Monday, December 15, 2008

Holiday break and a little entertainment. Back in early January

Dear BOOT readers,

I am going on holidays early this year. Barring a collapse, buyout or killer email that draws me back to the keyboard I will see you back on the blog around Jan 5 2009.

Merry Christmas, Happy Hanukkah, Seasons Greetings, Happy New Year and best you and yours.

I'm having a blast writing this. Hope you are enjoying reading. See you again in 2009.

In the meantime I am reposting an old favourite which has no relationship at all with the business of online travel.


Friday, December 12, 2008

Expedia and Travelocity team up (in Asia at least): Zuji is carrying Tripadvisor reviews

Am sure you know by now that Travelocity is operating in Asia under a number of brands including Zuji in Australia, Hong Kong, Singapore, New Zealand and Taiwan. You definitely know that Expedia owns Tripadvisor (though I keep getting search engine travel from people that don't). But did you know that Zuji is now including Tripadvisor branded reviews in their hotel search results. In other words a content sharing deal between a Expedia company and a Travelocity company.

BOOT Link Exchange Policy

The quantity of link requests I am getting is going up by the day. I feel compelled to do a post setting out my link policy. At the very least it will give me something to point to when I reply to link requests. So here is the BOOT link exchange policy.
"I don't due pure link exchanges. Instead I link to sites that I read regularly whether or not they link back to me. I think that is a "purer" way of building blogging and linking communities. You can see from my blog roll there are sites that have not given me links back. Similarly there are sites that have given me links that I don't link back to. If you want to submit a link to me then I promise to take a look at the site and if it joins my list of regularly visited sites then will add to my blog roll and give you a link back"
Best way to get a link out of me is to:
  • Give me a link;
  • Send me traffic; and
  • Have something interesting to say that I want to read again and again.

PhoCusWright Interview: TripWolf CEO Sebastian Heinzel and his relationship with MairDumont

Another very interesting meeting I had in LA at PhoCusWright with TripWolf CEO Sebastian Heinzel. TripWolf is a German based online destination guide, social network and travel planning website. They call themselves a "social travel guide". They have already been generating a some blog buzz (Travolution examples) since their May 2008 beta launch. They have received some funding from i5invest. The part of this conversation I enjoyed the most was hearing about the unique relationship that the online Tripwolf has with the offline publishing powerhouse MairDumont. More on this below.

I have commented before on content sites, including a specific post summarising a series of travel planner sites that participating in the PhoCusWright Innovation Summit.

Tripwolf do a number of the things you would expect from a travel planning and social media site including displaying destination information, providing blogging and UGC systems and allowing travel guide printing. Functionality-wise they have the expected social networking pieces but are still to develop the itinerary aggregation functionality we have seen from players such as TripIt and fellow TechCrunch 50 allum GoPlanit.

Rather they have focused on two elements as their differentiator compared to other trip planning sites. Firstly they are European based. This provides for a different destination focus, greater breadth in language and different consumer pool to fish in.

The second is content and this is where my interest in Tripwolf was particularly engaged. The challenge that a travel planning company has (as I have discussed before) is the need for content and lots of of it. This usually requires time, patience and good marketing as the trip planning site tries to piece together its own editorial content and collect user generated content. Tripwolf has dramatically sped up the time required through a unique relationship with a large content provider - MairDumont. MairDumont (I am told) is the largest publisher of travel guides in Germany (which likely makes them number one in Europe also). It is trite to call them the "Lonely Planet" of Germany because one of MairDumont's many products is to market and translate the German editions of Lonely Planet. I am reliably told that their books, maps and publications are ubiquitous in Germany.

On their own MairDumont have followed an approach we have seen with by companies such as Lonely Planet and Frommers by launching series of sites (8) based on their various publication brands. These have been successful in their own right generating some 240 million page impressions and 36 millions visitors a year (according to Tripwolf's Heinzel).

The interesting part here is that in exchange for equity in Tripwolf and the right to sell advertising on TripWolf, MairDumont have given TripWolf access to the extensive MairDumont library of content. This means access to quality editorial information/content on more than 200,000 destinations in five European languages (press release here). It grants Tripwolf an enormous content head start but threatens MairDumont's tradditional business. This is a very bold move by MairDumont as Tripwolf is now "giving away" the content that MairDumont has been selling in books for 60 years. They are supporting a distribution mechanism that seeks to undermine the traditional publishing business that generated Euro190mm for MairDumont in 2007. Allowing their content to go online through a vehicle they have an interest in, even though it competes with the traditional business is a bold move that deserves our applause. It will cost them book revenue but it recognises that the future of content distribution for travel is going to be beyond the printed page.

Monday, December 08, 2008

Travel industry copying the appliance industry: American Airlines Fly Now / Pay Later

I have written before about how travel is competing with appliance retail for the consumers dollar. In one post I quoted a report from Tourism Research Australia that said as much. In that post we saw evidence of JetStar (AU low cost carrier owned by Qantas) trying to fight this trend with a promotion tied to prizes from a white goods and appliance retailer.

Thanks to an email from an equity research analyst I have become aware of another airline's efforts in this retail battle. Below is a shot from the American Airlines site with a very common appliance store tactic of buy now pay later. In the case of American Airlines they are offering Fly Now Pay Later with six months interest free.


There are restrictions here. Firstly it applies to air only (ie the areas on directly under American's control). The consumer has to apply for an AA credit card, combining financing with credit card customer acquisition. Most outrageously if the amount is not paid in full within six months interest is accrued and back dated at a Mafia like level of 25.96%.

The execution and interest rate may be bordering of scandalous but I expect this to be the first of many appliance retailer like activities from travel suppliers and online agents. Even in these times of credit crunches there is just too much money in financing, extended warranties (insurance) and flexirent style products for margin pressured suppliers to resist the lure of appliance retailer practices. The BOOT will be tracking and posting on these as I see them. If you spot some let me know.

Friday, December 05, 2008

PhoCusWright interview: Talking with Tina Fitch of EzRez about how airlines can improve their online offering

I am finally finding time to write the follow up posts from PhocCusWright in LA. This post also ties back to a story I wrote in May 2007 called “Helping Airlines Stay On Top”. Also one a few months later when EasyJet announced a complete revamp of its website – becoming the first of the low cost carriers to do integrated (read seamless) land and air cross sell and packaging.

I was reminded of these two stories during my meeting at PhoCusWright with Tina Fitch the President and CEO of EzRez. As you probably know EzRez is a provider of web based reservation and distribution services. This includes a mechanism for allowing travel distribution companies (including suppliers) to build multi-product (air, land etc) engines with cross sell and packaging. Effectively allowing a supplier/airline to look like an OTA.

This took me back to my earlier posts because in them I proposed three things that an online supplier (namely airline) should do to increase their online presence. I have updated this list from the earlier post. Here are my three recommendations to an airline:
  1. Cross Sell Complementary Product - Properly: Advising an airline to sell complementary land product is the easy part. The twist in this advice is they should not do it through through a simple white label and link on the home page that says "book hotels". It is another mistake to simply to bring online the offline holiday or vacation division of the airline (like what Qantas have tried with what used to be known as ReadyRooms). Instead they need to invest in being a true online hotel (land) business. One that lives by the principles and processes that have made the hotel only players successful - hotel flexibility in rates and availability, product focus and online product managers living and breathing their channel. Leaving it to the holiday division means that the hotel contracting style and results mirrors the less flexible world of wholesale. This does not produce the inventory and pricing you need to beat the hotel only players. Just as important you need to match the big OTAs in putting cross sell in the purchase path through both dynamic packaging and shopping basket style. Both of these things mean investing seriously in the complementary product. It will likely involve a third party inventory provider but for maximum effectiveness needs more than a link to a white label;
  2. Give Customer rewards and enticements beyond price: Web only deals and lots of them drove customers to Airline websites but with the OTAs and meta-search now using API connections and screen-scraping to provide customers with the same inventory, the airlines need to expand their offering to customers. They should use content, loyalty concepts/miles, customer service and bonuses (all the stuff that OTAs do) to open up another front in retaining customers. I talked about this in relation to how BA brought their Highlife magazine online. When using content to retain consumers, Airlines should seek to drive loyalty through building community, building brand and linking all elements to the customer experience not just to drive traffic and generate advertising revenue ; and
  3. Apply focused channel management and structure: Stop treating the online channel as...well...just another channel. Make it a separate business in itself. Put the person in charge, truly in charge such that they never have to enter into a debate over cannibalisation of other channels. Turn the site into a business that is independent of the airline's other sales activities.
Tina's EzRez is building a business around helping Airlines with these recommendations. Her company's pitch is that their software as a solution (SaaS) products can provide the functionality and connections needed to drive the architecture and inventory. With clients such as AA Vacations where they are hoping to prove it. She believes a SaaS provider like EzRez can invest more in technology (than an airline), can go behind the scenes at the airline (unlike an OTA) and can build on top to customise for areas such as miles/points.

I see a very interesting battle emerging between companies like EzRez approaching this market from the SaaS angle, the OTAs with customisable white label solution and now XML feeds and black box connectivity style companies such as TopDog. The winner will determined by whether or not players like EzRez can keep up with the technology strength of the OTAs (with their deeper pockets and larger technology teams) and can stay ahead with interoperability capabilities ( I have also mentioned these challenges before).

Gift Disclosure Tina was kind enough to give me a t-shirt during our interview.

Wednesday, December 03, 2008

What the hell does Recombobulation mean? Maybe the TSA can help?

This sign was spotted at Milwaukee's Mitchell International Airport. It is the place passengers go after the security check to put their belt and shoes on and reassemble computers and toiletry packs. I tried to search around for the definition of Recombolutation. This was a typical response online

That is - it is a made up word. Trying to figure it out I came across "Combobulate" which is (according to
To put together in a somewhat mysterious manner. To bring something out of a state of confusion or disarray. To manufacture by some unusual or novel means. Antonym: discombobulate.
So drawing on my very poor high school grammatical training it is very nice of the Transport Safety Authority (TSA) to provide people with a place for Recombobulation or the
"putting back together of personal items in a somewhat mysterious manner"

Not sure if helping people do things in a mysterious manner should be hallmark of TSA service but then I am not the professional in this area. I am just thrilled to be able to add the word recombobulation to my list of techorati tags.

UPDATE - Looks like it was the airport not the TSA that put up the sign. Here is what the photographer "lark is already taken" had this to say about the photo in an exchange with me

"FWIW I had the impression that the airport put up the sign, not the TSA. Perhaps the airport is expressing an opinion on the whole screening process.."

Hat tip to Consumerist for the story and lark is already taken for the photo

UPDATE 2 - More fame and recognition for Milwaukee. The American Dialect Society has voted "Recombobulation" as the most creative word of 2008. To complete the story - the winner of the "word of the year" was "Bail Out" with runners up including "lipstick on a pig" and "change". Thanks to Steve Sherlock at Oodles who sent me the link.

Qantas and British Airways merger means bringing the pacific pain to the Kangaroo Route

Story on CNN that BA is in talks with Qantas over a merger (thanks to iKangaroo on twitter where I spotted the story).

I hate this idea.

Right now Qantas is gouging me and every other customer on the Pacific Route (East Coast Australia to West coast USA). Qantas earns 40% more revenue per passenger kilometre on that route than the Kangaroo route because...they can. And they "can" because there is no competition. The only "competitor" (if you can call it that) is United. The US and Australian governments have restricted who can fly this route - ensuring profit good times for Qantas and high prices for me. There are possible long way round options with Canadian and Hawaiian Airlines but the routings and timings are terrible. V-Australia (Virgin Blue's long haul play) is due on the route in Feb 2009 but there is only limited capacity improvements expected and how they will connect out of LA to other US destinations is not clear. Basically Qantas own this route and take advantages of customers because of it.

I ranted about this a lot in a recent post - "Open Skies between the US and Australia: There is no one I don't hate right now".

Currently we (travelling consumers) have been spared this gouging on the Kangaroo Route (Australia to UK/Europe and a Qantas Trade mark) because more than thirty carriers fly this route in addition to BA and Qantas from the well respected - Singapore, Cathay, Emirates, Virgin-Atlantic, Etihad, to the mid ranges - Malaysian and Thai, to the micro and niche - AirAustral, to the "no way in hell would I get on it" - Garuda.

But the UK and AU governments let BA and Qantas enter into a "Joint Services Agreement(JSA)" in 1995 allowing them to
"coordinate scheduling, marketing, sales, freight and customer service activities"
In other words to engage in behaviour that otherwise would be anti-competitive. When accused of this BA and Qantas point to the above facts - that 30+ carriers fly the route as proof that competition continues. However since the JSA was signed the following airlines have pulled out of the route - KLM, Alitalia, Air France, Lufthansa, Lauda Air, Austrian Air. Do you see a common theme? In fact there is now not one Continental European carrier flying the route. Not one. All have been forced to pull out because of the scheduling and marketing collusion of BA and Qantas under the JSA (OK..maybe in the case of Alitalia there have been other causes).

I have a (legitimate) concern that a merged BA and Qantas will have further competition consequences and help Qantas to extend their Pacific gouging to the Kangaroo route. If the government is listening please squash this. Then again it is the AU government(s) that allowed the JSA and Pacific Route dominance to continue.

Update - Delta have announced they will fly the route around July 2009. The Cranky Flier has written a post showing what this means in terms of flight schedules across the Pacific.

Tuesday, December 02, 2008

Australians at PhoCusWright - ekit and viator

Photograph of an Australian group at the recent PhoCusWright Conference in LA. From left to right John Diamond CEO of international mobile phone card, SIM and geo-location services company eKit, Tim Hughes (me) and Rod Cuthbert Executive Chairman of destination services company Viator. Am grateful to Rod as it was through his introduction of me to Philip Wolf of PhoCusWright that I managed to get a blogger ticket to PhoCusWright.

Monday, December 01, 2008

The war on Mumbai, the rescue of my family and the re-writing of the media rules care of Twitter

I have been quiet for the last week on the blog. You could be forgiven for thinking that this was a come down from the activity of PhoCusWright in LA the week before. But actually it has been because my family has been directly caught up in the Mumbai horror that dominated last week. My wife’s cousin and her family (husband and six month old daughter) were long term residents of the Trident Oberoi hotel in Mumbai. The husband was the head chef at the Italian restaurant that was part of this five star property. He was evacuated immediately after the terrorists stormed the hotel but my cousin (in-law) and her infant daughter were trapped in the hotel for more than thirty-six hours as they hid from the terrorists with little to no food or fresh water. The husband managed to sneak back into the hotel at around the thirty hour mark with food and water but it was not until late Friday afternoon Sydney time (around midday local time) that the whole family was liberated. Not surprisingly photos of a young a family escaping the horror dominated a lot of the online and offline pressparticularly in their native Italy (click on links for photo).

I share this with you for a few reasons. Terror attacks of this kind will impact all of us in the travel business – particularly in Asia. As an industry we have lost colleagues and friends. Additionally this was a very personal experience for me as I a was filled with worry for nearly two days culminating in the incredible feeling of joy at their survival – held in check by the sadness of the loss of so many others.

It was also a very powerful experience to live this moment in real time with the changing media tools at our disposal. The second I heard they were trapped (early morning Sydney time), I fell into an old habit, immediately switched on BBC world and sat on the couch alternating between that and CNN. Then new world instincts took over. I started by having multiple tabs focused on different online news sites –, CNN, Nytimes. But they did not time stamp their updates very effectively. It was hard to know how old (read out of date) a particular story was.

By the end of the second day I had my eyes glued to Twitter under the search tag #mumbai and more generally searching Twitter for any mention on the word Oberoi. Towards the end of the siege these twitter feeds updated themselves with nearly a tweet a second. People from all around the world were tweeting with the important ("am watching pictures of commandos storming the hotel"), the emotional ("thoughts are with all those in Mumbai"), the practical ("here is the direct line to the Oberoi Mumbai staff"), the wishful ("heard a rumour that it was all over, is that true?") and of course the useless ("here is a link to [an unrelated] video"). Meanwhile my other screen was alternating between live web streaming of NDTV (local news) and CNN-IBN (CNN’s partnership in India). Live professional feeds on one screen and live citizens on the other.

This kept me so up to date that I actually saw the live footage (as it happened) of my cousin and her family stepping out of the hotel and towards the buses. My cheers of glee brought work colleagues rushing into my office as I jabbed at the screen screaming “That’s them!!! That’s them!!!”.

This combination kept me as close as possible to the action. Almost certainly closer than if I had actually been there on the ground as I could see, hear and track the events from multiple angles. There was also an amazing human side to the Twitter feed experience. As I posted more and more questions, thoughts and updates to Twitter in the search for “and Italian national and her infant”, more and more people tweeted back with support, tips, thoughts and just plain human to human contact. Some I knew, very many I did not. It was an amazing experience but not a perfect one. At the height of things the Twitter feed was completely unmanageable. Too much information steaming too fast and none of it verifiable. People would state any rumour as fact, which would then we re-tweeted at the speed of light and build up a momentum of its own. One person Tweeted “Indian government to shut down Twitter feed because of security concerns”. Within moments this had become “Twitter law” and reappeared every 15-20 mins without fail. At no point was it supported by a source or any basis for confirmation. Real time Twitter reporting of an event like this is clearly flawed and over-whelming but it is a view into a dramatic change in how events will be reported.

Without a doubt the Mumbai horrors have shown us a real time information world unlike any before it. We will now see and watch the world unfold from multiple angles and the lines between professional media and the people on the street are not just blurred they are eliminated.

[photo is of the Vetro restaurant at the Oberoi Mumbai where my relative was head chef]

Wednesday, November 26, 2008

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

Virgin America Mood Lighting by Binder.donedat
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

Monday, November 24, 2008

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.

Saturday, November 22, 2008

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.

Friday, November 21, 2008

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 There was some unhappiness at Active when the brand was dropped in favour of 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. 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 .
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?

Thursday, November 20, 2008

PhoCusWright Travel Innovation Summit - Video of all of the presentations

The Travel Innovation Summit at The PhoCusWright Conference
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 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 and 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

United 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

Center Stage at The PhoCusWright Conference
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 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.

Wednesday, November 19, 2008

Tuesday, November 18, 2008

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 - 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 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 - 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

iPhone by William Hook.
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 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

Monday, November 17, 2008

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.

Friday, November 14, 2008

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.

Tuesday, November 11, 2008

Wow - HomeAway raises $250 million at a $1.15 billion valuation (TechCrunch)

Headline says it all. Wow. TechCrunch is carrying the whole story on this monster sized fund raising round for vacation rental company HomeAway. Makes money raised to date $459mm. TechCrunch state the pre-money valuation is $1.15 billion but does not say what the source is but remember that the biggest online travel company Expedia (EXPE) has a market cap currently of $2.38 billion. To give another example Google bought Youtube (top 5 site worldwide) for $1.65 billion. At first glance it is hard not to agree with TechCrunch's view that this is overvalued. What do you think is the vacation rental space hotter than first thought?
Publish Post

Trialing Yammer - will let you know

logo has been pitched as Twitter with security controls. That is a micro-blogging/updating service where to can limit the "followers" to ensure internal security. I it supposed to be better suited to corporate users. I have just started to trial it with my team. Will let you know how it goes. I first heard of Yammer while watching the TechCrunch50 list, looking for travel companies. Yammer was the TechCrunch50 winner.

Of course the day before I decide to kick off the trial the first piece of bad news for Yammer (capacity issues) hits the interwebosphere (TechCrunch story here).

Sunday, November 09, 2008

WebInTravel & PhoCusWright: See me, Philip Wolf and Ram Badrinathan in action

If you are looking for a prelude to PhoCusWright here is a link to a thirty minute video of me (Tim Hughes), PhoCusWright CEO Philip Wolfe and AP Head of Research Ram Badrinathan talking shop at the recent WebInTravel conference.

We cover a number of topics including:
Great session (but I'm biased). Watch it here.

The BOOT confirmed for PhoCusWright

PhoCusWright - Market Research | Industry IntelligenceAll - I am now confirmed to attend the PhoCusWright conference in Hollywood Nov 17-20. I will be there for all four days. Hope to see you there. I will be around on the Sunday night beforehand (16th). Anyone else out there going that wants to meet up for pre-conference margaritas (Kevin, Darren, Stephen, Jens, Siew Hoon, Guillaume, Phillip, Alex, anyone)? Let me know your interest in the comment section and will think up a place.

UPDATE: Twist bar at the Renaissance Hollywood at 6pm

Saturday, November 08, 2008

Expedia Online Advertising in Australia: Sometimes marketing and IT need to talk to each other

Spotted the following online advertisement on the NRMA website (an Australian AAA company) for Expedia. An automobile website is a perfectly good place for a marketing team to buy for a banner campaign.

But the timing of the ad is no good. Someone in IT scheduled an outage and either forgot to tell the marketing team or it was too late. Here is the landing page from clicking on the ad

Oops! Unfortunate waste of advertising money.

Friday, November 07, 2008

Ctrip and Qunar go to war over $150

Just last week I was sharing my thoughts with you about the China market - specifically that while it Ctrip that dominates travel sales in China it is arguable that Qunar is the biggest travel site if you measure by online traffic and share of voice.

In a (clearly) unrelated move, news out today that Ctrip is suing Qunar. In a story that looks like the recent battles between RyanAir and the meta-search players, the fight is over Ctrip's allegation that Qunar is screen scraping Ctrip and that such a thing is illegal.

The compensation being sort - a paltry RMB 1,000 ($146) according to the media reports.

Very few details out their in Web land about this legal action. My guess is (with no knowledge of the Chinese legal market) is that RMB 1,000 is the nominal damages amount in Chinese courts. Really what Ctrip is looking for is an injunction to stop Qunar from scraping to either force Qunar pay for access or to hurt the Qunar business and shut down a competitor.

Thanks to Martin from Wego who was first to send me the story (Siew Hoon at Transit Cafe was just seconds behind Martin)

Thursday, November 06, 2008

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

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 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 ( 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 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 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?

Tuesday, November 04, 2008

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

Rakuten TRAVELI posted last week on the Chinese market, particularly the dominance of Ctrip in "online" travel sales. A complementary story appeared this week in (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 - 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.

Monday, November 03, 2008

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?

Thursday, October 30, 2008

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

Sabre Holdings LogoThe 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?

Wednesday, October 29, 2008

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).