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Archives for May 2011

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Travelport appoints Gordon Wilson as President and CEO

Travelport has named Gordon Wilson as President and Chief Executive Officer, effective June 1, 2011. Wilson has also been named to the Travelport Limited Board of Directors. 

He has led Travelport’s GDS, the firm’s core business, comprising its global travel distribution capabilities and Airline IT operations, for the last five years and has served as Deputy CEO for the last year. 

With the sale of GTA to Kuoni Travel, Travelport is now focused on its GDS business; the firm’s most strategic and largest business. 

Jeff Clarke, current President and CEO, has been appointed Executive Chairman of the Board of Directors.

Clarke will be responsible for Travelport’s strategic investments – including remaining as Chairman of Orbitz Worldwide, mergers and acquisitions and corporate development as well as ensuring a seamless transition of the President and CEO duties to Wilson.

Eric Bock, Chief Administrative Officer and General Counsel, Phillip Emery, Chief Financial Officer, and Lee Golding, Executive Vice President of Human Resources will continue in their current roles reporting to Wilson.

Effective June 1st, the Travelport Limited Board of Directors will be comprised of Martin Brand, Jeff Clarke, Will Griffith, Chip Schorr, Gordon Wilson and a representative from One Equity Partners who will be named in the near future.  

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“Technology’s brisk pace has propelled travel agents to constantly redefine their role”

Today the Asia travel industry leads worldwide growth and travel agents are faced with travellers who want the best deal, and the latest information at their fingertips. Throughout this ever-evolving industry one core element has remained constant and critical - Technology.

“Since air travel began, technology has provided the solid foundation on which travel agents build and develop their businesses. It is central to how they operate and communicate; and with today’s increasingly tech savvy travellers, it is the number one priority that helps them gain a competitive advantage,” stated Robert Bailey, President and CEO of Abacus International. “Globally, the travel industry is spending billions of dollars on technology, and Asia accounts for about a third of this.”

Technology’s brisk pace has propelled travel agents to constantly reinvent and redefine their role and that of their business. According to a new Abacus poll, 96.4 percent of agents polled were unanimous in their agreement that technology has completely revolutionised the way they conduct their business.

Abacus International reveals insights from its travel agent poll on their outlook on recent technologies:

Not surprisingly the Internet was indicated by 87.3 percent of agents polled as having had the biggest impact on their businesses. Mobile, social networking and location-based services were also highlighted as key factors. Although most agents cited convenience, communication and productivity as key technology benefits, a few agents thought the online travel space had also led to fiercer competition and reduced prices.




“Competition has been intensifying as digitalisation, wireless communication and high bandwidth networks are bringing transparent and ubiquitous access to information across all networks,” said Bailey. “Mobile systems are becoming more portable yet gaining in power, bringing information directly to the individual. Information technology has become indispensable not only in lowering costs for businesses, such as through improved inventory management, better scheduling and better customer service, but also in managing operations and overall distribution for agents.”

Agents polled indicated that enhanced communication (74.5 percent), speed of business (72.7 percent), convenience (72.7 percent), productivity (63.6 percent) and marketing (60 percent) were the primary ways that technology has enhanced their businesses. Not only do most agents believe that technology in travel has been the driving change for them, they also believe a quick adoption of technology (98.2 percent) is essential in order to stay competitive.







In an e-commerce environment, technology offers a great deal of change to the traditional agent’s role in the provision of content, efficiency and personalisation. Half of agents felt that technology has actually affected the personal touch of how travel transactions are conducted today. However, one agent responded by saying that technology has merely changed the meaning of personal relations, as they are now able to keep in touch with their customers at all times.

“There is so much technology out there, and whether beneficial or not, these technologies are converging to offer the next wave of how travel will be conducted. Travel agents will need to take advantage of these opportunities and be willing to adopt new innovation,” added Bailey.

The Internet

Today, 43 percent of the world’s 2 billion Internet users are in Asia, with online penetration expected to increase by +39 percent by 2015.

The Asia Pacific online travel market is valued at US$53 billion or 21 percent of the total travel market. The online travel booking market in the region is expected to hit a value of US$51.6 billion in 2011 and will grow by 30-40 percent per year. Travel sites in the Asia Pacific region are outpacing growth from the general Internet audience by almost three to one, showing a strong affinity for travel growth, adoption of technology and the Web in travel. More than three-quarters (79.6 percent) of agents indicated that the Web will continue to influence and drive their agencies through increased speed, efficiency and productivity of Internet travel bookings as well as Internet ticketless reservations/ticketing.

Brett Henry, VP Marketing and VP India, Abacus International, said, “Not only in speed and information, the Internet has completely transformed how agents conduct their businesses today and in the future, especially as many of the newer technologies are Internet-based.”

Upwardly Mobile

Agents today already understand the potential of mobile phones with the sharp rise in mobile technology and proliferation of mobile-enabled services, delivered primarily through smartphones.

Asia is home to the largest mobile phone market, with the majority of phones now being smartphones. According to data from IDC, smartphones exceeded PC shipments for the first time in the fourth quarter of 2010. Agents are well positioned to take advantage of this opportunity.

With smartphones that allow access to booking content, transactions on-the-go and interaction with customers, many of the agents in the Abacus poll affirmed that mobile technology has made their lives a lot easier and truly changed how they stay competitive in today’s travel landscape. 55.6 per cent indicated mobile as a top technology impacting the future.

“Flight and trip changes cause a great deal of stress to thousands of passengers each year. Mobile provides an intelligent platform by which agents can communicate with their customers at crucial times,” said Bailey. “New technology and solutions catering to the changing mobile environment are keys to our core business, as we want to help the agents effectively resolve any traveller changes or issues they may face, wherever the agent may be.”

The Rise Of Tablets

The mobile device has also been evolving, and the launch of the Apple iPad in 2010, heralded tablet devices as the new mobile device of the future. 11 million tablets had been shipped by the end of 2010, and there is a rising interest in tablets. Worldwide shipments of “app-enabled devices” including tablets is predicted to reach 377 million in 2011, and 462 million shipments in 2012, exceeding PCs which are expected to ship 402 million in 2011 and 448 million in 2012.

Asia Pacific is expected to lead the way in global shipments of tablet devices in 2015, ahead of both North America and Europe. Sales of tablet devices are expected to hit 150 million units in 2015, with Asia Pacific accounting for 35 per cent of global shipments – an enormous growth from 2.8 million (20 percent of global shipments) in 2010 to 52 million in 2015.

Although Apple gets the bulk of publicity, Android devices are forecasted to be the top smartphone and tablet operating system in 2011 and beyond. At least 450 million smartphones are expected to be sold in 2011, about a 50 percent increase from 2010, and approximately 40 percent of those phones will be powered by the Android operating system. For tablets, Google’s Android OS share is expected to be higher (36 percent) than Apple’s iPad (35 percent) by 2015.

“Larger displays, touch screen interactive displays, cloud computing and the rising of apps for tablet devices - whether via Apple App Store, Google Android or Blackberry AppWorld - will all play a part in how the next generation travel agent will be able to leverage these devices in the future,” said Henry. “

Html5 Will Allow For Greater Non-App Mobile Utilisation

HTML5 is widely regarded as the next standard for website design and creation, and this new evolution in HTML will allow for greater compatibility with video, audio and other interactive media. With this new code, Android and iPhone operating systems without Flash plug-ins are now capable of watching YouTube videos.

In the App space, Apple still leads the way in number of apps, while Google Android is closing in. In three years, over 300,000 apps have been developed, and in 2010, these apps were downloaded 10.9 billion times. The demand for app stores is expected to peak in 2013 and slowly decline, as subscribers migrate from download apps to mobile Web sites and the more popular ones are preloaded onto the devices.

Interestingly, one in four mobile apps once downloaded are usually never used again and discarded. Henry said, “Apps are an interesting area of discussion at the moment, and one that agents will eventually want to incorporate into their operations, especially with the growth of smartphones and tablets. Apps, still a new player in the travel technology space, offer a great opportunity for our agents to leverage upon, similar to what airlines such as AirAsia, American Airlines, Lufthansa and ANA are doing already. However, I hope the industry looks more to a mobile specific site strategy rather than limiting it just to apps. The new HTML5 mobile specific websites, means the user can receive an app experience without having to download any specific app.”

“HTML5 is the wave of the future that will help drive technology further. With increasing mobile Internet access speeds and newer mobile devices such as tablets, and larger screen smartphones coming to the market, this new code will allow a reduced need for apps and a higher usage of mobile Internet,” added Henry.

Social Media Agents

From the Abacus poll, 57.4 percent of agents highlighted the importance of social networks in order to remain competitive in the travel landscape.

Today, two billion people are connected in the top 40 networks, with close to 600 million on Facebook alone. By 2020, five billion people are expected to be online and social networks will be their core connective tool to communicate and interact with each other.

Social content is becoming an essential part in making travel decisions, whereby three in 10 travellers share travel experiences and 35 percent interact with travel companies on social networks. Mobile plays a big part in social networks, since sites like Facebook have 100 million mobile users, and one third of tweets sent and read are from smartphones.

Many of the agents indicated that social media sites like Facebook and Twitter have proved highly successful in reaching out to their existing customers as well as attracting new ones. The traveller of today and of tomorrow is well-connected, and it is imperative that agents access this growing channel.

Social media has also been playing an increasing role in transactions, as seen especially with the now transaction-enabled Facebook and its Credits system. The Facebook Credits payment system has a great reach to all Facebook users, and supports payments via several credit cards, 15 currencies, mobile payments and recently, PayPal. In Asia, Malaysia Airlines was the first airline carrier to utilise the Facebook transaction platform, allowing its customers to book tickets, check-in and see if their friends are headed in the same direction or on the same flight through its MHbuddy Facebook page. Even travel agents and destination sites such as Bolongo Bay Beach Resort and Mobissiomo have started Facebook pages which enable users to book and pay for their travel via social networks

Social Media Rising Stars

Location-based services like Foursquare, Gowalla, Loopt, SCVNGR, Whrrl and Facebook Places are playing increasingly important roles in the travel industry, and travel agents should be aware of the opportunity to connect with visitors and attract them with specific rewards through local business partnerships or tie-ups.

Augmented reality is available via applications such as Word Lens, Foursquare, Layar, Tonchidot, Yelp’s Monocle, RTP’s RealSki, Intelligent Spatial Technologies, GeoVector’s World Surfer and Google Goggles. Foursquare leads in this space with over 1.9 million users, while Layar has 1.8 million users that deliver 1.2 million augmented objects per day.

The Realisation of M-Commerce and NFC

M-commerce and Near Field Communications (NFC) are playing an increased role in improving and enhancing the travel experience for travellers. The ability of the mobile device to pay for goods and services, coupled with the seamless exchange of information electronically, enabling payments, check-in and personalised marketing messages with a simple swipe of the device against a reader, offers not only traveller efficiency but new opportunities for personalised interaction with the travel provider.

The value of goods and services that people will purchase through mobile devices will reach $200 billion globally by 2012, much of it via NFC. The number of these NFC-ready devices is expected to rise from 700,000 in 2009 to 247 million in 2015. Through their mobile device, the traveller can then do everything from boarding and check-in to mobile payments and social networking. During the NFC travel experience, there will be specific touch-points for agents to consider, including mobile marketing and ancillary services they can offer to travellers.

Cloud Computing

Although the travel industry is generally 12-18 months behind in technology adoption, many industry players are already exploring cloud services. Especially with the greater uptake of mobile smartphones and tablets, greater efficiencies through cloud-based technologies can be realised at a lower cost.

Henry commented, “Cloud-based services are an emerging area, as cloud travel providers are offering agents more flexibility in scaling their businesses at lower costs through existing cloud-based portals, such as Amazon Web Services. The agents can focus more on improving user experience and will have easy and unlimited access to information and files without the hassle of hardware. Soon we will truly be able to see the agent always while on the go.”

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Zuji Australia to utilise Twitter’s new sponsored tweet functionality

Online travel agency Zuji Australia has become the first Australian travel group to utilise Twitter’s new sponsored tweet functionality.

The company not only intends to build its growing social media presence, but it is also looking at ways to interact more candidly with its existing and potential customers via this initiative.

Zuji’s tweets will provide travellers with insider trip information, hot tips and the latest flight, holiday and hotel deals.

According to a report filed by campaignbrief.com, Reprise Media recommended Zuji to go ahead with this campaign.

Reprise Media social marketing strategist reportedly Maura Tuohy said: “The nature of online travel demands two key things from Zuji; they need to be able to listen to their customers in real time and they also need to be able to release special travel offers at record speed.  This partnership will allow the company to broaden its follower group and better communicate to them.”

“Additionally, with technology as a core pillar for Zuji, we felt it was appropriate for the organisation to be among the very first companies to trial the new functionality in Australia.”


Zuji is forecasting the biggest year in the company’s nine-year Australian history.

Only few days ago the company shared its new approach, Travel Your Way. It is focused on putting the power back into the hands of the individual traveller. With this move, the company is forecasting to yield 200 percent growth on last year. 

The company also referred to recent Roy Morgan Single Source Data (December 2010) figures. It shows up to 75 percent of 18 - 55 year old Australians saying that the Internet is the most useful media channel for booking travel and 80 percent of Australians in this age bracket use the Internet for booking travel. The Travel Your Way campaign will be supported by Zuji’s biggest ever marketing investment in Australia through a multi-platform media strategy, which includes television, outdoor, print, social media and digital marketing.

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Optimising Your Checkout Process from Check In to Check Out

One important part of optimising an ecommerce site is making sure you are losing as few people as possible during the checkout process.

If you haven’t analysed the performance of your checkout process you could be missing out on tons of potential revenue.

If you have a high abandonment rate, it’s in your best interest to check out the areas of your checkout process that could do with an overhaul. Even if you think your abandonment rate is pretty good, there may be some easily implemented chances to give your conversions an added boost.

Before you think about moving forward with changes to your checkout process however, make sure you have adequate funnel tracking enabled within your analytics software. You’ll want to be able to glean a clear “before and after” picture of performance.

1. Don’t require an account.

Requiring users to sign up for an account just to buy a product on your site is a great way to ensure you’ll lose a lot of customers before they even see a subtotal for their cart.

We live in an age where we have account logins for everything from social networks to doctor’s offices. As a online retailer it’s important to realise that some people simply don’t want to remember another account login. Provide users a “Continue as a Guest” option to avoid losing them before the process has begun in earnest.


2. Be transparent.

Let users know exactly where they are in the checkout process by showing a progress bar on every page. Doing this helps eliminate ambiguity and doesn’t allow a customer to feel “lost” in the checkout process. Clearly call out the last step of the checkout with button text.

3. Kill site navigation.

Amazon kills all site navigation during the checkout process. This might be a bit drastic for your own site, but if you have any side navigation you should definitely eliminate them on checkout pages. However, you may choose to experiment with keeping top and super navs present throughout the process.



4. Show subtotals.

Let users know early on what their estimated totals are. People want to know exactly how much money they are about to spend. Don’t let that number be a surprise at the last step!


5. Make edits simple.

Allow customers to edit their orders without having to backtrack to the cart.

6. Make yourself available.

Prominently display your contact information on every page of your checkout process. If customers need a question answered before they complete the purchase process, they will definitely abandon if they can’t find a way to contact customer service.

7. Answer questions.

Aim to answer a customer’s questions before he or she needs to ask them. Kate Spade’s checkout page answers a lot of potential questions from the very first step of the checkout process:

• How much is shipping? Oh, I see, it’s free!
• Can I call someone? Oh, I see, they have a customer service number!
• What’s my total going to be? Oh, I see, it’s estimated on the bottom right!
• How much info do I have to give? Oh, I see, required fields are marked with a pink asterisk!

8. Always follow up.

Don’t hang the customer out to dry as soon as she’s entered her payment information. Send an email outlining all order details and send another email when the customer’s order has shipped. Doing so reinforces your credibility as a retailer and keeps your customer happy, and hopefully loyal.

(This article appeared as a posting on Blue Fountain Media blog)

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Business travellers increasingly sourcing their own mobile tools and apps: study

With more mobile tools available than ever before, almost two-thirds of travel managers believe that more than half of their travellers carry a smartphone. Yet, only 10 percent of the companies sanction their preferred apps and tools, according to AirPlus’ report The Wire…from AirPlus.

While mobile travel tools and applications have become plentiful in the leisure travel market, few solutions have targeted corporate travel. Many business travellers are using their own mobile devices and adapting leisure-focused tools to meet their own needs.

This year, however, has seen a flurry of activity on the part of corporate travel vendors as they race to release mobile applications and specialised mobile websites dedicated to the business traveller. Recent and upcoming releases of mobile solutions this year include enhancements to expense reporting tools, itinerary management, traveller alerts, security and status features, and the promise of what’s been the holy grail of corporate travel management – online booking that embeds corporate policy.




In a recent online survey, AirPlus International asked travel stakeholders about their current mobile travel
management strategies in the face of a rapidly changing marketplace. According to survey respondents, the early jumps in adoption of mobile technology have slowed down, at least temporarily, when it comes to the numbers of business travellers carrying smartphones or other wireless-enabled devices. For example, according to survey respondents, 38.1 percent estimated that more than, 90 percent of their company’s travellers currently carry a smartphone or other wireless-enabled mobile device, up only three percent from the 35 percent estimated in 2010.

At the lower end of smartphone adoption, there was virtually no change in responses: This year 15 percent
estimated that fewer than 50 percent of their company’s travellers use smartphones, statistically
insignificant when compared to the 14.6 percent who said the same last year.

It’s likely, however, that corporations will continue to see increases in adoption of mobile technology as such devices jump in popularity through the population at large. Nielsen reports that 31 percent of all mobile subscribers owned smartphones at the beginning of this year and predicts that 50 percent of mobile phone purchases will be smartphones by the end of the year. And information technology research company Gartner predicts that by 2013, mobile phones will surpass computers as the most common web access device.



These increases go hand in hand with the fundamental change respondents reported in the way such devices are sourced for business travellers, who are increasingly taking personal control of their smartphones and mobile devices. While in 2010, 36.1 percent of the surveyed respondents said their travellers used only company sanctioned mobile tools/apps, that number was down to 9.9 percent in this year’s survey. Instead, 21.6 percent said their travellers are now personally sourcing their own tools and apps (compared to 9.8 percent last year) in addition to the 40.5 percent whose travellers use a hybrid of company sanctioned tools and apps along with sourcing their own.

While such numbers indicate that some policy is being determined at certain levels of the corporation, most of that policy is not coming from travel management professionals. The majority of survey respondents— nearly 55 percent—said travel management has no responsibility for mobile travel apps and tools.

Of those that are involved in the process, the role is primarily advisory. Nearly one-quarter of the total
respondents contribute to strategic plans for using mobile travel tools and applications (23 percent) and/
or research and recommend mobile travel tools for possible purchase (23 percent). Only 15.9 percent
source, negotiate and purchase mobile travel tools, while slightly more—17.7 percent—implement and
manage the use of sanctioned mobile tools.

Without strategic policy and involvement of corporate travel professionals, managed travel programmes are at some risk of leakage as travellers are left to their own devices when it comes to mobile technology. That risk will only grow as more business travellers purchase their own mobile-enabled devices and use them to access apps and mobile-enabled websites of their own choosing. However, the new spate of solutions specifically geared to corporate travel programmes and business travellers also means an unprecedented opportunity for corporate travel professionals to become more involved in the strategic management of mobile business travel tools.

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Why the Cloud is Right for Hospitality

By offering a fundamentally faster, less risky, and more affordable solution to on-premises applications, cloud computing will forever change the economics of hospitality information technology.

With cost-effective alternatives for application enhancement and development, cloud computing provides innovative ways to create competitive industry advantage. Why are cloud solutions the right technology strategy for 2011 and beyond?

1.  Delivers faster time to value
Cloud computing affords hospitality organisations a return on investment within weeks, not months or years. Since cloud computing streamlines all stages of the application development cycle, with complete, pre-built applications and project management services, developers can immediately focus on customising features and functionality.

Additionally, cloud applications are much faster and less expensive to scale to multiple applications since there are no additional costs to deploy more to existing users. And because all applications are built on the same platform, pre-existing capabilities and services can be reused across multiple applications.

2.  Requires no up-front capital expense
Cloud computing platforms are based on subscription pricing. Companies can start small, with virtually no up-front costs, and instantly scale to meet broader business needs. The ability to pay-as-you-go is categorised as a service rather than a capital expense, making it a compelling option for financial predictability and project accountability. And because there is little risk, cloud solutions allow hospitality organisations attain better information technology despite reduced capital budgets.

3.  Minimises operational costs
Cloud environments are immediately available and vertically integrated with ready-to-use services for developers, administrators and end users, cutting project time and cost. Cloud technology providers even manage the burden of operational maintenance and support. Performance tuning, patches, and upgrades are delivered as part of the service, requiring fewer technical resources and minimal demands on the customer.

Such operational efficiencies are the result of a true multitenant architecture where users share the application’s physical instance and version. Individual deployments of applications occupy virtual partitions rather than separate physical hardware and software stacks. So every time a major innovation is released, every customer instantly benefits, resulting in lower risk, rapid innovation and reduced costs.

As hospitality organisations reap the benefits of placing their technology in the cloud, what do industry professionals need to consider to stay on top of this growing trend?

1.  Is the cloud reliable and secure?
In contrast to an on-premises system, data maintained in the cloud is securely stored elsewhere. Gone is the fear of losing information if a localised computer network crashes; and it is accessible from anywhere in the world with an Internet connection.

Additionally, cloud technology providers offer secure infrastructure and reliable development platforms using such enterprise-class security as firewall protection, intrusion detection systems, and SSL encryption. Because it relieves the cost, burden, and liability of maintaining security compliance and certification from the customer, cloud computing saves customers both time and expense.

2.  Does the cloud simplify integration?
Gartner estimates that up to 35 percent of the implementation costs associated with on-premises application development is for integration. In comparison, cloud computing makes it faster and easier to integrate and extend legacy environments as well as connecting to other cloud services. And because of the cloud multitenant architecture, integrations no longer “break” during upgrades, require intricate technology dependencies, or lead to vendor lock-in.

3.  Are all new technology providers truly in the cloud?
Beware of the “false cloud”. Cloud computing might sound like network computing, but it isn't. With network computing, applications and data are hosted on a single company's server(s) and accessed over the company's network. In contrast, cloud computing encompasses multiple companies, multiple servers, and multiple networks.

So when considering a cloud computing solution, distinguishing criteria should be carefully evaluated. A true cloud technology provider:

• does not try to sell hardware
• does not need to install software
• will have open APIs
• does not need to re-architect systems
• does not require a specific number of machines upfront
• does not run on only one operating system
• does not store data in on-premises machines
• will connect to any computer or personal device

With limited budgets and a highly dynamic market, it is critical to stay ahead of the hospitality information technology curve. With cloud computing, organisations can extend the life of their existing systems with new innovations, improve time to market of new systems through affordable pricing, and ultimately gain competitive advantages in the hospitality industry.

(This article has been contributed by Gregg Hopkins, President and CEO, Libra OnDemand)

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“Working with an OTA can actually help in growing the hotel’s direct channel objective”

IN-DEPTH: Interview with Peter Lee, director of North Asia, Expedia

By Ritesh Gupta

Different distribution platforms cater to the need of different sets or groups of customers.

For instance, a GDS caters to the agency and the agents who have specific needs in terms of information and content. Similarly, direct to consumer platforms like brand websites represent content more catered to the needs and relevance of the end-customer.

A recent study in the US indicated that consumers have become more insular with a closely-knit sphere of influence, and this is affecting how they both arrive at and make purchase decisions.

The role of online travel agencies is a significant one when it comes to gathering pricing information and impartial comparisons, and also purchasing the best deal, according to Ypartnership/Harrison Group’s new study, 2011 Portrait of American Travelers. Importantly, when it comes to purchasing the best deal, the funnel narrows to two main options – booking through an online travel agency (41 percent) or directly via a travel supplier’s own website (38 percent). Less than one in four travellers uses traditional travel agents (23 percent) when booking, followed distantly by multi-brand websites (18 percent) and destination websites (17 percent).

The school of thought that subscribes to an aggressive direct to consumer focus will always substantiate the strategy by show-casing higher profitability, enhanced customer engagement and a more effective management of customer relationship strategies. However, this requires a great amount of investment.

Though the role of an OTA cannot be underestimated, it is often said that hotels should guard themselves against over-reliance. 

If growing the direct channel is truly a hotel’s main objective, working with an OTA can actually help in that endeavour, providing free exposure, global reach and marketing support, Tokyo-based Peter Lee, director of North Asia, Expedia told EyeforTravel’s Ritesh Gupta.

Lee spoke in detail about the role of an OTA in today’s marketplace. Excerpts:

Changing a hotel’s market mix does not happen overnight. Therefore, like any business decision, it is important to understand the risks and rewards of taking such actions both now and in the future.  Do you think suppliers who have been focusing on going direct to consumers have lost out on indirect channel partners?

Peter Lee:

Hotels don’t have to make a decision between growing their direct channel and working with other channels. They need to evaluate the costs and benefits associated with every channel they have the opportunity to distribute through.

The direct channel comes with higher costs in marketing and customer acquisition, while other channels, such as the OTAs, can help lower.

A recent study from the Cornell Center for Hospitality Research found that nearly 74 percent of consumers looking for a hotel will visit an OTA prior to making their booking decision, versus just 10 percent of consumers that go directly to a supplier’s website. This builds on an earlier study that found that hotels displayed on Expedia received between 7 percent to 26 percent more bookings than when they were not displayed. So if growing the direct channel is truly a hotel’s main objective, working with an OTA can actually help in that endeavour, providing free exposure, global reach and marketing support.

In the context of hotels, customers are purchasing more than just a convenience.  Customer decision making is influenced by a mix of tangible and intangible benefits represented by the brand or the physical asset.  However, price targeting has become increasingly difficult in this time of transparency.  Some level of generalisation is necessary, combined with careful and discreet targeting of offers. How do you think OTAs have played their part in today’s environment?

Peter Lee:

Expedia customers are actually quite discerning and tend to make booking decisions based on much more than just the room rate.

Our booking data shows the importance of content like property photos, virtual tours, star ratings, and importantly, user reviews in influencing booking decisions. The more information that is available about a property, the more likely that a traveller will book the right property that best meets their needs, which in turn helps to ensure a happy customer, and may eventually lead to a positive online review for that property. OTAs have become an integral part of this cycle. Expedia sites today feature well over one million traveller reviews—just another example of the depth of information provided to consumers shopping our sites.  

It is being said that many hotels have been forced to cut back on their marketing and advertising budgets and so have come to recognise the value of mere exposure on OTAs. How do you assess the situation?

Peter Lee:

More than 75 million consumers visit Expedia, Inc. sites worldwide each month, making Expedia an extremely efficient marketing and advertising channel for our supply partners to reach a global audience of travellers.  The hotel industry throughout APAC and beyond has become much more sophisticated in their thinking with regards to distribution and online marketing, and understands the value OTAs like Expedia offer to hotel partners. The “Billboard Effect” has been quantified by the Cornell studies, which found that Expedia generates between 3 and 9 additional bookings to a hotel’s direct site, for every booking made on Expedia.

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. How have OTAs acted as valuable partners more than ever?

Peter Lee:

Expedia delivers value to hotels in all demand environments and through all economic cycles.  We deliver the most value when we have the opportunity to develop a long-term, consistent relationship with a hotel. 

That being said, negative economic changes in countries or regions can have a major impact on occupancy levels, leading to lower-than-normal rates in a given market. In these instances, Expedia gives hotel partners the ability to run need-based offers on their own to boost demand over specific dates, or to incite a specific type of demand, such as longer lengths of stay or weekday stays. 

Additionally, Expedia has the local market knowledge necessary to coordinate with local tourism authorities and local supply partners to very quickly organise merchandising and promotional opportunities to drive demand at a destination or property level.

It is said that Rate Parity and Best Rate Guarantees have contributed to the commoditisation of the hotel product. In today’s environment, how do you think OTAs have contributed, positively and negatively, to a hotel’s distribution strategy?

Peter Lee:

Rate parity is becoming increasingly important for hotels in light of the Billboard Effect, which is the tendency of travellers to browse for hotels on OTA sites and then go directly to the supplier’s site to book.

Parity ensures that a customer will see the same price for a given room no matter which booking channel they use, and is one important way that any hotel or OTA can increase consumer confidence.   

From distribution perspective, with online channels more responsive to discounting, how do you think online channels impact ROI and CPA?

Peter Lee:

It’s important to clarify that hotels are responsible for setting their own prices, and at the end of the day it is the consumer that ultimately decides whether the price is acceptable or not.

The fact is, online channels enable hotels to reach potential customers they would not otherwise be able to reach, and to quickly make adjustments to rate in accordance with their needs. 

It is very clear that working with Expedia drives better CPAs than not working with Expedia. Overall, the traffic we drive is something a number of hotels could not effectively and efficiently afford to generate on their own. 

Do you think it’s time to consider profit parity as opposed to price parity? What do you think are the main challenges in doing so?

Peter Lee:

This would be very difficult. That is like asking a consumer to pay the same price for a 2-star hotel as for a 5-star. Different OTAs provide different levels of value in terms of geographic reach, traffic volume, and the strategic and tactical programs offered to help hotels maximise demand and occupancy in accordance with their needs.

For example, Expedia offers hotels the ability to participate in the vacation package channel, through which they can secure bookings that typically have a longer length of stay, an extended booking window and a lower cancellation percentage – all very tangible, valuable benefits for hotels beyond the traditional marketing channel.

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Google works on new flight schedule feature

Google has started incorporating airline flight schedules in its search results.

“With the close of our ITA acquisition last month, we’re eager to begin developing new flight search tools to make it easier for you to plan a trip. While this flight schedule feature does not currently use ITA’s search technology, this is just a small step towards making richer travel information easier to find, and we hope to make finding flights online feel so easy,” Petter Wedum, Software Engineer, Google, wrote on a company blog.

Explaining how users can see the flight schedule on a route, Wedum wrote if you have a particular destination in mind, you can now quickly find out which airlines serve that specific route and when they fly.

For example, if you search for [flights from San Francisco to Minneapolis], you’ll see a selection of non-stop flights and the airlines that offer them. To see a full timetable, one has to click on “Schedule of non-stop flights.”


 
One can also see all the destinations with non-stop flights from a particular airport.

“If you’re in Buffalo, New York and need ideas for a weekend getaway, search for [flights from buffalo] to see popular travel destinations from Buffalo. By clicking “Show all non-stop routes”, you can get the full list of destinations and from there, you can click to get more flight details,” wrote Wedum.

This is currently available in 10 languages: English, French, Italian, German, Spanish, Dutch, Brazilian Portuguese, Polish, Russian, Turkish, and Catalan.

Competition for travel meta-search

Last month Google entered into a consent decree agreeing to conditions on Google’s acquisition of ITA, and Google subsequently completed its acquisition of ITA.

Travel meta-search engines have acknowledged the emerging threat from general search engines. For example, if Google chooses to provide comprehensive travel search results such as flight and hotel pricing and availability, and further chooses to integrate such offerings with other Google services such as Google maps and weather information, then the number of users that visit travel meta-search websites and their ability to attract advertising dollars could be negatively impacted.

According to Experian Hitwise, in September 2010, approximately 30 percent of traffic to travel-related websites began with Google.

Kayak says it uses Internet search engines, principally through the purchase of travel-related keywords, to generate traffic to its websites.

Approximately five percent of its user queries during the three months ended March 31, 2011 resulted from searches initially entered on general search engine websites. Search engines, such as Google, frequently update and change the logic which determines the placement and ordering of results of a user’s search, which may reduce the effectiveness of the keywords purchased, according to Kayak.

“If a major search engine, such as Google, changes its algorithms in a manner that negatively affects the search engine ranking of our websites, or changes its pricing, operating or competitive dynamics to our disadvantage, our business, results of operations and financial condition could be adversely affected,” stated Kayak in the new version of its S-1, with updated financials.

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Bing Travel works on new features

Microsoft has added social functionality to Bing Travel to ensure users’ friends are part of their travel planning experience.

Other features are as follows:

• Updated Places Pages

The company says it has continuously improved its Bing places pages, which pull together everything one needs to know about a destination or one’s very own home. Bing has improved the page layout and updated parts for weather, flights, related destinations, and local listings. It is being described as “one-stop-shop for cities, states, countries, and islands around the world”.


In addition, Bing has added new ways to get to the places pages from Bing.com. Its new instant answer even shows your friends who live in or near a city you’ve searched for.  As with other social features, you will need to be logged into Facebook and have allowed Instant Personalisation.


Bing Travel Wish List

“Another exciting way to use our places pages is to add them to your Bing Travel Wish List in Facebook. Once you’ve chosen your dream destination in Bing, just click on the “Add this destination to your Bing Travel Wish List on Facebook” link to share it with your friends,” said David Lindheimer, director, Bing Travel.

Flight Deals in Facebook

“Sometimes the best updates on deals come from your friends. Now Bing Travel can provide a similar level of help by sending you great deals right in your Facebook feed. Just “like” a flight search result and we’ll send you the best deals from your city as they become available,” added Lindheimer.

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Kayak acknowledges threat from leading Internet search engines

Travel search engine Kayak processed more than 214 million user queries for travel information in the first quarter of this year.

This represented growth of 48 percent over the three months ended March 31, 2010, according to Kayak. This performance was shared in the new version of Kayak’s S-1, with updated financials.

The financial results, disclosed in the company’s latest IPO prospectus, shared that Kayak generated $53 million of revenues, representing growth of 43 percent over the three months ended March 31, 2010.

Kayak had a net loss of $6.9 million in the quarter, up from $854,000 in the year-ago period. The company took a $15 million charge for dropping its Sidestep.com URL.

The company’s mobile applications have been downloaded over seven million times since their introduction in March 2009. For the first three months, Kayak had over one million downloads, representing growth of 226 percent. 

Kayak operates websites in 14 countries outside of the US, including Germany, the UK, France, Spain, Italy and India.

“We believe that the international opportunity for our services is sizable and we intend to invest in both head count and marketing in 2011 and 2012,” stated the company.



Dependence of ITA

For its part, Kayak highlighted that it licenses faring engine software from ITA Software under an agreement which expires on December 31, 2013. This faring engine software directly provided approximately 56 percent of its overall airfare query results for the three months ended March 31, 2011. Additionally, 29 percent of its overall airfare query results during such period were obtained from other sources which, in turn, utilised the ITA faring engine software.

“We have invested significant time and resources to develop proprietary software and practices to optimise the output from ITA’s software for our websites and mobile applications. In addition, we believe that alternative faring engine solutions currently do not provide the level of comprehensiveness and accuracy that ITA’s software provides,” according to the company. 

Airline travel queries accounted for approximately 86 percent of the queries performed on its websites and mobile applications for the three months ended March 31, 2011, and distribution revenues from airline queries represented approximately 25 percent of its revenues for the three months ended March 31, 2011.

The company expects the domestic airfare queries to represent a significant portion of its overall queries for the foreseeable future. Thus, a loss of access to ITA’s software or enhancements or improvements to the software, or an adverse change in its costs associated with use of the ITA software, could have a significant negative effect on the comprehensiveness and/or speed of its query results, and on its revenues and operating results.

It added that a loss, disruption or other negative impact on its airfare query results could also result in a significant decline in the use of, and financial performance of, its query services for non-air travel queries.

According to Experian Hitwise, in September 2010, approximately 30% of traffic to travel-related websites began with Google. The consent decree stated Google’s intent to offer an online travel search product. Google may also create other flight search tools and services that directly compete with the services Kayak offers.

As a result, this number could substantially increase, and people may be able to find comparable flight information on the internet without using Kayak’s services.

“Although the consent decree requires Google to renew our existing ITA agreement on the same terms, if ITA or Google limit our access to the ITA software or any improvements to the software, separately develop replacement software to which they claim we are not entitled or increase the price we pay for any improvements of replacement software and we are unable to replace ITA’s software with a comparable technology, we may be unable to operate our business effectively and our financial performance may suffer,” acknowledged the company.

Competition from general search engine companies 

Large, established Internet search engines with substantial resources and expertise in developing online commerce and facilitating Internet traffic are creating, and are expected to create further, inroads into online travel, both in the US and internationally.

Citing an example, the company added: in addition to its acquisition of ITA, Google has stated that it intends to offer an online travel search product and is already actively testing a travel search engine that displays hotel information and rates to travellers.

Moreover, Microsoft acquired one of Kayak’s competitors, Farecast.com, in 2008 and re-launched it as Bing Travel, a travel search engine which not only allows users to search for airfare and hotel reservations but also purports to predict the best time to purchase.

Kayak said these initiatives appear to represent a clear intention by Google and Microsoft to appeal more directly to travel consumers and travel suppliers by providing more specific travel-related search results, which could lead to more travellers using services offered by Google or Bing instead of those offered on its websites and mobile applications.

Kayak further added: For example, if Google chooses to provide comprehensive travel search results such as flight and hotel pricing and availability, and further chooses to integrate such offerings with other Google services such as Google maps and weather information, then the number of users that visit its websites and its ability to attract advertising dollars could be negatively impacted.

Google or other leading search engines could choose to direct general searches on their respective websites to their own travel search service and/or materially improve search speed through hardware investments, which also could negatively impact the number of users that visit Kayak’s websites and its ability to attract advertising dollars.

“If Google or other leading search engines are successful in offering services that directly compete with ours, we could lose traffic to our websites and mobile applications, which could have a material adverse effect on our business, results of operations and financial condition,” according to Kayak.

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