Record Traffic Levels For Aussie Travel Web Sites

CONSUMER traffic to Australian travel websites is at an all-time high, according to Nielsen//NetRatings and Hitwise.

Not surprisingly, given the launch of Jetstar, the sharpest growth has occurred within the airline sites over the past two years.

However, hotels and travel agencies are not far behind.

According to Hitwise:

  • Commercial Airlines >> Increased 69% between December 2003 and January 2005
  • Travel Agencies >> Increased 40% between December 2003 and January 2005
  • Destinations & Accommodation >> Increased 46% between December 2003 and January 2005

Meanwhile Nielsen//NetRatings reports a similar pattern.

Senior Analyst Andrew Eckford said the trend has been particularly evident during the first three months of 2005.

"Over the past few weeks we have seen consistently more than 630,000 unique browsers a week to audited travel sites.

"This is significantly higher than seen for any week since we launched the Market Intelligence measurement for the travel industry."

Tables Below From Nielsen//NetRatings and Hitwise:

 

Nielsen//NetRatings Market Intelligence, Domestic Traffic to Travel Sites by Category for February 2005

Category              Unique Browsers      Page Impressions

Travel Portals       1,272,537                  10,659,606
Destinations         488,256                      5,065,915
Hotels                   203,342                     1,640,914
Rental Cars          133,497                     1,576,388

Hitwise – Travel – Agencies " February 2005 " Ranks by 'Visits'
   
Name                           Domain                                               Market Share

1 Flight Centre             www.flightcentre.com                 11.50%
2 Webjet                      www.webjet.com.au                     6.31%
3 lastminute.com.au    www.au.lastminute.com              5.96%
4 Expedia.com             www.expedia.com                         4.47%
5 ZUJI Australia           www.zuji.com                                 3.91%
6 Best Flights              www.bestflights.com.au              3.44%
7 Travel.com.au          www.travel.com.au                        3.18%
8 Octopus Travel        www.octopustravel.com/au         2.50%
9 ITN.net                      www.itn.net                                    1.92%
10 ninemsn Travel       www.ninemsn.com.au                 1.90%

 

Hitwise – Travel – Destinations and Accommodation " February 2005 " Ranks by 'Visits'
   
Name                         Domain                                              Market Share

1 Wotif.com                www.wotif.com                            6.71%
2 HotelClub.net           www.hotelclub.net                      5.70%
3 RatesToGo.com      www.ratestogo.com                   2.93%
4 Need It Now            www.needitnow.com.au            1.96%
5 TravelMate              www.travelmate.com.au            1.91%
6 Trip Advisor            www.tripadvisor.com                 1.60%
7 Totaltravel.com       www.totaltravel.com                   1.37%
8 Visit Victoria           www.visitvictoria.com.au           1.36%
9 Lonely Planet          www.lonelyplanet.com               1.35%
10 AAA Tourism        www.aaatourism.com.au           1.30%

Nielsen//NetRatings Market Intelligence, Top Destination Sites for February 2005


                                            Unique Browsers                 Page Impressions

  
1 visitvictoria.com              161,372                                  1,353,450
2 ourbrisbane.com             154,053                                  1,235,204
3 visitnsw.com.au              60,383                                    559,331
4 discovertasmania.com    48,739                                    813,611
5 westernaustralia.com     39,281                                    337,420
6 southaustralia.com          21,653                                    319,092

Ends/ 22 March, 2005

Travel Clicks Worth More Than Retail Bricks

By Martin Kelly

ONLINE travel in Australia has reached a milestone of sorts with the stockmarket capitalisation of Webjet (WEB) surging past traditional retailers – including significant share holder Harvey World Travel (HWT).

Webjet, valued at just four cents 12 months ago, raced to an all-time high of 34 cents on the Australian Stock Exchange following recent strong growth and a maiden net profit A$1.44 million.

Its price seems to have settled above 30 cents, giving it a market value north of A$75 million, compared with Harvey World's recent average capitalization of around $65 million.

Yet HWT – which has more than 500 franchised agencies throughout Australia, New Zealand and South Africa – made more money, recording a A$2.52 million net profit for 2004/05.

This traditional and well-run travel company also pays investors a healthy annual dividend of more than five per cent.

So what gives – why are investors ascribing a greater value to Webjet than HWT?

Basically, they are betting that Webjet has much better growth prospects than traditional franchise retailers like HWT or Jetset.

And there's definitely something to that.

The online travel market is still relatively immature and companies in this space – provided they have the technology – can operate much more effectively in a low commission environment.

It is also easier for them to expand because they are starting from a lower base and – like the Low Cost Carriers – have a fresh business model.

Of course, the stock market gets it wrong all the time and there are currently faint echoes of the dot bomb era in some valutaions.

However, the difference now is that many online companies such as Webjet are real businesses making real money.

Not that HWT Managing Director Barry Mayo would care about the differing valuations – his company's 19 per cent Webjet holding, which cost just A$1.9 million, is now worth A$13 million.
HWT also has the option to take its Webjet stake to 35 per cent.

The Webjet share price rises come on the back of consistently strong business performance.  In July and August, Webjet's turnover exceeded A$23 million, more than three times last year's figures.

"The increase strongly validates our business model," said Managing Director David Clarke.

However, the Webjet results failed to detail the comany's revenue mix and growth prospects.

Ends.

Good Times Ahead in 2005 – Abacus

ABACUS International has forecast solid growth in Asia-Pacific travel bookings for the rest of 2005.

The Singapore-based GDS reports that bookings for the first four months of this year are already up 21% over the same period in 2004, which was the best for a decade.

Vietnam was the standout performer during April with a 25% increase in bookings over March.

The established North Asian markets of South Korea (22%) and Hong Kong (16%) also grew strongly, while FIT bookings in Indochina and Central Asia increased 14%.

Four out of five bookings (78%) made in Asia-Pacific during April were for travel within the region.

Abacus President and CEO, Don Birch, says: "We are seeing signs of solid growth which, barring unforeseen circumstances, we expect to continue for the rest of the year."

He says total bookings on the Abacus system during April increased by 7% month on month to 2.9 million, up 10% over the previous year.

A black spot has been the slow recovery of passenger traffic to the tsunami hit markets such as Krabi and Phuket where "we are seeing a 60% to 70% drop in bookings" over last year.

Abacus now distributes through 11,000 travel agency locations in 22 markets throughout the Asia-Pacific region.

Ends

Travel.com.au Launches DP

New management at perennial under-achiever Travel.com.au Limited (TVL) has launched Dynamic Packaging on both its sites – travel.com.au and lastminute.com.au.

TVL has also ended its dual supplier approach to GDS, concluding a long-standing relationship with Sabre Pacific and fully committing to Amadeus, which has a stake in the company.

These moves come after disappointing results for the six months to December 31, a period in which TVL lost A$745,000 compared with a net profit of A$9000 for the corresponding period in 2003.

Encouraging sales growth of 9% was completely overshadowed by a 20% blowout in expenses largely due to the relaunch of the main site with a new design and booking engine.

Sales were driven solely by lastminute.com.au, which grew 35%, while Travel.com.au continued to disappoint with a 1% fall in sales. The bulk of its bookings are still handled offline.

Acting CEO Adam Johnson, who replaced incumbent Bill Gair in mid-February, said the focus at TVL – which employs 80 staff – is on growing automated sales.

He said this approach has been given strong impetus through the acquisition of Arnold Travel Technology (which Johnson used to run) via a share issue late last year.

As a result, interests associated with Arnold now control around 25% of the company. These include Johnson and new Chairman Roger Sharp.

Johnson claimed the early results from its Dynamic Packaging flight/hotel offering were encouraging, adding that automated booking numbers had increased on both sites as customers became familiar with the new booking engine.

"We're already ahead of budget and are going to be promoting it more over the next couple of months," he said.

Its Dynamic Packaging product is branded as 'TripSaver' which allows clients to "book flights and hotels together and save".

Chairman Roger Sharp described Travel.com.au in the six month results as a company which has "traditionally operated as an offline travel agency with a website offering limited online functionality".

It is a situation he aims to change.

Sharp said the aim now was to slow the cash burn – at December 31, TVL had reserves of A$2.5 million compared with A$4.4 million six months earlier – while growing sales.

But how? "Just having the Arnold booking engine in there means we can reduce costs, so as we grow we'll need fewer people to handle a larger number of bookings," said Sharp.

"The trick is to get growth in online transactions, and get it past our offline business."

Ends/ 22 March, 2005

Vroom, Vroom, Vroom – Car Hire Hits Online Accelerator

By Martin Kelly

Online car hire is taking off online faster than a BMW down the Frankfurt Autobahn.

Everywhere you look on the web there are new outfits with catchy names such as www.drivenow.com.au, www.webcarhire.com.au, www.standbycars.com.au, www.rentnewcars.com.au and www.bargainwheels.com.au – to name just a few.

They have come from nowhere and are providing a dynamic new distribution channel for suppliers such as Hertz, Avis and Europcar, who inadvertently find themselves in a win-win situation.

Not only are they getting extra business without doing much, but they also have a great chance of keeping it.

That's because many of the new Australian sites simply display rates from all the leading car hire companies on a matrix that takes them back to the chosen suppliers booking engine, allowing the big boys to own that customer.

Others have a direct XML feed in to the supplier databases, offering real-time availability and dynamic pricing. Improvements in supplier technology over the past 12 months have played a large role in making this possible.

"I think the car companies are astounded – like 'where are these bookings coming from'," said one website owner.

The key thing it's all happened so quickly. For example, when the progressive www.drivenow.com.au started in September, 2003, competitors were few and far between – now you can't Google "car hire" without getting deluged with options.

Meanwhile, established players such as DriveAway Holidays, Holiday Autos and Global Cars are reinventing themselves and going online in a very big way – utilizing the web for both business-to-business and business-to-consumer sales.

These outfits are also investing heavily in the back end, with technology creating enormous booking and financial efficiencies.

The recent merger between Holiday Autos and World Cars to create Holiday Autos Australia is an excellent case in point.

Managing Director of Holiday Autos Australia, Chris Hamill, said technology played a major role in the deal.

"The Holiday Autos system is very good," Mr Hamill said. Not surprising when you consider the might of this global giant, which does more than one million 'hires' each year.

Mr Hamill said affiliate marketing has been very successful with some travel agents using a standard 'white label' booking engine setup, while others are opting for the full XML feed. Either way they are making money.

"The online agents we have signed up are doing very well," Mr Hamill said.

DriveAway Holidays is also moving into the affiliate marketing space, announcing a new white label booking engine for agency sites after successfully testing with YHA Travel.

National Sales Manager at DriveAway, Doug McFarlane, said the company is having a big year and that much of its incremental growth is coming from online sales through agents.

Global Cars is another vehicle-based wholesaler in the midst of ramping up its capabilities and expects to roll out a new integrated system, based on Microsoft .NET, within the next couple of months.

It will have all the bells and whistles, allowing for direct inventory access, affiliate marketing and the rest, but for Managing Director Andrew Morgan it's all about creating efficiencies.

"I wanted to do all this six years ago and I couldn't but now I can," he said.

Ends.

Sabre Bids For Lastminute

Sabre has offered to buy Lastminute.com Plc for 577 million pounds to add to its Travelocity brand and create Europe's biggest online travel retailer.

It is offering 165 pence a share in cash for Lastminute.

Analysts believe the offer is fairly priced but say there is still a chance rival U.S. groups such as IAC/InterActiveCorp or Cendant Corp may counter bid.

Lastminute Chairman Brian Collie endorsed the Sabre approach, telling reporters: "This is the only offer we've ever had, and it's a very good one."

Sabre says buying Lastminute will strengthen its negotiating position with global airline and hotel companies, allowing it to offer better deals to customers.

May 13, 2005

JTB and Viator Combine to Distribute Japanese Product

A new distribution deal between JTB Corp, Japan's biggest travel company, and Sydney-based Viator is already yielding strong sales, according to Viator CEO Rod Cuthbert.

Cuthbert said Viator has now added JTB's huge Japanese destination product range to its database, which is marketed through through Viator.com and 500 affiliate sites such as Hotwire, Travelocity, Zuji and Priceline.com.

Products include sightseeing and destination activities like the famous Shinansen Bullet Train tours.

"We've been surprised and pleased at the booking levels so far," Cuthbert said.

"Clearly, given the perceived language challenges a destination like Japan presents, people like to get themselves organized before they go."

Cuthbert said the initial product focus is on Tokyo, Osaka, Hiroshima and Kyoto, while the primary target market is inbound English-speaking travellers to Japan.

Cuthbert said Viator has partnered with the Sunrise Tours division of JTB.

"It's a clear leader in English-language tours to Japan," he said.

"There's a bias towards educating visitors about the culture and history of Japan, and that's exactly what our customers are looking for."

Viator claims to be the world's leading online aggregator and seller of destination product. Purchases are typically made by travellers prior to departure.

JTB Corp. is Japan's largest travel company. Founded in 1912, it has offices worldwide and annual revenues in excess of US$13 billion.

More than seven million overseas travellers are expected to visit Japan during 2005, according to JTB estimates.

Ends / March 22, 2005

 

Sucker Punched By Technology – Blackberry The Culprit

By Yeoh Siew Hoon

I have to confess. I have succumbed. I got a Blackberry.  Despite declaring I wouldn't, despite my sincerest desire to be free of it, I have caved in.  Let me tell you what did it. Paranoia.

I was about to leave for a 19-day vacation in France and two days before I was due to catch the flight, I got an email from a friend saying there may not be Internet access where we would be going.

I panicked. So many things to do. Deadlines to meet. Loose ends that had to be tied.

Plus, a friend's voice kept whispering in my ear. "Get a Blackberry. It's perfect for someone like you," she said.

Two other friends I spoke to had told me differently. One said he gave it up after a week because he found it too intrusive and another, a hotelier, said he regretted ever insisting his company gave every manager one.

"Now that we have it, we have no excuse not to respond to emails."

To which my tech geek friend – notice it's always a woman who has an answer to everything – rebutted, "If it's a company mandate, then yes, I can see how it would be intrusive. But you? You are a free agent. It will free you even more. You can decide when to switch it on or off." 
Well, when you put it like that …

The day I was due to catch my flight, I got a call from another friend (male) who said, "Babe, I hope you're leaving all your gadgets behind."

"No. And I'm bringing my Blackberry," I said proudly.

"Babe, you are insane," he declared.

So, now I am paranoid about whether this latest device will ruin my holiday. Already half my baggage is made up of gadgets and all the paraphernalia that come with them.

Here's what I am carrying. An iBook G4, which has just been upgraded to the Tiger platform (grrr) and 1GB RAM, a hard disk drive containing stuff from my PowerBook G4 which I leave behind when I travel, my Sony digital camera, iPOD, iPOD Shuffle, Altec Lansing speakers, my mobile phone, radio and, of course, the BB.

Sometimes, I wonder why we even bother to go on holidays. Before we leave, we have so much stuff to clear. While we are away, we worry about stuff left behind. When we return, we have to deal with a backlog of stuff. 

Here's the other thing. When I told my friends I was going away for 19 days, everyone went, "Wow, so long." No one said, "How wonderful."

It seems to me that we live in a guilt-laden world. Few of us take long breaks anymore. Most of us can't afford to be away for an extended period of time.

Or perhaps it's because we don't know how to be idle anymore.

Someone is late for an appointment and what do we do?  We take out our phones and start SMS-ing. We go on holidays and what do we do? We check our emails.

When Tom Hodgkinson, author of "How To Be Idle", was asked on practical tipson how to be idle, he said, "Part of this individualism is you feel this pressure that you alone have to conquer the world, and if you don't work all the hours God gives then you start feeling really guilty.

"If you can stop feeling guilty, then I think it's easier to start doing what you want to do.

"The way to stop feeling guilty is to read stuff - I'm not saying my book, but works by Bertrand Russell or Oscar Wilde, people who weren't losers but who didn't believe in the work ethic, and argued this thing about guilt or wrote philosophy about idleness."

A friend drove me to the airport. "Is this all you have?" he said, referring to my one small suitcase.

"Yes," I said proudly. I pride myself in travelling light. "Half of it are books and my high-tech toys."

"For 19 days? Are you sure you will have enough clothes? Or were you just planning to wear your underwear throughout?" he asked.

So, now I am worried that I will be a semi-naked albeit fully wired traveller.

Actually, I am most worried about whether I will even have time to be idle during my break and whether my Blackberry will make a fruitcake out of me.

Ends

 

Melbourne Hotels Win Asia-Pacific E-Marketer Award

Crown Towers Hotel and Crown Promenade Hotel in Melbourne have been jointly named Asia-Pacific E-Marketer of the Year in the annual TravelCLICK and Hospitality Sales and Marketing Association International (HSMAI) awards.

The Melbourne properties scored the award, restricted to TravelCLICK customers, for significantly increasing business through electronic distribution channels.

During 2004, Crown Towers, a 482-room luxury hotel, used search engine marketing to increase its website visitors by approximately 41%.

Over the same period room nights 40%, while 2004 revenue rose 50% over the previous year.

Sister hotel, the Crown Promenade, a 465-contemporary property, targeted travel agents and became one of the top 15 hotels in Melbourne, based on revenue booked through the GDS, within one year of opening. 

Hyatt International was selected as the Overall E-Marketer of the Year winner based on its strong performance in electronic channels and effective use of both targeted electronic media and competitive knowledge.

Other E-Marketer Award winners are:

  • North America E-Marketer of the Year – Kimpton Hotel & Restaurant Group
  • Latin America E-Marketer of the Year – Country Club Lima Hotel
  • Europe/Middle East/Africa E-Marketer of the Year – Radisson Edwardian International Plaza Hotel Heathrow
  • E-Marketer Lifetime Achievement – Tom Civitano, Executive Vice President Sales & Marketing, The Plaza Hotel, New York

TravelCLICK is a US-based company that provides electronic marketing and price benchmarking services to the hotel industry. It has more than 8000 customers across 140 countries.

Ends.

 

Strong Foundations For Decipher.biz

Decipher.biz – billed as the world's largest tourism data portal – today announced it has signed three of Australia's largest travel companies and all state tourism bodies as foundation members.

CEO Mark Phillips said Decipher, which aggregates tourism data from more than 200 sources and features a range of business planning tools, wants to further boost sales of its resources through industry resellers. 

"We're looking for distributors and want to establish a network of resellers," Mr Phillips said. Decipher packages start at A$550 for small companies, up to A$33,000 for large corporations.

Mr Phillips said Decipher had been buoyed by strong industry support with hotel group Best Western, hire car companies Avis and Budget signing on as foundation members.

"They view it as a valuable business planning tool – it allows them to access the latest data from around the country and build that information into their business strategies," Mr Phillips said.

Other partners include AAA Tourism, Australian Tourism Export Council, Tourism Queensland, Tourism Tasmania, South Australia Tourism Commission, Northern Territory Tourism Commission, Australian Capital Tourism, Tourism Australia, Tourism Victoria and Tourism NSW.

He said www.decipher.biz has attracted more than 7000 unique visitors since its launch last month by the Minister for Small Business and Tourism, Fran Bailey, with the average visit lasting 20 minutes.

"I think this shows we have really hit the mark," Mr Phillips said.

Managing Director of Decipher Technologies, Peter O'Clery, said Decipher aggregates the latest statistics from disparate sources such as the Australian Bureau of Statistics, Tourism Research Australia, State and Regional tourism organisations and private companies like Roy Morgan.

"It is designed to help tourism operators of all sizes, as well as local governments, regional tourism authorities, destination marketers and industry organisations."

Decipher has been in development for many years and is the result of a working alliance involving the Sustainable Tourism Cooperative Research Centre, Amadeus and international consultants Ernst & Young.

Much of the funding has come from the Federal Government, which identified poor access to as a major industry issue in the late-2003 Tourism White Paper.

Decipher Technologies is administered as a business unit of the CRC for Sustainable Tourism Pty Ltd, which is responsible for developing and managing the commercial operating system.

Tourism contributes nearly 6 per cent of Australia's employment and earns about A$17 billion in exports.

Ends / 22 March, 2005

Competition Heats Up For Asian Search Engines

FLEDGLING Asian travel search engine, Bezurk, has landed its first major client – the InterContintental Hotels Group (IHG) ahead of its launch later this year.

It is the latest in a slew of Asian travel search engine announcements.

Airline search engine Fare.net, based in Singapore, has already taken off and is offering comparative pricing on airfares across Asia.

Pascal Bordat, CEO and Co-Founder of Fare.Net said: "We see a huge opportunity in Asia for a service such as Fare.Net. 

"In the US, several such comparison shopping portals are already successful and growing rapidly.

"We are equally confident of the success of Fare.Net in Asia Pacific.

"After Singapore, we plan to successively launch in Malaysia, Thailand and Australia in the next six months, with other key markets like Hong Kong, India, South Korea, Taiwan, and China soon thereafter. "

Beijing-based Qunar.com has launched into the Chinese market with a Mandarin language search site, while Oodles 100% Travel Search is planning to go live within a couple of months.

Qunar, which means "where are you going" in Mandarin, offers price comparison search capabilities across air, hotels, car rental and tour packages.

The company plans to complete beta-testing of its English, Japanese and Korean versions by the end of September.

Things are also moving quickly at Bezurk.

Chairman James Vaile said the company will offer accommodation search "by September or October" before expanding into other areas.

 "We think that is a good stepping stone," he said.

Mr Vaile said he has no doubts the Asian market is ready for specialist search engines, which operate on similar principles to the majors such as Google and Yahoo!

The major difference is that instead of evaluating all travel deals, specialist search engines typically only monitor the sites of its member companies.

These companies then reimburse the search engines on a 'pay per click' basis for sending traffic to their sites.

"The reaction has been phenomenal since we launched a couple of weeks ago, particularly from the Internet portals, which recognise what a perfect fit this is for the region," Mr Vaile said.

Regional Director of E-Commerce at IHG, Craig Hewett, said travel search engines had really worked for the group in the US.

"We want to be apart of the action," he said.

Mr Hewett said an advantage of travel search engines for suppliers is that they facilitate direct booking.

"By sending customers direct to our branded websites – including InterContinental, Crowne Plaza and Holiday Inn – it enables us to forge direct relationships between travellers and our brands."

Meanwhile, in Australia Oodles.com.au is also preparing to start.

But instead of accommodation, it will be launching with car hire and Director Steve Sherlock said agreements had been signed with all major suppliers.

He added that its technology development – outsourced to India – is progressing well.

Mr Sherlock said Oodles had decided to start with car hire because just a handful of companies dominate the global marketplace.

Oodles expects to launch within a couple of months and is currently seeking additional capital.

Ends.

Search Engine Marketing Takes Off – Are You On Board?

SEARCH Engines are going gangbusters. Advertisers – travel companies prominent among them – are lining up to get on board. Just look at the first quarter results for the two biggest brands, Google and Yahoo!.

Google's first quarter profit quadrupled to US$369.2 million. Revenue – almost entirely from online advertising – increased 93% to US$1.3 billion. The news pushed Google shares, which listed last August at US$85, beyond US$220.

Meanwhile, Yahoo!, the most popular US website, posted net income of US$205 million for the first three months of 2005, more than double its US$101 million profit for the same period last year.

Big money, massive profit growth rates, something is very real happening here. In simple terms, the Search Engines are getting mobbed by businesses large and small which want to advertise with them.

And this is just the beginning. Search Engine Marketing (SEM) – the art of highlighting websites, brands or products in response to consumer "keyword" queries – is still in the first flush of youth.

Google, which has entered the lexicon and seems to have been around forever, is just 10 years old. Yahoo! was started in a Stanford University trailer in 1994, and listed a year later.

Here in Australia, the SEM story is equally positive. Why? Because SEM is cost-effective (for now at least) and it works. In fact, Australian internet advertising in general is on the rise with SEM the current star performer.

According to a survey by emitch and Roy Morgan Research, prominent advertisers estimate that 9% of their total advertising budget (or around A$800,000) will be allocated to the internet in 2005.

These experts are increasingly shifting their spend to SEM and believe the major strengths of the internet as an advertising medium are (1) targeting capabilities; (2) customer reach; and (3) cost effectiveness.

They also saw "immediacy" and "accessibility" as major strengths.

And with travel one of the most searched for categories on the Internet, there are clearly major opportunities for travel businesses to market online, with very real benefits for those who get in early.

The buzz among travel industry early adopters is very strong. At the recent Search Engine Room conference in Sydney, around 25% of the 250 attendees came from travel, with many actively using SEM to great effect.

Importantly, it's not just airlines, hotel and destination sites who are getting on board. Corporate travel, car hire and destination sites are all using a mix of organic and paid search to generate sales leads.

Organic search results are the links which appear on the main panel in response to a keyword searches such as "cheap airfares" or "Gold Coast hotels" – while paid search is generally the boxed listings to the side.

Most experts like to have a mix of the two to balance risk and return.

Paid search advertisements are priced – and ranked – according to demand. Researcher Frost & Sullivan estimates that the average cost of a keyword is around A$1, although prices can range from 10 cents to $50.

Organic results are much less predictable with high rankings determined by a number of factors, in particular relevance of text, number of site links and popularity.

In Australia, the clear search engine market leader is Google with around 50% of eyeballs, followed by ninemsn and Yahoo! (which also offers organic and paid search to numerous partner sites, including ninemsn, through Overture).

Combined, these sites are just about the most popular segment on the Internet, and Nielsen//NetRatings reckons search engines have a "reach" of 71% among the 13+ million Australians with Internet access.

That's a lot of potential customers. Can they find you?

May 13, 2005

Totally Teetotal on Technology

Can you survive a week without your mobile and Blackberry? Yeoh Siew Hoon goes cold turkey in the golden land of temples – Myanmar

I've just been reading a report about what it takes to keep the 21st century business traveller happy.

Apparently, the four top requirements are a direct flight, a flat bed, a Blackberry and being met at the airport – so said 1000 business travellers who were surveyed at the recent Business Travel Show in London.

According to the survey:

  • 62% said a direct flight would make their journey more enjoyable
  • 48% craved to see a chauffeur hold up a card with their name on at their destination airport
  • 46% said they wouldn't be parted from their Blackberry for the world
  • 43% longed for the undeniable luxury of a flat bed on their long-haul flights

So there we have it – the 21st century business traveler is a spoilt and insecure species.
 
Spoilt because he or she craves luxuries and comforts and insecure because he or she can't do without their communication devices – some psychiatrists believe our fear of being without our mobiles or Blackberries stems more from insecurity than conscientiousness about our work.

In other words, we all need to be needed and we all want to feel indispensable in our jobs. Imagine if everything ran smoothly while we were away and were out of touch …

Anyway, the survey got me thinking that if they were ever to do similar research on what it takes to keep a 21st century leisure traveler happy, I am quite sure that top on the list would be no mobile phones and no Blackberries.

I say this because I have just spent a week in Myanmar, mobile-less and email-less.
 
And I am glad to say I survived. In fact, more than survived. I felt a sense of freedom and liberation that I had not felt in years. It was like walking on winged feet through a golden land of temples.

At first, it felt strange. In the first few hours of arrival, my mind kept wandering to my phone and laptop, wondering what messages I was missing and if I had missed any deadlines. My fingers actually started to itch.

Switching off my mind was infinitely harder than switching off my electronic gadgets.

It's hard when you are an SMS addict, like I am, to suddenly go cold turkey. But let's face it, if you have to go cold turkey, Myanmar is the best possible rehabilitation clinic on earth for us urban, email, mobile phone junkies.

This is a land that is timeless. It's a place steeped in time. People have time. They take time to do things. They do not rush. They sit. They talk. They pray. They smile a lot. They do not have much but they have a lot.

It teaches you not to hurry because why worry? There is time.

By the time I went to bed at the Pansea that first night, I was in step with Myanmar.

I dreamt of white clouds, not Blackberries.

During the course of the week, there were temptations thrown my way. Perish the idea but some hotels now actually have business centres with Internet facilities.

The temptation was strongest on "The Road to Mandalay" cruise from Mandalay to Bagan where I had to spend three nights on the ship in really close proximity to an Internet connection.

It was tough but whenever I felt the old habit creeping up on me, I immediately ordered a gin tonic, recited Rudyard Kipling and counted flying fishes.

I therefore recommend Myanmar to any 21st century business traveler who wants to learn to do without his or her Blackberry.

Truth is, it's amazing how easy it is to do without when you are forced to do without.

Ends / 21 March, 2005

Get Set For Wired 2005 – Speakers Sponsors Announced

Speakers and sponsors have been announced for Wired 2005: Asia Travel Matrix, which is happening at the Grand Copthorne Waterfront Hotel in Singapore on October 20 & 21.

It's set to be the best travel technology, marketing and distribution conference staged in the region.

  • Sponsors: Singapore Tourism Board, Amadeus, Abacus International, Millennium and Copthorne International, TravelCLICK, Pegasus and WORLDHOTELS.
  • Industry partners: Hospitality Sales and Marketing Association International, the Hotel Electronic Distribution Network Association, MarketShare and the MacroVision Network.
  • Media: Yahoo! South-East Asia is the online media partner, while e-Hotelier, 4 Hoteliers and Travel Trade Report are also supporting

A dedicated site will be launched in mid-July and tickets for the two-day conference will start at just US$395.

Meanwhile, check out the speakers below who have already confimed, and click here to register for updates – stay tuned for more big names.

If you have any questions, feel free to contact the oraganisers Yeoh Siew Hoon – yeoh.sh@pacific.net.sg – or Martin Kelly – mjk@iform.com.au.

  • Ram Badrinathan, Analyst, Asia-Pacific, PhoCusWright
  • Nicole Bernthaler, Chief Marketing Officer, World Hotels
  • Scott Blume, Chief Executive, Zuji
  • Oliver Bonke, Vice President – Marketing, Starwood Hotels and Resorts
  • Symon Bridle, hief Operating Officer, Shangri-La Hotels and Resorts
  • Maria Cary, GM Pricing and Distribution, Accor Asia-Pacific
  • Rick Clements, Managing Director, Rick Clements and Associates
  • Tony Davis, Chief Executive, Tiger Airways
  • Bernadette Dennis, Vice President Asia-Pacific, Marriott International
  • Olivier Dombey, Vice President Sales and Account Management - Asia Pacific
  • Sue Graham, Regional Manager – Hotel Business Asia Pacific, Travelocity
  • Peter Harbison, Managing Director, Centre for Asia-Pacific Aviation
  • Deep Kalra, Founder, Makemytrip.com
  • Ken Low, Assistant Chief Executive – Branding and Communications, Singapore Tourism Board
  • Grant McCarthy, Head of Search, Yahoo! South-East Asia
  • Ken Mandel, Chief Executive/Regional Director, XM Asia Pacific
  • Toby March, Vice President – Hotels & Cars, Abacus
  • Gerry Oh, Senior Vice President – Marketing, Millennium and Copthorne Hotels International
  • Timothy O'Neil-Dunne, Managing Partner, T2 Impact
  • Lucas Peng, Founder and Managing Director, MacroVision Network
  • Chananya Phataraprasit, Chairman, East West Siam
  • Mark Renshaw, Managing Director – Singapore, Arc
  • Mark Rizzuto, Managing Director – Asia, Cendant TDS
  • Karthik Siva, Founding Chairman of the Global Brand Forum; Group Strategy Director of Ogilvy & Mather, Singapore
  • Peter  Smith, Vice President – E-Commerce, Amadeus Asia-Pacific
  • Stuart Spiteri, Director Asia-Pacific, Akamai
  • Martin Symes, Executive Director – Commercial, Zuji
  • Aileen Tan, Vice President – Centres for Excellence, Abacus International
  • Jan Tissera, President – International, TravelCLICK
  • James Vaile, Chairman, Bezurk
  • Anthony Venus, Executive Director, MarketShare

Ends.

TIAS Signs More Suppliers

Avis, NSW Holidays and TravelPoint have joined Australia's TIAS TravelTools booking database, which now features 37 suppliers.

General Manager Sales and Marketing, Gerald Chait, says the number of travel agents using the system had also increased.

"Over the past month we have seen a significant increase in activity and May was a record month for agency subscriptions," he said.

Three new suppliers have also joined the TIAS online payment system, TIAS Tips – Captain Cook Cruises, Spacewalker Gold Coast and Infinity Gold Coast.

Chait said TIAS Tips can now be integrated into a supplier's host booking system.

Ends.

 

Static Pricing Going Nowhere – Accor Moving To Dynamic Model

The region's largest hotel operator, Accor Asia Pacific, is moving to a Dynamic Pricing model and reducing fixed rate allotments in the current round of 06/07 contract negotiations.

Bullish regional hotel markets – in particular Hong Kong, Sydney, Bangkok and Melbourne – are also colouring agreements and mean that room rates are set to increase by 10% in popular destinations with limited supply.

General Manager Pricing and Distribution, Maria Cary, said traditional static pricing is fast becoming an historic relic.

"This is a real issue for wholesalers, inbound operators and suppliers," she said.

"It just doesn't make sense to sell at a flat price across the year."

Ms Cary said static rates are irrelevant four days out of five when they are either below or above the dynamic market rate, which consumers can see via any number of Internet sites. 

"In benchmark cities like Sydney and Singapore the rates are going to be above the market 40% of the time and below it for another 40%," she said.

"So what we are doing for next year's contracting is giving static rates to those that require them but over and above the allotment it shifts to Dynamic Pricing."

She cited an Accor study which showed that one major player had lost A$50,000 in potential commissions in a single year by sticking with the static model.

However, Ms Cary said despite continued resistance there had been significant change in attitudes over the past 12 months.

"A year ago we were talking with people about Dynamic Pricing and no-one wanted to know about it, now we're getting a mixed reaction," she said.

"A third of the wholesalers we're talking to don't want to hear about it. They are either resistant to change or don't understand the benefits of Dynamic Pricing.

"Another third want to make it happen and have the technology to do so.

"Then there is the remaining third that can see they need to do it but their technology is holding them back."

Ms Cary said a couple of major Singaporean businesses – Chan Brothers and HIS – are now connecting directly to the Accor system, and predicted others will follow.

She said technology is crucial and that wholesalers who are serious about adapting must invest to ensure they are not left behind.

Accor offers Dynamic Pricing to wholesalers either direct or through the GDS, Pegasus, WorldRes and the Internet.

Ends

Flurry of Deals For eNett

THE flurry of announcements from eNett International has continued with Tramada the latest company to announce an alliance with the Australian technology provider.

eNett has moved quickly to capitalise on the push for travel agent service fees in Australia and announced a series of distribution agreements over the past two weeks for its Travel Service Fee (TSF) product.

These include arrangements with Galielo and now Tramada, which supplies travel management software to the retail travel industry.

eNett claims TSF enables travel agents to easily move to a service fee business model from July 1 when Qantas cuts domestic airline commissions from 5% to 1%.

CEO Anthony Hynes says: "TSF is a very simple product which can be fully integrated for 'booking-to-back-office' processing and reconciliation, interacting seamlessly with existing agent systems.

"It can also be set up to offer batch processing or operated as a standalone desktop solution to make the process easier and more cost-effective."

The company also markets the eNett payment and accounts management system.

Partners include Qantas Holidays, Calypso, Sunlover Holidays, The Travel Corporation, P&O Cruises, Scenic Tours, Globus & Cosmos, the AOT Group and Australian Pacific Touring. 

Also on board is MasterCard International for credit card connectivity, and ANZ Banking Group.

Ends.

Deals Up In The Air For Amadeus

AMADEUS is making inroads in into the Asia Pacific aviation market, recently announcing a couple of significant deals with carriers from the region.

Bangkok Airways will use its Revenue Integrity product to better manage 'no-shows' while Amadeus e-Travel technology is powering the freshly launched American Airlines website in Japan.

Vice President Marketing at Bangkok Airways, Peter Wiesner, said the airline hopes to cut 'no shows' by up to one third.

"We expect to save US$1.75 million a year from reduced no-shows, reselling seats which wouldn't have been paid for, and more accurately forecasting our load factor," Mr Wiesner said.

Meanwhile in Japan, American Airlines has launched a new website powered by the Amaeus Internet Self-Service engine e-Travel® Planitgo.

Putting the traveller firmly at the centre of their online sales strategy, Planitgo allows the airline to reduce costs and increase online yield.

Japan has been classified by Nielsen/NetRatings as an "emerging online market" with double-digit growth online time over the past year. 

The Japanese spent 12% more time on the web at home in 2004 compared to 2003, showing key potential for online travel sales in that market.

American Airlines joins five other airlines with Japanese websites powered by e-Travel Planitgo – Air France, Cathay Pacific Airways, Korean Air, Philippine Airlines and Thai Airways. 

Amadeus said more than sixty airlines worldwide use Planitgo.

Ends.

Tramada Links With Amadeus

TRAVEL Management Software provider Tramada is seeking further distribution opportunities after sealing a fresh agreement with Amadeus, announced just days after its exclusive arrangement with Sabre expired on April 30.

Tramada Director David Lanning says while "it's still business as usual with Sabre" the company is keen to further expand its distribution network and access a greater number of travel agents.

Managing Director Michael Rudny says Tramada is also talking with Cendant and hopes to have an agreement in place by the end of this year.

"I think there are great growth opportunities for Tramada, and Sabre has graciously understood that were we to remain exclusive to them we could never reach our full potential," Rudny says.

Tramada has 1500 travel agent clients from most leading groups including Jetset, Travelscene, American Express, Harvey World Travel and Traveller's Choice.

May 13, 2005

Rapid Asian Growth for Wotif.com

Wotif.com has boosted Asian sales revenues by 135% over the past 12 months, while increasing its regional property portfolio by 76% over the same period.

Company CEO Graeme Wood said in a statement wotif.com is also reaping benefits from its online sales agreement with low cost carrier Valuair.

During 2005 wotif.com's Asian product focus has been signing up hotels in the secondary cities of China, Taiwan, Malaysia and Indochina in response to demand from business travellers visiting these regions.

"Meanwhile, we have been adding to our current product offerings in the major cities like Hong Kong, Singapore, Kuala Lumpur, Jakarta, Bangkok and Manila," Mr Wood said.

In the second half of 2005, wotif.com will focus on expanding its presence in Hong Kong.

"On the leisure front, our focus has been developing a more diverse product range to include serviced apartments, golf and dive resorts as well as boutique hotels that cater to travellers who prefer an alternative to a normal hotel stay."

To meet corporate demand, Wotif.com has been adding properties that feature facilities such as broadband internet access, fitness centres, business centres and work desks.
Major branded hotels are also playing a greater role.

This includes working with many of the Asian based regional and global hotel groups such as the Mandarin Oriental, Shangri-La, Intercontinental, Le Meridien, Raffles International, Pan Pacific amongst many others.

Ends

STB Supports Wired 2005

ASIA'S first home-grown travel distribution and technology conference – Wired 2005: Asia Travel Matrix – was launched today with a three-year marketing commitment from the Singapore Tourism Board. 

Wired 2005 will bring together all major Asian industry players in travel's most dynamic sector, reflecting the increasing maturity of the local travel technology and distribution market.

Based on three basic pillars – Bold Thinking, Fresh Ideas, New Technology – Wired 2005 has already won strong industry support.

Apart from the STB, other foundation partners include Akamai, Yahoo! Asia, Millenium and Copthorne Hotels, Pegasus and HEDNA.

To be held at the Grand Copthorne Waterfront Hotel on October 20-21, the event has been founded by two of the region's leading travel communication specialists – Yeoh Siew Hoon and Martin Kelly.

Stay tuned for further details.

May 13, 2005

Wholesale Changes? Not Likely

By Martin Kelly

WHOLESALING sounds like something that should only happen at a fruit and vegetable market. Yet the middleman is an intrinsic part of the travel industry, and has been since ancient times.

The question now is whether the wholesaling sector is headed for rocky times unless the traditional single-channel business model – selling through travel agents – changes.

Senior industry executives privately say that wholesaling is vulnerable, lagging as air and hotels have moved forward, using the Internet to bypass traditional distribution channels and sell direct to consumers.

At first glance, this argument makes sense, at least for small wholesalers.

They simply don't have the capital to invest in new technology, or the time to develop fresh strategies, while the complicated nature of international holiday packages demands personal service.

But what about the big boys, who can pretty much do what they want – why haven't they changed?

The answer, according to the likes of Qantas Holidays and Creative Holidays, is that the agency distribution system works, Internet or not, especially for international travel.

For smarter wholesalers with good product and service, the traditional agency channel is working overtime

Head of Qantas Holidays, Simon Bernardi, says the direct/travel agency split has remained static: at 10% direct and 90% through travel agents.

"The Internet has been good at selling air and capital city hotels, but certainly land is still being booked through traditional means," says Bernardi.

"People prefer to make a phone call or get a brochure – that hasn't changed."

He says there's been some disintermediation with many people now buying land and air separately.

Bernardi also adds that the Internet offers no real price on holiday packages,  which can be bought cheaper through the big wholesalers.

Creative Holidays Managing Director Justin Montgomery claims there is a big opportunity for wholesalers selling exclusively through travel agencies in the low-cost low-commission airfare environment.

On July 1 standard Australian domestic airline commissions fall from 5% to 1%; while  in many cases international rates have already fallen from 9% to 7%.

"Travel Corporation has taken the strategy of staying with the trade and not going direct because every other competitor seems to be doing that, and at some time there's going to be a breaking point," Montgomery says

Montgomery believes agents will become more selective about who they deal with, and ignore wholesalers selling direct.

"We are now at watershed period, and I think agents are saying we can make money (in the new environment but) if a supplier is selling direct, why would we support them?"

Peregrine and Gecko's takes a similar position, although from a slightly different perspective, as it has always sold direct and marketed its brands heavily through consumer media.

"The vast majority of Gecko's sales come through travel agents in Australia and the proportion is very stable," Gecko's Brand Manager Steve Wroe says.

He adds that a web presence is essential because "it's what consumers want" but Peregrine and Gecko's believe there is no need to fiddle with the standard approach – even when entering new, web-savvy markets such as the UK.

Why? Because if it ain't broke, don't fix it.

Ends.

Hungry Octopus

Australian travel agent sales have passed the A$10 million mark at OctopusTravel.com.

GM Peter Smith says while OctopusTravel.com is best known for its accommodation listings, "we've seen a significant increase in transfer and sightseeing bookings over the past year."

He says that the local Octopus sales team has been boosted to drive continued growth. Octopus.com now has 22 offices around the world and was recently named the UK's fastest-growing travel company.

May 13, 2005

 

Black Friday Changes Nothing in Long-Running Soap Opera

By Martin Kelly

Black Friday, July 1, has come and gone and nothing has really changed.

For those of you living under a rock, this is the date Qantas cut its standard domestic commission to Australian travel agents from five per cent to one per cent.

Meanwhile, generic international commissions are down around seven per cent and will certainly fall further over the next few years.

Therefore the days of making an easy buck by selling an airline ticket are gone, while the era of travel agents charging a service fee is here.

Which is not so bad – service fees have brought prosperity to agents from New Zealand to Ireland, and other sectors of the industry are still offering significant commission rewards.

Certainly, the industry's major technology providers see it as a business opportunity and have launched a plethora of linked product.

Yet such developments continue to be coloured by sporadic outbursts over airline behaviour – perhaps because it is basic human nature to resist change.

Once again, the airlines – Qantas in particular – are the Bad Guys, an essential character for every long-running melodrama or soap opera.

And that's what this is.

Just like Days of Our Lives, a lot of things appear to be happening short-term but leave the country for a year or two and you will have missed nothing.

Similar story lines, same major players, a few bit actors killed off and a couple of new stars to get the juices flowing.

In this case, the baddies have done what they always do – looked after themselves first and everyone else second.

But it is important to note that the airlines are still rewarding productive travel agents and chains with higher commission levels.

Some even say that Jetstar, which has proudly declared itself a no-commission airline, is being written into Qantas sales agreements.

Yet selling direct to the public and cutting out the agent remains very much a priority for all carriers.
 
Of course, technology is at the heart of what they are doing. The internet makes selling direct as simple as saying World Wide Web.

Perhaps travel agents could let bygones be bygones and learn a trick or two from the Bad Guys in this saga and apply them to their own business.

Lesson One: cut costs, create greater efficiencies, improved productivity and increased profits.

For airlines, that generally means sacking staff and outsourcing to cheaper locations.

Now that won't be feasible for already stretched travel agents, so they can look to some of the new back office and travel management products the GDS are now marketing to save time with all the messy procedural stuff.

All these products also link with service fee software.

Lesson Two: marketing. The airlines are all over the internet using the latest digital marketing techniques.

Now while that might not be suitable for many agents, technology can really help market smaller businesses such as travel agents.

In particular, database management and email marketing offer enormous opportunities if handled with sensitivity and integrity.

The advantages are many - no mailing costs, and the chance to immediately pitch offers to those with a declared interest.

And there are many other opportunities.

Lesson Three: keep a close eye on what the baddies are doing to learn how best to look after number one.

After all, airlines are the masters at that game.

Ends

Travel Distribution Strong But Net Income Down 44% At Cendant

By Martin Kelly

EVER thought about creating a global travel content and distribution empire? The people at Cendant Corporation, based out of New York, certainly have.

And what's more, they have done something about it. Over the past couple of years, Cendant has bought up big, with travel and real estate the major focus.

Over the past 12 months alone it has acquired Orbitz, ebookers and Gullivers Travel Associates.

Other travel brands it owns include Galileo, Avis, CheapTickets.com,  Budget, Ramada International, Howard Johnson etc.

I'm sure you get the idea; they are big – but how big?

Well, to give you an idea of scale, Cendant is capitalised at more than US$22 billion on the New York Stock Exchange, while Sabre Corporation (which apart from the GDS also owns Travelocity) is worth around US$2.5 billion.

But no-one said running a company of this size was going to be easy, as an analysis of its recent second quarter results reveals.

On the plus side, Cendant's Travel Distribution Services division went well and is expected to continue its strong performance, driven largely by recent acquisitions and solid gains from established internet businesses, albeit from a low base.

"We expect growth to accelerate," Cendant's President and Chief Financial Officer, Ronald L. Nelson.

However, the Cendant accounts reveal that total net income for the company slumped 44% to US$387 million despite booming real estate and travel markets.

The reasons for this are a little hazy, although it's safe to assume financial indigestion flowing from the challenges of integration are a significant factor.  

Meanwhile, as part a bid to focus on core activities, Cendant will sell its Marketing Services Division for US$1.83 billion and embark on a US$2 billion share buy back over the next 18 months.

See, not easy, a fact recognized by the stock market with Cendant's share price going nowhere over the past year.

The second quarter result was undeniably patchy. It revealed steady demand for Global Distribution Services (Galileo) but issues in its Vehicle Rental and Hospitality Services divisions.

Highlights from Travel Distribution Services (excluding contributions from Orbitz, Gullivers and ebookers) include:

  • A 48% increase in revenue and 21% growth in pre-tax profit to US$143 million.
  • Organic growth of 47% in online gross bookings at Cendant's travel agency businesses (or US$14 million increase in revenue). 
  • Strong growth and higher margins from CheapTickets.com, which has now migrated to the Orbitz technology platform. 
  • Steady result from GDS cash cow Galileo which generated 3% revenue growth – from US$396 million to US$410 million.
  • Global air traffic up 6% by GDS segment but US domestic air yields down.

Nelson claimed the recent acquisitions would really start to kick in during the second half of 2005 and through 2006.

However, analysis of the company's overall forecasts reveal that total "income from continuing operations" will probably be down between 5% and 10% for the full year.

Once again, the strongest growth will come out of travel distribution, where Cendant is forecasting an increase in pre-tax earnings of up to 43%.

However, vehicle rental remains troublesome with decent revenue growth undermined by discounting combined with increased vehicle and depreciation costs.

"In order to offset these increased vehicle costs, we recently raised pricing at both Avis and Budget. To date, these price increases appear to have been successful," said Nelson.

On face value, Cendant's accommodation brands booked a solid quarter, with RevPAR increasing 10%, while revenue grew 12% to US$130 million.

Yet pre-tax profit was down 17% over the previous year due to marketing and other expenses.

Oh well, when running a global travel giant, you've got to be philosophical. You know, win some, lose some.

Ends.

Flight Centre Acquires Online Market Share

FLIGHT Centre has aggressively entered the online affiliate marketing space, with some competitors claiming it is paying up to A$40,000 a month to sell travel through several major websites.

Over the past three months, Flight Centre has done deals in rapid succession with high-traffic sites www.ninemsn.com.au, www.smh.com.au and www.getaway.com.au.

It is primarily selling domestic airfares and its hotel inventory through these sites, while also heavily advertising the new 'Search Compare Book' online campaign.

Further website signings are likely, intensifying competition and forcing up pricing in a sector previously dominated by the likes of Flairview Travel, Octopus Travel and the Online Travel Corporation (which is now part of the UK Lastminute).

Global Head of Marketing at Flight Centre, Colin Bowman, says the giant retailer – which some analysts feel has previously ignored the Internet to its detriment – is now fully committed to an online, multi-channel distribution strategy.

 "In the last three months we have increased our emphasis on this medium and moving forward it's going to be a bigger part of what we'll do as part of our multi-channel push," Mr Bowman says.

 "We are really looking at the online space with consumers trending more to the web, either to purchase or for research."

Bowman says Flight Centre has been looking at a number of new sites but scoffed at suggestions his company has been paying over the odds for an online presence, while declining to comment on specific figures.

"We're not about to sit back and are always looking at new Internet opportunities, which we continually assess on a Return On Investment basis before making a business call."

He says that Flight Centre has to be competitive in this area even though it may be taking revenue away from consultants.

"At the end of the day it's all about promoting our product to the customer – we'll deal with revenue issues internally," Bowman says.

May 12, 2005

Promiscuity Disrupts Marriage of Convenience

By Martin Kelly

AIRLINES and the GDS. Hardly a marriage made in heaven, more like a union of convenience, but one which has reaped significant benefits for both parties over many years.

Yet now one of the partners is getting restless, and it's not the GDS. The airlines are pushing for change, throwing money at younger, sexier companies who reckon they can do it – distribute airfares to travel agents, that is – for much less.

And while most of the preliminary skirmishes have been fought overseas, the show came to Sydney last week, when Star Alliance CEO Jaan Albrecht declared: "We want to bring new players into the market."

In a wide-ranging speech packed with Darwinian analogies – only the fittest will survive etc – Albrecht told the National Aviation Press Club that the Star Alliance is working with the new players to come up with web-based GDS alternatives.

Broadly speaking, these entrant companies offer airline inventory direct to travel agents through internet portals at a fraction of the distribution cost charged by GDS.

For example, ITA Software has claimed it will charge airlines just 50 cents per segment. Compare this with Star Alliance estimates that the average GDS charge per ticket is more than $16.

"By exploring the potential of so-called new entrants, Star Alliance member carriers will be able to break the dominance, cost structure and poor flexibility of the Amadeuses, Galileos and Sabres," Albrecht said.

"Welcome, good old GDS, to the world of competition. It seems to be time for you, to evolve as well."

The response of local Galileo boss, John Guscic, was equally Darwinian.

"It took an asteroid to wipe out the dinosaurs, but it will take more than gum flapping to undermine the value that the GDS brings to travel agents," Guscic said.

Managing Director of Amadeus, Tim Russell, said there would be room for both players, something Albrecht agreed with.

"In a nutshell, we have a healthy respect for them and Amadeus is looking at how we can serve that market," Russell said.

By "that market", Russell said he means simple point to point travel.

His comments also highlights the inevitability of the GDS getting involved in web-based distribution alternatives, either developing their own or buying into one of the new players like G2 SwitchWorks, ITA Software and FareLogix.

All this debate follows moves in the United States, where seven of the largest carriers have signed with G2 SwitchWorks "as a provider of choice for alternative-GDS distribution services between them and key agency clients".

Five of the carriers – American Airlines, America West Airlines, Continental Airlines, Delta Air Lines and Northwest Airlines have also agreed to pre-pay distribution fees, of up to eight million tickets, in exchange for transaction discounts and the opportunity to acquire a minority stake in G2 Switchworks.

So, as you can see, it is more than just posturing by the so-called Legacy Carriers, fired and challenged by the success of Low Cost Carriers distributing direct to consumers through the Internet.

They have clearly targeted distribution costs as a manageable expense – unlike oil prices – and are doing everything they can to bring them down.

However, come what may, you can be sure of one thing – while the boundaries within the marriage of convenience between the airlines and GDS might shift, the relationship will most certainly endure.

Better the devil you know, right?

Ends.

Internet Roars In Lion City But Traditional Retail Stable

INTERNET bookings in mature Asian markets such as Singapore have already reached 15%, online operator Zuji believes.

However, the National Association of Travel Agents Singapore is more circumspect, estimating that the internet and direct bookings now account for around 10% of the Singapore travel market.

NATAS Chief Executive Officer Robert Khoo says traditional travel agencies are holding their own in the Lion City, generally regarded as the most net-savvy of all South-East Asian markets.

Mr Khoo says demand for traditional agents is increasing with a 15% boost in local agency numbers over the past five years.

Both NATAS and Zuji agree that booking trends are changing due to the emergence of Singapore as the primary regional hub for Low Cost Carriers (LLC), which in 2004 accounted for 7% of all flights from Changi Airport.

Freshly fluid consumer travel patterns are also having an impact, with the General Manager of SA Tours, Alicia Seah, saying business is strong for her company, one of Singapore's largest travel agencies.

"The main difference now is that there perhaps is less emphasis on booking flights and more on-the-ground (product) such as organised tours, cars, restaurants and cruises."

Singaporeans are also travelling more often, says Khoo. "Previously, many Singaporeans saved, sometimes for years, to go on one long international vacation," he says.

"Now, many have the money but not the time to take long vacations so the trend is to take several short trips on a free and easy basis."

Zuji says internet booking is getting especially strong strong support from the small to medium business sector in relatively mature Asian market such as Singapore and also Hong Kong.

It says yearly growth (end 2003 to end 2004) was in triple digits in all markets – Australia, Singapore, Hong Kong, Taiwan, Korea.

Director of Corporate Affairs Kim Stockham says hotel sales are particularly strong, growing at around 300% a year.

She adds that much of Zuji forward growth will come from hotel sales following a renewed corporate and marketing focus.

Ends

Upcoming Events

No Vacancy Australia

No Vacancy Changes It Up

Sydney, November 1 & 2

Exciting times ahead for No Vacancy, founded in 2007, which has been acquired by National Media from founder Martin Kelly, who also publishes TravelTrends.biz.

The new era kicks off with No Vacancy LIVE at Sydney’s new International Convention Centre on November 1 & 2.

“We’ll be taking No Vacancy to another level, combining high quality content with a large trade show featuring up to 150 exhibitors across all verticals, transforming it into the business hub of Australia’s accommodation industry,” says Harvey.

He says the accommodation industry is worth more than $18 billion to the Australian economy. “Yet surprisingly, given the size of the industry there is no dedicated exhibition designed to meet all its needs.”

“No Vacancy LIVE will fill this void and offer hoteliers and other accommodation industry professionals a platform to discover products and ideas to optimize their properties, create amazing guest experiences and ultimately boost their profits.”

Historically No Vacancy has been very much an accommodation marketing conference, but the new look exhibition will embrace all aspects of the accommodation business. 

Content is still central to the event and will be expanded upon with more topics, more sessions and more speakers.

The exhibition will showcase the best quality suppliers across design and decor, property management, operations and finance, housekeeping, spa and leisure, in-room and guest-facing technology, and marketing, distribution and reservation solutions.

“We are really excited about where we can take No Vacancy and look forward to working closely with the community that's been supporting the event since 2007,” said Harvey.

For more information, contact:

Mark Harvey, MD, National Media
Phone: +61 7 5510 5101  //  0419 775 488
Email:
mharvey@nationalmedia.com.au

TRAVELtech Australia 2018

Returning in 2018

Change is the only constant in travel and so it is with TRAVELtech, which will be returning early in the second quarter of 2018.

The event has been bought by National Media - one of Australia's most respected event management companies - from founder Martin Kelly, who also publishes TravelTrends.biz.

Kelly says he’s happy TRAVELtech is in good hands and will remain connected in a programming and moderation role.

“I’ve really enjoyed creating and running TRAVELtech but it was time to step aside and let someone else with the capacity to accelerate their evolution take it on,” says Kelly.

He will now focus on further developing TravelTrends.biz, while also consulting to travel companies on communications, innovation, industry trends and strategy.

Mark Harvey from National Media says TRAVELtech, founded in 1999, will evolve into a much larger event.

"We have plans for become the main exhibition and conference in Asia Pacific for travel technology buyers, travel agencies, tour operators and transport professionals to source, learn and network," he says.

"It will bring together a large selection of specialist suppliers showcasing the latest innovations across distribution, reservation, business operation and sales and marketing."

For more information, contact:

Mark Harvey, MD, National Media
Phone: +61 7 5510 5101  //  0419 775 488
Email: mharvey@nationalmedia.com.au