Review Centre has now put a warning against reviews for LowcostHolidays on its system, informing readers the company has offered money for customers that leave positive reviews.

ORIGINAL:

A UK travel company has defended its use of a discount voucher given to customers in return for them leaving a positive review of their trip.

A reader of consumer blog BitterWallet forwarded an email sent from LowcostHolidays after they returned from a trip to Lanzarote in Spain…

The incentive was only if they posted a positive comment on the Review Centre site, rather than on TripAdvisor, for example, for the hotel that was part of the trip.

Some might ponder that this is because Review Centre feeds in star ratings to pay-per-click ads for LowcostHolidays.

BitterWallet is not impressed:

“Astroturfing at its murkiest. So don’t forget to take those online reviews with a large pinch of salt from now on, eh readers?”

The comments against the original story are actually quite mixed, illustrating that consumers are either completely indifferent to be rewarded for having a good trip and telling everyone about it, to those that think there is a blurring of the boundaries, especially as there is no way to illustrate on Review Centre that the positive comments also led to the consumer pocketing £25 towards their next trip.

Such an issue incenses those critical of the user review concept, but for LowcostHolidays it actually sees nothing wrong with dangling a little carrot in front of happy customers.

CEO Paul Evans says:

“We offer customers a £25 voucher when they return from their holiday as a thank you for booking with us and taking the time to write reviews about their experience.

“And 99%+ of customers have a fab time and we like to hear from the majority not the minority in life. We like happy customers – we encourage happy customers – we are proud of them – we celebrate them and we encourage them to share their experiences.

“And we are delighted when the come back.”

So, the entire episode does beg the following question: if a customer had a good time on a holiday and was likely to re-book, is there anything wrong with saying thank you with a handy voucher?

Or is just a bit on the stinky side?

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

Itinerie is a new start-up in the travel flash-sale space. We will offer our members full one-week luxury vacation packages (itineries, if you will) to fantastic destinations in Latin America.

We are currently in beta stage, building our membership base, but will be releasing our first trips this spring.

The company was founded by Nick Milne and Jack Sarvary. Nick brings the travel expertise to the team, having spent three years in luxury travel: two years with Sunvil Latin America in London and one year with Blue Parallel in Buenos Aires.

Jack, on the other hand, has more formal business and start-up experience.  Prior to Itinerie, he worked in New York City for the Boston Consulting Group for two years and then in Buenos Aires with a series of entrepreneurs through the non-profit, Endeavor.

What financial support did you have to launch the business?

Although to date Itinerie is completely self-funded, we are currently in the middle of raising additional investment through our personal networks.

What problem are you trying to solve?

While in recent years there has been steadily increasing demand for luxury vacations to Latin America, it remains a relatively unknown destination.

Many potential travelers do not know where to start in organizing a comprehensive trip to the continent.  Attempting to figure it out independently online can be stressful and time-consuming, while using travel agents or tour operators comes at a significant cost and is still far from efficient.

Itinerie looks to provide an alternate solution to this problem.  We use our years of experience in luxury Latin American travel to create well-priced luxury trips to the region’s best destinations. We then release these fantastic trips through email and our website one at a time, every other week.

Our members can therefore sit back and wait for their dream vacation to come to them, eliminating all the stressful searches or tedious back-and-forth interactions currently associated with booking travel.

Describe the business, core products and services?

We will run flash-sales selling luxury vacation packages to Latin America.  These packages are designed to be truly once-in-a-lifetime trips, spanning one week and 2-4 destinations within a selected country.

They will include luxury accommodations, all internal transportation, and a number of unique and interesting activities.  And while these packages are put together in bulk, the experience for each individual party will be completely private.

If a member is interested in a reserving a trip, all they will have to do is select which activities interest them most (picking 5-6 activities from a menu of 8-12) and then choose between two potential start dates (each roughly 6 months in the future).

They must reserve their own international flights but then that’s it – their vacation is fully booked.

Who are your key customers and users at launch?

We are already well underway working with partners in Argentina, Brazil, Chile, Ecuador, and Peru to design the ultimate vacation packages for our members.

We are pleased to announce that despite our untraditional model, we have been able to secure discounts in line with what the hotel-only flash-sale sites are receiving.

From a user base perspective, we are very excited with how things have taken off.  Through a combination of personal networking, participating in online communities, and leveraging social media, we have built a substantial and fast growing user base in only a few weeks.

Did you have customers validate your idea before investors?

Not directly, but we believe we have seen strong indicators of demand in the market.  First, the success of flash-sale sites in the travel industry to date indicates that customers are willing to book vacations spontaneously and online in order to secure good prices.

Second, changes in the product mix on these sites (where full package tours are showing up more and more frequently) suggest there is significant demand for more than just hotels.  It wasn’t hard for us to find investors who agreed.

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

Itinerie will make a margin off all packages purchased on the website. We aim to grow our bottom line by increasing the number of reservations we set aside for our members each week and offering customers more potential start dates for each trip.

SWOT analysis – strengths, weaknesses, opportunities and threats?

Strengths:

• Our main strength is the quality of our packages.  We are working with some of the best partners in Latin America to ensure that our packages will exceed the expectations of even the most discerning travelers.  In addition, we have a unique angle on a dynamic, high-growth market, as well as a beautiful website.

Weaknesses:

• Most of the other players in this space had huge user bases from the start – for example, Jetsetter started with Gilt’s user base, SniqueAway with TripAdvisor’s, Vacationist with Travel+Leisure and Luxury Link’s.  We, on the other hand, have had to start from scratch.  We are very excited with our numbers so far, but we undoubtedly still have a long way to go.

Opportunities:

• While there are a lot of players in the travel flash-sale space, no others are dedicated to selling full itineraries.  As first movers, we believe we have the opportunity to build a strong brand in this niche now, and when the market moves in this direction, as we expect it will, we will be well positioned to become a dominant player.

Threats:

• The current players in this space have significant cash at their disposal which they can use to squeeze potential new entrants out of the market.  While Itinerie hasn’t raised significant capital to date, we have had preliminary conversations and believe it is there if and when we need it.  Additionally, we are focusing on product quality in the short term in order to build a strong and well-respected brand, and that does not require a huge amount of investment.

Established competitors could quite easily expand and copy our products types. While this is true, we believe our experience in organizing package trips and our long-term personal relationships with the players in this space make the quality we offer hard to replicate.

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

Many people warned us of the large number of established players in the space already.  However, we believe we are sufficiently differentiated to create a new niche brand for ourselves.  In fact, we like the fact that there are so many other players in the market as it demonstrates the size and growth potential that exist.

What is your success metric 12 months from now?

We are giving hundreds of people once-in-a-lifetime experiences each month, and are expanding well beyond our initial Latin American focus.

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

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

Travelmatch is a revolutionary travel search and price comparison website that allows consumers to find their perfect holiday and then compare offers from major UK tour operators and travel agents to get the best deal.

Founders Alex Francis and Jonny Marsh are part of a core full time team of 12 people who are committed to developing a great product. We also have advisors from the travel industry including David Scowsill and Brent Hoberman.

What financial support did you have to launch the business?

We closed our first major round of funding in January 2010 from strategic investors, including David Scowsill (formerly CEO of Opodo, ex-Easyjet and British Airways), Jon Moulton (formerly of Alchemy, founder of Better Capital) and other leading figures from a range of industries.

What problem are you trying to solve?

Finding your perfect holiday online currently takes a huge amount of research, planning and effort. Frustrating much of this time is often completely wasted as you trawl through brochures or websites looking for hotels that meet your criteria, only to find out the cost is out of your budget or there is no longer any availability.

Frequently, people return to places they have been before because they either can’t find what they are looking for elsewhere or they don’t want to risk the holiday going wrong.

We aimed to solve both problems by building a travel site that enabled consumers to find their perfect holiday with just a few clicks, allowing them to compare hotels in many destinations that meet whatever criteria they may have, while also finding the best offers available to ensure the most value for money.

Describe the business, core products and services?

Travelmatch enables consumers to find their perfect holiday by searching nearly 10 million package holidays without any of the constraints associated with the current generation of travel websites.

This makes the process of finding a holiday much less time consuming, but just as fun as you don’t waste time reading endless hotel brochure text checking for all of the things you are looking for.

We also hold pricing data so the site is lightning fast, unlike some of the competition in the holiday price comparison space where you can go away and make a cup of tea while you wait for results to come back!

We support users at any stage of the research process, and have made the site useful regardless of how much or how little they know about their holiday.

We inspire users at the start of the process, helping them find their perfect hotel and then compare deals from various tour operators and travel agents so they can find the best deal for that hotel.

Who are your key customers and users at launch?

We believe we have 3 major groups of customers:

Need inspiration – no idea of where they want to go or what they want to do, for example:

• I’ve got a week’s holiday to take in May
• I don’t like flying so no more than 4 hours on a plane
• I want to go somewhere I’ve never been before
• I’d like to go somewhere hot to top up my tan

Those who know a destination/activity but haven’t yet found a hotel/holiday that suits their requirements, for example:

• I’d like to go to Ibiza
• A Spa holiday will help me relax and unwind
• I have £500 per person to spend on a Villa holiday

Those who know exactly what they want and are looking for the best deal. for example:

• Best deal flying from Manchester airport on 15th June and staying at the Hotel Atlantis in Belek
• How much can I save if I can fly at any time of day from either London Heathrow or London Gatwick on 18th September +/- 5 days to 5* hotels in Lara Beach, Turkey

Did you have customers validate your idea before investors?

Yes – we initially spoke to friends and family, followed by people in the travel industry to gauge interest in the product. We then conducted numerous surveys which backed up our understanding that the majority of users know what they want to do on holiday rather than where they want to go.

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

Currently, our business model is an affiliate model where we earn booking commission from partners who are present on our site.

SWOT analysis – strengths, weaknesses, opportunities and threats?

Strengths:

• Unique search
• Proven business model in other sectors (e.g. insurance, flights, car hire)
• Good strategic partnerships with operators
• Strong website design, function and technology
• Exceptional technical team with experience of building stable, scalable platforms
• Advanced analytical platform helps find issues and opportunities quickly
• Low cost base

Weaknesses:

• Relatively low profile and awareness in the general public at present
• Partner sites purchase process has a large impact on conversion rates
• Relatively small advertising budget
• Limited scope of marketing activities

Opportunities:

• Accomodation Only product
• International expansion
• Development of niche versions of the site e.g. Luxury
• White label service for potential partners
• Expand product into other verticals outside travel
• Reward programs
• Social media development

Threats:

• Icelandic volcanoes
• Global economic climate

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

Most people we spoke to were very encouraging and supportive – but inevitably there were a few who dismissed the idea out of hand, particularly those who had previously tried and failed to build something similar. We didn’t believe that previous failure meant it couldn’t be done!

What is your success metric 12 months from now?

Our product being widely used, understood and valued by consumers searching for holidays. A constantly growing user base built on recommendations to friends, particularly via social media. A large percentage of our users being returning users.

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

Really? A competition that may come back to bite Expedia on the backside if the suggestions do not match its branding requirements and product strategy?

Perhaps not, then. But, if anything, it’s an interesting idea and shows Facebook fan pages can be used for more than just peddling products and sharing pictures.

Launched this week in the US, Expedia says the phrase “may be confusing to some travelers and tamps down interest” and therefore it wants to give the “collective wisdom of the American traveler” a crack at coming up with a decent title.

Until early-February 2010, fans will be able to submit new names via the Facebook page (they have to become “fans” first, of course) and then ten entries chosen by Expedia will be put to the vote, with various prizes for those deemed the best by users.

Expedia is not expecting simplification of the name, however, allowing entrants to use up to four words.

Of course, Expedia in the US could just follow its European cousins and rename the product line to “package holidays”.

The worrying spate of company closures over recent weeks is being blamed on a number of factors – depending on who you listen to. Reasons vary from reliance on low-margined dynamic packages, consumers not rushing to the hoped for “lates” market, cash flow, etc.

In the UK the situation is increasingly bleak, with two big companies – Goldtrail and Sun4u – going under in the space of a few weeks, and now joined by Kiss Flights. Unfortunately in many cases the communication has either been poor or confusing.

For today’s victim, it was probably both.

After the news first emerged from mainstream news channels such as Sky and the BBC, KissFlights.com inevitably went down.

The site finally emerged an hour or so later with the following, slightly odd homepage.

This was obviously not exactly correct (it still has the same message, nearly four hours after the company officially folded.

Parent company Flight Options managed to get a brief message up on its website, clearly not as high-trafficked as its consumer-facing subsidiary.

Package holiday regulations ensure consumers that booked an ATOL-bonded package holiday are protected in the event of the seller going into administration, thus the redirection to the ATOL part of the Civil Aviation Authority website (regulators of the ATOL scheme).

Problem with the ATOL web service is that, probably for legal reasons, it uses the trading company name, rather than the consumer-facing name, so concerned passengers will be equally confused when arriving at the website.

Information about the collapse of Kiss Flights could only be found by clicking on International Flights Ltd.

Misleading to say the least…

With thousands of passengers either stranded overseas or with their travel plans in disarray, it is down to the CAA to ensure consumers are kept informed – but in a simple, coordinated, logical and meaningful way. Unlike today.

Embarrassingly for the those behind what should have been a simple communication exercise, the only place on the internet where consumers could find any up-to-the-minute information about the situation around Kiss Flights was, inevitably, Wikipedia – updated within minutes of the company’s collapse.

Update: No idea if this Twitter profile for @kissflights is genuine, but a timely and solitary status update.

But first, some background: two key distribution models are emerging in consumer-facing online travel.

Firstly, there is the distributed transaction model – supplier places product, price and availability information into some form of distribution system, consumer buys from an agent (online or off), the transaction details are transmitted to the supplier.

Secondly, media models are coming to the fore. Awareness of the product (including perhaps price/availability) is on a 3rd party website, but ultimately the consumer books with the supplier directly.

Media models are simply a form of advertising with rich data. It is a marketing process, not a sales process.

With flights, hotels and other commodity products distributed transactions work well.

Most leading OTAs sell flights/hotels and consumers are happy enough to book these products via OTAs.

One reason is that collectively we as an industry have worked out what product information the consumer needs in order to make a purchase decision on a 3rd party website.

For flights/hotels the hot news is the media model websites (including meta search, trip planning sites etc).

For escorted tours, activities and some ground arrangements the story is quite the opposite. Take the example of a customer looking to book a white water rafting holiday.

The consumer will want to communicate with the supplier prior to booking. It is the nature of the product. Hence for these products distributed transaction websites have never really taken off and, I argue, are unlikely to.

Instead of automation tour companies focus on efficiency. You know you are going to have human-to-human contact as part of the sales and booking process – how can that be made efficient?

For these kinds of products the media models are king as ultimately it ensures consumer-to-supplier communication takes place directly.

The hot news is where you see distributed transaction models being given a go.

Trouble ahead

In the UK at least, distributed transactions are a core part of what a travel agent does. In flight/hotel sales the travel agents are competing not only against strong online distributed transaction players but with media model sites that don’t need any complex technology nor any consumer protection mechanisms. Is that fair?

Seems the agents don’t believe so and they want to even up the playing field.

What we may have here is the start of a proxy war between the smaller agents who want to maintain the distributed transaction model and the media model people.

However the media model people haven’t really woken up to it yet (probably because the trade press tend to write from a travel agent perspective!).

The proxy war will be fought within the new Package Travel Directive (a European-wide proposal that is under consultation at the moment).

From an ABTA statement this week:

“The ABTA submission to the European consultation advocates that the scope of customer protection should be extended to include all linked leisure travel arrangements, including “click-through” arrangements bought on the internet.”

Now I am not quite sure what this means yet. Does it mean that if you are a travel website and you have an affiliate banner to sell a hotel – and an affiliate banner to sell a flight – you need to be offering consumer protection?

That would be troubling. It would also be troubling to all non-travel websites who have travel advertisers and, if finally incorporated into the new directive, break the media model at least in Europe.

ABTA asked their members the following question:

If a new Package Travel Directive were introduced, indicate which of the following travel-related products or arrangements you think should be within the scope (tick all that apply).

One of the answers was:

• Accommodation, transport andor other tourist services purchased on the internet from different sites which are clearly linked on their web pages.

105 out of the 141 responses (74%) ticked that this should be in scope.

I am somewhat surprised by this position taken by ABTA. Last year when the ABTA chairman was being elected there was a great discussion on the Musings blog about this very topic. John McEwan (now ABTA chairman) stated:

“My view is that ABTA is best placed to represent the industry as a whole and that should include non transactional companies such as Cheapflights, Google etc. The methods of purchasing travel have evolved and ABTA needs to evolve accordingly.”

The European Union is still accepting responses to the open consultation (until 7th February 2010). Consultation website.

If you believe that websites should be able to link to travel companies without taking responsibility for consumer protection then make your voice heard!

NB: I am taking part in a debate about these two models in tour distribution as part of Travel Technology Europe (London, February 9th 2010). Seminar A1. I will be debating these two models with Deepak Jha from Isango.

Thomas Cook has yet to officially announce the change but Tnooz has learned that any customer who books a bundled deal (flight and hotel) is already being serviced by Expedia white label offshoot Worldwide Travel Exchange (WWTE).

The partnership is not simply a technological one – customers on a bundled deal are financially protected under an ATOL belonging to Travelscape (a little-known Expedia name often used to front its white labels), rather than the Cook’s ATOL bond.

Casual visitors to the Thomas Cook website will have no idea that Expedia is behind the dynamic packaging/build-your-own service and is also holding the protection bond. The company is never mentioned by name and Terms and Conditions only refer to WWTE.

Any only hint of a partnership will only be picked up by the slightly more trained eye with the presentation of search results almost identical between the two brands.

Thomas Cook

Expedia

The service also runs off the WWTE domain and servers.

Thomas Cook has chosen to take a low-key line over the partnership and will not comment on a number of aspects of the deal, saying in a statement: “Relationships with our suppliers are commercially sensitive and therefore we cannot confirm details.

“We work with a number of partners across our ecommerce business, eg bedbanks and technology companies. Thomas Cook’s relationship is with Expedia affiliates only and is one of these partnerships.”

Cook’s stresses that it is “very strong” in the dynamic packaging sector through its myriad of other brands such as FlexibleTrips, Hotels4u, NetFlights and MedHotels.

Nevertheless, Cook’s decision to partner with a major company from an area of the industry (OTAs) it says it wants to move into will raise a number of eyebrows, or at least trigger some rueful smiles.

Following the company’s November 30 2009 preliminary results, chief executive Manny Fontenla-Novoa was quoted as saying:

“You’ll also see Thomas Cook competing with Expedia, Priceline and lastminute.com in their space as well, and we’ll have a much bigger presence in that market.”

The reason for the partnership remains intriguing and largely unknown one at this stage given that Thomas Cook has an airline, the ability to charter seats elsewhere, existing bedbanks and has dynamically packaged product for some time.

One clue might rest in the collapse of Thomas Cook’s reservation system software provider BlueSky last year. When the BlueSky deal was announced in August 2006, creating a system to handle dynamic packaging across the Thomas Cook portfolio was one of the original components.

The financial failure of BlueSky and subsequent re-examination of Cook’s technology requirements may have changed the wider dynamic packaging strategy, triggering the need for a partnership with Expedia.

However, those close to the BlueSky saga say that the original vision for the Globe project changed in terms of the dynamic packaging software as individual brands within the group had different requirements.

Another reason could be simply to get access to Expedia’s accommodation and flight inventory, including 80,000 hotels and 450 airlines around the world – content that Cook’s air partnerships and existing bedbanks and owned stock are unable to match.

Dynamic packaging is a major play for Thomas Cook, especially if it is to reach its stated target of becoming a leading OTA in Europe – ironically alongside Expedia et al.

From the company’s financial statements in November 2009:

Independent travel passengers increased by 18% through investment in dynamic packaging capabilities, significant focus on our ecommerce operations and expansion of our product offering. With the strength of our retail brand, access to inventory and a true multi-channel capability, our strategy to develop an international online travel agent represents a compelling customer proposition.

Questions remain as to why a partnership with another white label flight+hotel provider, such as lastminute.com, didn’t materialise after both companies said they would be exploring other opportunities following the transfer of Med Hotels between the two in 2009.

In a statement released late this afternoon, officials in Brussels (headquarters of the European Union) said the existing Package Travel Directive would be extended to include dynamically packaged holidays created over the internet.

The original guidelines, created in 1990 and pre the explosion in online travel, did not include “liability for sub-standard services and protection for insolvency” for holidays.

The EU is now looking to include bundled holidays as part of the legislation – a decision it says was accelerated following the spate of recent travel company failures over the past 18 months (such as XL and Zoom).

In a statement, EU consumer commissioner Meglena Kuneva says:

“We need tough protection that gives all consumers booking a package holiday the peace of mind they deserve, and we need a level playing field so businesses compete on equal terms.

“I am particularly concerned about the issue of insolvency. Anyone who saw the TV pictures of thousands of holidaymakers stranded at airports after bankruptcies from Sky Europe to XL, Futura and Zoom, knows that now is the right time to ask tough questions about extending basic insolvency protection to consumers across the board.”

The move follows recent localised challenges to existing package holiday regulations, such as the TravelRepublic vs CAA saga in the UK.

The EU’s decision to take up the baton will be seen by some as a typically late entry into the debate.

Officials today said around 40% of all holidays booked in the EU are package holidays, with around 33% dynamically packaged and 25% classed as other arrangements.

Nevertheless, around 56% of all travel is booked independently and therefore not protected by EU directives in the case of a travel provider going under or airline insolvency.

The EU says it plans to introduce “concrete” proposals to review the Package Travel Directive by the Autumn of 2010. The official consultation process kicks off today and ends in early-February 2010.