Thursday, August 29, 2013

Travelocity's surrender to Expedia

I remember the first time I booked on Travelocity back in 2001 -- a nonrefundable airline ticket to Miami for spring break.  But being the beer bonging undergrad with impaired judgment at times, I accidentally entered the wrong travel dates.  I immediately called Travelocity's customer service hotline to rebook the correct dates.  They told me I had to make a new booking and refused to refund the erroneous one.  Man I hated that (ugly) gnome from that point forward.

Time to put this gnome out of its misery
Reflecting on this experience, I half grinned when I read about the strategic marketing partnership between Expedia and Travelocity announced last week and expected to begin begin next year.  It appears to me this is more or less Travelocity's inevitable surrender.  Its supply and customer operations will soon be handed over to Expedia, and the Travelocity brand will become little more than a gnome that thinks it can pull from its sleeve a marketing plan that will trump the online and offline marketing power of Priceline, Expedia, and TripAdvisor.

But will Travelocity even get a reasonable chance to flex its marketing muscle  when all its content and pricing will be powered by Expedia?  A Travelocity spokesman Joel Frey says they will continue to offer their own travel deals and pricing that will be different from Expedia.  I'm not convinced.  As if Expedia would even entertain the idea of letting its new ex-competitor affiliate undercut its own pricing, especially under the performance share model they've entered together.


The winner in this partnership is Expedia, who will soon absorb the North American traffic and booking orders of its previous arch nemesis.  According to Phocuswright, the market share of these two brands combined is over 60% based on its estimates of 2012 gross bookings.  Commanding this much market share will bolster Expedia's relevance and negotiation power with suppliers, and will likely lead to conversion increases as it sources better rates and inventory for consumers.  All of this couldn't have come at a better time with Booking.com biting at Expedia's ankles and OTA traffic increasingly diverted through meta search sites.  With intensifying competition and diminishing margins in the OTA industry, along with increased substitution from vacation rental sites, I suspect other companies will surrender themselves

Saturday, August 17, 2013

For Airbnb and Roomorama, desktop is to mobile as amazing is to aggravating


When planning my European travels last month, I had a smooth experience searching for and successfully booking properties on Airbnb and Roomorama.  I browsed a wide range of suitable choices, and I even enjoyed the informal banter with some of the local owners.

That was a month ago.  Now fast forward to tonight and the booking experience nose dived from amazing to down right aggravating.  Separated from my laptop and with only my iPhone in hand, I attempted to make a booking for that same night in Oslo, Norway using Airbnb and Roomorama mobile apps.  Unlike a month ago though, I didn't have the luxury of time to flip through listings and chit chat with hosts about compatibility or availability.  I just needed a decent place in a decent location for a night, and I needed it asap.

All of a sudden my darling sites that served me so well a month earlier left me nearly homeless.  Despite having beautiful mobile apps with no shortage of mouth watering 'house porn' imagery from places everywhere but Oslo, both companies failed to deliver local listings that were immediately bookable for that same night.

Airbnb's mobile app defaulted me to its featured collection of properties in Paris, Berkeley, and Geyserville . . . wherever the heck that is.  Great, I get it.  They have stunningly sexy photos of unique properties around the world, but all I need right now is a room in Oslo.  Roomorama's app also gave me thumbnail images of properties from everywhere except the city where I needed to sleep.  I'm thrilled they have listings in Lisbon, Toronto, and Jerusalem (Illinois, not quite Israel), but did that put a roof over my head tonight in Oslo?  Nope.

At least with Airbnb's app, they have a quirky callout intended to help travelers who need a place for same day arrivals.  It's one click away on the search function and labeled, "Help! I need a place, tonight!"  It conveniently detected my location and then displayed a short list of properties that had calendars indicating availability.  Too bad none of them could be confirmed instantly and waiting up to 24 hours for a reply was out of the question.  The concept is great though and it's a nice start!

Brian Chesky of Airbnb aims to reduce this friction by increasing the number of properties that allow instant confirmation, a booking standard set long ago by the incumbent online travel agencies.  He calls this feature insta-book and ballparks around 1-2% of their current properties have this capability.  From my Oslo experience this is essentially like finding a needle in a haystack, especially if you isolate the same day arrival booking window.  For example, with 350,000 global listings, only 3,500 properties are insta-bookable under the 1% assumption.  Of those 3,500 properties enabled for insta-book, I would estimate a smaller fraction would actually have room availability for same day arrival.  And for Oslo?  I actually found none available.  Since I know I'm not the only one who books last minute, there's a lot of user pain that Airbnb and Roomorama could help alleviate with improvements to their mobile app . . . not to mention a lot of money on the table up for grabs.  Last minute bookings are typically the highest converting since the customer is intent on making a transaction.  Here are some ideas on how to improve conversion of last minute mobile bookings.

First, fix your supply issues.  Get more availability in destinations/markets with strong patterns of last minute bookings (e.g. corporate markets, city center clusters, convention compression periods).

Work with professional property managers who are more likely to have accurate last minute availability due to technological integration or because it's part of their day job to manage inventory.  Large management companies have the resources to support instant confirmation and can efficiently provide access to thousands of properties across broad regions.  On the downside, the apartments and social connections guests have with these managers isn't nearly as unique or experiential as with individual hosts.  But when you're desperate for a room for later that night, beggars can't really be choosers.

At the same time, identify the most active individual hosts and develop powerful mobile tools that equip them to more quickly update their availability calendars on the go as their plans change.  Let hosts opt in and receive booking requests by e-mail, text messaging, even phone calls.  When a new booking request for same or next day arrival comes in, it gets blasted to all opted in hosts and requires a response within 1 hour.  The first host to accept gets the booking and the guest gets automated check in instructions and more importantly peace of mind.  If no hosts accept, consider incentivizing with the removal of host fees.  The lost revenue is minimal and just a small sacrifice to convert the customer and keep them around for another day.

Next, make sure your last minute supply is properly showcased to the mobile user.

Instead of defaulting users to inspirational photos from around the world, just go straight for the jugular.  Have the app default users to properties nearby that are guaranteed available, and sort up hosts that have a strong track record of accepting same day bookings.  Give these hosts a special callout or badge so users know their chances of booking are strong.  Then apply the same set of sort and filters that users already use.

Lastly, before basking in the glory of helping last minute bookers find rooms, remember to brace yourself for a new pain point . . . relos!

Build a bullet proof relocations procedure because availability mistakes will certainly happen and there is nearly no margin for error when it comes to same day arrivals.  The biggest traveler disappointment is finding out on property that the last minute booking they made can't be fulfilled.  Service recovery is key, and a well trained agent who can help immediately relocate to a comparable property can help turn that traveler's frown totally upside down.  :-)

If companies like Airbnb and Roomorama currently fail to convert last minute mobile bookings, then at least on the bright side there is tremendous opportunity for them moving forward.  This is because trends indicate that mobile is the fastest growing booking platform (at least for the major online travel agencies), and that the booking window for lodging is getting shorter and shorter.  The focus on increasing availability of instant confirmation of same day bookings will benefit all last minute booking windows, and when combined with product enhancements will result in much improved user experiences and increased conversion . . . and the icing on the cake --> increased revenues.

In the end my trusty Expedia app saved the day in Oslo . . . for now.  I'm sure it won't be too long before Airbnb, Roomorama, and their peer companies beef up their mobile offerings and take a bigger bite out of the OTA market share in last minute mobile bookings.

Wednesday, August 7, 2013

Turning homes into hotels . . . Innovation you just can't learn from the corporate workplace or school!

My first Airbnb experience!
I've worked in branded hotels, the world's largest online travel agency, and studied hospitality and online distribution at Cornell's hotel school.  Despite the experiences I've gained over the last decade, none prepared me for one of the biggest movements currently going on in the business world -- the sharing economy.

The travel industry has been tremendously impacted by the rise of the peer to peer sharing economy.  The poster child of this new movement is Airbnb, the online marketplace for people to rent their own home out to travelers who seek a unique, localized, and often times cheaper alternative to conventional hotels.  Although the company is relatively young, it won't be long before its marketplace of lodging substitutes starts taking an enormous bite into hotel market share.  We're seeing it in Spain already.

Already in less than five years, Airbnb grew from 3 air mattresses in the co-founders' apartment all the way to over 300,000 listings in over 34,000 cities worldwide.  To put it into perspective, these supply figures and likely booking values already rival that of some major international hotel chains.  While there are competitor sites such as Roomorama, Wimdu, and Housetrip, the supply footprint of Airbnb dwarfs the pack at the highest aggregate level.

But the massive supply stats aren't the only cool numbers . . . did you know there are 123 people staying in castles on any given night that were made possible by Airbnb?  Yes, that's right . . . frikkin castles.  But there are some bad numbers as well, including the hefty fines imposed on some hosts for illegally renting out their homes.

The disruption that the sharing economy and specifically Airbnb has created in the online travel world has inspired me to start this blog.  It's really for me to organize my own thoughts and research, but I'll share news and provide some points of view on the sharing economy and the key players aiming to revolutionize the online travel space further.

Check out this video below for a good intro to Airbnb given by none other than co-founder Brian Chesky himself.



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