trod. Giving the company time to test itself and prove that their approach is the right one. I have a personal favourite in the list and there one that I don't get but that's not important. What is important is that these companies need to make sure that they have a lot of runway (ie can survive for a long time on the money that they have) and are able to change and adapt on a dime.

What do you think?

UPDATED - to include YourTour

UPDATED 2 - to include NileGuide

Thinking about the gap between economy and business fares

Was sent a question as a follow up to the recent post on the airline industry with fuel at $60 per barrel. Was asked "Wanted to get your thoughts on the possibility of airlines lowering their prices. Most think the airlines will maintain prices despite the falloff in passenger demand".
Here is my reply

I have been trying get my head around the two competing airline trends. Firstly the decline in demand but also the corresponding drop in capacity. The current economic pain is in effect being absorbed by the airlines through reductions in supply. This can only last so long, as there reaches a point where airlines cannot cut any more (ie cheaper to keep planes in the air than on the ground). The other factor that will hit in the next month or two is a dramatic reduction in premium fare usage by consumers. I have looked a very unsophisticated statistical sample (my peers, friends and check-in staff at premium class counters) and have noticed people flying long haul economy for work they had not done so for ten years. This sent me to think about the costs of long haul premium travel now and historically.

I remember that back in 1990 when I first starting looking at travel as more than just a wide eyed kid, the gap from economy to business to first was double:double. Business was twice the cost of Economy and First was twice again. An economy trip to Europe from Australia was $2,000-2,500, business was $4,000 - $5,000 and first was $8,000-10,000. Now, 18 years later you can still get an economy fare to Europe for around $2,500. But the gap to business and first is times four and times one and a half. Business is now four times the cost of economy and first is now one and a half times the cost of business. No doubt that the quality of the 2008 version of premium product is light years beyond that of 1990 (flat bed as standard, limo pick ups, hundreds of hours of interactive entertainment, world class restaurants in airport lounges etc) but the price gap is now significant. Of course, airlines have looked to fill that gap with premium economy (twice the price of standard economy). But the 2008 version of premium economy is not as good as the 1990 version of business (seats smaller, pitch not as deep, staff not as attentive).

The airlines were able to justify/maintain/get away with this increasing the price gap/multiple from 1990 to 2008 due to a booming economy and ever increasing T&E budgets. But now the economy is boomed out and T&E budgets are being wiped out. From this I believe that the first hit on pricing we will see is in premium classes. I expect that very early next year (if not starting right now). Meanwhile capacity cuts will continue. Then some tipping point will hit where capacity cuts have reached as far as they can and early cuts in premium have gone as low as they can. Then economy fares will hit the floor and more airlines will hit the wall.

I say all this back on good old fashioned blogger intuition and anecdotally driven research. I have not done the deep price and capacity analysis that should accompany an answer like this - but that is the blogger prerogative.

UPDATE - LA times travel blogger Jen Leo just let me know that expiring and midnight tonight Qantas are offering two for one in all classes to AU and NZ. Expect this to be the first of many.

thanks to atalou on flickr for the photo

PhoCusWright: Blogger drinks

Day "-1" at PhoCusWright started with a pre-Blogger summit at the hotel Bar. Thanks to Jaime at the Canadian Tourism blog who first posted on the meeting and the photo to the right.

Who's the in photo? From left to right: back row: Tim Hughes, Kevin May (Travolution), Phil Caines and Stephen Joyce (Rezgo). Front: Jaime Horwitz, Claude Benard (Hotelitour), Sean Keener (Bootsnall).

Death at Hong Kong Airport

I am now in LA for PhoCusWright after ending last week in Hong Kong. The flight from Hong Kong was long and painful. Twelve hours in economy class with no reading light and no VOD. That sounds bad - but it is nothing compared to the emotionally charged and draining time spent at gate 64 of Hong Kong airport. For those that know Hong Kong well, gate 64 is next to the entrance/exit of the the second of the Cathay Pacific lounges at Hong Kong airport. I therefore left the lounge with only 15 minutes to go before departure. I arrive to two sights. The first is the long long queue of people to join this soon to be full (if not over booked) 747.

The second is a collection of very serious and official looking people. A mixture of paramilitary security officials, flustered immigration agents, panicked Cathay attendants and four paramedics. Two of the paramedics are working furiously on a prone man in his mid sixties. One is bashing his chest. The other is pumping a hand ventilator with determination but also a sense of loss. Then they all seem to stop. They stop the CPR, they stop the hand ventilation and they change the look of determination to one of resignation. Then efficiently and respectfully they load the man onto a gurney and rush him out toward the main part of the terminal. The paramedics continue to try resuscitation techniques but it clear from their behaviour and the state of the patient that it is too late.

I have never seen death up close before like this. It does not have any of the complexity or drama that you read or see in theatre or cinema. It is simple, a man falls and other people try to pick him up.

Airline Industry - Wharton on fuel at $60 per barrel and the benefits of hedging

Thanks to Madame BOOT for pointing me towards an article on the Wharton Knowledge website called "For Airlines and Others, Even the Best Fuel-price Bets Can Lead to Turbulence". Article talks about the activities of airlines in hedging against fuel costs. This issues came up again recently with the outrageously deceitful campaign by US airlines against "evil" oil speculators.

Drinks Pre-PhoCusWright Sunday 16 Nov at Twist bar in Renaissance Hollywood from 6pm

Update to post earlier. Seems to be lots of pre-PhoCusWright interest in drinks. If you can make it, see you at Twist bar in Renaissance Hollywood from 6pm.