“Expedia will never treat travel as a commodity”: Cameron Jones

Revenue Management Asia Special: By EyeforTravel Correspondent

Over 65 percent of Expedia’s dynamic package bookings in Asia Pacific are made more than 30 days in advance and on average stay for 6.5 days in each hotel, according to Cameron Jones, regional director, Expedia Partner Services Group, Asia Pacific.

Sharing info on the major developments in RM from dynamic packaging perspective, Jones says, “At Expedia, we have been offering Dynamic Packaging in North America to our air, hotel and car partners for several years since December 2000 so we’ve been able to use this knowledge to help all our supplier partners extract the most value from this customer segment.  This head start we have on competitors has also provided us the opportunity to study customer behaviour and learn what is important to customers. The major development for Expedia has been educating our suppliers how to get maximum benefit from our Dynamic Packaging tools. Our years of experience make it easy to showcase the value of attracting incremental business through the Expedia package channel.”

He adds, “Our partners that have been utilising Dynamic Packaging over time are certainly capturing more market share due to their early move and their pricing in this channel. A major advantage that our hotel partners find when using our package channel is the fact our package customers book earlier, stay longer and spend more. In Asia Pacific over 65 percent of our dynamic package bookings are made more than 30 days in advance and on average stay for 6.5 days in each hotel and spend more than double what our non-package customers spend per reservation.”

Jones spoke to EyeforTravel.com’s Ritesh Gupta in an interview related to recent Revenue Management and Pricing in Travel Asia conference in Bangkok. Excerpts:

What initiatives have you taken recently to opitimise RM in dynamic packaging segment?

Expedia had over 900 employees in technology development, which allows us to continually enhance our customer experience and also our suppliers’ facing  back end tools to make our business systems more efficient.

With consumers, Expedia’s Dynamic Packaging technology was the first to highlight savings customers make for booking components of their travel together.  This is a key differentiator for Expedia.  Unlike most competitors, we have developed our technology to highlight to the consumer the savings they have made for booking individual components together, compared to the cost if they booked each component separately.

For example book a return flight and hotel package from Los Angeles to Tokyo including a single return flight and seven nights at the Cerulean Tower Tokyo Hotel would save you over 11% on standard pricing just for enjoying the convenience of booking together on Expedia.com.

Using our hoteliers as a supplier example, we enable them to automatically apply a preset discount from their best available rate for all package bookings. We know our hotel partners believe this is a great benefit because they’ve told us they don’t want to manage separate rates.

Dynamic Packaging also allows hotels to manage bookings and pricing further in advance then is currently best practice.  This allows better yields for hotels as customers search and book in advance, rather than booking closer to the stay date.

How is RM evolving considering complexity associated with dynamic packaging? What challenges did you come across while handling this segment?

Expedia has been continually evolving Dynamic Packaging since we launched the technology online in December 2000.  We have proven that Dynamic Packaging makes travel easier to plan, easier to purchase online and it also stimulates online travel growth with great pricing.

The next steps for Expedia’s dynamic packaging technology in Asia Pacific are further adoption by hoteliers.

This is happening as we speak.  For example, more hoteliers are seeing the results and value delivered from Expedia’s dynamic package business. We know this because hoteliers are telling our market managers throughout the region and we have case studies of the value dynamic packages creates for hoteliers. In the US, Expedia is the leader in online packaging today, accounting for 65 percent of the online package segment.

As far as challenges go, we are overcoming one of the current challenges for Dynamic Packaging internally by utilising our call centres. Our challenge centres on very complex multi-stop itineraries and currently it’s best if our call centres complete these purchases.

The explosion of electronic distribution channels has moved travel-pricing practises more towards the approach of a commodity than a differentiated product. Do you agree with this?

Well, if you think travel is a commodity you could be spending too long in the office and not enough time travelling!  Expedia will never treat travel as a commodity and will continue to focus on the experience of travel, including the experience of planning the trip.

We see in our transaction data that Expedia customers make their travel decisions on much more than just price, both Expedia and its travellers know that travel is all about experience and adventure.  Our global travel marketplace empowers customers to make informed decisions to ensure their travel best fits their needs and budget.

For example, Expedia allows our hotel partners to differentiate their hotels with extensive content including virtual tours, extensive photography including room type photography and descriptions, in fact we send professional travel writers to our hotels in Asia Pacific to write enhance hotel and facilities descriptions… they even add a ‘Travel’s Tip’ which adds some local knowledge for first time travellers.  You will not find this on any of our competitor’s sites. Expedia has also recently launch ‘User Generated Content’ on our Australian and Canadian websites to further enrich our travellers planning experience.

It is being felt that all aspects of RM have become complex, with the issues of keeping control over business and at the same time the reduction of the extensive manual work have increased dramatically. What’s your opinion on this?

The core concepts of revenue management have not changed.  Today is all about seeking ways of adapting to new distribution channels and models.  For example, we have developed Expedia Connect which connects hotel inventory systems directly to Expedia’s global travel market place of more than 70,000,000 unique visitors per month.

Expedia Connect takes away the need for the hotelier to manager inventory manually and they also benefit from real time pricing.  This means their hotel inventory is live in Expedia’s travel market place right up until their last room is sold.

Many global hotel chains utilise Expedia Connect and we are continuing to connect with regional hotel chains and independent hotels.

The introduction of dynamic pricing along with customer-focused products has reduced the gap between business and leisure pricing. How do you assess this?

When looking at the price point for leisure and business travellers it is important to understand why business customers often pay a premium over leisure customers, so let’s review what items travellers will be willing to pay a premium for.  This is what’s in keeping with revenue management practice.

For example, business travellers value flexibility and value-adds such as broadband Internet access, executive floor access and to be able to book much closer to the actual travel dates.  All of these benefits come at a premium and businesses are willing to pay for this. 

Hotel revenue managers can continue to charge a premium for these requirements regardless of the channel the traveller prefers to book. Dynamic pricing is really just demand based pricing and as distribution becomes more transparent, customers pay for perceived value.

What’s on your agenda?

In Asia Pacific specifically, I’m excited about the launch of flights, cars and dynamic packaging on the Australian Expedia website Expedia.com.au and the launch of the brand new Japanese Expedia website Expedia.co.jp with Japanese language content. This excites me because we are continually enhancing our value proposition to our supply partners as we are marketing and distribute their product in an increasing number of global markets. The Expedia Japan website is of particularly interest as Japan is the second largest travel market in the world.  We get the world going by building the world’s largest and most intelligent travel marketplace.