Chief executive of Hoseasons, James Villa Holidays and cottages.com parent attracted a packed room at Barclays’s HQ in Canary Wharf for this year’s Travolution Business Breakfast during World Travel Market. Ben Ireland reports
Developing the right technology platform for your business early on helps online travel businesses scale and merge new acquisitions.
Kjellberg said tech development is “just math” and “scale rules”, but warned moving too fast to integrate brands risks not going through the process in the right way.
The former Expedia Group senior director and now boss of Awaze, the corporate parent of the European vacation rental brands sold to private equity by Wyndham Worldwide said:
“The natural tendency is when you have a small local brand you think it’s great, we’ll keep it. When you keep these small local brands, you don’t notice the cost.
“Over time when you end up with 15 to 20 brands and they’re all slightly different you start paying the penalties of being on different platforms.
“It’s a bit sad, but scale rules in technology. Facebook is the same here as it is in Brazil. With Google there are some local differences, but they’re minor.
“It’s an active discussion for us right now. How do we take these wonderful brands and keep innovating and doing that at pace?.
“We don’t want to go too fast but we have to build a product in such a way that you can start integrating the brands so that you can move faster because in the end you develop it by test and learn and if you can have more traffic on the platform you can develop quickly. It’s just math.
“The thing about [tech development] is that it’s very rational and dry. If you try to be too friendly to everybody and end up with multiple platforms you eventually slow yourself down. You end up not being friendly to everyone.
“But it’s easier said than done. Even the newer companies have tech debt, or legacy debt, nobody has a fresh stack.
“It’s always about what pieces do you do first. That’s where the real magic happens and the mistake is to go and buy it brand new.
“If you think about it as a vehicle, it’s about replacing parts gradually as you keep moving. You have to do it in an agile way and figure out which order to do it.”
Kjellberg said it was important to get technology developed in-house as agencies might not be used to its complications.
He added: “Over time you definitely want to have the knowledge of how to think about it in-house.
“You can outsource parts, but a lot of third parties will have done [web development for] others sectors like supermarkets, but travel is a lot harder.
“It’s a marketplace with dynamic pricing. There are agencies that can help you in parts of the area, but there’s no Shopify for travel. There’s a reason for that: it’s too hard.”
Direct vs indirect
Awaze would “love to sell everything direct” but Kjellberg said he appreciates the role of high street agents and OTAs in distribution.
“In the industry, our definitions mean more to us than they do to the consumer. I would love to sell everything direct but the big OTAs have a big role to play – and we have a role to play for them.”
Kjellberg said it was hard to build brand loyalty with customers with sales through OTAs because they don’t typically pass on consumer data.
Referring to Awaze trade-friendly brand Hoseasons, he said two thirds of sales were direct but said the “symbiotic” relationship with third party agents works both ways.
Kjellberg said he was relaxed about potential competition from web giants Google and Amazon in the travel space, saying they don’t add value in the inspiration phase.
“Quite frankly we do a better job [than Google],” he said, adding: “Amazon has simplicity and speed – but I don’t want one click to book my whole trip. I want to savour my vacation before my vacation.”
Shift to online slows
The shift towards booking online from the high street is now moving at a “slow pace” and there is still a need for face-to-face interaction in the sales process.
Kjellberg, predicted there will still be plenty of travel agents on the high street in 20 years’ time.
He said: “Fifty percent of travel, and this almost is 30 years after online travel [selling] came, is still done offline.
“Why? Because a lot of people still like to go and talk to a human being and want to know that if their trip goes badly they can go back to Sally on the high street and talk to her. They feel safer with that and there’s still a need for that.
“It’s moving online, but it’s moving online at quite a slow pace. Twenty years from now we will still have a large amount of people buying travel from the high street agents.
“But the question is how much extra are people willing to pay to cover their high street rent etc in a more consolidated world.
“But I think there is definitely still going to be a need.”
The future for voice
Voice activated technology will grow in popularity but not become a popular hotel or villa booking process, Kjellberg predicted.
The Awaze boss said the channel’s lack of image results means consumers searching for holidays will look elsewhere for visual inspiration.
He said: “It can be a good pre-selector, but I want to see the pictures. What’s Alexa going to say? ‘There’s a luscious tree on your right’?
“They say a picture paints a thousand words, so that’s a lot of words needed. We are going to have to listen to Alexa for a long, long time before we know what the hotel looks like.
Kjellberg made the comparison to clever moving graphics on Powerpoint presentations, which he said were popular when first introduced.
“But just because you could do it, doesn’t mean you should do it – right? What problem is it solving?”
Nimble UK OTAs win out
“Nimble” UK OTAs have outplayed global giants in the online summer sun package holiday market, according to Awaze boss Henrik Kjellberg.
The former Expedia Affiliate Network president said the package holiday is a staple of the British travel market and has survived the componentisation of the traditional package by web players.
“The UK summer sun market is very specific. The global players are not as nimble-footed as some of these local players who solve a consumer need.
“They said people in this market want to have this experience and they work with local suppliers and airlines and they figured that out. Well done.”
Kjellberg cited Awaze brand James Villa Holidays as a “great example” of a UK-specific brand catering for market needs. “It’s basically flight, car, villa as opposed to flight, transfer, hotel.
“It’s a great product, people love it and it’s a local agency, so you know who you are talking to.
“I’m not sure that brand would do so well in France, but it does great here in the UK and I’m very happy to have it. This is a product people are used to buying and it’s doing well.”
Specialising in holiday rentals means Awaze businesses Hoseasons and Cottages.com are “well-positioned” in a marketplace where climate change is increasingly important.
Kjellberg said the recent trend of flight shame, or flygskam that originated in his native Sweden, indicates a growing movement of people opting to holiday closer to home.
“You want your brand to be into environmentalism,” he said. “We are extremely well-positioned for that, but it may take longer for consumer to move as long as there are cheap flights to Dubai.
“I would love to say it’s all eco, but one rainy summer in the UK and people may think I’ll go back to Majorca.”
Kjellberg said investing in eco-friendly buildings for its owned properties was the key environmental focus, saying: “We have more work to do in that area.”
Concierge service for customers
Awaze UK is testing a concierge service for its cottage and villa holiday rentals businesses.
Kjellberg said there had been “good results so far” in trials of the service that is designed to provide a more standardised service that depending on property owners to act as hosts.
“We have some who get really involved, and make the apple pie [for guests], and others who would rather not be seen. It’s hard to institutionalise that across the board.
“It’s hard for hotels too, but even harder for this sector. We are clear on the grading of our houses – and we have to be careful on the review scores.
“Because its non-standard it’s a hard problem to solve, but that’s good for us because its more personalised.”
He said customers want “endless” amounts of information and more pictures than before – adding that if Awaze branches out into experiences, as Airbnb has, he would likely outsource that to another company.