Profit Up, Excitement Down

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.

Travel Wired: Opinion – Not Everything Is B&W

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.

Ends.

Heard About User Generated Content? It’s The New Word of Mouth

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.

Ends.

Growth Back On After US$4.5b Sale

 

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.

Ends

Asian Branding On Table

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.

Ends.

Just Briefly…

• 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%.

Cendant Sticks With Knitting

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.”

Ends.

New Jetstar Distribution Strategy

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.

Ends.

Winter Storms + Advertising = Record Web Snow Sales In NZ

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.

Ends.

Case Study: Online Destination Marketing

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.

Courtesy of MarketingSherpa; Image from Hankins Photography.

CHALLENGE

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?

CAMPAIGN

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."

RESULTS

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:
http://www.marketingsherpa.com/cs/vbcvb/study.html  

BCF – the interactive agency Virginia Beach uses to create, update, and track its Web site
http://www.bc-f.com  

WebTrends – the Web analytics software currently used by VBFun.com
http://www.webtrends.com

Virginia Beach Convention & Visitors Bureau
http://www.vbfun.com  

Ends

S8 – Visionary Or Stuck In The Past?

 

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.

Ends

Massive Profits For Wotif Investors

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.

Expedia Signs Deal With Rival Company

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.

Look! Viator Grows In New Ways

THE recent rapid growth of Viator is set to continue as the company pursues an expansion strategy to consolidate its position as the world’s leading online seller of destination tours and activities.
 
CEO Rod Cuthbert said the immediate focus is on bedding down Viator’s first acquisition, LookTours in Las Vegas, which brings the company head count to just under 100 staff.
 
Cuthbert said Viator will “certainly look at further acquisitions if they make strategic sense” as the company capitalizes on an injection of funding and expertise.
 
Carlyle Venture Partners and Australia’s Technology Venture Partners have invested US$10 million in the company over the past few months.
 
The funding has enabled Viator, founded in Sydney 10 years ago, to quickly create an eight person marketing / business development team in San Francisco headed by Barrie Seidenberg, former Chief Marketing Officer of Preview Travel.
 
“It’s also allowed us to add new resources to our Engineering team, which in turn facilitates further development on both the web site and the back-end systems,” Cuthbert said.
 
Meanwhile, LookTours gives Viator a major presence in the key Las Vegas market, which has 35 million visitors a year, and a foothold in other key North American tourist hotspots.
 
Cuthbert said LookTours has also fostered a reputation as a discount supplier, which compliments Viator’s mid-market positioning.
 
He said while Viator would continue to distribute through partner websites such as Lonely Planet, Opodo and Priceline, “we will have a greater focus on consumer direct business through Viator.com, and the LookTours sites.
 
“Meanwhile, there will further development of LookTours as the leading brand for discounted tours and activities.”
 
He said there will be an increased focus on the top 20-30 destinations (Las Vegas is a great example of this) out of the 450 destinations offered by the company.
 
“There’ll also be a continued focus on Asian markets, both inbound and outbound,” he said.
 
 
Ends.
 
 

Online Loyalty Comes At A Price

What price loyalty? Online, the answer appears to be the lower the price, the higher the loyalty.
 
Overall, however, research indicates that online shoppers are less promiscuous than their bricks and mortar compatriots.
 
According to research uncovered by Amantha Imber of ad agency, Leo Burnett, repeat purchases account for approximately half of e-tailer’s sales.
 
Among other findings:
 
  • 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.
 
 
*Source: Balabanis, G. Reynolds, N. & Simintiras, A. (2006). “Bases of e-store loyalty: Perceived switching barriers and satisfaction. Journal of Business Research, 59, 214-224.
 
Ends
 

Shrinking Margins, Increasing Costs = Lower Profits

The latest results from US travel industry giants Expedia and Sabre Holdings do not make pretty reading for either investors or the online travel industry.
 
In short, sales are up but profits are down thanks to rapidly shrinking margins and increasing costs. 
 
Expedia’s profit of US$23 million for the first quarter was 51% less than a year before.
 
Sabre Holdings – which apart from the GDS, owns Travelocity (Zuji) – did slightly better. Its first quarter profit of US$32 million was only 34% under the weather.
 
Both stocks have been hammered as a result. Expedia shares fell around 30% in a day. Sabre’s share price has been on a slow descent, shedding around 25% of their value since January.
 
Headlines from the Expedia results include:
 
  • 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
 
At Sabre:
 
  • 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%
 
Interesting reading, don’t you think?
 
So what’s the take-out, takeaway, whatever?
 
Become a supplier and sell direct (ha, just kidding).
 
Ends.
 

Online Booking Fees: How High Can They Go?

BOOKING and service fees are emerging as a crucial source of income for Australian online retail sites with Webjet reporting that fee income now accounts for more than 50% of its gross profit.
 
In fact, Webjet appears to be setting the global benchmark for online fees, charging a A$14.95 processing fee on all bookings, land or air, in addition to an extra A$3.45 per person per sector ‘Seat Price Guarantee’ 
 
This means airline passengers pay A$21.85 to book a return flight through Webjet – up to five times higher than its local rivals, which charge as little as A$4.40 per booking.
 
In the United States, online airfare booking fees have settled at $US5 after a fierce price war, similar to rates in major European markets such as the United Kingdom.
 
Webjet Managing Director David Clarke said his customers have no problem with paying such comparatively high fees and that rivals are crazy for not cashing in.
 
In the past 12 months Webjet has increased its processing fee by 115% and its Seat Price Guarantee has risen 345% from $1 to $3.45 without suffering customer backlash.
 
“What I don’t understand is why our competition don’t charge higher fees,” Clarke said.
 
For online airfare bookings, ZUJI charges $8 and Flight Centre is at $6.95. Travel.com.au and Lastminute.com.au charge $4.40 (domestic) or $9.90 (international) – a situation that may change soon.
 
Managing Director of Travel.com.au Adam Johnson commented: “I really feel at the moment that we are probably a little bit under the market rate.”
 
Clarke said “however extraordinary it may sound” many Webjet customers don’t care one way or the other about service fees.
 
“In fact, greater than 50% consider fees a reason for doing business with us, and we believe that this is a result of an absence of bias (through its airfare booking matrix).”
 
However, this is a service most other leading sites now offer.
 
So the multi-million dollar question is: why should people stay with higher-cost online retailers?
 
But no-one has the answer right now, and it is in nobody’s interests to ignite a price war.
 
Right now it’s a waiting game.
 
As for the future, Clarke believes that service fees are not only here to say, but that everyone will soon be charging them.
 
“I think the simple fee structure that now exists may become more more complicated and equate back to product value.”
 
“And I’d be really surprised if the major online airlines don’t start charging internet fees.”
 
Ends.
 
 
 

Record Online Ad Spend

AUSTRALIA’S online advertising spend could hit a record $1 billion for 2006.
 
The Audit Bureau of Verification Services reports that the online advertising market grew 65.3% in the first quarter compared with the same period last year.
 
Online advertisers spent $195 million in the three months to March 31, 2006.
 
Most of it was outlaid in the booming Search and Directories area which had a 38.7% market share ($75 million) – 80% up over 2005.
 
Classifieds consumed 31.8% ($62 million), followed by general advertising with a 29.5% share ($57.5 million).
 
Interactive Advertising Bureau spokesperson Patty Keegan said: “We’re extremely pleased with the continuing growth in this sector which again, compares very favourably with traditional advertising categories as spending habits continue to shift.

"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."

 
Ends.
 

Online Bookings Surge For Distribution Giants

STRONG online booking growth is a feature of results reported by distribution giants Amadeus and Cendant TDS.
 
Amadeus has reported that online bookings “from all providers grew” by 34.1% during 2005 and now accounts for 12% of total bookings, which in turn increased 4% to 473 million.
 
The company claimed global GDS leadership with 29.24% market share at the end of the year, up 0.44% year-on-year.
 
“Total revenue grew by 17.6% to EUR 2,418.3m, with an increasing proportion coming from IT services,” the company said.
 
Meanwhile, Cendant TDS reported that its online travel business bookings grew by almost 30% in the three months to March 31 – a period when revenue was up but profits were down.
 
Cendant’s online properties include Orbitz, ebookers.com, Octopus Travel, Rates To Go and Hotel Club.
 
“On an organic basis, our online travel businesses grew worldwide gross bookings by 27% and achieved higher margins,” Cendant said in a results statement.
 
“In addition, revenue from GDS (Galileo) and supplier services increased 5%, driven principally by a 7% increase in worldwide air booking fees, partially offset by decreased subscriber fee income.”
 
Despite overall revenue increasing 17%, Cendant TDS profit fell by 19% during the quarter to $US105 million.  
 
The company said relatively new acquisitions Gullivers and ebookers “contributed a total of US$66 million to revenue but reduced Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) by US$13 million.
 
“In addition, EBITA was negatively impacted by higher expenses at Galileo, including infrastructure improvements to support growth, higher technology costs in our online businesses and US$7 million of separation costs.”
 
Ends.

Cendant Considers Sale Options, Signs Up Virgin

CENDANT has announced it is now considering selling its Travel Distribution Services division as an alternative to a shareholder spin-off.
 
Chairman Henry Silverman said Cendant has “decided to further explore other strategic alternatives” after receiving a number of unsolicited offers for the TDS business, which is being renamed Travelport ahead of the sale process.
 
The news follows the appointment of a new TDS senior management team – Gordon Bethune, Chairman, (formerly Chairman and CEO of Continental Airlines) and Jeff Clarke, CEO and President (formerly Chief Operating Officer of CA).
 
“The announcement that TDS will be re-named Travelport further identifies our company as the destination for travel bookings, with a strong and unifying identity for the distinct travel businesses that comprise TDS," Mr Bethune said.
 
Mr. Clarke added: "TDS, with its leading brands such as Orbitz, Galileo and Gullivers Travel Associates, is well positioned to experience considerable growth.”
 
In a statement, Cendant reiterated its plan to spin-off Realogy Corporation and Wyndham Worldwide to shareholders as previously announced, which would result in three separate public companies, including Avis Budget Group, Inc., if TDS is sold.
 
Meanwhile, Cendant TDS) announced that Virgin Blue has signed a multi-year agreement to use aiRES, its “next-generation Passenger Services System (PSS)”.
 
Cendant said aiRES is built from the ground up on open systems technology and is designed to replace “less flexible, more expensive legacy systems now common in the industry”.
 
Ends.
 

Windfall For Founders as Wotif.com Goes Public

Wotif.com has announced details of its much-anticipated listing on the Australian Stock Exchange, revealing that it will float 42% of the company, reaping a $160 million windfall for foundation investors, who will retain control with 58% of the company.
 
The money will largely be raised from major institutions paying up to A$2.00 a share, effectively locking out retail investors, until the shares start trading on the ASX in early June.
 
Founder and CEO Graeme Wood, who owns 35% of the accommodation website he started just six years ago, could reap A$140 million from the IPO.
 
He will receive A$42 million cash for selling down 10% of the company’s shares into the offer, while his retained 25% will be worth $102 million based on a A$2.00 issue price that will value the company at around A$400 million.
 
All proceeds after expenses will go the founding shareholders.
 
The prospectus – now available through www.wotif.com, reveals than Wotif.com is a very profitable company, operating with enviable margins.
 
The company is forecasting net profit after tax of A$15.7 million on revenues of A$45.3 million this financial year, and is expecting after tax profit of A$19.1 million next financial year on revenues of A$55.8 million.
 
“Wotif.com anticipates a fully franked final dividend of 1 cent per share for FY2006 and 8.4 cents per share for FY2007,” the company said in a statement.
 
Wotif.com, which has international expansion aspirations, claims to be the Australasian market leader in the online accommodation industry “processing approximately 36% of all online accommodation sales in Australia and 18% in New Zealand."
 
The joint lead managers for the offer are Macquarie Equity Capital Markets Limited and ABN AMRO Morgans Corporate Limited. These companies will make more than A$7 million from the float.
 
Ends.
 
 

TVL Soars On Brand Association

WHAT’S in a name? Money, that’s what.
 
Travel.com.au (TVL) shares have soared to a 3.5 year high with news that a News Corp investment vehicle – netus, headed by former ecorp boss Daniel Petre – is taking a 19.9% stake.
 
Just a few weeks ago TVL failed to raise A$1.6 million from investors in a rights issue with its underwriter absorbing the shortfall.
 
That now looks like a great investment with the TVL share value increasing 50% immediately after news broke. TVL is now trading in the 28 cent range.
 
Netus is building its stake through the acquisition 8.6 million shares from Amadeus (subject to Amadeus board approval), and the issue of another 10.6 million shares at 17 cents by TVL.
 
The placement will raise A$1.8 million.
 
Amadeus has been with TVL since the company listed in 1999. At one stage the shares were selling for A$2.80.
 
Petre will take a seat on the board, replacing Bill Lawler from Amadeus, pending final approval of the deal.
 
TVL says the extra money will be used to build and promote its two brands – travel.com.au and lastminute.com.au.
 
The latter hit new highs in March, with Total Transaction Value up 40% year-on-year.
 
Ends.

Online Travellers Use Maps More

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumers are flocking to online map sites. 
 
Hitwise reports that "visits to the Travel – Maps category by Australian Internet users grew by 43.9% in the year to April 8.
 
The beta launch of ninemsn’s MyLocal service and the expected launch of integrated maps and local search offerings from other major players in Australia signal a highly competitive market ahead.

"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.

 
"Much of the recent category growth has been driven by the launch of Google Maps (maps.google.com) and Google Earth (earth.google.com) which ranked 2nd and 4th respectively for the same week.

"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 nearest competitor was a new entrant owned by News Ltd., TrueLocal.com.au, which maintained 3.6% market share.

"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.

 
"An example includes social networking website, Frappr (www.frappr.com) which allows users to find friends’ locations by their post code.
 
"Frappr ranked at 7th position in the Travel – Maps category, holding 2.6% market share for the week ending April 8, 2006.

"The opportunity exists here to extend net community functionality into business directories to improve the relevancy of the service to consumers.

 
"Indeed, the possibilities of combining various content formats appear endless, where there will be more start-ups offering ancillary services to the major players.

"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.

 
"The search term, ‘post codes’ drove a significant amount of traffic to both categories, with 602 variations on this term. Australia Post received the majority of this traffic (66.8%), where local search providers have the opportunity to improve website visits on these variations."
 
Ends

 

TRAVELtech and Wired Return For 2006

Got any ideas? Great, then send them through… Work is well under way on both the TRAVELtech and Wired: Asia Travel Matrix conferences. TRAVELtech has an Australian focus and is on at Dockside in Sydney on August 22, while Wired is all about the Asian industry. It will be happening a couple of months later in Singapore on October 26 & 27. They are both great events, attracting more than 250 delegates, and if you’d like to have an input or are interested in sponsorship, please email Martin Kelly.
 

News In Brief

Check-in: Hotels will continue to enjoy strong sales growth from Global Distribution Systems and the Internet through 2006, according to TravelCLICK. The company said revenue from the GDS and web was up by almost 11% in the last quarter of 2005. According to leading industry consultant PhoCusWright, 2006 will be the year that supplier or brand sites overtake third party sites in terms of percentage of online hotel bookings.
 
Viral: You all know that Tourism Australia’s ‘Where The Bloody Hell Are You Campaign’ has gone ballistic – but have you seen the spoof? Check out www.downwindmedia.com.au where a couple of different versions can be downloaded but you’ll need Quicktime to play.
 
Shooting Star: The international online bookings of the Qantas Group are set to surge with the announcement that Low Cost Carrier Jetstar will fly to six destinations in Asia and the Pacific – Bangkok, Phuket, Osaka, Ho Chi Minh City, Bali and Honolulu. Jetstar will “ultimately provide more services to Asia and the Pacific before expanding with second stage flying to Europe,” Qantas CEO Geoff Dixon said. Meanwhile, the Australian Airlines brand will be retired for the second time.  
 
Money Talks: Martin Symes, for many year Executive Director, Commercial, at Zuji, has joined travel search engine Bezurk as CEO. “He will also make a financial investment in the company and become a significant shareholder,” the company said in an announcement.
 
 

Yahoo!7 & Travel.com.au Link

INDUSTRY survivor Travel.com.au has stitched up an agreement with Yahoo!7 to supply content for its main site – www.yahoo7.com.au. The deal covers air, hotel and car – boosting the profile and potential revenue for Travel.com.au, which has yet to post a profit. Investors are adopting a wait and see attitude with the company – a recent rights issue fell well short of the A$1.6 million target, forcing the under-writer to pick up the slack. Staff are optimistic, however. There has been some recent offline advertising in the weekend press, while the local Lastminute website – which Travel.com.au runs – is performing strongly.
 
Ends

Accommodation To Make Cents For Sensis – Travel Next?

 
 
 
 
 
 
 
TELCO giant Telstra has moved into travel, emerging as a major industry force with the launch of GoStay by Sensis, its directories and online search division.
 
GoStay (www.gostay.com.au) is an accommodation listings and booking business Sensis has created in conjunction with Australian Online Travel, part of the AOT Group.
 
The move heralds a major strategic shift and follows rumours that Sensis tried but failed to buy online accommodation market leader, wotif.com.
 
Go Stay is effectively two products: a website and accommodation guidebook.
 
The website features 2000 properties supplied by AOT, while the guidebook features 5000 properties sourced by the Sensis sales team.
 
AOT, which owns the Needitnow.com.au and Travelmate.com.au wesbites, is providing fulfillment for both products through the website and a 1300 number.
 
Sensis has also signalled it wants to expand into other areas of travel, including air and car.
 
“Anything is possible,” said Jane Blackley, Group Marketing Manager, Verticals, at Sensis.
 
She said Sensis is looking at sectors that work across the online, print, voice and mobile platforms.
 
Meanwhile the company has unleashed a massive marketing campaign to support GoStay.
 
The campaign includes a record-breaking letterbox drop to 3 million Aussie households – almost half the Australian population.
 
“It’s the biggest distribution of a guide like this ever done in Australia,” Ms Blackley said.
 
GoStay marks the first time Sensis, which makes virtually all its revenue from advertising, has moved into retailing – a sign of things to come.
 
Parent company Telstra has been hit by consumers transitioning from fixed line phones to mobiles, and is looking at Sensis to drive extra revenue.
 
The Sensis sites – which include White Pages, Yellow Pages, Trading Post, City Search and many others – have around 2.5% of the Australian online market.
 
Microsoft (many sites) and Google (single site) lord it over everyone with around 20% total market share, according to the latest Hitwise stats on the market share of parent companies.
 
Yahoo! is on 9% followed by eBay (6.36%) News Corporation (2.97%) and Telstra (2.46%).
 
At present there are no pure travel companies in the Top 20.
 
Hitwise says ‘Destinations and Accommodation’ is one of the most popular internet categories with about 1% of total traffic.
 
The ‘Travel’ category comes in at 2.3%.
 
 
Ends
 

Quenten Smith Goes Bezurk

TRAVEL Search Engine, Bezurk, has appointed Quenten Smith Sales Director, Asia Pacific. Quenten joins Bezurk from Yahoo! South East Asia, where he has been in charge of travel industry partner development.

Upcoming Events:

No Vacancy Changes It Up

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 - The Accommodation Business Expo at Sydney’s new International Convention Centre on July 17-18, 2018.

“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 - The Accommodation Business Expo 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