Tuesday, January 29, 2008

GigaOM: Yahoo! should change its travel strategy and buy Priceline, Orbitz or Expedia

Yahoo! is in trouble. Stock is down almost a third in the last twelve months, big layoffs are coming (as many as 2,500), CEO Semel is out and many of the senior execs have followed leaving founder Jerry Yang in charge. John Battelle dug up an old quote Nov 2001 that effectively says that Yahoo has been looking for a turnaround strategy for six plus years. Even Kevin May at Travolution is worried.

Sramana Mitra guest editing on GigaOM has a post offering a number of revolutionary solutions (read acquisitions) for each of the major sectors that Yahoo! operate in, including this
"Yahoo has also made a move in online travel, but is not a top performer. Priceline, Expedia and Orbitz are all monetizing the segment. Yahoo should acquire one of them, and become a serious player."
Revolutionary to say the least but Yahoo! actually has a precedent for operating a travel retail business (rather that just a media business). In Japan Yahoo! Travel is an operating travel buseinss (also known as Tavigator) is a joint venture between Yahoo! Japan, JTB (Japan's and one of the world's largest travel companies) and uber Japanese investment house Softbank (itself an investor in Yahoo! Japan).

What do you rate the chances of this?

Friday, January 25, 2008

China Eastern in new marketing activity to improve duty free sales

It is definitely photo week here at the BOOT. Thanks to Madame BOOT for finding this great piece of Engrish on a China Eastern check-in sign.

UPDATE - thanks to Luke for adding to the China Eastern English collection with this "No Crabs Allowed" check-in sign

Thursday, January 24, 2008

Tuesday, January 22, 2008

Wotif.com signs with Tourico - first time they have connected to operator inventory

With the acquisition of Travel.com.au out of the way, Wotif.com have turned their attention to new inventory sources with the announcement of a deal with Tourico for US and Canadian inventory. First time I have heard of them taking a non-direct approach to hotel contracting and to using a merchant model (net rate). Presumably required a lot of back end work to adjust the system to allow new rate structures and the issue of different forms of voucher. Also reduces the flexibility of inventory access as Tourico mainly work on a fixed contracting basis. On the upside likely to also to increase margins on US business. Wotif did not have a US office before this deal but does have a Canadian office.

UPDATE - word on the street is that it took 7-9 months to build the seamless link with Tourico - Wotif's first. Most of this dev work but some of it also commercial discussions and concluding the deal. Wotif now has the taste for integration work (will need it for life post the Travel.com.au acquisition) and third party inventory so is on the hunt for more.

Monday, January 21, 2008

TUI restructures online division - no hints at integration plans, but lots of names invovled.

News out late last week (eyefortravel via Hotelmarketing.com) outlining a new consolidated structure for TUI's various online travel assets. Joan VilĂ  and Wolfgang Bremer will be joint MDs with Joan being solo MD from 2009 of the new division to be called the Online Destination Services (ODS) group.

On the B2C side this is a consolidation of Hotelbeds, Laterooms, Hotelopia and the infamous Asiarooms into one operating group. The article names eleven people involved with managing, running or board observing the business (not including the separate boards for each of the businesses) but gives not a hint of the plans for how to bring these four businesses together (or how they will all be run out of idyllic location of Palma). It seems to me that there are still four platforms, four inventory connections, four marketing plans etc. I suppose you could call one organisation a start but I see a lot of cooks on the list of this online broth and not much a guide as to how the menu will be put together (how's that for a tortured analogy).

Sunday, January 20, 2008

Flying Virgin Atalantic - when a free ride from the airport not a bonus

I have spent the last week in London. I just love this town. There is a lot to hate about it – the weather, the traffic (congestion zone business has made no difference as far as I can see), the tube (A$10 per trip on a train filled with people that simply do not wash often enough) and reluctant embrace of the secret to good food (high quality ingredients). But there is more to love about it – the most cosmopolitan city in the world (walk for ten minutes and listen to 15 languages or watch 25 news channels in 30 languages - yes this is possible with combinations of dialects, variations and accents from northern England), two bit plays with first rate actors (whathisname from that TV show staring in that play by the famous guy) and top rated shows with famous name hacks (Chicago starring Kelly Osborne). Has also been a very productive week.

Travel-wise it was my first time flying Virgin-Atlantic and a chance to experience the famous VS Upper Class cabin. All the things you hear are true – a masseuse to give you a “grapefruit arm scrub and deep tissue hand massage” (cant do business without one), a bar in the sky (I actually saw two passengers starting an affair and breaking up each other’s marriages with a line “my wife just doesn’t understand me”) and more free pyjamas than Madame BOOT will know what to do with.

But – one of Virgin-Atlantic’s top business traveller perks is now looking to be an actual disadvantage. Virgin started a trend now followed by Emirates, Malaysian, Etihad and others of offering free limousine/town car pick up and drop offs for Upper Class passengers. It sounds like a fantastic deal – no painful queues at the airport for a taxi, actual T&E savings and the self satisfied feeling that comes from someone holding a piece of paper with your name on it at the arrivals lounge. Unfortunately airport to work and back again limo service in London is more of a curse than a benefit. It took me two hours door to door to go from Heathrow to my office in the City on the way in versus 45 mins if I had taken a Heathrow Express and tube combo. On the way back I booked a pick up for 1830. The car finally arrived at 1900 and I arrived at Heathrow after 2015. There is the “sexy factor” of riding in the back of a smart Mercedes and arriving to a dedicated security check-in but you pay for it with a travel time that is twice that of public transport. At one stage driving along the Thames I was passed by five joggers beating my car in both pace and what looked like comfort levels.

Don’t get me wrong – I am not complaining about Upper Class travel. It beats the back of the plane any day, every day. However in a world of high speed train connections and congested morning traffic, Virgin-Atlantic and others will need to rethink whether or not the free limo ride into town in London is going to turn from a piece of brilliant marketing to a bonus that nobody wants. My recommendation is to allow customers to trade the limo ride for a Heathrow Express ticket for smarty pants bloggers like me to look a little closer UPDATE - A reader sent me through this screenshot to show that Virgin Atlantic also offer a free Heathrow Express ticket that can be picked up from the Clubhouse. Now where did I put that book "Attention to detail for Dummies"

Friday, January 18, 2008

AOL to buy Where Are You Now (WAYN) rumour: TechCrunch says yes, WAYN says no

Erick Schonfeld at TechCrunch claims to have a solid inside story that AOL is in talks to buy Where Are You Know (WAYN) for $200M. The company reportedly has 9M registered users and is on course to earn $4.5M in revenue this year.

If true confirms my recent post about travel meta-search and social networking being a media business and therefore has a stronger alignment with media companies that OTAs. Is also hot on the heals of the smaller but similarly themed News Corp investment in Asian meta-search company Bezurk.

According to Techcrunch WAYN raised $11 million in 2006 from DFJ Esprit and a gaggle of British entrpreneurs, including Lastminute.com founder Brent Hoberman.

Thanks to a loyal reader for sending through. I have been travelling for a number of days and feeling daunted by the number of stories in my RSS reader and email in my inbox.

UPDATE - Thanks to Kevin of Travolution who pointed me to the comments from WAYN spokesperson Annika Erskine in the Techncrunch article denying the rumour outright.

Thursday, January 17, 2008

The Bezurk Sessions: Interview with Bezurk CEO Martin Symes on News Digital Media investment

Meta-search stories have been dominating the news in the last month, naturally driven by Kayak’s purchase of Sidestep. This has (unfairly) stolen a little of the deal buzz around the investment by News Digital Media (one of News Corps online arms in Australia) and OWW Sinapore's investment in Asian meta-search company Bezurk (my first mention of the story here).

I have a connection to the Bezurk deal through some consulting work that I did for them in early 2007. So it would not be fair to give my thoughts and any commentary around the deal. However I did have a chance to chat with Bezurk CEO Martin Symes today about his post-deal plans around Brand, Product and ongoing relationship with News. Here are some of the points that came out of our conversation.

Maintaining independence

Bezurk will maintain its independent operations from other News online assets. This is important (says Symes) to ensure that Bezurk can continue to work with other media partners and reflects that New has taken a minority stake. Symes and team will work hard to integrate activities with other News online assets (mainly in Australia) but this is not guaranteed. Will only do it where it makes sense. I read this to mean that the News properties such as News.com.au or truelocal.com.au or Moshtix nor Bezurk itself are compelled to link to each other but that each will have the inside running on a a pitch to the other. Bezurk is already an important part of the travel section on News.com.au but this occurred prior to the investment deal.

The other important factor for continued independence says Symes was that Bezurk needs to continue to think and operate like a start-up. This is both in the sense of cost control and lean operations as well as the need to have the flexibility to innovate.

New Plans - Some more people, some more product and some more markets

The deal has brought some much needed money into Bezurk that Symes intends to use for the following:

  • New Markets – about to launch in India off the back of a “portal deal”. Will open a small Sydney office in the next few months;
  • New people – will be announcing soon a new SEM manager and senior marketing appointment; and
  • New products – cars and packaging to come very soon. Will also allow them to uncut some of the corners around QA and testing that were required given their pre-deal budget restrictions.

So what does the Kayak/Sidestep deal mean for the meta-search market and for you

Symes (not surprisingly) sees the Kayak buyout of Sidestep and Yahoo! upgrade of Yahoo! Travel through the relaunch of Farechasee as a “fantastic validation of the model as people are prepared to put a lot of money into the sector.” He is sceptical that Kayak can deliver on the integration plans they have as quickly as they want (see my Interview with Kayak’s Kellie Pelletier for more on the integration plan).

Does meta-search need to be local market focused? Why should a consumer care that Bezurk is an “Asia Pacific market specialist”? Wont Kayak give a consumer all they need?

The last area of questions for Symes was around why he thought customers needed a local meta-search provider and what he thought Bezurk offers that is better than Kayak.

Symes says “Great question. We are still developing exactly what it is that each market needs by figuring out the local practices and booking patterns. I argued during my time at Zuji that you have to be as nimble as possible locally to access local content. Same is true in meta-search. You can get 80% of the way to meeting your customer’s needs by being a generalist but if want to be the player in a market, the authority then you need to do the last 20%. Need to be local.”

Congrats again to Martin, Craig and Ross on this deal.

Sunday, January 13, 2008

American Airlines Ex-CEO Bob Crandall in "Man Fires Dog" story

Great video and story from the Consumerist on airline cost cost cutting gone mad with American Airlines Ex-CEO Bob Crandall discussing the merits of combining animal wrangling with ruthless micro management.

Friday, January 11, 2008

The BOOT is in the skies and on the road

I have one of the craziest travel schedules in front of me that I've ever experienced. Between now and this time in Feb I am spending weeks in London, Chicago, Nelson (New Zealand) and of course Sydney. Will have a chance to try out Virgin Atlantic for the first time and re-experience the old faithfuls of Qantas and Air New Zealand. Will try to keep the posting up but time and travel is against me. Happy New Year!

The Kayak Sessions: Interview with Kellie Pelletier of Kayak on the Kayak / Sidestep deal

You know about the Kayak and Sidestep $196mm "merger" (if you don't you can see my post on it here). I had a chance this week to speak with Kayak's VP Communications Kellie Pelletier about the deal, meta-search, online travel and a whole lot more. A couple of very interesting themes and ideas came from this interview.

Doing a deal with (OK buying) Sidestep

The deal is talked about as a merger and legally looks like one but is clear from the conversation that it is in fact an acquisition with Kayak in charge. The deal was done quickly. The idea emerged early in the third quarter initiated by the three key founders - Rob Solomon (CEO Sidestep), Stephen Hafner, Co-Founder and CEO, Kayak.com and Paul English the Kayak CTO. Discussions started early last year but really got going "late summer". Owners of Sidestep were all bought out - however Trident Capital (Sidestep's biggest VC backer) joined the funding of Kayak's buyout of Sidestep.

Kayak + Sidestep: The Integration Plan

Pelletier shared the integration plan for the combined products. In the US they will retain two brands. Sidestep will keep it feature and content focus (supported by search), while Kayak will keep its clean, uncluttered, pure search approach. Pelletier used a Google vs Yahoo! analogy to show the difference. A focus on engineering and search, search, search (Kayak) vs features, functionality, content and brand based connection with users (Sidestep). Quotes Comscore to say that the traffic cross-over between the two is only 10% which I found very surprising.

While they will maintain these brand feelings in the front end, the back end will be one system - dominated by the Kayak technology. There will be some enhancements in the Kayak engine drawn from Sidestep (ie packages and air guides) but in the end both brands will point to the same Kayak dominated engine. In the rest of the world (mainly Europe at present), the Sidestep brand will be set aside. Already the Sidestep.co.uk refers directly to Kayak.co.uk. Full integration should take around 3 months.

The content pieces of Sidestep are nice to have but not really core to what Kayak believes is key to success in meta-search - great engineering. Sidestep have content deals and have bought content companies (for example Travelpost). It is clear that Kayak aren't that interested in this content but when pressed on what Kayak will do with these side assets and deals Pelletier used a couple of good PR phrases saying that Kayak was “evaluating all those relationships now” and “reviewing contracts and performance”. My interpretation is that this means that the content assets were not part of the reason why Kayak bought Sidestep and Kayak would not have established these assets independently but at the same time don't want to just through them away.

Re the team - 20 of the 75 Sidestep staff have been offered/accepted employment contracts making a total staff of 60 (35 of whom are engineers).

Kayak to the World - We are here, were coming and we're willing to buy

Even though "everyone wants to be bought by Google", Pelletier says that the enlarged Kayak is not looking for a buyer or an exit plan. Does not believe that the OTAs can afford them anyway. Instead Kayak is gearing itself to take on the world with expansion plans for China and India "sometime in 2008". Additionally there maybe "newsworthy announcements later in the year". This is PR code word for plans to grow through further acquisition.

Sure we like search engines but there are plenty of other ways to get traffic

I have spoken in the past about how so much of meta-search is about traffic arbitrage - buying traffic from Google and selling it to travel providers. I was very interested to hear from Pelletier that PPC was only responsible for a third of Kayak's traffic. Affiliate deals delivered another third and (surprisingly) direct to the side was a full third of Kayak's traffic. Very impressive if true as indicates a customer loyalty I did not expect in meta-search.

My Thoughts

Kayak is hungry for more. Unless Pelletier was messing with my mind then Kayak are determined to stay independent, grow traffic, expand product and become the travel search company. But integration is never as easy as it sounds in the acquisition deck shown to the Board. Simple maths of the traffic puts Kayak + Sidestep in the traffic lead but they will need to prove that an combined company can rely on maintaining the combined traffic.

Meanwhile Yahoo! is offering up some resistance having finally put its Farechase product on the Travel home page (here is Kango's Yen Lee with more of the story).

Congrats to Kayak on this deal and I agree with the strategy. However - to end with a word of caution - Kayak will do well not to under estimate the challenges of integration and the potential for an inexplicable evaporation of traffic.

Dear Tim - I have a content start up, what do I need to do to succeed? - Expanded.

Prompted by Alex Bainbridge's 11 more rules and an email exchange with Kevin May of the Travolution Blog I have expanded the description of my four quick rules for a successful travel content/community company.

Here are the expanded rules:

1. Content - lots of it. The main source of traffic you are going to receive is from search engines. For a search engine to trust you and for the scale of long tail traffic to be sufficient you are going to need to be adjudged "relevant" by search engines. Nothing establishes relevance better that a constant stream of good quality content. Does not mean that size is better but need a mix of quality and quantity. Chances are you will need the help of consumers to get you to the quantity threshold (ie user gen content);

2. Index - a fantastic Google friendly index and expertise in search optimisation. It is no good to have great content if the search engines can't read it or find it. Yury Shar of Hotelscombined.com said design the site for both Google and consumers. You need smart consumer/UI people and smart search engine people to work together for the index that speaks to both;

3. Access methods - varying ways and means for consumers to access the content. Consumers are choosing very different ways to access and use content - old fashion websites, RSS, email subscription, embedding in blogs, widgets, social networks etc. You cannot provide all things to all people from day one but your system needs to be able to support different access and sharing methods or you will cut off customers; and

4. Patience - time (and money) to wait for the traffic to build. It takes time for the search engines to trust you and the consumers to care. It takes intestinal fortitude to survive the peaks and troughs of the whims of consumer behaviour. Bursts of traffic will come and then go away - inexplicably. Advertisers (outside of Google adsense) will want to see a history of success before committing to big juicy CPM campaigns.

As with the short version - very easy to write much harder to do.

Thursday, January 10, 2008

China heading to $1billion online travel revenues (well sort of and I think it already did)

Thanks to China Industry Travel Blog and Seeking Alpha I came across some online travel numbers for the China market.

The Data Center of the China Internet (DCCI) released its 2008 China Internet Survey including the following commentary on online travel.
Revenue of China's online travel and hotel reservation services climbed 65.4 percent year-on-year to RMB 2.25 billion ($309.1 million). Revenue of the sector is expected to hit RMB 3.84 billion ($527.5 million) in 2008 and RMB 7.32 billion ($1 billion) in 2009, driven by the Olympics and the further opening of China's tourism market.

Ctrip remains the leader in China's online travel and hotel reservation market, followed by Elong, Auyou and MangoCity.
Important point is as I have said before most of what is online in China is actually offline.

Also PhoCusWright are already reporting China at above the $1billion mark.

Wednesday, January 09, 2008

Qantas has power problems, Virgin-Blue cashes in

Contextual advertising on news sites often results in great "coincidences". Check out this one from today's online version of the Sydney Morning Herald. A Qantas near disaster story with a Virgin-Blue ad.

Thanks to a loyal reader for the tip. Here is the full story if you want to read the article (unlikely Virgin ad is still there).

If you would like another SMH example have a look at the end of this post on the Travel.com.au acquisition. Shows an Expedia AU ad on a Travel.com.au filing about being sold to Wotif.com

Sunday, January 06, 2008

Kango Sessions: Interview with with Kango CEO Yen Lee

Back in September I reported on the rumours of Kango having raised money to set up a company to "help family's plan travel through organisation tools, reviews and editorial content". Just before the end of the year we received confirmation that Kango had in fact raised a very respectable $4mm in series A funding from the web 2.0 loving Shasta Ventures (also backers of Techcrunch40 winner Mint, Turn and Flock).

We also saw the beta for Kango and found out it is meta-search product but from a different angle from what we have seen. In the past we had two types of meta-search:
  1. the free form search players such as the now combined Kayak/Sidestep where the interface looked like an online travel agent but with the back end fulfilled through aggregated search; and
  2. the advertising/deal hunter driven model such as Travelzoo and Cheapflights.
Kango's angle is to be the aggregator of content, reviews and travel information - not deals. Destination, hotel or activity searches on Kango produce a result that takes all of the unstructured data out there from web based sources (TripAdvisor, Travelpost, Expedia, Orbitz, Travelocity, etc) and combines it into a structure data result. In other words aiming to be a contextual summary of all of the editorial and user generated content relating to a travel term. Is a dramatic contrast to the manual page build approach of the high profile Mahalo.

I had a chance just before the end of 2007 to talk with Kango President and Founder Yen Lee about Kango, meta-search, raising money in online travel and how to deal with "too much information". Here are some of the themes and ideas from that conversation.

How did you come up with the idea?

Yen and his co-founders are search junkies. They love search, need search, trust search. Yen told me that the idea for Kango came from a desire to develop a targeted search product for a sector with lots of unstructured data, a sectoral ontology, vertical structural options and a need for subjectivity (ie editorial contribution). That is a sector with too much information - hence they naturally ended up in the travel sector.

What is the background of you and your founders?

Alongside Yen (ex-Yahoo), the other founders are Elliot Ng (ex-Necentives) and Gene McKenna (ex-
Acxiom Digital and Bluedot Software). Experience in search, customer loyalty and product. More on the founders here.

How hard was the product to build? How much human intervention is needed to make the unstructured data structured?

The content is accessed through the same methodologies as general search - crawling sites and normalising/structuring the data. At the content access and search level they operate just like the traditional search market. It is at the display and refinement level that Yen claims Kango is different. Instead of relevance (and therefore ranking) being based on inbound links it comes from a number of weighted dimensions based on the link between keywords. For example "spa", "private", "hideaway" in hotel reviews are linked to searches for "Romantic". Similarly "kids club" etc is linked to "Family Friendly". The relevance and ranking comes from the quality of this semantic analysis, not inbound links.

Needs editorial input to provide the knowledge that links search terms to themes, destinations and activities. All about going after what Yen put as 10 billion travel related searches a year.

How hard was it to raise money? How are you going to make money?

Yen made the raising of $4mm sound easy. Says they were able to raise the money before they had a product - that is based on the team and idea only. This is an uncommon story in travel 2.0. As to making money - Yen and his team are hoping that by giving an meta-index to travel content will give Kango ownership of the long tail of travel search. From this the cash will flow from travel advertisers.

What do I think

Talking to Yen was like lifting the bonnet on a search engine and looking under the hood, seeing how the words, algorithms, spiders and links combine to generate the answers that Google and Yahoo churn out. The search knowledge of the Kango team is clear. Also the product looks good. Search and search refinement are easy - modelled more like an OTA than a search engine. The big challenge is that to build on the travel ontology and develop the semantics takes time and manual energy. This why the beta is limited to only two destinations. This is why they need a round of $4mm to fund the building of more destinations and product lines. This is a case where if they can get the product out right, the traffic will flow (easy) and the money will follow the traffic (even easier). Very impressive stuff.

Friday, January 04, 2008

Dear Tim - I have a content start up, what do I need to do to succeed?

Have been using the post new year break period to clear the BOOT email inbox. The hardest part about running the blog is keeping up with the email I receive. F0llowing from my "too much information" post I have found that I receive a constant trickle of email from travel content/community sites asking me for a review and comment. I touched on my thoughts in this area back in April 2007 when I talked about how to "Build and maintain scale in Travel 2.0". Thought I take this time to add to that post with four quick rules on how to succeed as a travel start up:
1. Content - lots of it
2. Index - a fantastic Google friendly index and expertise in search optimisation
3. Access methods - varying ways and means for consumers to access the content
4. Patience - time (and money) to wait for the traffic to build
Very easy to write much harder to do. What do you think?

Want a little more detail - follow this link.

Lonely Planet: New Owners and New Approach online - Diarmuid Russell to lead new digital charge

Moments after the news of Lonely Planet's sale to BBC Enterprises comes immediate steps to re-invigorate the Lonely Planet online strategy through the appointment of former Expedia VP Strategy Diarmuid Russell to the role of Commercial Director, Digital. Diarmuid is relocating as we type - due in Australia this month. Lots of work for Diarmuid to do - but his appointment is a sign that the new owners are looking to invest immediately in turning around Lonely Planet's poor online efforts to date.