m-Travel.com and Travel Distribution News

Archives for August 2009

« July 2009 | September 2009 »

eLong delivers its highest ever quarterly operating income

Despite a difficult quarter on the topline, online travel company eLong has managed to report its first quarter of positive operating income since the fourth quarter 2007 and its second straight quarter of positive net income.

Sharing its second quarter results, the company mentioned that its operating income was RMB 6.4 million, an increase of RMB 14.3 million from a year ago and up RMB 9.7 million from the first quarter. Net income in the second quarter was RMB9.5 million compared to net loss of RMB20.3 million in the prior year period.

Guangfu Cui, chief executive officer of eLong, said the company believes that its turnaround is gaining momentum.

“Our go on-line strategy is working well, with online bookings enjoying healthy growth in the second quarter. Moving more business on-line helps offset the margin pressure from an increasing mix of lower margin air bookings and declining hotel average daily rates,” said Cui.

Total gross revenues increased 1 percent year-on-year to RMB86.9 million and net revenues increased 1 percent year-on-year to RMB81.9 million.

Sales and marketing expenses for the second quarter of 2009 decreased 29 percent over the prior year quarter, mainly driven by decreased marketing promotion expenses and sales commissions, decreased expenses related to loyalty point awards, and decreased labour costs.

Read more: eLong, Guangfu Cui

| Comments (0)

Travelport GDS sets up six Solutions Labs in Asia

Travelport GDS has set up six Solutions Labs within its offices in Hong Kong, Beijing, Singapore, Manila, Taipei and Kuala Lumpur.

The facilities feature Travelport products including online booking engines and front-, mid- and back-office systems. The company says these Solutions Labs replicate a virtual agency, whereby travel agents can experience real-time demonstrations of its solutions. 

Complete end-to-end capabilities can be demonstrated in real-time, said George Harb, commercial director – Asia, Travelport GDS.

The Solutions Lab will also be available for customers to trial their own technology solutions and software with Travelport systems.

| Comments (0)

Luxury-hotel chains not to give up their hard-won stars: report

Top hotels “don’t intend to cut corners in a way that will cost hotels hard-earned stars or diamonds”, according to a media report.

According to a report filed by USAToday, Starwood spokeswoman K.C. Kavanagh, Marriott spokesman John Wolf and InterContinental spokeswoman Francie Schulwolf said their companies aren’t trying to beat the recession by shedding stars.

The same report added that “demand for the ratings is still brisk”, and “AAA’s ratings gurus don’t expect a bigger-than-usual change this year compared to last”. 

AAA added 10 five-diamond properties and dropped eight last year. 

Only a few days ago, a report by Bloomberg mentioned that luxury-hotel chains are giving up some of their hard-won stars to save money. It was reported that Starwood Hotels & Resorts will let some of its properties reduce their level of service -- and number of stars -- until the industry begins to recover. Hilton Hotels and InterContinental Hotels have already cut the ratings for some locations, it added.

| Comments (0)

Being comfortable with losing control in social media environment

More and more airlines are embracing social media marketing for promoting their brands, engagement and brand loyalty. But much of this activity is still “experimental – and may be ephemeral”, according to the Centre for Asia Pacific Aviation (CAPA).

In its analysis, CAPA, which has also mentioned that such activity can be dangerous, said these intiatives are still in their early stages. But the “scale of activity at the non-commercial level is however such that businesses cannot help but seek to tap into what may prove to be a lucrative flow.” 

Even though both traditional and LCC models are stepping up their efforts, till date, Twitter, Facebook, Flickr, YouTube and online blogs, offer largely unexplored new advertising and promotion platforms.

CAPA highlighted that through well developed social networking sites, airlines are able to communicate on a more personal level with potential and existing customers. “However, as yet, the full potential of these sites has not been developed – and may in fact prove to be much overstated, or alternatively, have the power to transform some marketing strategies. Most probably, as the media evolves, airlines will come to understand how to integrate its usage into wider marketing and sales strategies,” it added. 

As highlighted in several EyeforTravel.com’s reports this year, CAPA, too, mentioned that for social media marketing approaches to be truly effective, they need to be clearly and effectively aligned with the carrier’s business strategy, rather than being seen merely as a trend or a gimmick. Only when this is done can carriers realise the revenue potential from these sites. Airlines can also use this as a customer service tool.

“But, once airlines enter into these new, uncontrolled and experimental areas, there needs to be a recognition that the company:public interface becomes a whole different environment – and one over which the airline has only very limited control,” concluded CAPA.

How can travel companies navigate the minefields of the new social media landscape?

“It is easy to get caught up in and overwhelmed with social media”

Is your brand genuinely making the most of social media?

Social Media in Travel Strategies Conference 

EyeforTravel is scheduled to conduct Social Media in Travel Strategies Conference 2009, to be held in Prague (October 13-14) this year. 

For more information, click here:
http://events.eyefortravel.com/sales-and-marketing/conference/social-media-strategies-agenda.asp

or contact:

Gina Baillie
gina@eyefortravel.com

| Comments (0)

Starwood Preferred Guest site revamped, to aid flight search and booking

Starwood Preferred Guest (SPG) has introduced new online search and redemption options on its website to make booking flights easier.

SPG Flights site upgrades include one-way and multi-city flight options, in addition to round-trips, and  translation into six additional languages including French, German, Japanese, Spanish, Chinese and Italian. 

According to Starwood, SPG is the first and only hotel loyalty programme to offer members flight redemption on more than 350 airlines with no blackouts. 

Since launching last year, members have redeemed nearly one billion Starpoints. As airlines continue to lower fares, the value of SPG Flights rises.

In fact, according to Starwood, nearly half of the flights awarded have required fewer than 25,000 Starpoints, which equates to a fare worth up to $345.

| Comments (0)

Avis Europe sees improvement in overall revenue trends

Car rental company Avis Europe has indicated that recent trading during July and August to date has shown some improvement in overall revenue trends, with an improvement in rental revenue per day and a lower level of volume decline.

However, visibility remains limited and it anticipates continued pressure on consumer sentiment and travel demand in the second half.

The company also shared that volume declined 9.4 percent during the six months to June 30. Overall, for the company, loss after taxation on continuing operations was €25.8 million (2008: loss of €4.0 million)

Pascal Bazin, chief executive of the company, said that brand leadership, service differentiation and geographic diversification supported volumes and proactive actions improved rental revenue per day by one percent, excluding the impact of mix and increased rental length.

“Very strong fleet discipline led to a 4.7 percent point step-change in utilisation. We fully flexed variable costs in line with lower revenues, and together with a structural reduction in fixed costs, these actions led to a limited increase in the underlying seasonal first-half loss,” said Bazin.

He added, “In this uncertain trading environment, we will maintain our rigorous operational discipline to further improve our cost position and business model flexibility, in addition to continuing our strong commercial focus to protect profitable revenue, invest in future profitable growth and in our customers to position the Group well to take full advantage when markets stabilise.”

| Comments (0)

Consumers Now More Likely to Conclude Their Bookings with OTAs

Forrester Research and Citigroup Investment on Changes in the Travel Industry

Since the beginning of the year, the travel industry has been embroiled in a tough business environment.

2009 is expected to bring consolidation and restructuring for the travel industry. This will be driven by reduced enterprise valuations, limited access to capital, and lower expected future demand for the products and services being offered.

In order to assess the current sentiments, EyeforTravel’s Helen Raff spoke to Forrester Research’s travel industry analyst Diane Clarkson and Citigroup Investment Research’s director, Internet Research, Mark Mahaney.

Clarkson and Mahaney, who will be speaking at EyeforTravel’s Travel Distribution Summit on September 16-17 in Chicago, spoke about the economic and consumer trends affecting the travel industry. Excerpts:

Helen Raff: I started by asking Clarkson and Mahaney the question we all want to know, when will this downturn be over?   

Diane Clarkson: We anticipate in late 2009 we will see an upswing, with real results apparent in early 2010. 

Mark Mahaney: The clouds were at their darkest last fall.  But it’s clear to me that we have now seen the worst of it.  But for how much longer will we have to deal with the ongoing bad weather?  By September I think we will start to see growth again, but it won’t be on the same level as 2006 – 2007.  I think one year from now we’ll see clear skies.  

Helen Raff: Mark, one of the issues that crops up on the Summit agenda is consolidation.  Do you think we’re set to see more industry consolidation? 

Mark Mahaney: I think we will see more industry consolidation and my guess it will feature online travel agencies.  I don’t think in five years time the picture will be the same, with four big guys dominating the space. 

(OTAs are experiencing sustained pressure from suppliers who are increasingly competing for direct bookings with travellers while simultaneously compressing OTA margins).

Helen Raff: How do you assess the decision related to elimination of booking fees by the OTAs?

Mark Mahaney:  One of the major changes we have seen recently is online travel agencies cutting fees, and I think that this may signal a share shift.  We may well see leisure travellers shifting back towards OTAs.  We have to accept this strategy is here to stay, because it’ll be very difficult to re-introduce the fees.  In the past customers used the online travel agencies as search tools rather than booking tools.  They would use sites, like Expedia, to figure out which destination suits them and develop itineraries, then after doing this research they leave the website and book direct to avoid fees.  Now, with no fees, I think we will see customers concluding their booking with OTAs, as there is less incentive to leave. 

Helen Raff:  EyeforTravel research has shown that over the next 12 months the mobile channel will be a key concern for travel executives.  In response to this, we’re holding our first Mobile Strategies for Travel conference, alongside the Summit.  Do you agree with our findings and do you think the timing of this event is right?  

Diane Clarkson: I think that mobile is going have a big impact on the travel industry, but the timing is tricky.  To fully launch the mobile channel, companies need a technological investment and a promotional strategy – both of which are hard to come by with restricted budgets.  The big question is for travel executives is, will mobile generate incremental revenue or will this simply be a channel shift?  In these difficult times travel marketers have to justify ROI more aggressively, so it’s a difficult area to go into.  But I definitely feel that smart marketers should have mobile on their radar .

Helen Raff: Diane, I know you’ve done some research into Twitter recently, what were your main findings? 

Diane Clarkson: Companies who participate in Twitter must commit.  From a customer service perspective, Twitter drives customers to have higher expectations. They will expect an even faster response and customer service departments should be preparing for this. 

As consumers’ expectations change, this drives change in the way that travel marketers must communicate with potential customers.  At the moment, we’re seeing a preoccupation with finding out who the person is behind the brand; people are craving a dialogue, and this is where Twitter comes into its own. 

Helen Raff: How do you assess the situation from consumer’s perspective?

Diane Clarkson: Research has shown that nearly half of US online leisure travelers plan to reduce their spend.  So I think the big question is how do you make customers feel more valued?  
Travelers may sympathise with the struggling travel industry, but they are not going to give their hard-earned money to someone who doesn’t make them feel valued.  

Helen Raff: So how can travel companies make consumers feel “valued”? 

Diane Clarkson: Most travel companies are failing to make customer feel valued and there are a number of things they can do differently.  Firstly, be transparent about prices.  The current fluctuation of prices is making customers feel uncomfortable.  Secondly, companies need to communicate in a more personal and relevant way. 

Travel companies should be focusing on creating value-added components.  They need to ensure that these value-added components are relevant, for example there is no point offering someone free airport parking if you know they will be returning a rented car.  Customers like to see some kind of identifiable dollar figure for these add-ons.  For example, Omni Hotels normally charge $9.99 per day for Internet, but if you join their loyalty scheme it’s free, so their customers immediately see a clear monetary value. 

Helen Raff: Loyalty members are consolidating their spend with fewer hotels and airlines. What should travel companies be wary of?

Diane Clarkson: Traveler perception is changing because of the economy.  We have seen a 19% decline in customers who say that they are loyal to a particular travel brand, which means that companies are failing to earn customer loyalty. Many companies have to make the decision to follow loyal customers rather than focus on customer acquisition - It’s the hard reality of marketing budgets and ROI. 

Helen Raff: Is customer experience online is also on decline?

Diane Clarkson: We’re finding that customer experience online is declining.  In 2007, 53% of people enjoyed using the Internet to book their travel, now it is only 46%.  So why is this?  Firstly, travel companies are not presenting enough choice.  Secondly, there are few incentives to become a loyal customer.  And finally, user-generated challenges loyalty and the amount of online content can be overwhelming. I think most travel companies have not distinguished themselves online to make the customer experience positive.

Travel Distribution Summit N. America 2009

Diane Clarkson and Mark Mahaney are speaking at EyeforTravel’s Travel Distribution Summit North America 2009 to be held in Chicago (September 16-17) this year.

For more information, click here:
http://events.eyefortravel.com/tdsusa/conference/

or contact:

Helen Raff
VP North America
+44 (0) 207 375 7582 (UK)
helen@eyefortravel.com

| Comments (0)

Should the OTA-hotel relationship vary as per the economic conditions?

IN-DEPTH: Starwood’s Devdutta Banerjee on the role of OTAs in India

Suppliers acknowledge that online-direct can turn out to be more expensive than traditional GDS distribution if not properly controlled. 

There are various costs related to marketing/advertising, customer servicing, credit card fees, fraud, transaction cost, booking engine and payment gateway. 

In a market like India, OTAs have heavily focused on air products but over the last couple of years, such intermediaries have been trying to work on their hotel inventory and booking platforms. 

From a hotelier’s perspective, Devdutta Banerjee, regional director - revenue management, India, Bangladesh and Nepal, Starwood Hotels and Resorts, says OTAs can be leveraged to increase the hotels marketing as well as sales net. 

“In the current economic scenario, it becomes even more important to widen your distribution network. Also it helps your positioning and visibility on the online arena as OTAs focus on generic searches,” said Banerjee, who is scheduled to speak at EyeforTravel’s Travel Distribution Summit India 2009 to be held in Mumbai (October 6 -7) this year.

Banerjee says hotel chains that don’t have a strong brand presence and backing in terms of technology and know how, can make the most of existing online developed presence of the OTAs as besides commission there are no other so called logistics and financials that essentially need to be taken care of. 

“OTAs have contributed positively to a hotel’s distribution strategy in today’s environment by providing the option of paying a higher commission for capturing demand generated by dollar heavy marketing campaigns,” he said. 

Banerjee, in an interview with EyeforTravel.com’s Ritesh Gupta, spoke about price parity, the hotel-OTA relationship and other issues. Excerpts: 

Price parity is an important element, and plays a key role in today's revenue management and hotel distribution strategy. The concept of profit parity disregards that there are varying levels of value and increment in demand depending on the distribution channel. In this context, how does the online channel offer unique benefits? 

Devdutta Banerjee: As is evident by most of the researches many people often search online before making a buy decision, therefore it is important for a hotel to be on these channels and drive incremental revenues. Also by giving a level playing field, the hotel increases convertibility not only on spheres and geographies which are its strengths but also where the OTAs have a strong presence.

Lack of parity and that of rate variances will reflect badly on the hotel. Rate parity became a major topic of discussion when OTAs switched from GDS powered rates to merchant model, extranet powered rates. However, at the end of the day it is important for hotels to differentiate between self-owned channels and third parties and realise that if for whatever reason they need to run a promotion or a rate which is below the BAR on all other channels they should rightfully do so on their brand website. 

The OTAs of course have made attempts to counter this by monitoring such disparities and imposing harsh penalties for hotels that undercut them on their own websites, they implemented new clauses into their contracts that obligated hotels to provide them with the best available rate.  The OTAs seem to have convinced the hotel industry that the burden of rate parity lies on the shoulders of the hotels, the hotel must adjust their net rates in order to ensure the competitiveness of the OTA against other agencies. 

OTAs say that they offer services to hotels that are very much tailored to market demand factors. The key factor is that prices and promotions can be created, adapted, in real time for real customers. Rates are not set seasonally, but rather daily. How do you assess the utility and efficacy of this channel in today’s environment?

Devdutta Banerjee: Hotels that play more aggressively with OTAs and drop rates in an effort to steal market share damage the market conditions for their entire destination and it will take them years to build the rate back up to normal levels. The role of OTAs (and wholesalers) should not change according to economic conditions.

Due to limitations in terms of technology, it is important to leverage the OTA system, more and more travellers are now looking for a one-stop shop for their purchases. This is where some OTAs can play a crucial role.

Do OTAs share their rate research with hotel partners so that hotels can be aware of how their rates are being sold online? 

Devdutta Banerjee: In India, OTAs don’t essentially share rate research and other MIS for confidentiality of data and market share figures amongst their competitors. However, various rate shopping tools are being used by hotels to monitor rates sold on various TPS amongst the hotels comp. set. Also OTAs such as Expedia share weekly city wise production rankings for hotels to be aware of who is eating their market share. I think it depends upon the individual relationship with the hotels. How closely do the both work on a daily basis and how mutual the benefits and understanding is.

The nature of the lodging business is that there are always peaks and troughs of demand related to the supply available in any given market.  This can be seasonal, development-related, or economic, which we’re seeing most acutely right now. Do you believe that the best partnerships between companies are those that can flex to the varying demands and needs of each party across time?

Devdutta Banerjee:  Change is the one true constant of just about everything, Change is perpetual, inevitable and, as seen of late in our economic downturn, outright challenging for businesses at all levels. When it comes to succeeding  and often just surviving  in the face of changing market conditions, it’s the suppliers ability to adapt that will prove their worth to their business partners , their competition and, perhaps most importantly to their customers .

Yes, and this in turn takes us back to the fact that the hotels need to work closely with the OTAs on a daily basis and pick up information and trends well in advance and design strategies together to benefit.

Overall, a hotel-OTA relationship should not change due to changes in the market demand supply and economic conditions. Hotels need to identify these changing trends and invest their marketing money accordingly. With consumers shifting their spending toward lower-cost alternatives, it makes sense that marketers would be shifting their ad spending accordingly to achieve better marketing ROI.

Travel Distribution Summit India 2009

Devdutta Banerjee is scheduled to speak at EyeforTravel’s Travel Distribution Summit India 2009 to be held in Mumbai (October 6 -7) this year. 

For more information, click here:
http://events.eyefortravel.com/tdindia/agenda.asp

or contact:

Reece Gladstone
Regional Director, Asia-Pacific & Middle East
Email: reece@eyefortravel.com
Telephone: +61 (0)3 9938 1201

| Comments (0)

Hugo Burge talks innovation and the magic of the travel industry

This week’s Get Funded Show@World Travel Market podcast is from Hugo Burge Executive Chairman of Cheapflights and Founder of Howzat Media.

Offering some great advice for up and coming travel companies as well as tips on investment; Hugo’s podcast is a must-listen for all entrepreneurs.  Not just those attending The Get Funded Show in November.

Having been involved in WAYN and now Cheapflights, Hugo still enjoys the excitement and magic that the travel industry offers.  Of course, the rich opportunity the massive industry offers is also a draw.

Enthusiastic to nurture early-stage companies in travel who have passion, determination and a great idea, Hugo will be a mentor and judge at The Get Funded Show@World Travel Market on 11-12th November.

To listen to Hugo’s podcast – plus other valuable insights from Travel Gurus and Investors – go to http://www.getfundedshow.com/podcast-request.asp. 

| Comments (0)

IN-DEPTH: Combating budget and resources constraints as an independent hotel

Small companies and independent hotel chains refer to lack of resources and a limited budget to invest in high-end technology as major challenges associated with revenue management.

Key executives in such organisations manage several roles simultaneously. They oversee all revenue divisions, including sales, marketing, e-commerce, revenue and reservations. They need to ensure that these departments are communicating and working together so that revenue can be maximised across the company. On the other hand, large hotel chains have more money to invest in technology and people, so their roles within the revenue division are more defined.

The range of hotel management structures vary from complete independence with a private chain code to GDS/Internet Technology connectivity with a generic chain code to soft branded representation with CRS technology and a branded chain code to “hard brands” that provide technology and also manage hotel operations.  

Independent hotels may combat budget and resources constraints by choosing a “soft brand” that provides technology and resource savings through economies of scale, yet allowing independent management and identity,” says John Enright, executive director - revenue account management, Preferred Hotel Group.

The difficult trading environment has forced more and more independent hotel groups to analyse their technology and distribution strategy and costs.

For his part, Enright says he has focused on retention of loyalty base customers, broadening of distribution strategy for acquisition, and market-centric focus for rational competitive price positioning. 

Adjustment

It is an economic reality that downsizing in our economy requires a broadening scope of responsibility for reduced management resources. 

At the same time, Enright says it is important to retain the resources that already possess the technical and analytical skills to continue to manage pricing and distribution. 

“A skilled revenue manager may be more capable to broaden responsibilities to cover operational departments than the other way around, where technical skills are inadequate and revenue could suffer as a result,” Enright told EyeforTravel.com’s Ritesh Gupta. 

In terms of advantages, one of the bonuses of working for any small company is that there tends to be better communication between different departments. Working for a small hotel chain, you have the flexibility for open lines of communication so all team members can work closely together. 

Enright pointed out that smaller organisations are likely to be more nimble and may have less barriers for expeditious adaptation to new strategies in a rapidly changing marketplace.  Conversely, a smaller management staff has a broader scope of responsibilities across many departments, so expertise in any one area could be lower.  

“The managers selected must be appropriate for the environment, big or small,” added Enright.

Integration

Integration is quite critical for any successful revenue management strategy. Last year, an executive in an interview with EyeforTravel.com acknowledged that not all systems integrate into property management system (PMS). Integration remained to be a challenge and it was hoped that technology would improve the situation.

To truly boost revenue one needs to have a fully integrated RM system and put RM at the core of business decisions. The situation is only expected to improve as more and more small hotel companies have structure in place for better communication between different departments. 

Enright feels more independent hotels are installing fully integrated RM systems because of broadening interfaces between PMS, RMS and CRS and lowered costs.

Moreover, the technology is improving and is more affordable.

Profitability of each segment

Measuring performance across channels consists of tracking metrics like costs or margins, LOS / Booking window / Seasonality statistics, measuring revenue share from each channel and trends over time, impact on net ADR due to varying channel mix, measuring booking pace by channel to be able to focus on the right channel and finally making pricing/inventory decisions to impact the dominant channel at the optimal booking lead time.

A section of the industry also acknowledges that revenue management systems have not yet evolved to the point where they can consider all variables related to price, LOS, demand and competitive pricing – the components of distribution costs and ancillary spend are not yet considered in most versions. In many cases costs of distribution can and should be negotiated on a larger scale through contractual agreements.  

Enright agrees and says revenue management must value the profitability of each segment where the displaced customer is the least profitable.

Enright, along with other 25 speakers including ones from Continental Airlines, Hilton Hotels Corporation and InterContinental Hotels Group, is scheduled to speak at Revenue Management and Pricing in Travel USA conference, to be held as a part of the Travel Distribution Summit N. America 2009.

Travel Distribution Summit N. America 2009

John Enright is scheduled to speak at EyeforTravel’s Travel Distribution Summit North America 2009 to be held in Chicago (September 16-17) this year.

For more information, click here:
http://events.eyefortravel.com/tdsusa/conference/

or contact: 

Helen Raff
VP North America
+44 (0) 207 375 7582 (UK)
helen@eyefortravel.com

| Comments (0)