Fifteen years ago, when I worked in a large TMC, one of the sales agents rushed to claim his prize for outselling every other agent in the UK: return flights, first class, London to Sydney.

The thing is, the agent was earning mostly commission and couldn’t really afford a holiday. Taking three days off work, he flew to Sydney, spent long enough in the airport to buy souvenirs and some coffee, and flew straight home again.

Airlines sometimes act as if that guy were representative of their customers as a whole!

When it comes to selling anything beyond the flight ticket, airlines fall broadly into two camps – the white label versus the travel retailer.

Battle lines drawn

In the white label camp are those airlines that are unwilling to take what they see as a business risk of understanding and managing any products other than flights.

They don’t know hotels or car rental, and they let someone else sell them. They are essentially selling advertising space or renting out part of their shop front or brand. The white label travel providers step in, happy to take the bulk of the sales margin, own the customer engagement, and have the revenue up front.

The airline industry is never dull, and management has to focus on fuel prices, route network, mergers, labour negotiations, and so on.

Part of the attraction of the white label model is the belief that there’s nothing to do except embed some contextual links in the selling flow or the confirmation page and the commission cheques start to arrive.

The other camp, those airlines who try to be travel retailers, see it differently. They see the real value of their website in terms of complete customer engagement and the potential for the airline to take a bigger share of the travel spend.

They will use aggregators to give them access to a broad range of products – hundreds of car suppliers, tens of thousands of hotels – but will also manage some products themselves.

• They will marshal or create content for key destinations.
• They will directly contract some suppliers.
• They will talk to some hotel properties directly.
• They will decide which non-air products are complementary to their brand – what they want to sell.
• They will try to own the entire customer booking process, giving them true merchandising capabilities – a travel shopping cart, in-line cross sell, and the opportunity to personalise, creating a differentiated user experience.
• Commercially, they will try to become the merchant for some or all of the non-air products.
• They may try to grow this business in-house, or they may have a holiday subsidiary already.

If you aren’t in the travel retailer camp already and you don’t have a holiday subsidiary, it can seem like a daunting task. It is not just an IT project, to realise any significant benefit there will be changes to the business.

The good news for you as an airline is that there is a middle ground between handing the customer away or trying to do it all yourself.

Using the right technology, it is possible for your airline.com website to transition from white label to retailer, stopping at any point where the risk / reward balance is right for you, and the customer experience is right for your passengers.

Rather than taking an all or nothing approach to selling the high revenue ancillary products, consider some of the activities that could be done in a more gradual way, or even partially outsourced.

Hotel contracting is something you can grow into, so here are two steps to think about:

• Start with one content feed and one API to a hotel aggregator and you can get up and running with hundreds of thousands of properties – initially no different from the white label camp. Gradually you could start to contract hotels in your key destinations, or home market for in-bound. You can go from having the same 100,000 hotels as everyone else, but also 1 or 2 hotels at rates that no one else has. You can do this in-house (one FTE can contract 30+ properties per season) or outsource the contracting piece, as long as you ensure rates can be loaded that are unique to your channel.

• Consider being the merchant for the entire shopping cart and earning all of the revenue up front. You may want to act as merchant in some countries but not others or you may want to act as merchant for some products but not others. You have to consider bonding and duty of care and how it varies from market to market. Find partners that will allow you to operate different models in different markets but pick a business partner and technology platform that leaves you in control of the product, the experience, the consumer data and the payment model.

Finally when it comes to paying the suppliers, reconciliation is also something that can also be outsourced. Avoid the “special” airline back office system built in 1978, or having your retailing strategy derailed by a three-year ERP project.

What you need is effective accounts payable and financial reporting, and that is something you can buy.

Travel retail technology and business process outsourcing providers now exist to allow airlines to retail the full travel experience without the need to build or buy a large scale tour operator business.

If it still feels daunting, consider what the first step would be: If there was one thing you could change about your white label solution to provide a better product offer to your passengers or a better commercial model to yourself, what would it be?

NB: This is a guest article by Mark Lenahan, vice president of product strategy at OpenJaw Technologies.

NB2: Airline and suitcase image via Shutterstock.

Then ask yourself these questions:

• Are high volumes of supplier booking payments creating an accounting nightmare for your payments teams?
• Are you sacrificing control, or having difficulty managing to contracted rates with your supplier base?
• Do you spend too much time resolving payment disputes?

If so, our panel of payments experts in travel booking will help you tackle this problem in a different way.

In this webinar, payment experts from Wright Express, Expedia and HotelTonight will discuss how single-use virtual accounts can help drive efficiencies in the payment and settlement process.

You will hear tips – and potential traps to avoid – when evaluating the landscape of electronic payment solutions for travel booking.

Our webinar panelists are:

• Jim Pratt, Wright Express, VP, corporate payment solutions
• Chris Richter, Expedia, Senior Project Manager, financial operations
• Jared Simon, HotelTonight, chief operating officer
• Marc DeVallette, Wright Express, product manager

Moderator:

• Kevin, Tnooz, co-founder and editor

Attendees will be able to interact live throughout the event using the webinar’s chat facilities.

This FREE 60-minute webinar takes place on Thursday 23 February 2012 at 11am US/4pm UK/5pm Central Europe (all times local).

You can reserve your FREE seat at this webinar HERE.

The webinar is powered by GoToMeeting. System requirements: Windows7, Vista, XP or 2003 (PC users) or Mac OS X 10.4.11 Tiger or newer (Mac users).

We will record the webinar and publish on Tnooz following the event for those who cannot attend live.

Space is limited. Register for FREE now!

NB: Credit card image via Shutterstock.

Erik Blachford, the second CEO of Expedia joins Gregg Brockway, founder of Hotwire and Tripit, and Brad Gerstner, founder of Altimeter Capital and Room 77 in the latest investment round.

The value of the round is not being disclosed, but is understood to be significantly less than the $13.6 million Ostrovok raised in July 2011.

That particular round also saw a string of big names decide to play in the burgeoning Russian online travel sector, including General Catalyst Partners (backer of ITA Software and Kayak) and Accel Partners (HotelTonight and others).

Others supporting the round included Peter Thiel and Founders Fund (Facebook), Niklas Zennstrom and Atomico (Skype), Mark Pincus (founder of Zynga), Esther Dyson (Yandex board member) and Fritz Demopoulos (founder of Qunar).

Who and what are you (including personnel and backgrounds)?

Tripbox was born out of the need to provide cheap holidays for friends and family. Tripbox has since evolved into a fully fledged online travel agency, selling holidays to the wider public whilst adhering to its low cost ethos.

It was founded by Savio Fernandes, a travel enthusiast with experience in software development and design.

What financial support did you have to launch the business?

Tripbox has been bootstrapped up to this point; however, we do have some exciting ideas that need developing which may require us to raise capital in the future.

What problem are you trying to solve?

Searching for a holiday on the web can be a stressful experience, not helped by the gaudy colour schemes and deals and advertisements that usually clutter travel websites.

So, we wanted to develop a website where the holiday search experience would be enjoyable with the information always displayed in a comprehensible manner.

Describe the business, core products and services?

Tripbox sells low-cost hotels, travel ancillaries and flights to a wide array of destinations. The website is plugged into most major bed banks and ancillary suppliers offering great choice to customers.

Who are your key customers and users at launch?

Our key customers are couples and families mostly interested in beach holidays. Our main age demographic is 18 – 40 years old.

Did you have customers validate your idea before investors?

Customers have commended Tripbox for its fresh look and straight forward booking process.

What is the business AND revenue model, strategy for profitability?

Tripbox is solely reliant on online bookings and does not take bookings over the phone. This results in low running costs and helps us sell holidays at a cheaper price.

SWOT analysis – strengths, weaknesses, opportunities and threats?

Strengths:

• Engaging website with an inspiring, clean and consistent layout different from the homogenous ‘travel agency’ look.
• Search results only display the essential information in an intuitive manner and a range of easy to use filters help make the volume of information easily comprehensible for the user.
• Straightforward booking process.
• Sell holidays as cheap as possible.

Weaknesses:

• New player in a very crowded marketplace and lacking brand awareness.
• Reliant on data from slow third party content providers.

Opportunities:

• Build a steady customer base as users become more price conscious.

Threats:

• Larger, well-established online travel agencies.

Who advised you your idea isn’t going to be successful and why didn’t you listen to them?

We’ve been fortunate to have a lot of support from people who have appreciated our concepts from the very beginning.

We did have some people say that good design is not the thing that may attract and inspire customers, but we believe that design coupled with low prices make a very effective combination.

What is your success metric 12 months from now?

In 12 months time, we hope to have found a good foot hold with a decent customer base, aware of our brand and our low prices.

We would also like to further enhance our site and include some interesting features which are in a conceptual stage at the moment.

NB: TLabs Showcase is part of the wider TLabs project from Tnooz.

If we look at online travel around the globe, we can see that the four key global emerging markets – Brazil, Russia, India and China – are showing substantially greater growth than the developed world.

And they are already have a significant share of global online travel consumption.

This is beginning to show itself in the distribution of value – out of the top five most valuable publicly traded OTAs, three are outside the US (CTrip, MakeMyTrip and eLong). But who wins in those markets, and, more importantly, why?

In this article I am arguing that local players have an overwhelming advantage versus global players, and also describing the key characteristics of the local players that end up winning.

This perspective is based on our experience building Ostrovok (an online hotel booking product for the Russian market), as well as extensive research on key winners and losers in China, India and Brazil.

Why being local is an overwhelming advantage

At first glance it isn’t clear why the market leaders in BRIC countries are local. It seems that the Pricelines and Expedias of the world have significant advantages:

• Large pools of capital
• Established global supply bases appealing to BRIC consumers
• The ability to direct significant flows of global customers to BRIC hotels
• Experience developed over many years of success.

However, those advantages aren’t as significant as they initially seem:

1. Funds

Capital isn’t an advantage against local teams that know how to raise it.

A BRIC startup can raise $100 million in venture capital to invest on the way to success; any public company executive that spends that much money to fight in a non-core market will have the shareholders clamouring for his head.

2. Supply

Global supply is freely accessible through many of the local and global market leaders that are looking to aggregate demand into their core markets via affiliate partners.

3. Customers

Global customer flow to BRIC hotels is important, but:

• Local customers eventually become the dominant source of local hotel demand
• Global customers have little brand loyalty to global OTAs: they metasearch and go to whoever has better rates/availability for the BRIC hotel, i.e. the local OTA.

4. Legacy

Experience is of dubious value. Most successful Internet companies were built by outsiders because in rapidly changing markets flexibility matters more than legacy knowledge.

For evidence of this, look no further than at how online travel incumbents struggle with exploiting new distribution channels (social/mobile).

On the other hand, local players have substantial advantages that aren’t immediately obvious:

• Local fulfillment
• Local marketing
• Local supply

Let’s look at those elements in further detail:

Fulfillment

1. Local Payment Solutions.

The way people pay online varies significantly from country to country.

This is why CTrip has messengers collecting cash from people; Despegar sells a large portion of its hotels on installment plans; and Ostrovok processes payments via ATMs and mobile retailers. Global players do none of this, and lose a huge chunk of potential customers as a result.

2. Local customer support.

Consumers in BRIC countries need telephone support and transactions; help with visa issues; help learning to trust the Internet.

For example, CTrip embraces high-touch customer support, staffs its call centers with thousands of people and delivers a level of service unmatched in the West – a live agent answers 99%+ of calls instantly 24/7.

This enables the development of far greater trust with consumers.

Marketing

1. Local channels.

As the platforms through which users can be reached are substantially different in emerging markets, local marketing focus is a substantial advantage. SEM/SEO on Baidu or Yandex is quite different from CPC on Google; other channels with negotiated deals are even more so.

2. Local offline marketing.

Global players tend to be unable to stretch their organization to do offline advertising and tend not to appreciate its strength.

For example, MakeMyTrip in India or Despegar in Brazil both used TV campaigns to build much stronger brands than the global players.

3. Local culture focus. It should be self-evident that a person in another country that doesn’t even speak the local language can’t notice the nuances of cultural perception, morphology and many other issues obvious to locals.

Supply

1. Local focus.

Hotel supply is a high-touch, local business driven by relationships. As a result, over time local OTAs take the lead in terms of breadth of hotel coverage and in terms of rates and availability domestically.

This has already happened in Brazil, India and China and is happening in Russia right now.

2. Local hotel solutions.

By being attentive to the needs of local hotels, superior results can be delivered. For example, CTrip and eLong in China work with hotels in an on-request fax-based way, as well as via an extranet, and even today approximately 40% of Ctrip’s bookings are done this way.

Another example is that Ostrovok in Russia uses local-law contracts which are significantly preferred by local hotels for tax and accounting reasons.

Getting a strategy

Overall, a good way to summarize the advantages of a local player is that they are developing a custom solution for the local market, which is an easy sell against one-size-fits-all template solutions provided by global OTAs.

A final note to make here is that while the particulars may vary, the dominance of local Internet companies in emerging markets is not unique to online travel.

China is well-known for this, but the same is true in Russia, where hardly any of the Western internet companies have succeeded. Google trails Yandex with one third of its market share. Facebook is only the 4th biggest social network.

Groupon (which started as a leader in a market it has invented) has been overtaken by local player Biglion. Amazon, eBay, LinkedIn, Zynga and other global titans are nowhere to be seen.

So while many global players will attempt to compete in emerging markets, there is no reason to believe that they will be successful

What determines which of the local players will win?

Now that we have established that local beats global in the online travel industry, which of the local players actually do win?

In the process of figuring out the right strategy for Ostrovok, we have attracted investors/advisors from key global players in developed and emerging markets, and have done a lot of research on such players.

We have learned a lot about the strategies used and reasons behind the success of CTrip, eLong and Qunar in China; MakeMyTrip, Yatra and Cleartrip in India; Despegar and Viajanet in Brazil.

When we asked those players and their competitors about what determined the winners, the first factor everyone mentioned is “a very strong team”.

This was too obvious and generic an answer, but when we dug deeper we found three specific unifying characteristics at the winners in China, India and Brazil:

• Prior knowledge of the local market in executive teams.
• Technical engineering ability on the team.
• Ability to raise Western capital on the team.

What was also fascinating was that those three strengths taken together worked to create significant competitive advantages. Having talented engineers brought in more talented engineers.

Having executives with local experience helped bring in suppliers. Having the technical and supply capabilities brought in more capital, which helped bring in even more talent.

Once this virtuous cycle got started, other local players were unable to catch up.

How we built our strategy as a result of this research

So when we started Ostrovok, we built our strategy versus domestic competition around these key strengths:

• We are unique amongst all Russian online travel companies in that we have a team of more than 25 people who write code (not counting QA, designers and the like), many of them from top tech companies in Russia like Yandex. Techology is always the bottleneck to all other parts of the organization, and we are planning to expand to 150 people writing code by the end of 2012.
• We used local supply expertise to build the largest hotel supply acquisition team in Russia, and grow our local hotel supply base faster than that of any other player. This was done by Andrew Pyner, who was previously CEO of the Russian office of Booking.com, led Russian supply acquisition efforts for Expedia and GTA, and worked for Radisson in St Petersburg.
• Because of the strength of the team (and the past experience of the founders as entrepreneurs in Silicon Valley), we have been able to raise more capital than all other local players combined from leading global investors – General Catalyst, Accel and a number of others.

In conclusion, our prognosis is that the winners in emerging online travel markets will turn out to be local players with strong technical teams, a deep understanding of local suppliers, and the ability to raise a lot of capital.

And, over time, today’s situation will be reversed as those younger, faster and more aggressive players will begin to compete in developed countries.

NB: This is a guest article by Serge Faguet, co-founder of Ostrovok, a Russian-based hotel-focused online travel agency.

NB2: Image via shutterstock.

The move follows what the company says is the significant success of its Top Secret Hotels service, a product which now sees around 50% of customers buying accommodation the day before needing it.

For car hire, visitors to the site can choose a type of vehicle and location, but the supplier brand is not disclosed until after the booking is made (triggering a 10% discount).

Recently installed new CEO Matthew Crummack says vehicles will only supplied by its regular partners such as Alamo, Avis, Thrifty and Europcar.

A similar system is in operation for products such as theatre tickets, where visitors can select a show type (musical, play, etc) but not the specific performance, in return for a guaranteed ticket in the “top three seating bands”.

The decision to extend the opaque model to new areas is the first significant move by Crummack since joining as CEO from Expedia in August 2011.

He says the widening of the Top Secret service is part of a bigger effort to pull Lastminute.com back to its original concept of being a late-booking service, and build on the “lifestyle” elements of a trip, such as attractions and other in-destination products.

Although the brand remains strong in flight-only, package holidays and hotels, Crummack believes online travel agencies without a unique offering will find life difficult as the already-crowded marketplace feels the pinch from the economic pressures around Europe.

“If you are not clear to customers about what you are and what you stand for – in our case its great and quick getaways, and value – it’s going to be a very tough world out there. We have no desire to play the averages.”

This week’s most significant development in the hotel space for a number of years, the launch of the multi-brand Room Key service, has not gone unnoticed at Lastminute.com, especially as some consider online travel agencies to be the mostly likely to suffer if the service succeeds.

“There are some very strong hotel brands involved,” Crummack says, “and having them coming together like that is a welcome move.”

Lastminute.com will be speaking to each of the brands individually over the coming months to make sure there are better and more valuable ways of working together, he adds.

CEO of the business and ex-Pegasus founder John Davis has high hopes for Room Key, not least because it has been 18 months in the making after a number (names not disclosed) of the six founding partners came together to work out how to tackle the problem of growing distribution costs and a desire to capture more direct bookings.

From a corporate perspective, the six companies – Choice Hotels International, Hilton Worldwide, Hyatt Hotels, InterContinental Hotels, Marriott International and Wyndham Hotel Group - wholly own the joint venture, Davis says, although a exact breakdown of the stakes in the business has not been disclosed.

At launch today (Davis stresses it is a “beta” product at present) there are 23,00o properties listed on the system, with designs on having close to 80,000 worldwide by the middle of 2012.

Davis estimates the total number (“cap-out”) of hotels on the system will eventually be around the 120,000 mark.

The 23,000 figure will jump within the next week, Davis says, as another major hotel chain is joining the platform, though not as a founding partner.

Similar to the launch of Google Flight Search in September 2011, online travel agencies are currently not participating in the platform.

Industry analysts such as Henry Harteveldt of the Atmosphere Research Group suggest this is a “shot across the bows” of OTAs, but Davis says the door is open for them to participate, adding: “We will do whatever is necessary to get the right coverage on the site.”

Unlike the Travelweb multi-chain effort of the early-2000s, which featured Pegasus as a provider of accommodation, no GDS or other switch will be participating in Room Key, Davis confirms.

So what is the motivation behind Room Key, and why now?

Davis says chains have become increasingly wary of rising distribution costs for some time, while hotels increasingly want to “own the booking”, giving them a chance to up-sell ancillaries to travellers and allow guests to manage their bookings in a better way.

From a distribution perspective, Room Key will have lower “commission” or referral fees than other platforms, Davis claims, plus as the site is purely a metasearch service the hotel will continue to secure the booking and handle so-called guest management.

The shadowy figure of Google and its growing Hotel Finder service does appear to be lurking in the background, at least in terms of the timing of Room Key’s launch, although the idea for the site clearly came about before Google muscled in on the game.

Davis will not discuss where he thinks (and hopes) hotels will divert their existing distribution costs from in order to feature on Room Key, but Google is clearly one brand in his sights, as well as other metasearch players (Kayak’s Steve Hafner wrote “Travelweb part deux, congrats JD” on a TechCrunch article about Room Key) and the OTAs.

The challenge will presumably come when persuading OTAs that it might be a good idea to feature on Room Key, but at the same as potentially losing out on their home turf.

At this stage it appears chains are micro-managing whether all their properties are included or not, whether some are exempt, etc.

Davis says some of the chains have an opt-in system for franchises, while others have automatically include franchise properties and they will have to opt-out. Some may not have a choice, he admits.

The site is only at stage one, Davis concedes, with property reviews coming “very soon” at the conclusion of discussions with “major players in the review space”, as well as a plan at some point to include reviews from its own users.

The current process of allowing users only to search by city and date will also evolve, he says, with options to find properties based on hotel name and chain to follow.

But with any new consumer-facing brand comes the age-old problem of gaining exposure and growth.

Davis says a full-scale, multi-national marketing campaign will begin in March 2012 to attract visitors, with a number of “creative ways” of getting exposure.

More importantly, perhaps, will be the support which Davis says the chains (“birth parents”) themselves will be giving by alerting new and existing customers to the fact that the Room Key service exists.

Meanwhile, the Hotelicopter team, which is was quietly acquired by Room Key in June last year for an undisclosed fee, makes up a large part of the 22-strong number of staff.

Its CEO Adam Healey will head a Room Key Solutions division, maintaining the existing white label partnerships Hotelicopter has with tourism boards and DMOs while developing other partnerships, Davis says.

Choice Hotels International, Hilton Worldwide, Hyatt Hotels, InterContinental Hotels, Marriott International and Wyndham Hotel Group have combined to establish the joint venture under the leadership of CEO John Davis, founder of the Pegasus hotel distribution and technology service.

The site is essentially a metasearch platform for properties, prices and availability across all six companies, including their sub-brands and affiliates.

Users can browse rates across every property, read independent reviews, compare prices and share information around their various social networks.

The site is global and has enlisted ex-Hostess Brands SVP of marketing Stephany Verstraete as its chief marketing officer and J Kurt Zimmer (a former TIAA-CREF and Dupont IT executive) as chief technology officer.

Ahead of the launch, RoomKey bought accommodation site Hotelicopter to run the search technology behind the scenes as well as continue to provide its affiliate platform for destination marketing organisations, under a division known as Room Key Solutions.

The formation of the Room Key venture comes as the hotel sector continues to battle with various issues around distribution and pricing on the web, including the continued roll-out of Google’s Hotel Finder service (which many of the above brands participate in).

Davis says:

“Finding the right hotel is complex and, unlike booking a flight or reserving a car, it is a personal decision process – one which no one understands better than hoteliers.

“We believe Roomkey will provide consumers with an innovative resource that will give them unprecedented confidence in their booking decisions by fulfilling their hotel search needs, with comprehensive and trusted content, and over time, through additional features such as the ability to connect and share their plans with family and friends – all provided through a simple and flexible site experience.”

Collaborative efforts on the web by major hotel chains, similar to those that saw the formation of Orbitz and Opodo by the airlines, are not exactly new.

In April 2001, European trio Hilton, Accor and the Forte Group joined forces to launch AndBook, a search and booking service featuring properties from all three brands as well as accommodation on the Pegasus platform.

AndBook’s creation had to be validated by the European Union, due to competition concerns, but it was expected to become a significant player in hotel search.

It eventually failed to gain any significant traction as it suffered, similar to many travel brands at the time, from the downturn in tourism in the wake of the September 11 2001 terrorist attacks in the US.

The Forte Group was also broken up shortly after AndBook’s launch.

In the US, Travelweb was a web distributor of merchant hotel rooms in the early-2000s, formed by Hilton, Hyatt, InterContinental Hotels Group, Marriott, and Starwood.

Travelweb’s other part-owner Priceline took over the remaining 71% shares in the business in 2004 for $21 million, eventually folding the system into the main Priceline brand.

Room Key, however, arrives in a very different era in hotel distribution and marketing, with more channels than ever before and the emergence of big and potentially very influential players, such as Google.

The normally-fierce rivals are crawling over themselves to talk up Room Key, with is being described as “unique” (Chuck Sullivan, Hilton Worldwide), “well positioned” (John Wallis, Hyatt), an “industry first” (Steve Sickel, IHG), having “immediate scale” (Shafiq Khan, Marriott) and promising “clear benefits to the industry and consumers” (Flo Lugli, Wyndham).

NB: Further details here in this interview with Davis.

In a further statement released today the company says Dnata Group holds 75% of Dnata World Travel, the company set up to purchase the OTA, while TravelRepublic directors Paul Furner, Kane Pirie and Chris Waite own 25%.

All three will remain in their current roles with the strategy for growth in the UK and Europe still in place as well as plans for ‘expansion further afield.’

The statement, from managing director Kane Pirie, adds that no redundancies are planned for TravelRepublic and concludes with a line about ‘record breaking sales and profits’ expected for the year to March 31 2012.

The company confirmed today that it has been acquired by Dnata World Travel, a Dubai-based subsidiary of the Emirates Group which specialises in cargo, catering, ground handling and agency services.

Terms of the sale have yet to be disclosed, but according to Thomson Reuters is a 100% transfer of shares to Dnata. Further details are to be released shortly.

The deal marks the end of over eight years as an independent agency following its creation by co-founders Paul Furner and Chris Waite in 2003.

The company has grown steadily to become one of the leading OTAs in the UK alongside Expedia and Lastminute.com, pushing the likes of early movers Opodo and Ebookers into a second tier of web brands in recent years.

Focused primarily on the UK market, TravelRepublic recently expanded operations into Spain with a dedicated office and website. In early-2011 it also had its first significant site redesign since formation of the company.

In recent years, TravelRepublic found itself at the centre of a dispute over consumer protection rules in the UK after the Civil Aviation Authority attempted to punish it for allegedly flouting ATOL legislation.

The CAA dropped the case and lost a subsequent appeal when TravelRepublic and its managing director Kane Pirie were found not guilty.

TravelRepublic’s sale comes during an intriguing period for European OTAs.

Mega-brand Odigeo was created during 2011, bringing together Opodo, eDreams and GoVoyages under a single corporate identity, while the relentless growth and power of Booking.com continues to challenge the likes of Expedia in the accommodation sector.

We all know that nobody clicks on banner ads, right? A decent banner will net you only one click for every 1,000 impressions. So even if you bought one million impressions that is only 1,000 clicks.

After you blow through your budget you might end up with one or two bookings from those 1,000 clickers. But what about the other 999,000 people who did NOT click your banner?

It turns out many of them end up going directly to your site weeks later to book.

A so-called view-thru booking occurs when a user views a banner but does not click. The user then might visit the airline or hotel website directly to book days later.

Most travel suppliers use a view-thru window of time to give credit for bookings made after the banner was viewed.

Typically that window ranges from seven to 30 days, but can be 120 days for an international tour or cruise. The travel supplier simply places view-thru tracking pixels on its booking engine confirmation page.

Those pixels match up to the banner ad that was served to the traveler so that travel suppliers can give credit to the right advertiser that influenced the booking.

I have seen 25-100 times more airline and hotel bookings from view thrus compared to bookings that happen after a direct banner click.

Case study

For example, let’s take an airline called XYZ, whixh runs a banner ad promoting a $99 fare sale on a travel website called Travel Site #9.

A user would view that airline’s $99 banner ad but not click on it. The user would recall the ad and visit the airline’s website directly 11 days later to book.

Using view-thru tracking, XYZ airline would know that the booking was made by a traveler from Travel Site #9. This is called a view thru booking.

Tracking bookings can be a bit confusing since you must also track the bookers that clicked on your banner ad or textlink and then booked later.

Some of you are familiar with post-click bookings as they have been around for quite a while.

In our example above what if a user from Travel Site #9 actually clicks the $99 banner ad from XYZ airline? The user then might book directly on the airline website 17 days later. That is called a post-click booking since the user clicked the banner and then booked on the airline’s website.

I have seen a travel supplier get ten bookings from post-click activity. But then that same travel supplier would see an additional 500 bookings from view-thru tracking.

You can see tremendous value and benefit from tracking both post click and view thru bookings. It will increase your ROI and allow you to see what is working and what is not performing.

The cons are very few but some critics make the case that users tend to shop around across six websites or more before they purchase.

While this may be true, the user would not have booked if it was not for seeing your $99 banner ad on Travel Site #9.

Just because the user visits six websites does not mean he will see your travel offer on all six sites without you promoting it.

Some travel suppliers will give partial credit for view-thru bookings compared to giving full credit for post-click bookings. But the ROI is still amazing when you factor in even partial credit on view-thrus plus the post-click bookings.

So how can you get started? There are many advertising platforms and tracking tools that can track both view thru and post click bookings.

What to do

Some of the top vendors that I have worked with include: Adtech, ZEDO, DART, Atlas and Mediaplex.

If you cannot afford to use one of these vendors, you can ask the advertisers that you buy banner ads from if they can track view thru bookings for you.

You would simply place their tracking code from their ad server on your confirmation page of your site before the campaign went live.

Then you run some banner ads on various websites and monitor the reports to see your ROI. Make sure to target as much as possible.

If you only fly from LAX, for example, then do not run banner ads to people living in NY. If your hotel is in Memphis and most of your visitors come from a five hour drive radius, then target users living in those cities or users looking to visit Memphis.

Keep in mind that view-thru tracking can work for both B2C and B2B travel organizations. So even if you sell travel technology or services in the industry, you can still run banner ads on B2B websites like Tnooz for example.

You would place the tracking code on your website where a prospect would purchase or perhaps fill out a contact us form.

If that user has viewed a banner ad on a B2B website, and then visited your website later on, you would know where that user came from.

I like to think of a banner ad as an outdoor billboard on the Internet.

You drive by that billboard and of course cannot click it. But you do read it, remember it and take action later on.

A banner ad it turns out has the same effect as it clearly influences purchases both online and even offline. One study from Comscore showed that running banner ads leads to a 274% boost in the number of searches for your brand on search engines.

This concept makes sense as people are more likely to type your product into Google after they have been exposed to your brand online. Another study from Media Post showed that a banner ad impression influences 70% of all user conversions or bookings.

Even beyond bookings you also should track anyone who signs up for your loyalty program or email newsletter after they have been exposed to your banner advertising.

So if you are not able to track all these bookings and traveler actions, then I highly recommend that you do not waste your money buying banner ads.

You will be disappointed if you only measure success based on banner clicks so make sure you track the full extent of your banner campaign.

NB: This is a guest article by Ryan Bifulco, founder and CEO of TravelSpike.

NB2: Image via Shutterstock.

Who and what are you (including personnel and backgrounds)?

I’m Michael La Rosa – just some super lucky guy who happens to be called a CEO. My background is building awesome software.

And my team, I don’t even want to list their names – because there is no one better, and I am way too scared of people poaching them away. They are that awesome.

Cristian our developer who is a maniac, Julian our UX genius (as you can see), Cesar our chief get it done guy, and Esteban who makes sure our internet doesn’t get shut off and also on the occasion saves the world from self destruction.

But most of us have been working the last few years together, and our last company was acquired. I should really get superman uniforms made for these guys, because they are super-hero like.

What financial support did you have to launch the business?

$400,000. More on the way.

What problem are you trying to solve?

Two big problems:

• Planning a trip sucks and is expensive. We are making planning a trip super easy, and amazingly awesome and a little more easy on the wallet.
• Travel businesses count on 80% of their business from travel agents and pay crazy commissions. We are going to change that, and put businesses in control of their business. Not a travel agent.

Describe the business, core products and services?

We are in the business of making a travelers trip absolutely mind blowing. We are also in the business of helping travel businesses make way more money, and having control over their reservations.

That is our business, core product, and services we provide: Travel awesomeness.

Here is a clip and demo:

Who are your key customers and users at launch?

There is no such thing for us as a key customer or key user. I think this question is pointless. Every customer is key, and every user is special.

If someone spends $1 or $1,000,000 with us, they both get treated the same – as super special customers, because they are.

Did you have customers validate your idea before investors?

We are our customers. We build TripFab for us. When we had something we wanted to use, we took it to investors.

So I guess we are our “Chief Idea Validators”. Isn’t that how it’s suppose to be – build something with passion, right? Market research just seems so… dull and non-passionate.

What is the business AND revenue model, strategy for profitability?

We charge a 5% transaction fee. Then, we take 4.9% of our 5% we made, and spend it all on our customers.

Our strategy for profitability is to make one travelers trip freaking amazing. If it’s one a year, one an hour, one every second – we start with one, and it’s was so awesome that you tell at least one person.

Eventually, it all works out.

I think a better question is – what are we going to do to make a travelers trip mind blowing?

SWOT analysis – strengths, weaknesses, opportunities and threats?

I have never done one of these, and probably will never. Why?

Threats, to be honest, I really don’t care about competitors. I don’t look to see what people are doing, because I just don’t care.

We are building TripFab for us, and travelers that want to use us. And we will always do that. We are a team of innovators and visionaries – and we will innovate and set a vision.

The second we put any opportunities on paper, is the second we stop looking everywhere.

And our strengths and weaknesses? What are strengths are today, is our weaknesses tomorrow.

Again, we just want travelers to have the most amazing trips of their lives, and want travel businesses to have control of their business – not depend on travel agents or crappy travel aggregaters. Seriously.

Who advised you your idea isn’t going to be successful and why didn’t you listen to them?

Everyone. But I listened to everyone.

Why? Because most ideas suck and don’t sound successful when they start. But when you listen to why it sucks, you can figure out each time how to make it suck less. And here we are.

So tell us how we suck so we can be better.

What is your success metric 12 months from now?

The most insanely happiest travelers. One or one million. It’s all the same.

You build great companies by being crazy passionate about making sure each person is insanely happy. Everything else takes care of itself.

NB: TLabs Showcase is part of the wider TLabs project from Tnooz.

I had drinks with my mate Jack (name changed to protect the innocent) at the weekend.

He’d just returned from eight days in Hawaii and I was keen to hear how it went. To be honest, I was pretty sure what he was going to tell me, but let me give you some background before I get to that.

Real life

Jack is thirty-something, single and as red-blooded as the next guy. Outdoorsy without being a jock, enjoys a drink and loves a good restaurant, etc. etc.

His travelling companion was an old schoolmate of his from the UK, they’d travelled together before so there wasn’t going to be any issues of them wanting to go in different directions.

Eight days of surf lessons, sun, seafood, cocktails and etc. all surrounded by girls in bikinis, they hoped. So far so good.

Neither had been to Hawaii before, so Jack’s mate had a long call with a friend of his in New York who had spent a few months there last year.

Apparently an Hawaii expert, she was quick to suggest what sounded like a pretty good plan: four days in Honolulu and then four days on the neighboring island of Maui.

The boys were excited, bookings were made, bags were packed.

The Honolulu part of the trip went well, with well-earned hangovers each morning, washed away by noon thanks to the surf lessons on Waikiki Beach.

Plenty of bars, great food, people to meet (see “bikinis”, above) and generally all the sorts of things the boys were looking for.

Day five, and they’re off to the airport, vaguely wondering why they are leaving paradise and hoping that it was just going to get better. It didn’t.

And that’s not to say that there’s something wrong with Maui… it was just the wrong place for these two guys, who simply couldn’t recreate the Waikiki experience they had come to enjoy so much.

“Everyone was a couple! We could see ourselves coming back here in ten years with our families, but as single guys… No, it just wasn’t for us.”

The heart of the issue

That’s the problem with the whole social travel model, right there.

Your friends, no matter how well meaning, are not travel experts. They’re not going to ask you the right questions or make the right assumptions about what turns you on.

They’re just going to tell you what they like, which may be miles from anything you’d enjoy.

[The boys' Hawaii expert, it turns out, is a botanist who loves long walks with her husband while listening to Enya on her iPod. Vive la difference!]

Don’t get me wrong – I’m not advocating you forget your real friends, your Facebook friends, your family or your colleagues completely, nor am I suggesting you traipse down to see a travel agency instead.

Save for the minority of agents who are truly experts on something (see Conde Nast’s annual list for what I mean) there’s as much bad advice to be found there as there is good.

What I am suggesting is that relying on your friends is as likely to result in just plain awful advice as it is in good advice. There’s no getting around it.

Instead of building your plans around input from others, blend their suggestions with lots of your own research.

Academics who study happiness will tell you that the anticipation derived from researching an upcoming vacation will be every bit as uplifting and energising as the vacation itself. And it will ensure you have the best vacation for you, not the same vacation your friends had.

So what about all those companies we’re seeing emerge with sites that channel advice from friends, all to help your planning process?

They’re good fun, and sure to provide some great ideas that will enhance your trip. Just don’t rely too heavily on them: the very best person to plan your next vacation is still you.

NB: This is a guest article by Rod Cuthbert, founder and chairman emeritus at Viator and founder and CEO at Qewz.

NB2: Image via Shutterstock.

The announcement puts an end to a long-running debacle which included the collapse of the UK-based BlueSky Technologies two years ago at a critical point in the first delivery of the so-called Globe project to put the reservation system of every Thomas Cook tour operating brand on a single platform.

In the delayed annual results for the year ending September 2011 released today, Cook says £86.3 million of its financial write-off relates to “historic costs associated with a long running major IT project”.

The wider £428 million figure relates also includes “impairment of goodwill in our UK and Canadian businesses”.

It is still unclear the total costs incurred by the failed reservation system project, although a string of people familiar with the programme over the past 12 months have put the project well into six figures.

An official says:

“Over the past five years, we’ve continually reviewed the development of an integrated tour operating platform across the business. Compared to when the project was initially scoped, Thomas Cook is now a totally different business with many brands and tour operators with specific IT needs.

“As a result, the increased costs, time and risk now far outweigh the potential benefits of the project.”

The announcement comes as Thomas Cook prepares for another round of retail shop closures, restructuring and job losses, amid high losses during 2011, £398 million for the 12 months ending September this year, despite a 10% increase in overall revenue.

The company says it will close around 200 “under-performing” shops within the next two years but invest in its online offering, including relaunching its websites “in time for peak trading”.

It expects to see the total number of bookings made online increase to 40-50% over time from the current level of 25%.

The Globe project will no doubt enter folklore as one of the most problematic IT programmes in travel tech history, with millions spent on consultants, in-fighting amongst executives and, today, the eventual axing of the entire scheme.

A number of companies were invited to pitch for the project in the mid-2000s, with BlueSky winning what was seen at the time as a flagship project for the company but a massive undertaking for both it and Thomas Cook.

It has since emerged that at least one large travel tech company declined the opportunity to run the project – and told Thomas Cook as much – as it believed the job was simply impossible to do, given that the tour operator had a myriad of brands on different and very complex systems, each with their own vastly different requirements.

Despite the warnings, Thomas Cook went ahead with the programme and pretty much came into difficulties within the first year as BlueSky and Thomas Cook’s then-IT provider IBM fell out over delivery schedules and integration.

Disagreements at board level then came as costs spiralled, leading in September 2009 to the collapse of BlueSky and a switch from IBM to Capgemini as its main IT provider and consultancy.

Despite the dismay which the project appears to trigger from many of those involved in it, internally and externally, very few have spoken publicly about it.

Perhaps the only senior executive to have since hinted at the differences in opinion over strategy is Russell Gould, the company’s former-ecommerce director.

Speaking at a conference in September this year, he made a general but pointed remark about travel technology projects:

“It’s about lots of little agile developments every month, because if you start to build a new platform it will cost a fortune and be likely to be redundant.”

As we head into the busy travel season, travel agencies – both online and storefront – are poised once again to handle significant volumes of consumer traffic.

Online travel companies play a vital role helping airlines, hotels and other travel partners reach millions of consumers around the world through their one-stop travel shopping sites, and provide consumers with decision-making power to research, compare and purchase travel that fits their interest and budget.

Further, because of the transparency and competition that OTCs facilitate, they help lower prices for consumers, and to increase travel bookings for suppliers – a win-win-win for all involved.

For example, 40% of all travel is booked through travel agencies, and one third of all ecommerce in the US is travel based. So it is little wonder that Google – the Goliath of the Internet – wants in on the action.

Google closed its deal to acquire ITA Software for $700 million in April this year and has since launched the first version of its Google Flight Search tool.

For the travel shopper, what could be better? The biggest search engine in the world providing a search for consumers to get the best air fares, right? Wrong.

As that old adage reminds us: let the buyer beware.

The first version of Google Flight is not very impressive, with only a handful of airlines participating. No doubt it will get updated and expanded, but unless the underlying model changes dramatically, the choices will remain limited, and the prices will remain higher than traditional online travel companies – not a good tool for consumers to search for travel.

The reason for these shortcomings are clear, given that the parameters of Google Flight were clearly dictated by the small group of airlines that were Google Flight’s launch partners, and their intentional exclusion of agenices from the mix of search results.

Or, as Jeremy Wertheimer, the vice president for travel at Google, recently indicated when asked why Google Flight did not provide links and offerings from OTCs to help consumers search and compare, said:

“…we work with airline partners, we are in the airline industry, just as we are in the hotel industry. We are not actually in the stand-alone-technology-we-do-what-we-want industry – we’re in the airline industry. And our airline partners were very clear – as we discussed with them this year – that they were not interested in participating if we provided links to OTAs.”

Wertheimer’s comments speak for themselves as to why consumers who think they are going to Google Flight for impartial searches and the best information should be wary – they are not going to get an impartial search result with multiple choices like a traditional OTA, but instead are likely to end up with a limited menu of options, as dictated by the airlines.

And, it remains to be seen whether Google Flight will disclose those arrangements and limitations to consumers. It sounds like the airlines are calling the shots. And it sounds like Google Flight is perfectly fine with that arrangement, though their customers may not be.

In other words, instead of a typical Google search result, which delivers a significant supply of supposedly unbiased search results, Google Flight appears to simply serve as a search engine with a limited focus, and a clear, but undisclosed, bias toward a small group of suppliers.

This highlights another shortcoming of Google Flight for consumers – the lack of consumer protections that it provides.

The US Department of Transportation plays an active role in policing consumer protection rules with regard to advertising and transparency of information.

The established OTAs abide by very stringent rules with regard to how information is displayed and conveyed, and whether search results are biased (they are not).

However, whether Google Flight has embraced those same disclosures and protections is unclear. So the buyer should beware. And so should Google.

NB: This is a guest article by Joseph Rubin, president of the Interactive Travel Service Association (ITSA).

Hotel distribution changes every ten years. In the 1980s it was the GDS, in the 1990s the emergence of tour operators like TUI and Thomas Cook, and in the 2000s the adoption of the web and online travel agents.

At the beginning of the decade of the 2010s, we can already see a shift happening to digital marketing.

Hotel digital marketing is the response to consumer changes – consumers are much more “educated” in travel search, and they use multi-channel: OTAs, direct website, review sites, social media, mobile.

Never before are there so many search products: OTAs, metasearch such as Kayak, the new Google Flight Search and Hotel Finder, Hipmunk, the “cool” new search interface on top of Orbitz’s inventory.

In addition, the planning tools market is exploding. TripIt and TripCase are more traditional travel planners, but a whole slew of new social tools is emerging with Gogobot leading the pack, but also with new competitors like Gtrot, Flymuch and others.

Lastly, new products are now transactional online: restaurants at OpenTable, tours and activities using Viator and even derivative accommodation products using Airbnb, a new darling of Silicon Valley VCs.

So, against this backdrop of exploding choices, how does a hotel manager make its brand visible online?

Mass marketing vs Niche strategy

Hotel managers need to be realistic. Large OTAs spend tens of millions per month on SEO/SEM, and advertise on hundreds of thousands of keywords. So, becoming the #1 on “hotels in New York” is probably not an option.

But a niche strategy may work. Let’s consider New York City, one of the most competitive hotel markets in the world.

When searching for “Cheap Hotel in New York” the results are dominated by advertising from Booking.com, Hotels.com, Kayak, Airbnb and organic search results from Hotels.com, Hotelclub, etc.

However, just by focusing on the brand identify and location provides immediate differentiation. Let’s look at three examples:

• “boutique hotel in New York close to the Jacob Javits Center”
• “economy hotel in New York in soho”
• “corporate hotel in New York in chelsea”

Boutique hotels near the Jacob Javits Center

When searching more specifically for “boutique hotel in New York close to the Jacob Javits Center” the results are very different as can be seen from the screen capture below.

By focusing on brand and location, four things happen:

• While there is still some advertising, it is now dominated by specific brands (in our example morganshotel.com, royaltonhotel.com, thetimeny.com).
• The pay-per-click costs are lower
• The organic search results are now dominated by independents (#2 and #3 are ink48.com and indigochelsea.com)
• You have a good chance of showing up on the map

Let’s now try the other two searches and see if the same results apply:

Economy hotels in SoHo

Advertising is still very competitive with Booking.com, hotels.com and kayak.com. But by focusing on brand and location, three of the four things happen once again:

• The pay-per-click costs are lower
• The organic search results are now dominated by independents (#2 is TheSohoHotel.com)
• You have a good chance of showing up on the map

Corporate hotels in Chelsea

Advertising is very competitive with booking.com, hotels.com and kayak.com. But by focusing on brand and location, three of the four things happen once again:

• The pay-per-click costs are lower
• The organic search results are now dominated by independents (#1 is hotelchelsea.com)
• You have a good chance of showing up on the map

Experience tags differentiate further

Another element to differentiate your hotel is to associate experience tags with it. Let’s take a look at two examples: golf and wine for hotels in california.

When searching for “golf hotel california” we expect to see high levels of competition:

And, as expected, “golf” is a pretty wide term, and highly competitive with golf-oriented tour operators bidding no the keyword.

Surprisingly, the results for “wine hotel california” are quite different:

There is almost no competition, therefore an SEM/SEO strategy will work well for a hotel that is located in california and tied to the california wine experience. So, a quick search on the experience terms you can associate with your destination will probably provide a good benchmark of which keywords you should be optimizing for.

Conclusion

In conclusion, whether you are in a highly competitive market, or in a secondary market, three simple items will provide in-destination differentiation for you search optimization strategy:

• Your brand identity: economy, corporate, boutique, budget…
• The location of the property: landmarks around your hotel…
• Experience tags relevant for your destination: gourmet, horses, relax, nightlife, wine, museums…

Using these three items you will not necessarily make your hotel #1 on Google in your market, but you will have a good chance of having great occupation rates with guests that are going to enjoy the experience at your property.

NB: This is a guest article by Pedro Colaco, president and CEO of GuestCentric.

This morning, I was packing boxes. At the same time, I was thinking about getting someone to help with the processing bit. The packing, the invoicing and other general bits and bobs.

Not travel-related, I know, but nonetheless, I started thinking about travel and how we present ourselves.

The importance of boxes

When the recipient opens the box, they are not looking at their purchase. They are looking at you. Your company, your presentation. It does not matter how good your website is, how well placed on Google (or any other search engine), or how good adverts are for your shop are, how clever your marketing is or how much effort you put into presenting yourself to the local community or how many awards you have won.

If what turns up is rubbish, not value for money, but above all, not right, you have failed.

Yet we entrust these tasks to some of the lowest paid people in the business. These are people we control to the maximum, we give little or no empowerment to. We do not trust them to do the job properly.

So, we have checks and balances, more checks and more balances and so the spiral continues. More control to cover up less empowerment. These people – the frontline (or “coalface”) agents as I like to call them – are the point at which our product or service meets the end user.

Taking Possession – giving possession

This interface, be it online or offline, is the point where the end user wants to meet your company, your service.

They do not wish to meet someone who is merely a conduit, merely a person who is there to take the flack and then push the issue off to some faceless individual who can hide behind and email address.

Yet we do this and wonder why people become disillusioned. We send people off to call centres in heavens-knows-where, where there is often little cultural understanding.

Or all we have is an “email us” page, without even the opportunity to establish the actual email address. Why? Because (one can but assume) we are frightened. We fear that our product or service is not up to par. We are expecting lots of complaints, lots of problems and the last thing we want our customers to know, is where to find us.

What we should do, therefore, is be prepared to take possession. Have people say: “I will deal with this, I will resolve it”. My name is such-and-such and the buck stops with me. How refreshing!

The magic word – speaking!

How would you feel if you had a problem, rang Barclays Bank and said: “I want to speak to [CEO] Bob Diamond”, but the reply was: “Speaking”?

No machines, no buttons, no assault trenches of PAs and secretaries? Just “Speaking”. Or, if you rang Facebook, asked for Mark Zuckerberg and you got the same answer: “Speaking”.

I often get called by firms or customers who say: “Can I speak to Mr Harrold?” When I reply “Speaking”, there is silence at the other end of the telephone, generally followed by the request to speak to me being repeated.

Yet what better way to find out what is going on, where the problems are, what is selling, what better way of getting THE best reputation? What would the client who had just called think?

Imagine this reaction: ”I rang Barclays, asked for Bob Diamond and he is going to look into it!”

Okay, I know busy CEOs cannot spend all their time answering the telephone, but one day a month, maybe a few hours each week (or month, even), the big boss picks up some arbitrary calls.

Over time, we have, paradoxically, lost the ability to communicate. As technology offers more opportunity, we choose to hide behind it rather than use it. We pass over to technology those functions at which we humans are best at and spend hours of time and millions of dollars trying to work out how best to improve on something which has done it’s job so well for the past 2,000 – odd years.

How can I replace the most up to date, efficient, ability-to-laterally think piece of organic software with something which is much more expensive and is bound to be manifestly less efficient?

We have taken the ability to communicate better and made it into something which actually saves us, as individuals, having to communicate at all.

What we have not asked, is: Is this what our customers want? Answer the telephone… maybe you will find out!

NB: This is a guest post by Murray Harold, a homeworking business travel agent from Buckinghamshire, UK.

NB2: Image via Shutterstock.

The site, which launched in June this year, has secured a deal with Russia’s notoriously protective distribution systems run by SIRENA and TAIS, getting access to content from a string of airlines which would ordinarily unavailable to those off the GDS grid.

Jizo claims air content on both the SIRENA and TAIS systems are out of reach from other search engines, giving it quite a sizeable lead over other consumer brands and also those outside of the country eager to give travellers access to the vast array of internal Russian airlines.

Out of approximately 30 Russian scheduled carriers, only five are hosted on external distribution systems (such as Aeroflot on Sabre), meaning there is a vast swathe of content currently inaccessible to travellers unless they visit a SIRENA or TAIS-connected travel agency.

Travelport has a existing strategic partnership, signed in July 2010, with SIRENA to give Russian agents access to international carriers via the Worldspan and Galileo platforms.

The Jizo deal will be the first time that many of the Russian carriers will be available in a consumer-facing search engine both in and outside of the country.

SIRENA is a system which was created in 1972 as the Soviet GDS. After the collapse of the Iron Curtain the organisation split into two (SIRENA and TAIS), essentially to allow competition between the pair.

SIRENA commercial director Marina Volodina says:

“No other search engine in the world has established direct access to the broadest CIS fare databases before. With this project Jizo becomes a unique metasearch engine currently including the most extensive proportion of domestic flights in Russia.”

NB: Image of Moscow Airport via Shutterstock.

The focus has traditionally been on cost control. Reducing the operational or flexible costs on the hotel balance sheet is what used to determine the profitability of a hotel. But not any more!

To control staff payroll, purchasing costs and overhead spending used to be the main components of the job of a hotel asset manager. With the rise of the internet and increased dynamics of hotel distribution we have seen a shift in focus over the last few years.

The attention of hotel asset management has been increasingly moving towards room yield. Driving occupancy and average room rate is the key nowadays to controlling the bottom line the hotel.

Of course a hotel revenue manager should have a strategy that goes far beyond REVPAR. NREVPAR (read article) and GOPAR are of instrumental importance.

We have seen an overall revenue growth of 15.8% in first three quarters of 2011, through strategic pricing strategies. We looked beyond mere cost control and had our hotel clients invest in SEO and internet marketing to increase direct sales. As a result, distribution cost was reduced and profit increased.

Of course we do not advocate leaving costs uncontrolled. That would irresponsible, as with the recovery from the crisis hotels have to be weary not to reinstate cut services amenities too quickly.

However the scope of attention has to be widened and emphasis needs to change. Simply cutting costs and “trimming the fat” will also have an impact in the long term service levels of hotel and in the end impact financial results negatively.

Fundamental to success will be to gain more market share in a recovering market. With the occupancy rising across the board in many markets, it is important to fight and pick up one or two points more than the competition.

Furthermore, ADR/ARR should be pushed up where demand allows, in an effort to improve your hotel’s RGI (Revenue Generation Index).

The solution of classical asset management companies will almost always be to put a flag on the roof. However in the era on online distribution, social media and online reputation management, a brand is no longer needed.

Also should be considered the fact that costs of such a hotel franchise are tremendously high. Moreover the model is out of date. These companies are no longer the best solution in today’s market place.

Modern day revenue management, internet marketing and online distribution is the solution to generate a healthy ROI on your hotel investment. The industry has to move beyond operations to manage well business development.

And the next logical trends to be implemented in hotels will be total revenue management and business acumen, taking revenue management beyond the hotel room and optimize the results of all hotel revenue streams.

NB: More on hotel asset management on the Xotels website.

NB2: Image via Shutterstock.

Recruiting, motivating and retaining good people is the number one key success factor in building a technology company, particularly in the online travel industry.

In an OTA, the most critical skills required fall into three broad categories: engineering, marketing and supply acquisition. Engineering is the most important of the three because all other areas of the company are significantly enhanced by great engineers.

Practice: how do you build a great team?

In general, the core practice that we subscribe to is that you should always aim to hire A+ players (superstars).

There are three key reasons for this:

• In a creative, technology-driven job, someone amazing adds 10x more value than someone merely above average. This is more true for engineering and marketing (where output can scale significantly depending on how good the person is), and somewhat less true in sales (where output is determined both by talent, but its scalability is limited by how much time the person has invested).
• Superstars attract other superstars. This is self-evident, but also supported by data. For example, in anonymous team surveys we have done, great people were listed as the #1 factor why people joined our team.
• Superstars attract investors, partners and clients. The reason is that their brand rubs off: the fact that you have great people means that you are a great company and that you can be trusted.

To attract superstars you need to do a number of things:

• Create great work conditions. Google (which was my first and only big-company job and made an impression) does this very well. Gyms, free food, health insurance and other perks create a lot more goodwill and HR brand than they cost. For example, our office is based in a relatively expensive area of Moscow, and it takes a long time of standing in traffic or taking the metro to get here from areas where people live. So we decided to pay our employees the difference in living cost if they move to within 15 minutes walking distance of the office. Many have moved and we noticed a meaningful increase in their productivity – when you get to the office after a 10 minute walk rather than an hour-long commute, you have a lot more energy, and you won’t ever want to leave the company and go back to the commute.
• You need to aggressively poach staff from other companies. Great people don’t tend to be on the market looking for jobs – they are usually happily employed somewhere.
• Everyone must always be recruiting: from the CEO to the junior engineer. Recruiting never, ever stops and great people will always add value.
• You need to pay at the top of the market. As we discussed earlier, these people add a lot more value than the market-average people. Thus it is worth it to pay them more.

Once you have attracted your superstars, you need to manage them in the right way. I highly recommend you watch this TED Talk by Dan Pink on human motivation. The three key things are:

• Autonomy - Talented people are self-motivated and like to be in control of their own lives. For example, we let our employees come to work and leave whenever they want (as long as results are delivered). Obviously you need to have some overlap with your colleagues and you need to come to meetings on-time, but beyond that we don’t care whether you do the work at 10am on Monday or at 3am on Saturday.
• Mastery - Talented people want to get better at what they do. For example, we have a full-time staffer dedicated to training, and we have training available to all who want to get it, not just those for whom it is immediately relevant. If a hotel salesperson wants to learn Google Analytics, great!
• Purpose – Talented people want to feel that they are a part of something significant and long-term. For example, we don’t see ourselves as copying a Western player in the Russian market.

We are taking the best ideas from the US, EU, China, India and LatAm; adding things relevant for Russians; and building a fundamentally better company. We expect to be competitive on a global basis 5 years from now, and this gets people excited!

Engineering-specific advice

Hiring engineers is essential because everyone else is dependent on them. Hotel acquisition needs a better extranet and CRM. Marketing needs new analytics and automated bidding tools. Call center needs CRM and knowledgebase systems. Content needs new content management systems. Recruiters need better jobs pages on the site.

Our target is for 50% of the company to be writing code, and by end of 2012 we will have more high-quality engineers than some of our global competitors with 10x the total headcount. So what you should do is:

• Focus on hiring (a) superstars with significant success already behind them (b) 19-year old hackers with great potential. The experienced superstars will attract others and teach, but you can’t have a team comprised just of them. The hackers will do the more basic work, learn, grow quickly, and become an extremely loyal part of your culture.
• Load up on engineering recruiters. It is tough to find great engineers, and you will never, ever have enough of them.

Marketing-specific advice

Online marketing is essential for obvious reasons, and one important factor is that it scales. A single great person can save or waste large amounts of money.

The challenge is that the online marketing ecosystem tends to evolve extremely quickly in emerging markets because you are playing fast-second with technologies already created in the developed world.

The result is that almost no good experienced marketers exist and you have to teach them.

Here is what we found effective:

• Hire young engineers or math/physics wizards from top universities. Teach them and give them a budget + clear performance metrics. To do this, someone on your key management team needs to be an online marketing expert. If none of your key managers is well-versed in this area, you are in trouble.
• Their #1 key success factor needs to be that they are excited about data. These must be people that only believe that the sun rises in the east after experimental observation and statistical analysis (exaggeration, but you get my point). Marketing is not about being creative, marketing is not about aesthetics or awards for beautiful banners. Marketing is about data, and if the ugly banner converts better than the beautiful banner, then it is by definition superior.

Supply sourcing-specific advice

Supply sourcing is essential because supplier infrastructures in emerging markets are relatively undeveloped, and players who help them develop in the right way will have a significant advantage.

The challenge is that the supplier companies (hotels, airlines) in emerging markets are just beginning to transition towards online. These are very conservative organizations, and to work with them it is important to understand how they think.

This is the opposite of marketing in that usually there are plenty of organizations to hire from. So:

• the leaders of your supply team ideally need to be people who did supply sourcing before, who know how suppliers think, and who already have as many of the contacts as possible.
• to back up those leaders, hire top performers from the supplier industries who don’t have the specific experience of sourcing supply, but who understand the suppliers intimately and can learn the rest quickly.

Conclusion

Aggressively recruiting stars into your team is the #1 factor that contributes to your success. Once they are on-board, manage them lightly and give goals rather than tasks so they can focus on executing relentlessly.

And don’t forget about creating an insanely great culture that people will love working in – this is one of the few sustainable competitive advantages that a player in the online travel sector can have.

NB: This is a guest article by Serge Faguet, co-founder of Ostrovok, a Russian-based hotel-focused online travel agency.

NB2: TLabs Showcase – Ostrovok.

NB3: Image via Shutterstock.