This is my dream. To write in a place like this. A house on the beach. The sound of the waves crashing on the shore. A dog at my feet. I’ve named him Sam. He’s a beautiful husky and he comes and goes on his own. I think he belongs to someone living in a house nearby but clearly he’s a free spirit. A husky on a tropical island. Not quite his natural home but he seems to have found his place. As all true travellers do.
After wrapping up WIT last week, I am allowing my mind to go to new places and reflecting on the lessons learnt over the two days.
Here’s a summary of Day 1, Oct 28.
1. Magic is in the product + collaboration
John Kim (right): Don’t be boring; Aman Bhutani: Make it easy.
In a world ruled by technology, product that makes it easy for customers, entertains them and is improved everyday is critical. And the company that gets the right collaboration between engineering and product will have the edge. It is clear that Aman Bhutani and John Kim, chief technology officer and chief product officer of Expedia Worldwide, who opened WIT with a talk on “The Science of Travel” have a chemistry that is allowing the company to live up to its mission of reinventing travel with technology. One creates what the other wants to put in front of customers. Their joint mission is to make it easy, don’t be boring, build global and execute local and make small changes everyday. The question is, whether there could be too much science at the expense of art?
2. Data rules but could it over-rule?
Data driving the major online travel brands
Data seems to be driving the major online travel brands – from Expedia to TripAdvisor to Booking.com to Agoda. If you follow the data, are you destined to be followers? Entrepreneurs like Tony Fernandes certainly do not follow data when they launch certain routes – for example, when AirAsia launched flights to Bandung or Boracay, it wasn’t based on data but gut and local market knowledge that these two destinations would do well with Asian travellers. Will the major technology-driven travel companies allow instinct and local market knowledge to occasionally influence their decisions?
3. The next wave for Booking.com – mobile and vacation rentals
Gillian Tans: Stay humble and hungry
Booking.com’s COO Gillian Tans has seen the company grow from 20 staff then to 8,000 and she is a believer in never forgetting your roots. Stay humble and hungry, she says and never forget who your customers are. Her hotelier background stands her in good stead in understanding hoteliers’ needs and concerns.
Global thinking, and local execution, is key as it expands across Asia. Booking.com currently has 1,000 out of its 8,000 staff based in the region and Marnix Mali, vice president for human resource APAC, said the ratio could well go up to a third in the next few years.
While she declined to disclose how much APAC was responsible for the Priceline Group’s Q2 2014 results which saw a 34% growth in consolidated gross bookings to $13.5 billion and a 20% increase in room nights to 90 million, it is clear the region is a major contributor to growth, particularly in the area of mobile where it is leading.
Tans said that mobile was also helping reduce customer acquisition costs with the Booking.com app driving direct business.
The next area of growth for Booking.com is vacation rentals. In the Q2 2014 earnings call, Priceline Group CEO Darren Huston said the brand now has over 190,000 directly bookable self-catered properties and in the last 12 months, customers spent over $4 billion on vacation rentals – booked primarily through B.com “but also on our experimental site, Villas.com”.
This is clearly the brand to watch in 2015.
4. From performance marketing to building brands
The Asian Wave, from left, Keyur Joshi, MakeMyTrip; Timothy Hughes, Agoda; and Kathleen Tan, AirAsia Expedia
The online travel world is making the migration from performance-based marketing to branding. Booking.com has launched offline advertising in US, Australia, UK, Canada and recently Germany. TripAdvisor recently launched a Make Your Own TV ad for a chance to win $25,000 in the US.
Agoda is on a mission to build a global brand from an Asian base and Timothy Hughes, vice president marketing, admits it’s a challenge. The world’s major media attention is focused on US and Europe, less so Asia. Agoda’s business however is becoming increasingly global, following the path of travellers from Asia as they fan out across the globe and this will influence the spread of the brand.
CEO of AirAsia Expedia, Kathleen Tan, is working on breathing an Asian DNA into the American brand and building up its profile in Asia. She is using her traditional marketing expertise and social influence to paint Asia yellow.
In Thailand, she’s plastering trains with Expedia colours and going in big when many are staying away from the destination. “Thais want to travel and we are offering them hotels + flights,” she said. The joint venture with AirAsia is giving Expedia the advantage when it comes to hotels + flights, a popular choice for travellers in markets such as Malaysia, Hong Kong and Japan, which are still dominated by packages.
MakeMyTrip similarly wants to follow its Indian customers to new places and is attempting to broaden its footprint through its hoteltravel.com acquisition made a few years ago. It’s also set up a US$15 million innovation fund to influence the travel start-up scene in the region.
5. Search still far to go but Qunar is ahead of the pack
CC Zhuang: Planning the end-to-end matrix to change travel in China
The interview session with Qunar’s CEO CC Zhuang revealed that not only had Qunar gone beyond search to offer assisted bookings but was also acting as consolidator and revenue manager to domestic airlines in China. They give us the seats, we manage the allocation, we do the revenue management for them and it’s profitable for them, said Zhuang whose ambition is to develop Qunar into an end-to-end matrix solution that will change online travel in China.
He’s been unfazed by Ctrip’s removal of hotel content from Qunar and as for Ctrip’s acquisition of a cruise ship, he said, “We do not believe in investing in fixed assets.” He’s also unfazed by Alibaba’s move in travel. At WIT, Alibaba announced the set-up of Alitrip, which consolidates its existing national and international bookings for planes, hotels, cruises, package tours, and more from across Alibaba’s main Chinese ecommerce marketplaces (Taobao, Tmall, and the Juhuasuan daily deals site). “They are very good at public relations,” said Zhuang.
Qunar is also expanding beyond China with Asia clearly in its sights. Its investments in companies such as taxi app hailing service, GrabTaxi, are strategic to its ambition to be present throughout the entire travel value chain.
The next big thing in China? Outbound travel and clearly, Qunar wants to be the one leading this next wave as Chinese players expand beyond their home markets.
6. Big battle ahead for meta-search
The searchers, from left, Rod Cuthbert, Rome2Rio, Benjamin Jost, TrustYou; Kei Shibata, travel.jp; Ross Veitch, Wego; Hugo Burge, Momondo Group; Frank Skivington, Skyscanner; Debby Soo, Kayak
At the meta-search panel that followed, Ross Veitch, CEO of Wego, said Qunar was playing at another level. It may have started as a copy of Kayak but the scale in China has allowed it to go further than what other meta-searches are doing.
All are trying to scale in Asia. Out of Skyscanner’s 30 million users, a fifth are from Asia, a ratio chief commercial officer Frank Skivington is keen to see increase. In the 12 months since Kayak announced intentions to expand to Asia, Debby Soo, vice president for Asia, said it’s seen some progress but she wishes there could be another metric to measure Asia by. It being an emerging market where the brand is not so well known, she said there needed to be another metric by which to expand in the region.
Momondo came to WIT £80 million richer from its latest round of fund-raising and CEO Hugo Burge said the company intended to expand further into Asia but would maintain its “customer experience” proposition over “price is best” even though the common wisdom in Asia is that consumers want price over everything else.
Wego’s Veitch said it was facing formidable competition but was spending to build brand in markets such as Indonesia and the Middle East where it is seeing good growth and where it had the advantage over the global brands.
Rome2Rio’s CEO Rod Cuthbert remains committed to his multi-modal model, saying travellers do not travel from airport to airport, but from home to place and he felt meta-searches were missing out on the opportunity to crack the road and rail market which was huge in Asia, particularly China and Japan. “But it’s okay if they are not interested, it leaves more for us.”
Expect consolidation in this space. Asked to tip an acquisition, Kei Shibata, CEO of travel.jp, said “Google buying TripAdvisor.”
7. Loyalty – is it about points, price or experience?
The loyalists, from left, Takashi Tobohachi, Rakuten; Aya Aso, Agora Hospitalities, Japan; Steve Hui, iFLYFlat; Louise Daley, Accor Advantage Plus
As customer acquisition costs rise, brands need to retain customers and get them to repeat. Accor Advantage Plus has seen a 20% growth in active members in 2013 over 2012 and is also growing in other metrics – 18% growth in total revenues, 27% increase in rooms nights and 38% rise in Asia f&b revenues. Its renewal rate is 2.6 points and points burn is 186%.
CEO Louise Daley said its Asian members tended to be more skewed towards male, younger and more likely to have families compared with Australian members. While it sells “experience and engagement” to members, Daley said a survey showed that companies needed to do a better job of explaining what “experience” means to customers in Asia in general.
Rakuten’s Super Points, which can be earned by the more than 800 million members across its brands, is a key contributor to overall revenues and Takashi Tobohachi, General Manager, Membership Marketing, Rakuten, said there was a 58.1% cross-use rate among members who use more than two services.
The question Aya Aso, CEO of Agora Hospitalities, posed was whether points schemes such as these were useful for hotel groups like hers. “Are we building loyalty for them (Rakuten) or for us?” she said, adding that the points system also did not work for hotels in her group because a customer would have to go to the petrol station many, many times before they could earn enough points to redeem a night in her hotel.
“The challenge for us as a small group is how we build direct loyalty and we’ve been using social as one channel. I also believe there are lessons to be learnt from the P2P models such as Dropbox,” she said.
Steve Hui, CEO of Australia-based iFLYFlat, a start-up that advises companies and individuals on their frequent flyer points, said that there was no loyalty among customers who were more driven by the need to save money. “If you take the word loyalty in its true definition, it also means someone who will be there in hard times for you and do you see any airline who will come to your aid when you’re stranded or have had your flight cancelled,” said Hui.
Daley insists however that customers are after “experience and engagement” and brands that do these well would secure their loyalty.
The question is whether, in future, consumers would rather buy through discovery platforms which give them choice and variety or branded websites that offer them “experience and engagement”.
8: Making the offline-online migration is not easy
Kenny Goh: Never stop trying.
Tour operator veteran Kenny Goh is a living example of how hard it is for traditional tour operators to make the leap from offline to online. But he never gives up trying and for that, we have to salute him. His first company, Ken-Air, a household name in Singapore and South-east Asia outbound, went bust in 2002. The lesson he learnt – he lost 50% of his friends. But trying is part of his DNA and two decades later, he’s launching a new business in the US, Travel Zingo, which he likened to a “travel vending” machine which brings everything together into one site – flights, hotels, tours & activities and in-destination. He admits his timing hasn’t been good in the past but believes this is the right time. Travel
You have to tip your hat to him for never saying die and having big ambitions but taking on the US market will be a huge challenge. He’ll need deep pockets and a great team to execute.
9: To challenge the status quo, you got to do it the hard way
The Challengers, from left, Aaron Gill, GrabTaxi; Mario Berta, EasyTaxi; T Fuad, Travelmob; Melissa Yang, Tujia; Johannes Reck, GetYourGuide; and moderator Philip Wolf, founder, PhoCusWright
If there was one thing the “Challengers” panel demonstrated, it was that there is no such thing as easy success. You got to get your hands dirty and be prepared to change course when you find things aren’t working, as the founders of start-ups, from GetYourGuide, GrabTaxi, Easy Taxi, Tujia and Travelmob, shared during the panel moderated by Philip Wolf, founder of PhoCusWright.
For Johannes Reck, CEO of GetYourGuide, the initial model of connecting tour guides to travellers did not work and the founders then changed it into a marketplace connecting tour and activity providers with travellers. For T Fuad of Travelmob, it was having to cold call home owners and explaining to them how the sharing accommodation model worked. Tujia’s Melissa Yang similarly had to till the Chinese soil to plant the first seed for vacation rental. It had to educate not only property owners but consumers as to how to “conduct” themselves during their stays.
GrabTaxi’s Aaron Gill spoke of how a team would wait in line at the Singapore airport taxi stand, get in a taxi and explain to the driver how GrabTaxi worked, install the app and then get back in line in the taxi queue. For Mario Berta, who established Easy Taxi in the Philippines, he had to wade through rats in slum area to get to taxi drivers in Manila.
All these challengers are fuelled by passion and determination and oh yes, funding. Together, these five companies have raised millions of dollars in funding and all agreed, you need funds to scale, otherwise you’ll be left behind in the dust.
Next part: Learnings from Day 2
The post How to win in the next wave of travel: Lessons from “Little Big 10”, Part 1 appeared first on WIT.