WEBJET will record a pre-tax profit of between A$3.2 million to A3.4 million for the year ended June 30, well up on the previous year but not enough to get investors excited. Its share price stayed at around 30 cents – well down on its 12 month high of 50 cents. However, CEO David Clarke pointed out that Webjet’s capitalization has increased over the same period to just under A$100 million due to a massive 72% rise in shares on issue, from 224 million shares to 310 million shares. He said there would be no decision on how to utilize the A$23 million cash it has in reserve until the end of this year. Around 60% of Webjet’s gross profit comes through service fees.
By Martin Kelly
POLITICS is complicated and the best exponents generally turn everything into a black and white issue – good guys versus bad guys (no surprise who rescues the damsel in distress).
So you can see what Australian Federation of Travel Agents CEO Mike Hatton is trying to do when, clearly rattled by the growth in online bookings, he identifies the Internet as the travel industry’s ‘bad guy’.
“The message is simple – if you have booked over the Internet and have a problem, who are you going to call – Ghostbusters or some airline’s offshore foreign-manned call centre?,” Hatton told Travel Weekly.
But has AFTA made a mistake? Should the organization be providing online leadership and education to its members rather than criticizing the fastest-growing sales channel in travel?
Comments like these are also incorrect. Most, if not all, of Australia’s leading online travel sites have local call centres and can provide personal assistance if required (and often for a price).
Obviously, that is beside the point – reason has no role to play in a good old fashioned witch hunt.
These anti-Internet sentiments are the reason behind a new campaign AFTA is trying to get off the ground based around the slogan: “Without a travel agent, you’re on your own.”
Hatton, who lifted this idea from the United States, has received top-level support for his stand.
AFTA Chairman and Managing Director of Travelscene American Express, Bob Steel, told Travel Today that the Internet is good for research but “a very dangerous tool for consumers to book on.”
Whatever your thoughts on this statement, Steel, a successful businessman, is no hypocrite – Travelscene American Express has a basic website that does not accept bookings, only email enquiries.
However, a lot of mainstream AFTA members have more sophisticated websites that take online bookings, including two of Australia biggest travel agencies – Flight Centre and Harvey World Travel – not to mention a slew of smaller operators.
Politically, AFTA is clearly in a no-win situation with its present stance, which denigrates a key sales channel and does nothing to represent those travel agents who have chosen to use the internet for their own means.
Surely, the time has come for AFTA to take a positive stance on the Internet and help members adapt to a radically new sales business environment.
Fortunately, at the moment it’s largely trade press rhetoric.
It should not be allowed to go any further because selling travel over the Internet is not a black and white issue, and smart politicians do not paint themselves into a corner, as Hatton and Steel appear to have done.
By Martin Kelly
Word of mouth – always the most powerful of marketing tools – has taken on a whole new meaning with the Internet.
The emergence of travel review sites like Trip Advisor (which claims more than five million “unbiased reviews and opinions you can trust”) and IgoUgo ensures that the latest travel news – both good and bad – travel at warp speed around the globe.
These sites are basically travel search engines couched in user-generated content – beside every review will be PPC links to relevant product.
At present, most of the user comment concerns hotels but is slowly spreading to trip planning and will one day encompass every aspect of travel as people search out opinions from other travelers.
User reviews are also common on leading international retail and hotel websites, although some of Australia’s biggest online brands are yet to take the hint and get moving with this aspect of what has become known as Travel 2.0.
While consumer product reviews appear on Zuji, Expedia, Hotel Club and Rates To Go, at the time of writing Wotif.com doesn’t give its customers a voice; nor does Travel.com.au, Lastminute or Webjet.
Chloe Lim, Marketing Director of Flairview Travel, which owns Hotel Club, Rates To Go and Asia Hotels, says user reviews are one “of those features that is becoming a ‘must have’ rather than a ‘should have’ – people are demanding it.”
The potential of this new environment for the travel industry is enormous, and so are the risks.
The fact is that bad news travels fast, and there are plenty of upset travellers using reviews to lift on the lid on their latest travel disaster …
"…This is the kind of place in which you’d prefer to sleep in a snow suit during the hottest months of summer rather than let your skin touch the bedspread," wrote one TripAdvisor reviewer
“The entire staff seemed devoid of any humour, personality or notion of customer service and the atmosphere was vaguely reminiscent of a shoddy fairground Haunted House ride," wrote another
Suddenly, there is genuine, real-time transparency on the traveling experience – fresh opinions, immediate feedback – not just glossy travel brochures, although some reviews certainly read as if they’ve been written by the marketing department.
“…The staff is absolutely top-notch. The rooms are serene. The spa is literally to die for. This place takes pampering to a new level. "
“… Situated as the resort is on a private peninsula, everywhere you go you are surrounded by a fabulous panorama, the service was attentive and it was heavenly for relaxation."
And therein lies an interesting dilemma – how do you control the information appearing on these forums?
The answer is you really can’t, apart from keeping tabs on key sites and correcting any misinformation. An overly negative spray will be spotted, as will a supercilious blurb.
Arthur Hoffman, Managing Director of Expedia Australia, says it screens reviews to ensure no obscenities slip through the net but beyond that it is largely free speech.
Flairview Travel restricts review opportunities to people who have actually stayed in the relevant property to overcome potential issues.
Lim says Flairview is not going to move into forums and message boards and will still with review, potentially introducing a search capability based on hotel ratings.
Clearly, customers are on the move and travel businesses must surely keep up or otherwise get left behind.
Cendant has sold Travelport, formerly known as Cendant Travel Distribution Services, to the Blackstone group for US$4.5 billion cash.
Blackstone, one of the world’s leading private equity groups, has not yet revealed its plans for Travelport, which has annual sales of US$2.5 billion and owns some 20 major travel brands acquired in a buying spree over the past five years.
These include the Galileo GDS, Gullivers Travel Associates, Orbitz and Cheaptickets.
Travelport CEO Jeff Clarke told the New York Times that each of its three divisions is profitable and that Blackstone wants to keep present management in place.
Integration has been a significant issue for the company in recent times but Mr Clarke, who joined the company two months ago, flagged further growth.
"As a private company, Travelport will now have considerably greater financial latitude and firepower to take advantage of burgeoning opportunities in the travel market," Mr Clarke said.
Cendant said the sale proceeds will primarily be used to reduce the debt carried by its Realogy and Wyndham subsidiaries.
The sale is expected to be completed by August.
WOTIF is considering ramping up its Asian branding effort as regional sales continue growing at more than 100% a year.
CEO Graeme Wood said: “We’re definitely looking at increasing our marketing in the region.
“Obviously we don’t have the same word of mouth in Asia that we do in Australia.
“If we want to grow quickly we have got to get awareness happening.”
Wotif is a well-known brand in Australia, where it claims 36% market share.
Awareness dramatically increased following the spectacular float of the company on the Australian Stock Exchange.
Shares that were pre-sold to institutional investors for A$2 in late May are now trading for around A$3.30, valuing the company at A$681 million, according to CommSec.
Mr Wood said Asian business currently comprised less than 10% of its sales but was its fastest-growing region, albeit off a lower base.
He said the challenge is now to increase the Wotif brand profile across the region and the company is evaluating a range of marketing options.
“We want to grow as quickly as we can without putting too much stress on people and resources,” he said.
“It’s a balancing act to grow both the supply and the demand side.”
China is apriority for the company but Mr Wood declined to highlight any other target markets, while conceding credit card acceptance many Asian companies is a difficult hurdle to overcome.
Wotif employs a small sales team in Singapore “which is being led out of Brisbane right now”.
He added that Asian hoteliers had been receptive to the Wotif pitch.
“We don’t get too many knock backs when we approach properties we want to work with.
“For those new to the internet it’s an educational process but they appreciate the business we can bring, particularly the Australian inbound traveler.
• Swiss investment Bank UBS has emerged as significant shareholder in Webjet, revealing a 7.2% stake in the company.
• Early bird bookings are available at A$399 until June 30 for TRAVELtech.
• Bezurk has done a deal with Yahoo! to become its travel search partner Southeast Asia for hotels, air and online agents – – see the beta @ www.yahoo.com.sg.
• Air New Zealand reports that 30% of its Trans-Tasman bookings are now made direct online – while the all-up international web figure is around 16%.
HOTELS and accommodation will remain the cornerstone of Cendant’s regional consumer facing operations, according to Mike Nelson, Chief Operating Officer, Consumer Travel – International Markets, Cendant TDS.
Mr Nelson said Cendant’s online accommodation businesses – which claim either #1 or #2 position across major regional markets – currently take priority over the launch of the Orbitz retail brand in the Asia pacific.
“We are evaluating our plans for a full service Online Travel Agent model in Asia Pacific,” Mr Nelson said.
“But we will likely invest greater resources in our Sydney-based businesses – Hotel Club, Rates To Go and Asia Hotels.
“Those businesses have a lot of unrealized potential and are well positioned to capitalize on growth in the region.”
Meanwhile, Cendant is developing an international technology platform that will debut later this year.
“The international platform will first roll out to eBookers in the United Kingdom later this year and Orbitz next year,” Mr Nelson said.
“Remaining eBookers businesses will likely roll onto the new platform in 2007.
“We haven’t determined if or when the Hotel Club, Asia Hotels and Octopus Travel will roll onto the platform.”
LOW Cost carrier Jetstar will pay travel agents A$25 for every passenger segment booked on its new long haul flights via www.jetstar.com or A$20 for bookings made through a GDS.
It will also offer agents nett fares as part of a ‘comprehensive wholesale program … over all Jetstar routes”, introduce an industry standard Billing and Settlement Plan from July 1, and extend its GDS connectivity through a fresh agreement with Abacus.
November launch destinations for Jetstar from Sydney and Melbourne include Vietnam (Ho Chi Minh City), Japan (Osaka), Thailand (Bangkok and Phuket), Hawaii and Bali.
“Critically these initiatives will be implemented with Jetstar achieving the lowest cost base of any international carrier operating into or from Australia,” said Bruce Buchanan, Jetstar’s General Manager – Commercial.
These latest developments follow the recent launch by Jetstar of package holidays.
“The addition of holidays is crucial for our international business – in some markets customers travelling on package holidays can comprise 70% of the market,” Mr Buchanan said.
HUGE snowfalls across New Zealand and an offline marketing blitz have driven record traffic and bookings for www.skidealsnz.com.
The website is putting on three more staff to cope with demand, with a metre of snow already on the ground in major New Zealand resorts and further falls forecast.
“It’s all going really, really well,” said Chelsea Halliwell from Christchurch International Airport.
She said the site was launched “because we believed there was an untapped market for skiers and snowboarders looking online for New Zealand snow product.”
www.skidealsnz.com offers air, hotels, car, packages, lift tickets, hostels and copious background on the New Zealand’s snow scene.
More than 90% of site visits are coming from Australia – reflecting a comprehensive newspaper, pay television, search engine and digital advertising campaign through autumn.
Hitwise figures show major spikes following the TV activity, with search engines Google referring by far and away referring the most online traffic.
The most popular search terms are ‘ski new zealand’, ‘virgin blue’, ‘ski nz’ and ‘Queenstown’ and ‘New Zealand ski holidays’.
A marketing partnership with ninemsn is also proving fruitful, as are relationships with carriers Air New Zealand and Pacific Blue.
“There’s been a 140% increase in traffic over last year, we’re getting two to three thousand visitors every day,” Ms Halliwell said.
“We’ve gone for a ‘real call to action’ approach and our target market is the 25 to 40 age group.”
This is reflected in initiatives such as co-sponsorship of next week’s Queenstown Winter Festival with Pacific Blue.
Ms Halliwell said the ready availability of cheap fares to Christchurch, where both Air New Zealand and Pacific Blue have bases, has also been a major factor.
She said it allowed www.skidealsnz.com to package special offers such as a ‘Ski Free Deal’ with Pacific Blue.
Looking at a website revamp?
Then check out this great case study from Virginia Beach in the United States, which has just overhauled its website in time for the peak (northern) summer season. The key questions this case study addresses are: How do you simplify while adding content? And how do you make your site appealing for visitors from other cultures? Click on the link below for practical tips plus results.
When you’re a tourist destination advertising via everything from broadcast to print, how do you decide how much budget to give online? "We have a dartboard at the back of my office …" says Ron Kuhlman, Director Tourism Marketing & Sales Virginia Beach Convention & Visitors Bureau.
"No, I’m just kidding," he laughs.
"We time it out. We have a pretty good idea of how many talent hours a Web project needs, and from there we back into the numbers. It’s not like we set out to say Web is 5% of the budget. We don’t have a budget specifically for Web that’s stand alone. We have one media budget, and it’s all included in the channel mix from newspapers to Web to rack brochures as appropriate for each campaign."
Initially, Kuhlman admits the site was little more than shovel-ware for the Bureau’s tourism brochure. The brochure was fat (it’s still almost a 16MB PDF), so the site was, too.
But a home page cluttered with colorful graphics, ranging from golfing vacations to convention center booking info, all begging to be clicked, isn’t user friendly.
Kuhlman wanted to put the site on a diet. But, his interrupt research teams (who stop tourists on the sidewalks for a quick chat) told him the site needed more content — not less. Especially for Hispanic and French-Canadian tourists.
Can a site gain weight and slim down at the same time?
First, the team made five key design decisions to make the home page less overwhelming — while keeping all information within 2-3 clicks away:
#1. Boil down home page creative to fit above the fold.
The old home page extended below the fold. The new one was more compact, and felt at a glance, less threatening. Overall, the feeling was more like a postcard and less like a full Web site. (Link below to screenshots of old vs. new home pages.)
#2. Focus horizontal navigation by major demographic.
The site had visitors with four completely different demographics: meeting planners, travel professionals, press, and of course consumers. The old home page had tried to attract each with their own colorful call-outs competing for attention. The result was far too busy.
The new home page focused 100% on the most populous audience — consumers. The only concessions to other demographics were tabs across the very top of the page, where these professionals could quickly click for their own microsites.
#3. Keep all navigation visible (no Flash).
Heavy-content sites often solve the "we have too much content to put all the options on the nav bar" problem by making additional navigation options suddenly visible when a visitor’s mouse hovers over the nav bar. But this solution has three drawbacks:
– Visitors may be annoyed or find this hard to use
– Search engines can’t always crawl it completely
– The nav bar may not work in every type of browser
So, instead of overwhelming home page visitors with choices when they scrolled over navigation bars, the Web design team turned Flash nav into a simple hotlink. If you wanted to know more about a topic, you’d click to the next page where all the options (formerly in the Flash roll-over) were clearly listed… also as simple hotlinks.
#4. Keep five key offers on the home page.
Consumers visiting the site might be planning a vacation months away … or they might need a map for a drive that afternoon. Kuhlman’s team made sure the home page had five calls to action — one for each major type of visitor goal. That way, many visitors found the answers they sought with a single, convenient click:
o Drive today goal — link to map, lodging, dining
o Future planning goal — vacation guide plus links by activity
o Ongoing fan goal — sign up for newsletter
o Promotion-responder goal — click to enter promotion microsite
o International visitor goal — French- and Spanish-language areas
#5. Remove content if it’s not useful that day.
"It’s a very dynamic site," says Kuhlman. "It’s constantly being updated." The biggest part of updating may be taking content away.
Example — when the weather is fabulous, the team may add weather reports to the home page. If it’s the time of year when most people are planning not traveling, weather reports are removed. Who cares if the beach is sunny today when you’re stuck in an office for the next four months?
Next, the team continued to ask international and Hispanic visitors both online and at Virginia Beach itself what they really wanted from the site. This helped them avoid three big mistakes:
Mistake A. Don’t put it up unless it’s updated.
If you can’t keep your foreign-language content as updated as the English-language content, dump the section altogether. Why risk annoying people? Do your site well or not at all.
"Originally we had German, Japanese and Portuguese … quite a few pages with different languages from around the world. But, instead of continually updating those pages for low gain we made the difficult decisions not to do a site section unless we could absolutely prove there was a significant audience for it."
The site wound up with just three sections — English-language content for French Canadians, French-language content for the same, and Spanish-language content for US Hispanics.
Mistake B. Don’t translate your whole site.
Kuhlman’s team didn’t assume international visitors would be wowed by a completely translated site in their own language. Fact is, international visitors have different information needs than Americans do. For example, they may want to know about how the exchange rate benefits them or what U.S. gasoline costs are.
Mistake C. Don’t pick all images to match a demographic.
For the Spanish-language version of the visitor brochure PDF, the creative team deliberately did *not* replace every image with Hispanics. Why?
"You don’t want a link to the Spanish version of your site and then all of the sudden everyone looks like they are from Mexico, South America or Spain. At that point we’re being fake and everyone would be conscious of that. We have to show Virginia Beach as it really is — not some ideal that we want people to think it is."
As an integral part of the Bureau’s branding campaign ‘Life the Life’, the redesigned site at VBFun.com has won 60 marketing tourism awards in all.
Last summer (2005), 80% of surveyed Virginia Beach vacationers said they used the Internet to get some information before their visit. 39.3% said they had purchased tickets or made reservations related to their stay either through the site or elsewhere online.
More than 70% of VBFun.com visitors are returning visitors, coming back for more information. Roughly 10% of unique visitors download an English-language PDF (although this can shoot up to 18% during March, a heavy vacation-planning month). 0.3% of unique visitors download the Spanish-language brochure and 0.8% download the French-language version.
The team’s learned four lessons about offering PDFs:
Lesson #1. Consumers prefer PDFs to printed-and-mailed materials
Currently 350-400% more consumers will download a PDF from the site than fill out a form requesting a printed copy be mailed to them. It seems that instant gratification is very much in fashion.
The team have learned to position the PDF offer above the mail-me-a-brochure form for visitor convenience. The form still exists though, because a sizeable minority wi
ll always prefer the printed version.
Critical — the PDF will never ever be barricaded behind a required form of any kind. Kuhlman knows that a required form would stop roughly 95% of downloads, and it’s far more valuable to him to have thousands of brochures in people’s hands than to collect hundreds of visitor registrations.
Lesson #2. Remind your art department it’s a PDF
If your art department is used to creating gorgeous content for print purposes, they’ll most likely create a file that’s vastly oversized for an easy-to-download PDF. You want to keep your file size to 5MG or smaller if possible. "That was one of those life lessons for us."
Lesson #3. Tell visitors how big the file is
Put the file size of a downloadable file on the click link so visitors understand up front what they are getting themselves in for. This is equally important for small vs big files.
Lesson #4. If it’s big, also offer downloadable chunks
Since this year’s brochure PDF is 15.9MG, the team broke it into nine chunks by topic, ranging from "Shopping" to "Beach Life" (sample to one of them below).
Visitors told the Bureau’s survey team in the field they much prefer pick which info they want to download, and so far site analytics have born this out. "My downloads have increased significantly."
Useful links related to this article:
Creative samples from VBfun.com including Spanish-language PDF brochure:
BCF – the interactive agency Virginia Beach uses to create, update, and track its Web site
WebTrends – the Web analytics software currently used by VBFun.com
Virginia Beach Convention & Visitors Bureau
By Martin Kelly
Travel is in a crazy mixed up place right now. But isn’t that always the case?
Everyone is out for themselves, partnerships are fracturing and the retail industry has been turned on its head by an outsider no-one knows anything about.
S8, which operates out of an apartment block on the Gold Coast, moves with the reckless speed of a 1980s corporate raider, and appears to have a travel distribution strategy firmly rooted in that era.
It has bought into old-school travel businesses in a massive way.
Harvey World Travel was the first to fall, followed in rapid succession by Transonic Travel, Travelscene American Express and Gullivers Travel Group.
All up, S8 claims it will have more than 2000 traditional travel agents in Australia New Zealand, South Africa and the United Kingdom (though most are franchisees) when the takeovers are finally completed.
Through these acquisitions it’s also obtained corporate travel, wholesaling and GSA companies – just about every part of the travel distribution chain.
Except – and this is the weird thing – an internet business.
In fact, S8 has flat out rejected the online travel world.
The company has now sold every one of the Webjet shares and options it obtained via Harvey World Travel, no doubt using the proceeds to pay off debt incurred by its buying spree.
They’ve made many millions of dollars but the decision to sell seems a little strange, especially when you consider the online momentum generated by the spectacular Wotif float.
Does S8 know something we don’t?
Don’t bet on it.
I certainly wouldn’t, and, on recent evidence, neither would the Australian Federation of Travel Agents, which is paid to echo the views of its members, including several prominent S8-owned businesses.
AFTA wants to run a $1 million campaign promoting the benefits of buying through a real, live travel agent, as opposed to internet retailers.
“The chains previously considered this to be their job but now we’re seeing headlines like ‘Expedia Putting Agents Out of Business’,” Chief Executive Mike Hatton told Travel Today.
“You (also) hear airlines advertising on the radio mentioning everything but the travel agent.”
The unfortunate thing is that AFTA doesn’t have $1 million.
So it’s gone to Plan B – spending $2000 on a logo declaring “Without a travel agent you are on your own”.
Members will be encouraged to use the slogan in their marketing as a weapon in the fight against the internet, which AFTA clearly views as a major threat.
Yet S8 doesn’t.
After all, it’s just sold out of Australia’s biggest and most profitable online retailer, doesn’t own a stake in any other well-known online brand and has effectively put all its eggs in the traditional travel agent basket.
Weird, don’t you think.
The hard work now begins for Wotif after a spectacular debut on the ASX in which its share value increased by more than 65%. This followed heavy oversubscription of its public offer in which a lucky few – mostly at the big end of town – were able to buy shares in the hotel booking for company for just $2. Those same shares were worth $3.32 by the close of business on Friday. They are now trading around $3.40. CEO Graeme Wood said the company was firmly focused on growth: “The plan going forward is simply keep on doing what we are doing – grow the business in the Australian and NZ markets” while looking for international opportunities.
In a curious move, Expedia has moved a step closer to offering airfares in the Australian market after signing technology licensing agreement with Arnold Travel Technology – a subsidiary of major online retail rival Travel.com.au (TVL).
Under the deal, Expedia which is currently offering just offering hotels and tours on its Aussie site, will use Arnold’s airfare booking engine.
TVL told the Australian Stock Exchange (ASX) that “revenues under the agreement will be generated principally on a per booking basis”.
Arnold also has agreements with Carlson Wagonlit, Travelscene, BTI New Zealand, Travel.com.au and Lastminute.com.au.
Meanwhile, TVL announced that April was soft for business while conditions improved during May.
- Online shoppers tend to switch suppliers less often than bricks and mortar shoppers, despite the ease in which online comparisons between e-tailer prices can be made.
- Customer satisfaction with an e-tailer is not generally predictive of loyalty to the e-tailer.
- The greater the perceived economic barriers to switching e-stores (eg prices being higher on other sites), the more likely that customers will exhibit loyalty to the e-store, even when satisfaction is low.
- The more familiar a customer is with an e-store’s web layout and services provided, the more likely they are to exhibit loyalty to the store, even if they have been dissatisfied with the service.
- Bookings value up 14%, but revenue margin down by around 10%
- Airline margins down 9%
- Hotel margins down 7% (on a revenue per room basis)
- Less Americans, in particular, are buying its holiday packages
- Costs increased more than 10%, particularly in marketing
- Operating costs grew 26.5%
- The operating margin fell more than 30% (to 9.2%)
- Travelocity hotel room night sales were up 54% (probably due to recent acquisition Lastminute.com)
- Total packaging revenue grew 38% (see above)
- GDS revenue increased 7%
"Of more importance is the fact that Q1 is traditionally the weakest quarter of the year and we’re therefore expecting this trend to continue.
"Growth of this magnitude throughout the year could lead to 2006 online expenditure approaching the $1 billion mark."
"Whereis.com (whereis.com), owned by Sensis, holds the dominant market share in the Travel – Maps category, with 40.9% of online visits for the week ending April 8, 2006.
"In the Business and Finance – Business Directories category, Sensis web properties again dominate. WhitePages (www.whitepages.com.au), YellowPages (www.yellowpages.com.au) and Sensis (www.sensis.com.au) were the top three ranking websites, accounting for a combined 73.6% market share for the week ending April 8, 2006.
"The applications of mapping technology online have a wide scope, where a number of Google mashups, or websites using the Google API for novel content areas, are popping up.
"The opportunity exists here to extend net community functionality into business directories to improve the relevancy of the service to consumers.
"Hitwise Search Intelligence data show that there were 249,531 search terms that drove traffic to the Maps and Business Directories categories combined, over a 12 week period ending April 8, 2006.