1 month ago
 

Priceline’s Glenn Fogel on metasearch, home-sharing, direct booking, and localization in China

As the opening CEO Talk at TravelDaily’s annual gathering in Shanghai, China, Priceline Group’s CEO set the tone for an event focused on the current state – and future growth – of this country’s travel industry.

Fogel highlighted some of the themes that would resonate throughout the conference, especially those related to both global companies localizing in China and Chinese companies globalizing to compete internationally.

On metasearch

Kayak is probably not as well known here as it is in other parts of the world. Similar to a Qunar or a Skyscanner. Many customers, when they are looking at what they are going to buy, and at what price, they love these metasearch companies.

We think Kayak offers great technology, which provides better and faster results. And then using the data to provide tools like if you should buy now or wait to buy later because we expect prices to go down.

The customer wants to know which site is going to give them the best results that they want, and what they want is total transparency on pricing, they want to see as many results as possible, and they want to be able to filter it to what they want.

Kayak was a US-centric thing at the start, but they have expanded. We just bought Momondo in Europe, so we’re building up our European efforts. I suspect we will continue to do it throughout the world because I believe a certain segment of the population likes using meta. As you see here in China.

On home-sharing and Airbnb

Airbnb is a very good company and it’s growing nicely. Congratulations to them.  But when I go to booking.com, I could see apartments and hotels in the same search results. So it’s much easier for me to compare. And every single product on booking.com is instantly bookable. That’s a great thing.

For me, one of the things I want is speed. I don’t want to wait. My wife went to look at a competitor site, sent off some emails, and then a couple days later, comes back saying that I can’t rent this to you. So that’s so annoying!

The last thing is, we don’t charge the traveler any fee. Some of our competitors charge fees. We don’t charge a fee.

From my point of view, these home, villas, and apartments are an important part of our industry. It’s growing very very fast. And we’re spending a lot of time, energy, and effort to make sure we are as good in that area as in traditional hotel booking.

On brand.com direct booking

So the issue about hotel direct, it’s an obvious thing that every single company likes to not have to pay money for marketing. The hotels prefer that somebody came directly to the hotel, and the hotel didn’t have to pay for any sort of advertising, whether that be on a website like an OTA, like search, or TV advertisement.

But that’s not how the world works. The more important question is why people come to a site like Booking.com or Agoda versus going to a hotel direct.

On localization in China

China is a very challenging to do business, particularly for people that aren’t Chinese.

One of the things we recognized at a very early stage is the importance of localization. If it’s a non-Chinese company that comes into China and tries to do business here, but they don’t understand the culture, they don’t understand the regulations, they don’t understand the way things are supposed to be done. They aren’t going to be successful.

So what we’ve been trying to do, is trying to make our companies, we are trying to make sure that we are as Chinese as possible.

Most important, especially here in China, is one of the reasons why we’re becoming more successful: you have to localize. We have three customer service centers in China. We’re approaching 1,000 employees in China.

If you are a Chinese customer going outbound, and you’re booking a hotel, you want to make sure that, if there’s a problem, there will be someone there for you who speaks Chinese.

Most hotels, they cannot afford someone who speaks Chinese 24/7. They’re not going to do it. Are their websites all in Chinese? Do they understand the payment processes? If you want to pay through Alipay, or eventually WeChat, are these hotels set up for that?

That’s why places like Booking.com and Agoda are successful. It’s very hard for more hotels around the world to reach customers around the world. Locally, sure. They can do a good job of trying to acquire someone in their local environment than they can internationally. Overall, I think we are providing better service.

If we want to be successful in China, we have to combine services to the Chinese customer that are no different than what a local customer does. If you go on WeChat and can’t buy a hotel from Agoda like you can buy any other hotel, then the customer is not going to come to us.

We have to do it the same that they are doing. With every single new development, we have to make sure we are as localized as possible.

We have to develop great relationships with these giant companies. And that is something that everyone says, but it is not easy to do. You have to develop a friendship, an understanding, a long-term vision, together.

That’s something a lot of people in the West have not done a good job — understanding that, in China, the long-term is very important. You’re not a friend for a day, you’re a friend for a long time.

On ‘best price sourcing’ of inventory

In our industry, price is the most important thing. We know it’s the most important to the customer.

But look down the chain, on one end you have the hotel and on the other, you have the traveler. And in between, there are distributors. In 2010, I looked at the situation and realized that the wholesalers were taking a lot of value in that chain. They were giving that inventory to someone like us and then we were selling it to the traveler.

Why did the hotel give the wholesaler the inventory? Why don’t they always give it to us and cut out that wholesaler? What’s the value being added?

I don’t believe that situation has been resolved. I’ve noticed that the margins that wholesalers are taking have declined over the years. The fact is, we are always looking.

We want to provide the traveling customer the lowest price. To do that, we have to go out and get the lowest sourced price. And if the lowest price is coming from the wholesaler, rather than the hotelier, then we are going to choose the wholesale.

So my belief is that everybody who runs hotels should always be very careful for how they are distributing inventory. It does them no good to distribute to a wholesaler who then just gives it to us. I understand, a wholesaler gives inventory to a packager and creates a package for offline products. THat’s great, it’s getting new channels of distribution. I say give it to us before you give to the wholesaler.

On growth through cross-business interactivity

It’s important not to just focus on what’s going to happen tomorrow or the next quarter. You have to look further ahead. Just like the great hockey player, Wayne Gretzkytsky, scored so many goals because he skated ahead to where the puck was going to be, not where it was. And that’s what we’re trying to do.

We’re trying to develop for the future. We are always trying to provide better service to our customers.

When you’re developing very fast and growing rapidly, you focus on what is most important to your core business. But now, another way to develop fast is the interactivity among the different services you provide.

With all the new technologies, like artificial intelligence and big data, there are ways to provide interactivity among our companies, providing better services to customers.

Another way to develop fast is the interactivity among the different services you provide. With all the new technologies, like artificial intelligence and big data, there are ways to provide interactivity among our companies, providing better services to customers.

For example, when you travel, you’re not eating at home because you are traveling. So we have OpenTable, so you can book a restaurant. We have a good sense who that person is.

We should be providing them with good opportunities for great restaurants that fit the type of thing they want. Or when the person doesn’t know how they are going from the airport to the hotel, we want to provide the best choices for them.

On shiny new things

Lola was started by one of the co-founders of Kayak. There’s always going to be new things coming down the road. Things that people find exciting and interesting. Most of them will not become giant successes. It’s the new shiny thing that everyone likes at the beginning.

But it is important to always be developing new things. That’s the whole idea of technology advancement. Being innovative. We have tremendous numbers of engineers and scientists to work on new, better ways to do it. It’s a bit like a shark in the ocean: if it stops moving forward, it dies. A company is just like that, you have to keep moving forward.

That’s the whole idea of technology advancement. Being innovative. We have tremendous numbers of engineers and scientists to work on new, better ways to do it. It’s a bit like a shark in the ocean: if it stops moving forward, it dies. A company is just like that, you have to keep moving forward.

It’s about knowing things about your customers to be able to provide that service better than anyone else. We’re going to continue to experiment, that’s our philosophy. That’s how we built our company. If something works, we’ll do more of it. If something doesn’t work, we’ll do less of it.

We’re going to continue to try to find the best way, when someone uses our company, to provide them with a better experience. We are service oriented. That’s how someone wins — by making sure the customer has the best experience.

On China’s role in reducing friction in travel

What we’ve all seen, is that friction is disappearing from travel.

Look back — remember when you had to carry around a printed ticket to board a plane. Or that you had to order a taxi by holding out your hand or walk to a special stand. Now you just use your phone. Or a bike rental system — there was no such thing. So friction is going away.

Payments — used to be traveler’s checks, it was such a pain and it was unbelievable. Now, you just show up and take a picture of a QR code and they give you what they want.

That is the future – friction is going away. That’s why technology is so important.

When you look at what Ali has been doing, and what Tencent has been doing, in the area of financial innovation. A lot of people don’t realize China is at the front of the technological innovator revolution.

And that’s why we’re here, spending a lot of time, energy, money, and people — because we want to be part of it.

Part of the thing is a philosophy, it’s the need of people to have the ownership. The point is that, because we don’t know what the future will be, we have to take many paths.

We need to experiment to find the new ways people will use our travel services to achieve what they want – which is to experience the world.

On staying ahead of the competition

I’m concerned about everyone, anyone, all the time. That’s the way I am. I was in Africa with my wife, and we were on a foot safari in Botswana. We had a guide to protect us, and he had a very large rifle on his shoulder to protect us. We were walking along, and maybe 200 meters in the front of us, we saw some lions.

I turned to the guide, and I said to him, “Do we have to worry about the lions up ahead?” He looked at me and said, “Do not worry about the lions that I see up ahead.” And I’m thinking, really, because I’m pretty scared. Then he took the rifle off his shoulder, and he pointed and turned around in 360 degrees.

Then he comes back to me and says, “Worry a great deal about the lions you do not see.” So that is what I’m worried about — what do I not see?

On Ctrip

Ctrip is a great partner. They have done fantastic. Their management team is one of the best in the industry. So thankful because we have a large investment in them! There’s no doubt, with China being such an important business, there’s enough business for everyone in China. And there’s certainly enough industry demand outside China that I think everyone can be very successful.

Related reading:

Priceline Group buys Momondo for $550 million

Priceline and Baidu increase stake in Ctrip

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Nick Vivion

About the Writer :: Nick Vivion

Nick is the Editorial Director for Tnooz. Prior to this role, Nick has multi-hyphenated his way through a variety of passions: restaurateur, photographer, filmmaker, corporate communicator, Lyft driver, Airbnb host, journalist, and event organizer.

 

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