Is it possible to make a real splash in online travel given the evolution of the business over the last decade has spawned corporate mammoths that today appear to bestride the sector?
The closing session at this year’s Travolution Summit discussed this topic with some of the people and companies that have pioneered much of the change seen during the dot com digital revolution in travel over the last ten years since Travolution was born.
Maybe it’s a common misperception for generations that have lived through great change to believe all the best ideas have already been had.
Travolution founder Simon Ferguson, now Travelport northern Europe managing director, set the debate up by recounting the possibly apocryphal tale of how the US patent office was recommended to be closed in 1899 because it was believed there was nothing else to invent.
A warning against complacency perhaps, but Ferguson painted a picture of an online travel sector in which growth opportunities in mature markets like the UK are becoming more and more limited although remain for those with the vision to see the world differently.
While there is clearly still work to do in the booking process – tours and activities and ancillary hospitality and aviation products are still at an early stage of their journey to full online bookability – the opportunities for the mammoths of the future lie beyond the booking, said Ferguson.
Our expert panel agreed. David Soskin, former Cheapflights chief executive, who now spends his time looking for the next big investment in travel with his HOWZAT investment vehicle, cited legendary British playwright Noel Coward to explain his view.
Coward famously said he “would not put his daughter on the stage”. “I rather feel now I would not put my daughter in travel technology because it’s so competitive,” said Soskin.
However, Soskin said he has identified where the opportunities lie. “I think travel has been given a phenomenal boost by smart devices that give companies access to customers 24/7. And artificial intelligence has proved to be a fantastic tonic for the whole of the travel industry because it allows real personalisation for the first time.
“For the travel industry to do better and better analytics, going from the broad value of trying to appeal to everybody all the time to be able to pinpoint the user, please the user, sell to the user and delight the user, that’s an extraordinary change.
“If you are in the right sector providing the right product, I think there are still phenomenal growth possibilities. I’m very, very bullish about that. Having said that, there some mammoth players out there with huge pockets.”
In a sector today dominated by Expedia, Priceline, TripAdvisor and, arguably Google, no prizes for guessing who Soskin was referring to there, but another of our panellists, Alistair Daly, chief marketing officer of UK OTA success story On The Beach, offered hope to aspiring new entrants into travel.
He said the firm initially realised there was an opportunity to work with the UK’s dominant tour operators, Thomas Cook and Tui, to provide the sort online distribution they were not able to exploit through their own channels, and more latterly low cost airlines opened up a huge market.
“Today we have about 20% of market share of the online [UK] short-haul beach market which is worth about £40 billion in Europe. We will just keep focussing on what we do well. We own our own technology, which I think has been critical, we have a great marketing infrastructure and we understand our data.
“We have a clear strategy and we will keep executing on that. There are 300 of us [in On The Beach] and 50% are digital natives, technologists, business analysts, user acceptance testers and digital marketers, the rest are classic travel operations. Yes, we are a digital business that sells holidays.”
Echoing the views of Soskin and Ferguson, Daly said the ability to use its own and third party data to become more relevant and personal with its customers than its competitors will be key to On The Beach’s continuing success.
“A lot of personalisation that happens today is very passive,” he said. “You are waiting for some information to be provided through a search form, then you can put some recommendations together.
“What excites On The Beach over the next three, four, five years, is the ability to connect up third party data to that passive data so when someone lands on your site you know what car they drive, what financial banding they are in, whether they have a family, what TV programmes they watch so you can start the dialogue knowing something about them.
“We think that has the potential to help consumers get to the holiday that’s right for them because there are millions of combinations on our site, but to get the best five in front of someone straight away, that excites us, that drives disruption.”
Back to Soskin’s mammoths. What did Daly think of the threat of the likes of Google which recently indicated it was aiming its tanks towards On The Beach’s lawn by understanding packages better.
“We are one of their [Google’s] partners, we have a good relationship with them. Yes, they are looking at packages and we, and other providers, are looking to work with them. I think we have a really strong value proposition. Packages are very complex beasts to figure out, much more complex than single element.
“We have spent the last 10 years developing technology and we have a roadmap of innovation. We will keep an eye on them [Google], but it’s not just about the booking, it’s about the experience you are giving customers post the booking. That would be a very hard thing for Google to own.”
Skyscanner, another great Biritsh success story over the time Travolution has been around, is also wary about Google’s ambitions in travel, but like On The Beach sees its expertise and specialisation as ensuring the future is one of partnership rather than rivalry.
Filip Filipov, director of Skyscanner for business, said: “Google has been in travel since 2010; it’s a threat but it’s also a partner. If you are smart enough you know how to use them as a partner, if you do you risk becoming irrelevant in their search results.”
Although those mammoth global travel firms with the deepest pockets – Priceline and Expedia – have the financial clout to dominate on Google, Filipov believes there will continue to be room for smaller players.
“I do not think they can play in every single point of the journey. I think specialist companies will always be better. We need to be watchful because that partnership [with Google] can turn into a threat,” he said.
And it will be leading the way on personalisation that will become the vital factor for future growth, according to Filipov, although he said this won’t necessarily come via traditional digital channels.
“What we see is that over the years although we started with pure search this has changed. The industry has introduced different tools to allow you to expand your search and be more inspirational. It is also trying to bring search into bots and voice search.
“The internet is basically a state of connectivity, whether through an app, chat, or voice it does not really matter, the brand needs to be in place for the consumer. That opens up the door for true personalisation.
“Personalisation has been a theme for the last eight to 10 years. It’s about taking obstacles out of the way. People need the means to complete the transaction online. For us it’s how we connect the dots to make it as seamless as possible to book online.”
For Soskin it will be ideas and businesses that drive evolution in travel, rather than revolution, that offer the most attractive opportunities for investors looking to back the success stories of the future.
“Cheapflights was like that. Everyone was used to travel advertising. Cheapflights simply had a different platform: the desktop.
“Revolutionary businesses are incredibly rare and in most cases require vast amounts of money to dominate the world. At HOWZAT we are very traditional. When we look at businesses we like ones that do not require huge amounts of money to grow, we like businesses that are profitable and offer return for shareholders.”
Business like the pioneering OTA ebookers once was perhaps? Dinesh Dhamija, who founded ebookers, recalled how he built a brand that created enormous value but even in 2004 when he sold up to Cendant for £500 million the writing was on the wall as the mammoths began to dominate.
Asked if he regretted selling a brand that has since been bought by Expedia becoming one of the many travel brands in its portfolio, Dhamija, said resolutely no.
“We were spending £18 million on marketing a year while Expedia was spending £90 million. It was on the wall that we were going to lose one day. We had an edge when we started but not for ever. It was a good time to sell from that point of view.”
And maybe that was the underlying message of a summit session intended to mark 10 years of Travolution. Success has always been a mixture of being in the right place at the right time, spotting an opportunity and crucially executing better than anyone else.
The opportunities will come and go but it will always be possible to be more fleet of foot, more relevant and more adaptable to changing times than the mammoths.