Bloomberg reported today that Citigroup CMO Michelle Peluso (and former Travelocity CEO) has hired former Site59 and Travelocity co-conspirator Tracey Weber away from Barnes and Noble.
Tracey joined BN.com only in April after leaving Travelocity where she was COO.
Glassdoor.com, a cool website where "anyone can find and anonymously share an inside look at jobs and companies" has provided an interesting peek at job satisfaction inside the travel industry.
Travel is probably an industry Glassdoor knows something about given the site's founders which include such industry notables as Bob Hohman (Hotwire, Expedia) Tim Besse (Expedia) Ryan Aylward (EzRez, Hotwire) along with a few others who serve on the board who've spent a bit of time in travel: Rich Barton, Erik Blachford and Stephen Kaufer.
And what has Glassdoor, which garners its information from current and former employees, come up with? Might as well start with the OTAs since Glassdoor practically grew up in the OTA world:
The chart above details the approval ratings of the companies themselves and their CEOs as reported by the employees who came to Glassdoor and left feedback. (Hugh Jones isn't rated because of a limited number of responses - probably because he is still new in the role.) Looks like Hotwire is a pretty good place to work - we'll leave it to you to decide if that is because all of these guys left to start Glassdoor or not. (Just kidding, Ryan et al)
Glassdoor's info gets more interesting looking at hoteliers: The highest rated CEO, Issy Sharp, has just announced that he is stepping down - a real shame according to this report. Bill Marriott and Hyatt's Hoplamazian are just a hair behind Sharp, however.
Not surprisingly, airlines show by far the greatest variability from one to another:
Things appear pretty bleak over at American and American Eagle - with labor strife a way of life at AA, clearly Something isn't Special in the Air. Even US Airways pulls better rankings. Southwest and JetBlue, as usual, prove that they are run more like hoteliers than airlines with ratings like these. (oh, they make money like hoteliers, too)
But the big takeaway? Continental and United - look a the difference in internal company ratings. Glassdoor doesn't have a rating for Jeff, but boy do they have one for Glenn. This is going to be one interesting merger, don't you think?
It appears that a new front is opening in the ever tumultuous relationships between the large hotel chains and the online travel agencies (OTAs).
The major OTAs are currently pressing for legislative relief for future occupancy tax claims by states, counties and municipalities through a proposed bill known as the "Internet Travel Tax Fairness Act" or ITTFA. For those of you interested in a reprise of the old Schoolhouse Rock Saturday morning "how does a bill become law" cartoon, the initial draft of the bill is posted here
Interestingly, the American Hotel and Lodging Association's (AHLA) take on the bill is radically different from that of other smaller, regional hotel associations.
AHLA, which represents all the large chains, has come out as a vigorous opponent of this bill to say the least. AHLA offers a detailed description of their opposition to this bill which is centered on concerns that local hoteliers will see an increase in taxes or, worse yet, be stuck with the entire tax bill. As an aside, AHLA offers that the bill is "written in such a way that it may also exempt the payment of any occupancy tax on rooms booked through online travel companies." We don't believe this is the actual intent of this bill by the OTAs (call us naive, but this simply does not square with what the OTAs are trying to accomplish) whether you agree with that goal or not.
On the other hand, the California Lodging Industry Association (CLIA,) which represents "individually owned lodging properties," has just come out in favor of ITTFA. In a recent press release, CLIA declared that they would fight "with their Online Travel Company friends" to support this legislation.
So, why the disparity in thinking within the hotel industry?
For starters, independent hotels utilize the OTAs in very different ways from the large chains. Independent hotels do not (generally) have the powerful global brand recognition of the large chains much less the global sales forces and loyalty programs such as Hilton HHonors, Marriott Rewards and SPG. As such, they depend on the OTAs for distribution reach - reaching consumers that would not have ever probably stayed with these unaffiliated properties.
Many independent hotels have become much more aggressive in developing their own consumer web business, both directly and via the OTAs. New tools that distribute inventory, develop and implement SEO and SEM strategies, etc. have made these efforts much easier for small hoteliers. The web has become a great equalizer between branded and un-branded hoteliers' ability to reach consumers.
The chains have responded by offering their distribution services for hire - witness the launch of the Autograph brand from Marriott and the resurgence of Starwood's Luxury Collection. HC colleague George Roukas highlights these efforts and the reasons behind them here in a recent article in Hospitality Upgrade magazine.
It will be interesting to see where this bill ends up - the stakes are high.
Long-time Travelocity (and Site59) executive Tracey Weber has been appointed EVP Textbooks and Digital Education at Barnes and Noble.com (www.bn.bom)
Tracey Weber is one of the last Site59.com senior executives still with Travelocity. We expect that getting back to New York City was a key driver of Tracey's decision. No immediate successor has been named.
Expedia Media Solutions (the media arm of Expedia Inc.) yesterday announced that the San Diego Convention and Visitors Bureau had named Expedia.com "Partner of the Year." According to the press release, the San Diego CVB was recognized as "a top advertising partner and major sales channel for San Diego hotels."
The press release continues:
"'As a promotion partner, Expedia not only grew San Diego's room nights year-over-year by 26 percent, but in these tough economic times they were able to grow revenue by 11 percent – exceeding ROI estimates and generating a significant return on investment of 125 to 1,' said Joe Terzi, President and CEO of the San Diego CVB. 'Serving many different consumer segments—from families booking a summer vacation to individuals arranging a quick weekend getaway—Expedia gives us a highly effective way to share San Diego's message to a broad audience of travel shoppers and potential visitors.' "
Hmmm. Interesting that the CVB is so enthusiastic given that the City of San Diego is one of the many municipalities currently suing Expedia and the other major online travel agents. An administrative hearing has been held on the case but before any decision was rendered, the Judge in the similar Anaheim case rendered her opinion in favor of the the OTAs.
And just how does the San Diego CVB receive most of its funding? You guessed it, occupancy taxes. According to the CVB's own website, "the majority of funding is derived from San Diego Tourism District Assessment Funds." Again from the CVB's own website, the current transient occupancy tax is 10.5% in the City of San Diego. There is also an additional 2% occupancy tax levied for the San Diego Tourism Marketing District. If you enjoy reading tax code, here is the actual language from the City of San Diego's municipal code.
Anyone who has been following the ongoing saga of the tax lawsuits against the OTAs knows that the issue is if the taxes above are levied on the net or wholesale rate actually charged by the hotel to the OTA or the marked-up, retail rate sold by the OTA.
So now we have an interesting situation: The very agency (the CVB) charged with promoting San Diego (whose funding comes from the occupancy taxes in question) is holding out an OTA (Expedia) as a great partner. At at the same time the city of San Diego is suing Expedia et al for non-payment of occupancy taxes that largely fund the CVB!
The major Online Travel Agencies today notched a huge win in Anaheim, California where a judge threw out a $21,326,881.30 ruling against Expedia, Travelocity, Priceline, Orbitz and their related subsidiaries with a strongly worded rebuke to the Anaheim City Hearing Officer's earlier findings.
This case was originally heard by the City's Hearing Officer who made the determination that the OTAs did, in fact, operate hotels under Anaheim's definition. The Hearing Officer originally found that each OTA is both "the proprietor" and the "managing agent" of every hotel in the City of Anaheim. Wow. As such, the Hearing Officer found that the OTAs owed the princely sum of ~$21M covering back taxes, fines, interest and, no doubt, extra donuts for the office.
We'll get the whole decision up shortly for reading on your next flight but here are the highlights: The big take away is that the judge who decided this case will also be presiding over several other similar cases currently in various stages of litigation in California. These include cases in Los Angeles, San Diego and a particularly nasty one in San Francisco where the OTAs have already paid significant damages in order to even have the right of appeal under the City's "Pay to Play" rules. (Note: Anaheim had this rule as well but the OTAs were able to get it overturned.) While no one can predict how a judge will rule and each case is obviously different, this judge clearly understands the issues at hand.
The ruling states "OTCs do not control and run hotels. The Hearing Office's factual findings list several functions performed by OTCs with the respect to resale of hotel rooms" including marketing functions, determining mark-ups etc. The Court correctly determined that "none of these facts comprise incidents of control of a hotel or give the OTCs the right to run the business of a hotel. The hotel control the production of the product sold, the quality of production, the channels of distribution of the product and the pricing of the product." This discussion of Marketing 101 and the " Four Ps" reminds me of my first marketing class in college - sounds as if the Judge may have taken a similar class along the way.
In one of the stronger worded sections, the judge concludes that the Hearing Office that it is "a logical fallacy to conclude, as the Hearing Officer apparently did, that because a hotel operator is responsible for collecting rent and taxes from [guests], any entity that collects rent and taxes from a [guest] must be an operator [and be liable for the occupancy tax] " The footnote explains it more clearly still: "Principles of formal logic demonstrate that when the statement 'if A then B' is a true statement, it is incorrect to conclude that the converse 'if B then A' must be true. Yet the Hearing Officer accepted this reasoning." Ouch. Basic logic, right?
However, the judge clearly leaves the door open for the City to base an occupancy tax on the total amount paid by the guest for the hotel room if the law was drafted (as New York City has attempted to do) and constructed to facilitate such a tax. "There seems to be no reason why such a tax scheme could not be drafted and considered." But before Anaheim goes off to re-do the tax wording, consider the Courts further discussion in regards to the City's position that times had changed (with the advent of the merchant model) and that the taxation laws should simply morph to fit the times: "where a taxing agency has not anticipated a new revenue opportunity, the court may not act to fill what might be perceived as a 'gap' in tax coverage. Creation of a larger tax rate or larger tax base requires voter approval pursuant to Proposition 218. California Proposition 218 states that "A taxing methodology must be frozen in time until the electorate approves higher taxes"
This ruling came down to carefully interpreting the current tax laws on the books. Clearly, opportunities exist for taxing authorities to adjust those laws (at least outside of California) to change with the times - but a go-forward tax is a far cry from a huge retroactive tax from the OTA's perspective.
A trial court in Houston today dismissed a case brought by the City of Houston against the major online travel agencies for nonpayment of occupancy taxes. The court issued a summary judgement indicating that the judge found the evidence supporting the plaintiffs' case insufficient to even proceed to trial.
This ruling is a big win for the OTAs as the court looked at the same language in which a San Antonio jury concluded that the OTAs (somehow) control hotels. We took a look at this ruling back in November and concluded that ruling was a draw. Based on today's ruling, we are going to give it to the OTAs, minus legal fees and the overall distraction factor, of course. San Antonio, see you on appeal as they say...
Expedia announced today that they are removing booking/service fees on all travel products sold through Expedia's call centers.
From an airline perspective, the move is interesting in that it will now be cheaper for consumers to book with an OTA then calling the carrier directly. (Except, of course, for Southwest which does not charge extra for a call center booking but they don't participate in the OTAs anyway.) The move is another example of how the OTAs have continued to differentiate themselves from the suppliers in terms of service, functionality and price. The list of enhancements the OTAs have made this year is long and compelling and great for consumers. Just to tick off a few: Orbitz TLC, Orbitz Price Assurance, Expedia's SeatGuru reviews, Priceline's iPhone app all come to mind.
And what of the timing, by the way? Interesting that Expedia announced this change the same morning as Orbitz announced earnings - particularly when Orbitz had this say in their statement: "This net revenue decline was due primarily to the removal of most air booking fees and the significant reduction of hotel booking fees on the company's domestic websites, as well as a decline in average hotel room rates globally."
Today's move by Expedia along with the OTAs' other enhancements this year should be a wake-up call for suppliers - Airlines and hoteliers cannot continue to sit still while they are out-innovated by the distributors. Piling on more fees or other dis-incentives for booking through specific channels only further harms the supplier's brand and the overall customer experience. Suppliers, wake up!
Expedia and other OTAs have long touted what has become known in the industry as "the billboard effect" whereby they have claimed that positioning on their sites generates not only bookings through the OTA but also a halo effect on the hotels' own sites by generating brand awareness. Non-loyal consumers start many of their searches at an OTA to gain a perspective on the options available, relative costs and positioning of the hotels in a given market against one another. Then, they often check other sites to compare pricing - usually including the website of the hotel they are interested in.
Personally, I saw strong evidence of the billboard effect while I was at Starwood and Expedia has long claimed that for every booking generated on Expedia, another booking is generated on the hotel's own website.
In a new whitepaper, Cornell assistant professor Chris Anderson has measured the billboard effect with a several branded and unbranded hotels. The results are striking, particularly for the independent hotel in the test.
For the study, Prof. Anderson worked with Expedia and JHM Hotels, an ownership group with hotels under the Starwood, Marriott, Hyatt and Hilton flags to cycle specific hotels on and off of Expedia over a three month period. That is, the hotel was listed at the top of the search results when the hotel was participating on Expedia and and removed altogether from search results listings when the hotel was dark on Expedia. By the conclusion of the study, each hotel was listed on Expedia for 40 days and dark for 40 days.
The results are below:
According to the study, the hotels saw a boost in reservations ranging from 7.5% to as much as 26% for the inde hotel when they were listed on Expedia vs. when they were dark.
Prof. Anderson suggests that the branded hotels may not have seen as large of a boost because when consumers go the brand websites they are presented with other "in-chain" hotels, e.g they are searching for a Marriott but upon arriving at marriott.com they are presented not only with the Marriott they saw on Expedia but also a Courtyard where they may actually end up booking.
We'd like to see an expanded test at some point with some slightly different parameters. For example, what happens if the hotel isn't listed at the top of the search results on Expedia? Could the brand numbers be further refined if the test was conducted in markets without sister hotels nearby? What would the results look like for resort hotels? How did the booking curves differ? And the cancellation rates? Could leveraging the billboard effect actually be cheaper than buying google key words? And of, course, what do the bottom line ROIs look like after all distribution costs are taken into account. Those questions may be ripe for another study - any of you OTAs or chains reading ready to sign up? Lets talk....
Bill McCollum, the Florida Attorney General filed suit against Expedia and Orbitz this afternoon, opening the next chapter in the ongoing fight over occupancy taxes. Florida is the first state to take such a step - all of the previous actions have been filed by cities or groups of cities in a specific state.
It is not clear why the suit was only filed against Expedia and Orbitz - in the past these actions have usually been taken against all of the major OTAs including Priceline and Travelocity, among others.
In reading the actual complaint, there does seem to be some confusion in how the merchant model actually works.
For example, in Section 9: "each Defendant purchases and receives inventories of hotel rooms at negotiated rates from the hotels." and "re-sells the rooms to consumers at rates determined by that particular Defendant." Lets take a look at these two statements. Does Expedia, in most cases anyway, actually purchase a block of rooms and hold the inventory? No, not since the early days of Hotels.com - most, if not all, rooms are not purchased and held in advance. As far as determining the rates paid by consumers, again, certainly in the case of the chain hotels, the OTAs are not setting the prices - the chains are through their contractual agreements.
The AG claims that the OTAs are using a "purchase and resale" model which just isn't the case.
The big issue is that the model roughly described by the AG has been in place long before the Internet came around - how do they think all those rooms at Disney World are filled? Thousands of rooms are sold every night in Florida under the wholesale model - I bet more than in any other state in the country except for maybe Nevada. These wholesalers also remit the taxes back to the state based on the wholesale or net portion of the room rate, not on what the consumer actually paid for their package which may include Disney tickets and plenty of other things also bought on a wholesale basis.
Late last week, a jury in San Antonio delivered a verdict on a class-action suit against the major OTAs that was brought by around 170 cities in Texas. The verdict against Expedia, Orbitz, Travelocity and Priceline is for $20M plus court imposed penalties and interest.
While this sounds dire, (and if you read the lawyers press release you would think this was a slam-dunk) a detailed analysis beyond the headlines should give the edge to the OTAs. Why?
First of all, the jury rejected the municipalities' claims that the OTAs willfully pocketed tax dollars that were collected (as taxes) from consumers. This precedent setting verdict finally makes it clear, once and for all, that the OTAs are not collecting taxes and pocketing it - a position that many of the other lawsuits have taken and one that was sure to ring true with juries, particularly in this day and age. The "tax and pocket" position was a highly emotional stance that anyone who truly understand the true economics of the merchant model would obviously reject. Yes, taxes and fees have long been bundled together but the spirit and goal was clearly not to defraud consumers or rob cities and towns of tax dollars - the intent was to protect the underlying contractual agreements around margins.
Secondly, the jury rejected punitive damages against the OTAs because they agreed that the OTAs were not, in fact, pocketing tax revenues. Obviously, this is a no-brainer.
Interestingly, the jury did find that the OTAs "control hotels" and therefore are required to remit the occupancy taxes required by hotel operators. Knowing more than a few hotel General Managers, I can't imagine a statement that would boil their blood faster (except, maybe to say that "corporate" controlled their house!) than to say an OTA controlled the hotel. By now, everyone knows that hotels set pricing, inventory, discounts and room allocations either on the fly or during negotiations with the OTAs. The OTAs then re-market those rooms that have been offered to them to sell. This is hardly control. Furthermore, the hotel is clearly in control of the guest experience - after all, it is the hotel that decides which rooms to allocate to specific guests and who to "walk" when things go wrong.
Lastly, we believe the jury's definition of "control" may expand well beyond the OTAs. Put in the context of the ruling, traditional tour operators control rooms as well. Traditional tour operators (which pump a lot of rooms into Texas resort cities) have always paid the occupancy taxes based on the net rate of the room, not the gross selling rate. This has been going on long before the Internet and the OTAs came along.
Bottom line: if Expedia and the like are hiring, firing, allocating capital, negotiating with unions, customers, franchisers and managing to get the beds made and the bacon crisp, we'd agree that they control the hotel. Last I checked, these functions were not part of the OTA business model.
Travelocity just announced the departure of Paul Nelson who is leaving the company at the end of the year. Filling his shoes as President, Global Partner Marketing is long-time Travelocity vet Noreen Henry. Noreen has most recently been VP of North American Hotels and Packaging.
Noreen's step up to the big chair created the proverbial domino effect and allowed Leslie Harris to step into Noreen's role. And filling Leslie's former role as VP of Travelocity Business will be YannisKarmis who currently heads Sabre's global customer care team.
Nice to see some great people get promoted and a company with solid succession planning in place.
This morning, Travelocityannounced the purchase of Indian portal Travelguru. Interestingly, the press release calls Travelguru "India's leading hotel distribution network" which it may very well be. Adding 4000 hotels, most of which are independent, non chain affiliated properties is a major coup for Travelocity and for Sabre, particularly if they are able to expose this new inventory in the Sabre GDS. Adding hotel inventory in India is, in a word, hard. The extremely limited presence of the large chain hotels makes adding inventory a slow, manual process that requires lots of feet on the street. It appears Travelguru has solved this issue.
But Travelguru is more than just hotels. Interestingly, it is also an air meta search player and a pretty good one at that. A far cry from the traditional OTA model (and much less the GDS model) Travelguru actually send consumers to other sites to book low margin air tickets. A pretty interesting strategy for dealing with a low profit item. Travelguru's meta search is provided by IXIGo, a separate entity. Is this a precursor to a larger shift by the Gnome away from the GDS powered, air-centric OTA model here in the US? Time will tell.
Oh, and we wonder how long Expedia's white label product, WWTE will power hotel searches outside of India! It is kind of a throw-back to the days when Hotels.com powered Travelocity's hotel product! Do these icon etc look familiar?
Just before the July 4th Holiday, Mayor Bloomberg signed Resolution 1012 which will, in theory, force the online travel agencies to collect New York City's occupancy tax on the full amount paid by consumers rather than the net amount that actually is remitted to the hotels.
The full text with changes underlined tax law is here.
With this law, the City has redefined the definition of the consideration paid for occupancy to include "any service fee and/or booking fees that are a condition of occupancy" in order to include OTA's margins.
They have also added a new term known as a "room remarketer" which, according to NYC, is "Any person, excluding the operator, having any right, access, ability or authority, through an internet transaction or any other means whatsoever, to offer, reserve, book, arrange for, remarket, distribute, broker, resell, or facilitate the transfer of rooms the occupancy of which is subject to tax under this chapter." At least the Online Travel Agencies are finally getting credit for what they do - marketing rooms.
And best of all is a new term known as "additional rent" which is the "excess of rent received from an occupant by a room remarketer over the net rent" In the OTA lexicon, this would be known as margin.
What is most interesting about this law is that the OTAs will be responsible for remitting their portion of the occupancy tax directly to the city. In the past, the OTAs have sent the tax on the net rate to the hotel which has then paid the city. Under the new law, the OTAs will be forced to directly remit the tax on the "additional rent" to the city.
The OTAs, spurred on by Orbitz, have already largely given up the practice of adding additional fees in with the taxes during the check-out process. However, this change will either force the OTAs to become non-competitive with hotel brand websites and pass along the additional taxes to the consumers or further erode the industry's margins.
A very simple example: Rate on OTA.com: $100 Net Rate to OTA from hotel: $80 Tax rate: 10%
Today, OTA sells this room for $100 and remits $88 to cover the room and tax and earns $12. In the new world, OTA.com will probably still sell this room for $100 to remain competitive with the hotel's own websites. However, the OTA will now be forced to pay the 10% on both margin and net rate. In our simpleton example, this OTA will now remit $90 and earn $10. Good for the City, not so good for the OTAs.
So, today is June 1st and not surprisingly, Orbitz and Travelocity have fallen into line and matched Expedia's air booking fee removal which was announced last week. However, as usual in this game, plenty of nuances remain between the different sites.
For one thing, Orbitz and Travelocity have not eliminated *all* booking fees - they still charge them on multi-carrier itineraries and trip which originate outside the United States, Canada, Mexico and the Caribbean. So, intrepid travelers who use Travelocity or Orbitz to book a flight from Moscow to Minsk will still get hit with a booking fee on Orbitz and Travelocity. Similarly, let Orbitz or Travelocity find a great fare using American one way and Delta returning and you'll also get hit with a booking fee. Odd, because these kinds of tickets certainly don't cost either Orbitz or Travelocity more to sell or process than a regular old domestic ticket to Chicago.
(As an aside, Priceline does not sell international point of origin tickets)
Orbitz is still charging $30 (over and above anything the airlines charge) to cancel or change a ticket they sold. Priceline has not charged these fees for years and Expedia eliminated them last week when they announced they were removing booking fees for good. Travelocity also does not charge these fees.
Orbitz is showing another new feature for air consumers - it is a little hard to find, but Orbitz is now allowing bookers to cancel a ticket without penalties until 10PM CT the day after it was booked. This feature (which has been long available to traditional agents who are able to simply void tickets before they are fully reported to the airlines via ARC) is new to the online travel agency world. While the websites have always been able to do this, none have ever used it as a marketing tool. Several airlines (Delta, United come to mind) have similar features but this is one more example of Orbitz delivering more value to consumers. As just pointed out by Travelocity, they too offer this feature. Very cool but again, pretty well hidden - and it seems like a key differentiator from supplier sites.
And, if none of the OTAs are charging fees, do all the "fee chop," "no fees," and "booking fees eliminated" marketing messages really mean anything to anyone anymore? These are starting to sound a little like "Best Rate Gurantees"
As we predicted, Expediatoday made the removal of air booking fees permanent, matching Priceline and sister site Hotwire's no-fee consumer proposition for the long-term. No word yet from Travelocity and Orbitz but we expect they will fall in line as well. Of note, Expedia has removed all air booking fees - Orbitz is still charging them on multi-airline and international tickets with originations outside of the US/Canada/Mexico/Caribbean.
In so doing, Expedia has removed one of the major obstacles to their continued growth in the domestic US markets - a $7 price differential vs. booking direct.
In addition, Expedia has also removed the annoying "ankle-biter" fees that they used to charge for changes, cancellations etc of air tickets, hotel rooms, cruises and rental cars. Sister site Hotels.com had already removed these fees on hotel room changes and cancels some time ago and Priceline began the trend. These fees were charged by Expedia and were over and above the fees that airlines or hotels charged for making changes or cancels. Rest assured, those fees still exist regardless of booking channel. Funny that as airline continue to race to add fees for everything from redeeming frequent flyer miles to checking bags that Expedia is heading in the opposite direction.
A critical missing element in the press release was any mention of the go-forward plan on hotel booking fees - something Expedia has never messaged to consumers - only to Wall Street. Orbitz is still running with a July 15th cut-off date for their reduced fee promotion on hotels but given Orbitz's site changes to highlight the "all-in" price, we doubt highly that they will back off come mid-July keeping the heat on Expedia and Travelocity. Priceline, of course, hasn't had any of these fees (air or hotel) for some time.....
In a small 8K filing late last month, Expedia added Jose Antonio Tazon to the Board of Directors. Tazon replaced Expedia long-time insider and fellow European Simon Breakwell who left the board.
Breakwell leaving isn't particularly interesting aside from the fact that he was one of the "old guard" from earlier times - he joined the company in 1997.
But the Chairman of one of the big three GDS systems joining the board is interesting indeed. Clearly, Tazon brings a wealth of European knowledge and insight to Expedia - which could be crucial as Expedia continues to slug it out with the likes of booking.com in particular. Amadeus also brings deep experience in serving both airlines and travel agents alike.
But Amadeus' market strength comes from the European Markets - not North America where Expedia's strengths lie.
Amadeus, on the other hand, unlike Travelport and Sabre, has limited experience in the direct-to-consumer online travel agency space. From a consumer marketing standpoint, clearly Expedia sets the bar.
We doubt this is a prognostication of further consolidation within the travel distribution space (yet) but Expedia and Amadeus certainly have plenty to learn from each other.
Monday brings a new homepage from Travelocity. Its certainly a change from the past with a broad swath for marketing messages across the top of the home page. In fact, the current message is so jarring, we almost thought we had ended up at some sort of Swedish rental car site. Not quite sure why that huge yellow stripe at the top of the otherwise blue page is there - bringing cheery news about H1N1 - that is quite a marketing message. That said, the new focus is clearly on bringing deals to the forefront. Across the top and down the right hand side and in numerous tabs are plugs for deals, deals and more deals. They still don't appear to be customized or focused (at least on the home page) but Travelocity is clearly dialing up the promotional content.
And Henry Harteveldt would be proud - the "ExperienceFinder" has been prominently moved up to the top navigation bar - Henry has previously bemoaned Travelocity for taking one of their best features and hiding it in no-mans land.
But, other than a slightly revised layout and new row of tabs across the top, we don't see a huge sea of change here. In fact, we really have to question why the search button (which enables a user to actually engage with the site on the home page!) has been moved beneath the fold.
Orbitz fired off the latest salvo in the continuing war between the Online Travel Agents (OTAs) by removing the somewhat hidden booking fees that have pervaded the industry's merchant model. These booking fees have typically been included in the "second step" of the booking process after the consumer clicks on the rate at the hotel they wish to purchase. The fees have been bundled together with taxes in a single "taxes and fees" line without delineation to the consumer on which portion was/is taxes going to the government and which portion is fees going to the OTA.
This is a page right out of Priceline's play book but with a twist. PCLN eliminated the fees on non-opaque (meaning NOT name-your-own price reservations) several month ago under their "Fee Chop" moniker but only shows the "all-in" price when the consumer clicks to book. Orbitz, to their credit, is showing the full price, including taxes on the first page - something even Hilton.com does not do.
We sampled a room for tonight, Wednesday at the Hilton New York to see how the big OTAs and Hilton.com compared. As expected, every site we tested came back with the same initial price: $219. However, from there, prices diverged widely when the "all-in" price was compared:
Remember, these are the fully-loaded prices off the same$219 base room rate. Wow! Quite a difference indeed.
Obviously, Travelocity, Expedia and Hotels.com are adding some significant revenues under the guise of "taxes and fees" - often more fees than taxes!
Orbitz is clearly looking to strike Expedia and Travelocity where it hurts in their most profitable segment - hotels. The question is, will consumers notice? After all, all of the OTAs have had these "hidden" fees for years - with few complaints from consumers. All of the competition has been on the first page - ensuring that the first rate consumers see for a hotel is competitive.
And this is yet another "temporary" promotion - only for bookings made between now and July 15th. Will it last longer? Priceline's Fee Chop certainly has.
And there is still that little cancellation fee that Orbitz dings consumers for. Priceline and even Hotels.com have long removed the $25 cancellation fee they imposed above any fees the hotel itself might have charged. The $25 cancel fee lives on at Orbitz, Travelocity and Expedia. Will this be the next frontier in the race to be the most "consumer friendly OTA?"
If you listened to Delta's Q1 earnings call this morning, you heard some interesting commentary on the future of distribution according to Delta.
DL management echoed American'sCEO's suggestion on their call last week that the time would come when OTAs and agents would pay the airlines for their content. Interesting how the airlines can have these "open" discussions in their earnings calls, isn't it? We've been following the commentary over on Dennis Schaal's blog but this was too rich to pass up without a few thoughts of our own!
Of note, DL stated that "TMCs have an important role to play" and seemed to imply that their main target was the OTAs particularly when DL described the "value we provide vs. others" online. Maybe so, Orbitz's Price Assurance which offers consumers a refund when fares decline seems like a pretty good value. The same can be said for the multitude of air+hotel packaging options that the OTAs provide to consumers. And many consumers would also vote Orbitz's TLC in-route support to be far superior to many airline's offerings. And multiple airlines? Try booking a multi-carrier trip on Delta.com or Continental.com. OTAs are all about offering consumers choices and comparison opportunities - things they do quite well.
More interesting, however, was the suggestion that "OTAs should pay for [airline] content the way they do for hotels" Hmmmm. Obviously, someone at Delta has not taken a quick look at hotel distribution costs - nor drivers of OTA profitability. Newsflash: OTAs don't make any money selling airline tickets! They make it selling hotels. And they don't pay hotels - quite the opposite. Can you imagine the horror if someone at Delta knew that many chains are paying Expedia/Travelocity/Orbitz in the mid-teens for distribution? And what of independent hotels? Considerably more.
And finally, DL mentioned that Delta.com was driving ~ 37-38% of Delta's revenues - great news indeed. But they also estimated that the OTAs were providing in the area of 30% of Delta's revenues - wow is all we can say on that one.
The chart above details the approval ratings of the companies themselves and their CEOs as reported by the employees who came to Glassdoor and left feedback. (Hugh Jones isn't rated because of a limited number of responses - probably because he is still new in the role.) Looks like Hotwire is a pretty good place to work - we'll leave it to you to decide if that is because all of these guys left to start Glassdoor or not. (Just kidding, Ryan et al)
The highest rated CEO, Issy Sharp, has just announced that he is stepping down - a real shame according to this report. Bill Marriott and Hyatt's Hoplamazian are just a hair behind Sharp, however.
Things appear pretty bleak over at American and American Eagle - with labor strife a way of life at AA, clearly Something isn't Special in the Air. Even US Airways pulls better rankings. Southwest and JetBlue, as usual, prove that they are run more like hoteliers than airlines with ratings like these. (oh, they make money like hoteliers, too)
According to the study, the hotels saw a boost in reservations ranging from 7.5% to as much as 26% for the inde hotel when they were listed on Expedia vs. when they were dark.
Is this a precursor to a larger shift by the Gnome away from the GDS powered, air-centric OTA model here in the US? Time will tell.
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