Online Content and Community Sites: Ready for Primetime?

In another recent article for PhoCusWright, I explored the capabilities of the online content and community sites, and whether these sites are ready for mainstream Internet users in the context of their vacation planning efforts.

Here is an excerpt from the article:

"Up until 2000, the growth of online travel focused largely on the purchase transaction. Starting in 2000, sites sprung up to address those seeking more help during the travel planning process. These sites evolved from a narrow focus – i.e., hotel reviews – to encompass much more, including destination and vacation reviews, and communities where users can share and track opinions, journals, and photos provided by other site members. The growth and success of these online travel content and community sites have attracted significant attention. Within the past two years, IAC Travel (now Expedia Inc.), Cendant Corporation, and Sabre Holdings – parent companies of the three largest (“Big Three”) domestic online travel agencies – have each made acquisitions in the content and community space, involving TripAdvisor, Away.com, and IgoUgo, respectively. This space has also witnessed a number of new entrants, all claiming to find a new and unique way to assist those going online to plan their trip. However, these sites are still immature and must address significant challenges in a more meaningful way before they can be considered mainstream travel planning tools."

To read the entire text of the article, click here.

Online Managed Travel Naysayers: Perspectives on Why Companies Resist

I apologize for my neglect of this blog. In May 2005, I returned to Oracle full-time after a six year absence. Although my current position in Oracle On Demand has nothing to do with the online travel industry (although ironically, for my own internal business travel I use e-Travel, an application that was a significant focus of my career for 5 years), I continue to follow the industry by staying in touch with my contacts and former colleagues, and by authoring articles for PhoCusWright.

Here is an excerpt from one of my most recent articles, entitled Online Managed Travel Naysayers: Perspectives On Why Companies Resist.

"While online managed corporate travel continues to experience both solid and consistent growth, stubborn pockets of resistance remain. Naysayers on the buyer side are a diverse crowd that includes organizations of all sizes and in many industries. Much has been said to explore what facilitates online booking and its ROI but less so about why companies resist. From a marketing perspective, it is instructive to more fully understand the reasons for this resistance. It is also helpful to understand the temporal nature of such resistance and whether vendors can influence the removal of the barriers that constitute the resistance."

For full text of the article, click here.

Online Travel Communities - Part II: Sabre and IAC/Expedia vs Orbitz OR To Have or Have Not

While online travel content still has its kinks (see earlier post dated 31 March 2005 - Can Social Networking And Blogs Enhance The Online Vacation Buying Experience?), it has reached a level of usefulness to the point where now two of the top three travel sites see "communities" as critical to the future of any serious online travel contender. IAC already owns TripAdvisor, and in February (announced 5 April 2005, see the press release), Sabre acquired Igougo.com.

Although Sabre took the time in the press release to discuss a new travel search engine (for content only, not deals) on Igougo, the new search feature does not appear to be strikingly different from what is available on TripAdvisor. One item that does seem interesting is Sabre's push to include a 'Travel Experts' feature that 'will allow consumers to gain additional travel insight from travel agents with destination-specific qualifications'. This is useful in that agents will of course provide a higher degree of credibility missing from user reviews. This feature could be a move to help offline agents, a core customer group of Sabre and still a significant chunk of revenue. Interestingly, research does show that to a certain extent, many consumers do research online but still buy offline.

Going forward, as online travel content improves, Igougo, TripAdvisor, and similar sites will increasingly play a role in the buying experience as buyers visit the content sites either before or in tandem with visits to the booking sites. With Sabre and IAC having an ability to leverage both an advertising revenue model and cross-selling opportunities with their booking sites, it does appear that other booking players, notably Orbitz, may be at a competitive disadvantage.

Meta-Search Gets Key Endorsement from Consumer Reports

Although some of the established online travel agencies brush aside competition from meta-search engines such as Yahoo's Farechase, AOL's Pinpoint Travel, and SideStep, these relative newcomers to online travel are gaining important endorsements.

For example, in a recent eWeek article, Henry Harteveldt, an influential online travel analyst with Forrester Research, predicted that 'Yahoo and AOL together are going to contribute to total upheaval in the travel world'.

Additionally, in a recent study ("limited test" are the exact terms used), Consumer Reports found that the meta-search engines found the lowest fare overall in three of four searches versus the Big Three (Expedia, Travelocity, Orbitz). If you are a CR subscriber, you can find the March 2005 article here. CR criticisms of the meta search engines include lack of dynamic packaging and generally less friendly site navigation versus the "Big Three".

CR's findings are not surprising since these entities were created with a goal of providing unbiased search results across a variety of sites. Research (PhoCusWright) has demonstrated that travel buyers search 3-4 Web sites before making a purchase, validating the opportunity that exists for meta search to provide value for consumers who don't see any single site consistently delivering the best fares. It's fair to assume that given the number of players in this category, at least one was going to succeed in delivering upon its promise.

p.s. Meta-search is moving quickly to address technical and business challenges they face. For example, Kayak.com recently partnered with ITA Software to provide alternative fare search technology and to address resistance airline Web sites might have to "excessive" hits to their sites incoming from the meta search technology. See the Kayak press release.

Can Social Networking And Blogs Enhance The Online Vacation Buying Experience?

If you’re as demanding a consumer as I am, you’re probably somewhat disappointed with the state of online travel content – data that can make a huge difference in the level of enjoyment you experience with your vacation. Because of its extensive database of user reviews, I think TripAdvisor is the best site for such content. However, while TripAdvisor does help, I see two limitations with its approach. First, it can take a while to sort through all of the material to find something useful and of course you may not have the time or the patience to do the research. Even if you do the research, you may resist placing trust in the content found on TripAdvisor. Professionally written 3rd party content from such providers as Fodor’s or Frommers partly addresses the credibility issue, but the biggest limitation with this type of content is that they rarely go out on a limb to actually have an opinion on an attraction, hotel, restaurant, etc. User reviews don’t solve the issue completely either because you will often find widely divergent opinions and you don’t know the people writing them. Bottom line: I have a hard time placing stock in someone’s opinion if I don’t know him or her.

Don’t get me wrong; I’m not knocking TripAdvisor. It IS helpful and it seems to be playing a role in the growth of online travel (why else would IAC/Expedia buy the company?). But as a veteran of this sector and as someone looking for the “new new thing”, I believe that more can be done. Two of the most rapidly growing areas of the Internet, social networking and blogging, I believe offer such promise. Social networking enables one to load online (securely) a network of contacts and then those contacts can then load their contacts so that it becomes easier to establish a network of trusted referrals. LinkedIn and Friendster are two great examples of social networking for professional and personal purposes respectively. Blogging simply enables push-button Internet publishing. This blog is of course a (humbly spoken!) great example of blogging!

In come such online giants as Yahoo and AOL. With travel meta-search engines - Farechase and Pinpoint Travel - Yahoo and AOL smell ad revenue blood. But meta-search is just the beginning. Yahoo, for example, has much more ambitious plans. With its pending launch of Yahoo 360, Yahoo is betting that social networking and blogs (along with its other assets including its recent purchase of an online photo sharing Web site) can drive traffic and transactions to other areas of Yahoo, including Farechase. One of the underlying assumptions is of course that social networking and blogging can facilitate transactions by enabling sharing of information through trusted referrals. Yahoo is definitely on to something. As a member of Yahoo since 1997, I am a huge fan and I’ve already signed up to be a beta user of the new Yahoo 360 service. For a decent article describing the new service, click here.

The question then becomes, how far can search companies go with travel and how will it impact partners (notably Travelocity)? Other search entities (MSN, Google, AOL, etc.) have similar assets as Yahoo, so there is competition. Expedia is helped somewhat through IAC’s purchase of AskJeeves, but what about Travelocity (Sabre) and Orbitz (Cendant), who don’t have such assets? These are questions worth considering. Answers are not particularly clear now, but it is clear that online agencies are vulnerable to the search engines who promise to enhance (it may be a stretch to say “revolutionize”) the online buying experience.

Are Direct Links For Real (Part II)?

The following article in Travel Weekly - Cendant works with Orbitz on direct-connect technology (free registration req'd) - triggered this issue of my blog.

This really is part two of the direct links story because it first emerged in the late nineties when Internet hype was at its peak. Just about everyone assumed that every fantastic prediction about the Internet would come true. At that point, I was working with (as a partner of Oracle) and ultimately working at E-Travel, a company that was doing pioneering work with direct link technology. E-Travel was getting tons of press (Google "E-Travel, Inc." and you'll see what I mean) and came to be known as "the direct link company". While E-Travel* did indeed get direct links up and running (including production links with Hertz, Pegasus, and Amtrak, and an operational link with Continental Airlines), those of us on the inside soon recognized that the impact would be limited because broader success required (not limited to these factors) more significant business process cooperation between all value chain participants (supplier, travel agency, technology provider, buyer, etc.), and a business model that adequately addressed the economic concerns of these participants.

*Navitaire and Orbitz have also had production direct links.

A flurry of recent activity, including venture capital investment, in this area has sparked renewed interest in both direct link technology and the business model. New names for the technology/model have even emerged, including monikers such as GDS New Entrants (or GNE). Looking at venture capital investment in and of itself, one is led to believe that direct links are indeed poised to be much more relevant this time around. I can't recall ever seeing funding for a company focused exclusively on alternative distribution technology (i.e. E-Travel provided a booking engine as its primary revenue stream).

So what's changed? Here's what I see:

Supplier Leverage. Suppliers have been much more successful (i.e. nearly 60% of all airline tickets and car rentals in 2003 booked on supplier Web sites based on PhoCusWright research) driving business directly to their own Web sites, lessening their dependence on 3rd party channels such as the GDS.

Supplier Competition. The Internet has given strength to low-cost suppliers such as JetBlue in the airline industry, and to Dollar and Thrifty in the car rental industry; needless to say, it is much more competitive. The Internet, with its ability to provide price transparency, has also done much to commoditize suppliers' offerings. While certain suppliers and stronger brands can differentiate based on service and other aspects of their product, it is still very important to manage and reduce distribution costs to stay competitive.

Industry Weakness. Clearly, the airlines (vs hotels, and car rental suppliers) are impacted here the most. Two of the top seven airlines are already in bankruptcy, and most of the other majors are still losing tons of money. Several years ago, there was not as much urgency to reduce costs as there is now. Given the situation, top line and bottom line growth share equal billing on suppliers' agendas.

Industry Cooperation. While not all value chain participants (while discussions and meetings are growing, they are not ubiquitous) are at the table yet, many are, eliminating a key barrier to success. Now that one sees select buyers, agencies, suppliers, and technology vendors, all in one room (in a meeting for example, that United recently had) talking about direct links and how to make them work, one can argue that significant progress is being made.

Technology Maturity. While the Internet is far from a mature technology, it has come a long way, and its reach is growing, both in geography and in its pervasiveness in everyday business and home life. Witness for example, how more and more businesses and consumers rely on broadband phone or voice-over Internet protocol (VoIP) technology.

While exact and specific predictions are difficult to make, a case (and a wager if you dare!) can be made that direct links (or GNEs if you will) are indeed real this time around. Stay tuned.

Inaugural Issue - Welcome

Welcome to Rob Wald's Blog on Online Travel Trends. Visit this page for timely insights into key industry issues. To learn more about Rob's background, see my profile, or my Web site, which has the most complete profile of my background, skills, and key successes.

Rob has the following blogs:
my ProfConnect profile (registration req'd - it's free)
my ResumeBlog

Rob also has a LinkedIn profile

To help you learn more about Rob's expertise and credentials in online travel, the inaugural issue (6 March 2005) is dedicated to showcase key whitepapers authored by Rob:

Title: Travel Trends: Securing Comprehensive Content (October 2004)
Authored while Rob was Business Development Manager for Travelport, a Cendant company. This whitepaper was designed to educate corporate buyers and other industry participants about the existing and emerging distribution platforms - including GDSs, alternative GDSs such as G2 Switchworks and ITA Software, supplier-direct Web sites, and meta-search engines such as Kayak and Farechase - and how each platform addresses the needs of managed travel programs.
Download whitepaper "Executive Brief: How to Secure Comprehensive Content During a Period of Travel Distribution Uncertainty" (PDF)

Title: Travel Trends: Comparison of Tech-Based Managed Models (December 2003)
Authored while Rob was Business Development Manager for Travelport, a Cendant company. This whitepaper was designed to educate corporate buyers and other industry participants about the different ways in which corporations could implement an online managed travel program. In this whitepaper, Rob suggests that the most helpful way of understanding what online booking technology is right for your managed travel program depends on the business model of the online provider. He defines four different models - (1) traditional agency with bundled/private-label 3rd party online booking, (2) traditional agency with 3rd party online booking via direct agreement, (3) online agency or Internet travel management company (ITMC), (4) vertically-integrated online agency - then Rob analyzes the strengths and weaknesses of each model, and offers criteria to help buyers select the right model for them, including leading providers.
Download whitepaper "The Four Technology-Based Managed Travel Models: Which One is Right For You" (PDF)

Title: The Internet and Managed Travel: Are Web Fares Worth It? (Written July 2001, and revised Febuary 2002)
Authored while Rob was Senior Director of Product Marketing for e-Travel, an Amadeus company. This whitepaper was designed to educate corporate buyers about the impact Web fares (fares found only on airline Web sites and select third party intermediaries) would have on managed travel programs. Incidentally, much of what Rob predicted would transpire of this key issue has indeed come true.
Download whitepaper "The Internet and Managed Travel: Are Web Fares Worth It?" (PDF)