Rumour True! Google trialling meta-search in maps for hotels

Who knew that a BOOT rumour (admittedly one from a trusted source) could prove to be true. I wrote last week that I had a good but unsubstantiated story that Google was planning a launch of travel meta-search. Now we have confirmation that they are putting prices into the display of hotel results with priced links to booking engines. Not all users are seeing this functionality (in classic Google multi-variant testing) preventing me from giving you a screenshot of my own, but over at "eWeek Google Watch" you can see some screenshots of a "hotels in new york" search with prices and meta-search style functionality.

Kayak, Wego, Hotelscombined, Sprice and more - hold on to your algorithms this is going to be a bumpy ride!

More analysis over at Tnooz

PS - WOW I scored a TechCrunch link out of this

Drew Patterson Interview - Jetsetter CEO talks to the BOOT

I have re-read the Tnooz predictions for 2010 to confirm but as best I can tell none of the online travel punderati mentioned online private sale companies in their predictions for 'what's hot 2010'. But if the buzz around Jetsetter, Voyage Prive, Kayak Private Sale and more is anything to go by then clearly we should have. After I wrote a post on Tnooz called "Non-transactional travel sites are chasing the online agents on unique product hunting" I decided to do some more investigating into this area. From that I had a chance to talk last week with Jetsetter CEO and ex-Kayaker Drew Patterson.

As a reminder, Jetsetter offers a selected list of limited time deals at high end travel product to a member only list. To get on the member list you have to be referred by another member.

My view on the business model is that it is interesting, exciting but niche. Has the potential to carve a luxury/targeted space in the online world (like Abercrombie & Kent have done offline). But it is not right to view this move as an "OTA killer". Much like boutique clothing stores have a place in the market but will never beat malls in terms of turnover and scale.

Priceline's Jeff Boyd seems to agree with me. He is quoted in a Dennis Schaal Tnooz post as saying that it believes it is "hard to see how they [private sale companies] will scale".

The clothing analogy is particularly apt case of Jetsetter as they are an offshoot of high end fashion private sale company Gilt. Jetsetter appears to be more than a division of Gilt but an independent but related company. Patterson put it this way "Gilt has capitalised Jetsetter". As well as money, Gilt has set up an "intercompany agreement regarding access to customers".

A number of benefits come from the Gilt relationship for Jetsetter. Firstly they get an insta-database of high end customers (Patterson says more than 1 million). Next they have insta-funding in that they (presumably) are getting their funding from Gilt via the $43mm raised from General Atlantic and Matrix Partners. Finally there would be some technology synergies in Gilt providing Jetsetter with insta-merchandising through a common content management architecture.

These point towards solving a lot of the distribution and establishment challenges that face a travel start-up. Leaving Patterson and team to focus on getting product/supply on the shelves.

Patterson has a clear cut vision for his supply strategy. He is not out to replicate the OTAs with the need to manage "10,000 partner, many with low volumes. We much prefer to focus on 8-9 live sales 0n the site." Hotel selection has to be very tight and controlled according to Patterson. They use a combination of "editorial judgement" from a "group of people from within the industry" and post- stay survey responses from members. Patterson says that the survey response result in partners being discarded and new ones selected.

He stuck to the consistent line that I saw in the TravelTrends post on Jetsetter of not disclosing the margins that are being charged to hotels. He confirms that it is not the standard 20-25% of the OTAs but is "more than healthy enough to run a business". It matches his Gilt customer base to target a limited number of high end products. With a focus as much on descriptions and content as rate.

The spot that Patterson and Jetsetter are targeting has parallels with some of my EveryYou posts and discussions on how to help consumers answer open ended questions in online travel search.

He sees editorial content as the key to helping consumers to discover and book high end product. Wants to be compared to publication and information sources Daily Candy and Urban Daddy rather than shopping sites. To be a "lifestyle publication as much as a travel company". He believes that "Consumers want an editor to help point them in the right direction." To be provided with "a sense of what is interesting in the world of travel. What places to go to . What is distinctive." Jetsetter what their role to be to tell "a very different story to 'here are deals in vegas'" that is market of the OTAs. He did not give much away on performance but did say that traffic in Feb 2010 was 40% up on Jan which was 40% up on Dec. With "revenue per member holding constant".

Patterson and Jetsetter have spent time and energy thinking through the business. They have money, a targeted niche and a customer base. All point towards potential success. To get to success I see two challenges for them to address.

Challenge 1 - turning retail customers into travel customers

The bad experiences of Amazon, eBay and Pricegrabber in travel have shown that that a retail database does not translate easily to travel sales. Patterson's view on this is that there is "enough congruence in the basic business model and customers" between Gilt and Jetsetter to provide Jetsetter with an advantage. That the high end product seeking customers of Gilt will transition from buying expensive clothes to expensive holidays.

Challenge 2 - generating scale (in sales and data)

The first of these (scale in sales) is not that big a deal. While targeted sales will never be as big as mass market, there is plenty of money to be made trying to be the Abercrombie and Kent of online travel. High per booking values make revenue per transaction healthy and customers can be very loyal. Keeping supply numbers tight means that per hotel volume should be high enough to keep suppliers interested. However scale in data could be more challenging. As I discuss in a number of my EveryYou posts the future of online travel is not just making targeted recommendations, it is adjusting those recommendations based on the different 'version' of the traveller that is making a request at a particular time. One person can be many different travellers depending on the trip (ie business travel vs leisure v VFR). To do that you need lots of data on a customer. More than I suspect you get in the tight supply context of Jetsetter. To move to a more powerful recommendation architecture will require Jetsetter to tap into other sources of data from Gilt and other places.

The biggest asset that Jetsetter has to overcome these challenges is the 1 million member Gilt database to start things off.

Tnooz: The blurring lines between transactional and non-transactional sites

My latest post for Tnooz has is live. Title of the post is "Non-transactional travel sites are chasing the online agents on unique product hunting – but can it work?". I write about how content sites are starting to negotiate directly with suppliers for unique product offerings, trying to directly challenge the major online travel agents. Mentioned in the post are Kayak Private Sale, TripAdvisor Business Listings, Voyageprive, Jetsetter, Dealbase and Totaltravel.

You can read the full post here.

Kayak Private Sale: Surely to mean increased cost and complexity for Kayak. A zero percenter no more

Dennis Schaal over at Tnooz broke the story that Kayak is launching a program called Kayak Private Sale. In a post titled "Kayak gets clubby with exclusive hotel deals" he revealed that Kayak is planning on launching exclusive deals. These deals will be negotiated directly with a property and made available for Kayak exclusively. A few days later Dennis had an update in his post "Kayak exclusives to include flights, hotels, vacation packages" including confirmation that these exclusives would extend to flight and packages as well as hotels. Bookings will be at the supplier site based on a click/referral from Kayak.

This is a very interesting step from Kayak - but not for the reasons you first think. In the words of PhoCusWright boss Phillip Wolf one of the hallmarks of Kayak's success was that it was a "zero percenter". That is a site where zero (or near zero) percent of the site content is controlled or produced by the owner. The main disadvantage of being a zero percenter is that you don't control inventory, price or the customer experience. The main benefit of being a zero percenter is the dramatic operational cost advantage you have over an online retailer. No need for a supplier contracting team as a small biz dev team is enough to secure content. No need for a fulfilment team as the supplier/advertiser takes the booking. No need for a customer care team as the supplier/advertiser talks to the customer. This saves millions in costs. This is how you can be one of the biggest travel sites on the planet but with less than a 100 staff (last time I heard).

But (as I said in my comment to Dennis' first post) signing and managing exclusive deals takes time and a team. Call it a revenue management team or a hotel market management/contracting team. Either way it is a group of sales and revenue professionals who need to talk weekly/daily to suppliers. In the OTA world this means local market people - lots of them. Plus if you are going to load exclusive deals you are going to need to talk to consumers when those deals are not what they are supposed to be. This means more people which means higher cost. All of this adds up to a significant operational and cost change for Kayak

I am looking forward to seeing how this plays out. Am I missing something?

Bing Maps: Helping you find the middle of nowhere whether you want it or not

Bing was supposed to be the new black. Bing + Yahoo! search deal + Farecast integration + new mapping was supposed to = a revolution in search engines for Microsoft (excuse me.. not a search engine.. a discovery engine). For that all to work, the mapping has to work. Especially in travel. When people search for information on locations they need to be given very accurate mapping information on where the location is..well...located.

I have been house hunting recently and "accidentally" used an integrated Bing Maps feature on Internet Explorer. It failed miserably...in an entertaining way.

Here are the screen shots that tell the story. Shot 1 - the house in 138 Underwood St Padding (suburb of Sydney just next to downtown business region) that I was looking at and me highlighting the address and selecting map with Live Search/Bing. Shot 2 - the result. No only is the mapping result nowhere near Paddington, it is some 4,000 kilometres away on an Aboriginal reserve in the North West corner of Australia. In other words...somewhere near the middle of nowhere (with all due respect to the people who live there).

Shot 1 - me doing the search



Shot 2 - the result. We now know where the middle of nowhere actually is.
Described by Bing as "138, Aboriginal Land, Western Australia". Other than the number 138 there is nothing in common with the address I was searching for


Let me put shot 2 into perspective with Shot 3 showing how far away this is from the actual location of Underwood St Paddington

Shot 3 - how far apart the locations are


Think this is a one off? I tried the same for a property in another part of Underwood st Paddington (this time number 14 not number 138) Shot 4 is the result. At least this time in Sydney but still some 30-40kms away and under than the number 14 - nothing in common with what I searched.

Shot 4 - closer but still not close enough
Showing 14 Underwood st Paddington as 14 Bilgola St Newport


If Bing wants any chance at fighting Google, Kayak or the OTAs in travel search they will have to do dramatically better than this in the mapping area.

801 not out

Another 100 posts are live on the InterTubes. Time again for my regular "not out series" recap where I go through the last 100 posts and remind you of the themes that have been dominating the blog. I started almost three years ago with 101 not out and continued with 201, 301, 401, 501. 601, and 701 not out. This comes at a time that the BOOT passed the 100k visitor mark.

Two new segments for the Blog

• Seat Reviews including Qantas Economy, Qantas Premium Economy, JAL Business, BA Business, Singapore Raffles and United Business ; and
  
• Business traveller tips - what to pack, what to wear and getting through security.

Meta search action a-plenty which I tried to summarise in my post "Meta-search vs Online Travel Agents: the three main differences and why they matter"

• TripAdvisor launching air meta-search and received criticism (including from me) for allowing too many reviews from non-travellers
  
• Travelzoo launching Fly.com
• Kayak branching into content and review meta-search through expanded Travelpost
• Yahoo! went the other way and euthenased FareChase
• Cheapflights launched in Australia with a sub-par product
• Car meta-search company Oodles topped the car traffic numbers in Australia
• Sidestep founders came back with the oddly named Voyij
  

While also having time for Travel Discovery and Inspiration sites such as:

• event based search site Joobili
• the high profile Triporati
• data loving Tripbase

...and we found out how much Expedia paid for VirtualTourist and OneTime

BOOT interview mania with start ups and industry shakers

• Alfonso Castellano of TripSay (part 1 and 2)
• AsiaRoom came out of the closet, launched direct contracting and the BOOT found out more about them and their TUI ODS stable-mates including revenue numbers
  
• Jim Hornthal of Triporati
• Yen Lee of Uptake
• Reuven Levitt of Tripbase (part 1 and 2)
• Steve Hafner of Kayak
  

oh...and...a plane actually landed on water

Kayak is not that flattered by Bing imitation (Wired Mag)

Quick post for the BOOT recommended read of the week. Wired is reporting that Kayak sent Microsoft a "legal letter" along the lines of accusing Microsoft's Bing Travel of copying Kayak's look and feel and therefore misleading Kayak customers. No more details than that. Anyone out there is the Michael Jackson obsessed InterWebs know any more?

Full Article "Kayak to Bing: Stop Copying Us!"

hat tip to whodeani where I saw the story first

Kayak CEO Steve Hafner Interview: keep it simple, focus on search, stay out of Asia..oh...and get back into offline marketing

Enjoyed a chance to catch up with Kayak CEO Steve Hafner last week. I had planned the call to be about the challenges of a traffic arbitrage business model. I had hoped to draw out of Hafner that there was pressure in the Kayak model fuelled by rising paid search costs, being late to the review game with the Travelpost revamp and tremendous marketing and product pressure from the drop/elimination of booking fees by the big online travel agents (OTAs). Instead Hafner was relaxed, confident and ready to push ahead with millions of dollars in offline (yes offline) advertising planned.

We touched on two main areas. His focus and plans for the next twelve months (including plans for Travelpost and why the OTA fee cuts don't phase him) and his thoughts on expansion outside America (not in Asia and measured in Europe). On the former there is a lot to be worked on for Travelpost to catch TripAdvisor but there are plenty of flaws with the TripAdvisor product and an accompanying disquiet amongst users. On the latter, the potential risk I can see is that they may be under estimating the challenges of growing in Europe where they have more competitors and less compliant suppliers.

Here is our exchange in detail.

On plans for the next twelve months

Hafner says that Kayak is exclusively focused on three things:

1. More focus on core search: The measures here are speed, accuracy and simplicity. Hafner is measuring his world in terms of milliseconds in response time. I asked if we was worried about price accuracy, database loads, hotel and switch look to book issues but none of these concerned him. For Kayak the true cost per query is falling to near zero through caching and the costs of bandwidth. This allows him to focus on the speed of search and the comprehensiveness of the results. His goals are big but simple - that the submit button results in a search in 15 milliseconds, that the results contain every bookable option and that the filtering and customer profiling gives the client the results they want. While this sounds obvious it was the simplicity and aggression in his focus that impressed me;
2. Driving awareness: Hafner believes it is the perfect time to get back into offline marketing to take brand awareness to the next level and compete with the OTAs. He believes that Kayak is "fully penetrated online" and that the costs of offline has "come down by about a third". Critically he does not want to leave the offline channel as the exclusive domain of the big spending OTAs, especially because (as he puts it) "the fee cut [by the big OTAs] takes margin away from their P&L and out of their marketing budgets". New CMO Robert Birge has a $100mm to spend on marketing and a CEO keen to see the brand in lights on TV (example below of their "trip idea" commercials from back in 2006). Right now Hafner is claiming that 8% of online shoppers have heard of Kayak (cf he claims Orbtiz number is 60%). In two years he wants the number to be 20%. ; and
3. Making Travelpost a viable competitor to TripAdvisor and Travelzoo: Kayak has followed the much smaller Uptake into the review meta-search model through a revamp of Travelpost. Prior to the revamp Travelpost (acquired by Sidestep) was a user generated hotel review site much like TripAdvisor. Now post revamp it aggregates reviews from around the web as well as allowing direct posting and commentating. He plans to go after both TripAdvisor and Travelzoo with this new product. He hopes within two years for Travelpost to be generating about half the revenue that Travelzoo is making from deals and to be 15% of the size of TripAdvisor's media revenue (up from 1% now).
   

On Expansion plans

An interview with Hafner is famously free from PR generated answer obfuscation. I asked a detailed question about the Asian market that started with a lead in on the challenges in the market, the earlier successes of Qunar in China and Wego in Singapore and Australia. Even made a reference to Sprice and Cheapflights. "So Steve," I concluded, "do you have your eyes on Asia too?". Two word answer - "absolutely not". In short he thinks the market is too small (in terms of search volume) and not mature enough (in terms of online advertising).

Europe is another matter. He admits that the change in MD "reflects a disconnect in aggressiveness" which I read to mean that the outgoing MD had a more aggressive plan than Hafner did (see the Travolution post on this for more details). This does not mean they are pulling out of Europe and he rejected any suggestion that Kayak had made a "false start" there. Instead they will keep on with the general three strategies above run by the two people in the London office. He conceded that there are product gaps in Europe (no Rayanair and some other low cost carriers) as well as higher costs from online marketing as Google is so much stronger but he is there for the long term even with no plans to replace the Managing Director role.

The competitors are coming fast at Kayak with big marketing budgets and constant model changes. Kayak's response is keep doing what we are doing only better and now on TV. What do you think. Good plan?

---------------------
Example of earlier offline advertising efforts by Kayak.

Voyij - Sidestep founders and staff re-enter the meta-search war with a discovery and inspiration twist

One of the first things you learn as a lawyer when doing mergers & acquisitions work is the importance of the non-compete clause, especially the term of the non-compete. That is the restrictions you place on the people selling a company from walking out the door with "your" money, their knowledge and immediately setting up the same or similar business elsewhere. There is not a legal standard for a time period for a non-compete after a sale as it depends on the amount of money paid, the geographies involved and more. That said you would expect any major deal to come with a minimum two year non-compete. One year is possible but for acquisitions of a decent size you would expect to see at least a two year restriction on shareholder/owner managers (ie not "regular" staff, just those with a substantive stake in the business) .

Why am I giving you this little trip down memory lane to my days as a lawyer (even though I have admitted that every now and then I miss being one)? Because in late December 2007 the online travel industry was "rocked" by the meta-search equivalent of Pepsi buying Coke with the announcement of Kayak Buying Sidestep for $200mm. It was pitched as a merger but quickly became clear that the Sidestep brand would disappear and much of the Sidestep management would move on (see my post deal interview with Kayak VP comm Kellie Pelletier for more).

Now some 15 months after the Sidestep sale (ie outside of 1 year but within the typical 2 years) I have come across an announcement that a number of ex-Sidesteppers are back in the travel meta-search business with the launch of Voyij.com (pronounced "Voyage" and much cheaper than trying to buy the inactive but clearly for sale Voyage.com).

The press release (care of Business Wire) dates the launch of Voyij as 13 May 2009 and is heavy in linking the likely success of Voyij to the Sidestep pedigree of the founders and staff. According to the Voyij blog work on the product started as far back as March 2008 (ie just after the acquisition). Listed on the Voyij website as founders are Sidestep co-founder Brent Stewart (Voyij CEO), Sidestep Software Architect Nick Atkins (Voyij CTO) and Sidestep UI engineer Paul Kim.

Former Sidestep CEO Rob Solomon is quoted in the press release saying some glowing words but is not listed in the About us section as being either a founder or on the advisory board. To be clear I have no information either way on the post acquisition obligations of anybody but love the idea of seeing former employees of a target company build something to battle back against an acquirer.

Post Sidestep machinations aside, Voyij are coming at meta-search from a different angle to Kayak/Sidestep. I am tempted to describe their approach as a mixture between meta-search and the travel discovery and inspiration sites that we have been discussing so much here at the BOOT. Whereas your typical meta-search business asks you to type in a To/From combination and produces a set of results, Voyij ask for your departure point and an indication as to when you are prepared to leave. It then recommends both deals and destinations. For example selecting SFO as a departure point selected "beyond August" as the departure date recommend flights to Long Beach as being the cheapest options. For Vacation deals the top recommendations were Southwest Vacations deals in Oakland and Las Vegas.

True to their Sidestep origins the Voyij UI design team have produced a well laid out site for refining the sort order by date, price, destination, facilities and more. However the discovering and inspiration pieces are much weaker than the dedicated players that I have looked at such as Triporati (interview with founder here) and Tripbase (interview with founder coming soon). The meta-search part is seamless and attractive but they will need to develop a lot more depth in the recommendation part other than simply selecting the nearest and cheapest option otherwise they will limit their market to nearby weekend get-aways.

Final world - the name is going to hurt them. In typing this post I must have misspelt the name more times that I got it right, even though it should be phonetically easy to remember. Similarly messed up the URL a few times (thankfully without unintended and unsafe at work consequences).

Let's all welcome the team from Voyij back to the meta-search war front.

PS - Dennis Schaal has some interesting thoughts on the Voyjig functionality and the perils of screen scraping here on his post here.

Want to know how consumers search for Travel - well NY times has a few tips

Interesting piece here from the New York Times' "Frugal Traveler" called "Research: The Travller's Best Friend". Is an article where the Frugal Traveler gives their tips and tricks to NY Times readers on which sites to use to research, book and manage a trip. There will be no surprises for you the experienced online travel user/abuser but it does provider some useful insight into the advice the the mainstream media is giving the online consumer on where to look and book.

No blogs were mentioned. Sites getting a mention include:

• Google;
• Luxe Series of guide books;
• Kayak
• SeatGuru;
• Dealbase;
• TripAdvisor (but not in a good way);
• Craigslist;
• TripIt;
• Facebook;
• Couchsurfing;
• Oanda; and
• Flight 001 travel store

Also some old school recommendations to check out books.

Thanks for Madame BOOT for sending through the link.

Thanks to Kristina B for the fantastic image

"The AsiaRooms of 2009 is not the AsiaRooms of 2005": Interview with John Fearon, AsiaRooms Head of Marketing

AsiaRooms is one of the region's largest online hotel retailers. With 81, 908 hotels and counting (according to the site today) and a parent company that is the largest travel company in Europe (TUI), AsiaRooms is clearly a player that the BOOT should be paying attention to. Historically the company has made this hard as it has been very secretive with its numbers and plans and (to be frank) was not a company we wanted to pay attention to. Prior to TUI buying the company, AsiaRooms built up an unwanted reputation on online customer care forums for complaints and among the trade for scoffing at rate parity and associated price guarantees. Rumours of wholesale group rates being market up $5 and sold online became the standard trade fair post-session beer story when AsiaRooms came up in the conversation. The brand buzz was all bad. In fact the customer and industry complaint forums became the only source for profile information on the secretive company.

John Fearon the (relatively) new Head of Marketing for the Pattaya based AsiaRooms is determined to change all that. Determined to build on the TUI brand and infrastructure support to change the market perception of AsiaRooms and to bring the company out from behind the secrecy curtain. As John told me “we are not the AsiaRooms of 2005”. I had a chance this week to (virtually) sit down with Fearon and hear his plans for changing the reputation of AsiaRooms, overhauling their marketing plans, ditching meta-search and taking on all comers in a press to be number one in Asia.

In marketing, John's first target is to change the approach to paid search marketing. SEM and SEO is the frontier that John believes will sort out the winners from the losers in Asia (I agree). Is also the place he was happy to share numbers and metrics with me. After only three months of work Fearon is claiming to have doubled the amount of business coming form the search engines on the same level of spend. Not much of a metric to share but an indication of his marketing plans. He had a lot less praise for and desire to continue to invest in meta-search. Has pulled AsiaRooms out of Kayak and has no plans to go with hotelscombined. For the moment is sticking with Wego but as general rule does not believe that meta-search builds a brand or helps the business. Claims it forces you into “killing yourself” on pricing at the expense of the consumer experience. This is an interesting point. I am working on a separate post on my thoughts on the meta-search model but from what I am seeing the arbitrage gap (difference between price meta-search players buy traffic from Google and sell it to suppliers) is narrowing.

In supply the plan is to continue to gain access to cheap inventory - but with less (he did not say none) of the rate rule breaking.

Asia is a tough place to play but Fearon is not worried. AsiaRooms claims that profitability and support from the rest of the TUI nline Destination Services (ODS) group will prove another important factor. [FYI the TUI ODA group includes the UK based LateRooms and Spanish Hotelopia].

They will need more than good paid search plans and mothership support to make it in this market. Fearon says he is aware of this, especially with the Global F’n Crisis hitting Asia hard. He predicts the GFC will bring down a number of smaller brands (we off the record speculated which ones). But for Fearon this is the opportunity to bring AsiaRooms out and take competitors head-on. He has not been impressed by any of the marketing activities of competitors from the big four (Expedia, Orbitz, Travelocity and Priceline). "There is nothing they have done that made me say Wow".

Was interesting to finally hear a (confident) voice from AsiaRooms and one not afraid to admit to the reputation. He acknowledged that AsiaRooms broke a lot of the pricing rules in the past (and maybe that they still do) but is now looking to invest in brand and customer satisfaction (heck they even have a facebook fan page now!).

So what do you think? The consumer forums still don’t paint a pretty picture for AsiaRooms but the company is claiming a lot of changes since 2005. Either way the Asian online travel market war has moved to a different level.

Travelzoo bought and has now relaunched Fly.com - looks familiar

Email/Deals marketing firm Travelzoo (TZOO) bought the domain name Fly.com for US$1.76mm a week or so ago (more over at Travolution). Today I saw a story announcing that Fly.com has been relaunched as a meta-search beta. New model for them. I wonder where they got their inspiration. Here is a screenshot of the new Fly.com website. Free 1 year subscription to the BOOT for anyone who can tell me which site the Fly.com website looks the most like. Any guesses? There is a hint below.
Fly.com



Hint



Update - just saw a post from Tom Botts of Hudson Crossing where he reviews some features from Fly.com

Kayak to take on UpTake (or is it the other way round)

Quick post, as I am running around today

Meta-search behemoth Kayak.com (poised to hit a billion searches in Q1 09) has announced that it is adding hotel review meta-search to its engine (care of HotelMarketing). Two interesting points caught my mind here:

1. Uptake.com (nee Kango) came to this model first and has raised money and profile to go after it. But Kayak clearly has traffic to burn; and

2. I interviewed Kayak's VP Communications Kellie Pelletier back in Jan last year after thier acqusition of Sidestep. At the time Sidestep had a lot of content assets (such as the now dead TripUp). Kellie made it clear to me that Kayak was not looking to pursue a content based strategy - rather would rely on their engineering lead to beat the OTAs and "regular" search companies. I am trying to decide if this move into meta-searching content is a change in strategy or not. On the one hand it is embracing content but on the other it is using engineering to collate and organise someone else's existing content.

Need to think about his more but Uptake - watch you back!

Kayak CEO Steve Hafner on PhoCusWright Center Stage

Here is a quick list of quotes from Kayak CEO Steve Hafner that I Twittered during his PhoCusWright Center Stage Interview with Philip Wolf.

"Kayak's traffic was three times Sidestep when they bought them"

"The jury is out for the media model on retail sites"

"Bartels at Travelzoo has $80mm of revenue in their P&L. I want it. Of course they are a competitor"

"brought out a great mobile product a few years ago. Was used by 1000 people"

"next year will be talking about consolidation in OTAs (online travel agents), new faces at the top of some, cost cutting and site improvements. Can't believe how cluttered OTA home pages are"

TripUp - "our site is dead, go to Facebook instead"

Sidestep bought TripUp in 2007 as part of the plan to add content and community and with meta-search. Then Kayak bought Sidestep and made it clear that they believed in affiliates and search as traffic generators not content and community sites. When asked by me what this meant for sites like TripUp, Kellie Pelletier of Kayak gave the not so coded code words of “evaluating all those relationships now” and “reviewing contracts and performance". That usually means you will see things being shut down in the next three months. Well here we are three months later and TripUp is dead. I wonder how the staff at Travelpost (another Sidestep Content acquisition) are feeling?

The page that used to be TripUp is now thirteen simple words

"Tripup is gone, sorry.
Maybe you can use Facebook instead, it's very popular."

I doubt even that page will last very long.

Thanks to to the Triptouch blog where I spotted the story.

Have attached a screenshot below

501 not out

Time has passed and the posts keep flowing. Time for my "not out series" - a regular summary of the last 100 posts that I first started with 101 not out and continued with 201 , 301
and 401.

Just like the 401 update it has been deals, deals, deals that has dominated the last 100 BOOT rants:

• Wotif evenutally managed to by Travel.com.au/Lastminute.com.au despite a fight from Webjet and a cunning move from AOT. Followed up almost immediately buying Asia Web Direct;
• TripAdvisor launched a new version and continued its targeted site buying spree with HolidayWatchdog;
• TravelCLICK was sold to Genstar and the BOOT called it first;
• The Asian acquisition bonanza continued as Priceline returned to the market though an acquisition of Agoda, ;
• Sidestep disappeared in a flood of newly raised Kayak cash; and
  
• Venere bought Worldby.
  

Cash flowed into online travel:

• Fastbooking took Euro35mm;
  
• Worktopia grabbed $5mm;
  
• Bezurk got "an undisclosed sum" from News;
  

I spent some interesting times on the phone doing start up interviews with:

• Yen Lee of Kango;
  
• Gregg Brockway of TripIt;
  
• Martin Symes of Bezurk; and
• Kellie Pelletier of Kayak.

In the weird world of quirky news:

• bags fell from the sky;
  
• The president of Sri Lanka got bumped and was not happy about it;
  
• Man fired dog and bragged about it; and
  
• nobody, I repeat nobody is doing anything naughty naughty in the new Singapore Airlines double bed suites.

Oh and Qantas turned from being the flying Kangaroo to the thieving Rat.

But I saved my most angriest post for number 400 - the last in this seasons. When the new Australian government said they were doing me a favour by continuing to allow Qantas to over charge me on flights to America.

If you're still reading then I'm still writing.

The Bezurk Sessions: Interview with Bezurk CEO Martin Symes on News Digital Media investment

Meta-search stories have been dominating the news in the last month, naturally driven by Kayak’s purchase of Sidestep. This has (unfairly) stolen a little of the deal buzz around the investment by News Digital Media (one of News Corps online arms in Australia) and OWW Sinapore's investment in Asian meta-search company Bezurk (my first mention of the story here).

I have a connection to the Bezurk deal through some consulting work that I did for them in early 2007. So it would not be fair to give my thoughts and any commentary around the deal. However I did have a chance to chat with Bezurk CEO Martin Symes today about his post-deal plans around Brand, Product and ongoing relationship with News. Here are some of the points that came out of our conversation.

Maintaining independence

Bezurk will maintain its independent operations from other News online assets. This is important (says Symes) to ensure that Bezurk can continue to work with other media partners and reflects that New has taken a minority stake. Symes and team will work hard to integrate activities with other News online assets (mainly in Australia) but this is not guaranteed. Will only do it where it makes sense. I read this to mean that the News properties such as News.com.au or truelocal.com.au or Moshtix nor Bezurk itself are compelled to link to each other but that each will have the inside running on a a pitch to the other. Bezurk is already an important part of the travel section on News.com.au but this occurred prior to the investment deal.

The other important factor for continued independence says Symes was that Bezurk needs to continue to think and operate like a start-up. This is both in the sense of cost control and lean operations as well as the need to have the flexibility to innovate.

New Plans - Some more people, some more product and some more markets

The deal has brought some much needed money into Bezurk that Symes intends to use for the following:

• New Markets – about to launch in India off the back of a “portal deal”. Will open a small Sydney office in the next few months;
• New people – will be announcing soon a new SEM manager and senior marketing appointment; and
• New products – cars and packaging to come very soon. Will also allow them to uncut some of the corners around QA and testing that were required given their pre-deal budget restrictions.

So what does the Kayak/Sidestep deal mean for the meta-search market and for you

Symes (not surprisingly) sees the Kayak buyout of Sidestep and Yahoo! upgrade of Yahoo! Travel through the relaunch of Farechasee as a “fantastic validation of the model as people are prepared to put a lot of money into the sector.” He is sceptical that Kayak can deliver on the integration plans they have as quickly as they want (see my Interview with Kayak’s Kellie Pelletier for more on the integration plan).

Does meta-search need to be local market focused? Why should a consumer care that Bezurk is an “Asia Pacific market specialist”? Wont Kayak give a consumer all they need?

The last area of questions for Symes was around why he thought customers needed a local meta-search provider and what he thought Bezurk offers that is better than Kayak.

Symes says “Great question. We are still developing exactly what it is that each market needs by figuring out the local practices and booking patterns. I argued during my time at Zuji that you have to be as nimble as possible locally to access local content. Same is true in meta-search. You can get 80% of the way to meeting your customer’s needs by being a generalist but if want to be the player in a market, the authority then you need to do the last 20%. Need to be local.”

Congrats again to Martin, Craig and Ross on this deal.

The Kayak Sessions: Interview with Kellie Pelletier of Kayak on the Kayak / Sidestep deal

You know about the Kayak and Sidestep $196mm "merger" (if you don't you can see my post on it here). I had a chance this week to speak with Kayak's VP Communications Kellie Pelletier about the deal, meta-search, online travel and a whole lot more. A couple of very interesting themes and ideas came from this interview.

Doing a deal with (OK buying) Sidestep

The deal is talked about as a merger and legally looks like one but is clear from the conversation that it is in fact an acquisition with Kayak in charge. The deal was done quickly. The idea emerged early in the third quarter initiated by the three key founders - Rob Solomon (CEO Sidestep), Stephen Hafner, Co-Founder and CEO, Kayak.com and Paul English the Kayak CTO. Discussions started early last year but really got going "late summer". Owners of Sidestep were all bought out - however Trident Capital (Sidestep's biggest VC backer) joined the funding of Kayak's buyout of Sidestep.

Kayak + Sidestep: The Integration Plan

Pelletier shared the integration plan for the combined products. In the US they will retain two brands. Sidestep will keep it feature and content focus (supported by search), while Kayak will keep its clean, uncluttered, pure search approach. Pelletier used a Google vs Yahoo! analogy to show the difference. A focus on engineering and search, search, search (Kayak) vs features, functionality, content and brand based connection with users (Sidestep). Quotes Comscore to say that the traffic cross-over between the two is only 10% which I found very surprising.

While they will maintain these brand feelings in the front end, the back end will be one system - dominated by the Kayak technology. There will be some enhancements in the Kayak engine drawn from Sidestep (ie packages and air guides) but in the end both brands will point to the same Kayak dominated engine. In the rest of the world (mainly Europe at present), the Sidestep brand will be set aside. Already the Sidestep.co.uk refers directly to Kayak.co.uk. Full integration should take around 3 months.

The content pieces of Sidestep are nice to have but not really core to what Kayak believes is key to success in meta-search - great engineering. Sidestep have content deals and have bought content companies (for example Travelpost). It is clear that Kayak aren't that interested in this content but when pressed on what Kayak will do with these side assets and deals Pelletier used a couple of good PR phrases saying that Kayak was “evaluating all those relationships now” and “reviewing contracts and performance”. My interpretation is that this means that the content assets were not part of the reason why Kayak bought Sidestep and Kayak would not have established these assets independently but at the same time don't want to just through them away.

Re the team - 20 of the 75 Sidestep staff have been offered/accepted employment contracts making a total staff of 60 (35 of whom are engineers).

Kayak to the World - We are here, were coming and we're willing to buy

Even though "everyone wants to be bought by Google", Pelletier says that the enlarged Kayak is not looking for a buyer or an exit plan. Does not believe that the OTAs can afford them anyway. Instead Kayak is gearing itself to take on the world with expansion plans for China and India "sometime in 2008". Additionally there maybe "newsworthy announcements later in the year". This is PR code word for plans to grow through further acquisition.

Sure we like search engines but there are plenty of other ways to get traffic

I have spoken in the past about how so much of meta-search is about traffic arbitrage - buying traffic from Google and selling it to travel providers. I was very interested to hear from Pelletier that PPC was only responsible for a third of Kayak's traffic. Affiliate deals delivered another third and (surprisingly) direct to the side was a full third of Kayak's traffic. Very impressive if true as indicates a customer loyalty I did not expect in meta-search.

My Thoughts

Kayak is hungry for more. Unless Pelletier was messing with my mind then Kayak are determined to stay independent, grow traffic, expand product and become the travel search company. But integration is never as easy as it sounds in the acquisition deck shown to the Board. Simple maths of the traffic puts Kayak + Sidestep in the traffic lead but they will need to prove that an combined company can rely on maintaining the combined traffic.

Meanwhile Yahoo! is offering up some resistance having finally put its Farechase product on the Travel home page (here is Kango's Yen Lee with more of the story).

Congrats to Kayak on this deal and I agree with the strategy. However - to end with a word of caution - Kayak will do well not to under estimate the challenges of integration and the potential for an inexplicable evaporation of traffic.

Kayak buys Sidestep for $200mm

Hot of the blogsphere care of TechCrunch and days after I pondered if an OTA would buy a meta-search provider we find that Kayak has raised $196mm, from pretty much everyone on Sand Hill Road and used the money to buy Sidestep for around $180mm (plus $20mm in cash reservers at Sidestep equals $200mm). Arrington has the full story here.

Sidestep will lose 55 staff (out of 75) including CEO Rob Solomon (after 60 day transition.

What are the possibilities here:

• Do they keep two brands?
• Do they merge the content businesses that each of them built or bought to do SEO?

The biggest question of course - is this a sign of strength in the market with one and two coming together to dominate or a sign of weakness that they need to get together to survive? Deal of the year at the last moment in the year.

UPDATE - Adam Healey over at VibeAgent has crunched some numbers on the deal putting the combined entity (or new Kayak) at a valuation of $450 million or a P/E of 35 (assuming 15% margin on TechCrunch's reporting of combined revenues of $85 million).

UPDATE 2 - Interview here with Kayak's VP Communications Kellie Pelletier about the deal,

Meta search vs OTA: Should an OTA buy a meta-search company?

Was asked an interesting question about meta-search and online retail by a share analyst reader. Paraphrased, the question was

We get plenty of Private Equity calls relating to meta-search companies. Most want to know if these companies would work in Europe and who would be interested in buying them. Do you think that an online travel agency could/would buy a meta-search engine?

The main difference between a meta-search company (Sidestep, Kayak, Bezurk etc) and an online travel agency (Orbitz, Expedia, Travelocity etc) is that the first group are media companies and the second are retailers. The common element is that each is after the traveller - wants to attract travellers to the site to commit to a revenue generating activity. However the meta-search media business requires very different approaches to marketing, customer retention and business development than the OTA. This is because the activity the consumer is engaged in is different, the tools for retaining customers are different and the revenue model is different. Will quickly touch on each and then look at whether or not an OTA should buy one.

Customer Activity - You would think that since the activity on both meta-search and OTA is search that there would be little difference in customer activity. However the difference here is what is going on in the customer's mind. A consumer on an OTA is experience hunting. Is looking for advice, support, connection - all of the things a consumer desires from a retailer. In meta-search the consumer is singular in their focus - give me the cheapest price on the exact thing I want. This is why OTAs invest so much in brand and customer care. Meta-searchers are traffic arbitragers - they survive by buying traffic at a cheaper rate than advertisers will pay for referrals.

Customer Retention - Retailers can work to keep customers by offering discounts, exclusive deals and targeted promotions - ie product. Meta-search retention comes through bringing consumers into the search experience through reviews, social networking and new inventory connections - ie content.

Revenue Model - commission vs pay per click; cash from consumers vs bucks from media buyers; selling travel vs selling eyeballs.

OTAs therefore have the advantage in customer retention and breadth of marketing tools. But meta-search has the advantage in ease of access to supply and significantly reduced operational costs (no need for customer care and reduced supplier relations costs).

It is because meta-search is media rather than retailer that the biggest meta-search deal around was Farechase being bought by a media company - Yahoo!. However this does not cancel out an OTA as a potential buyer of meta-search. We have a very power example of success in an OTA buying, owning and running a media company through Expedia's ownership of TripAdvisor. Any acquiring OTA just has to embrace being a media company.

I am a fan of the meta-model but (as with all web companies) it is all about good product and execution. There is lots of success in travel so far for meta-search but comparison experts like Pricegrabber have already failed in moving to travel. The fit with a media company is stronger than that of an OTA. Of course - haunting the whole sector is whether or not the general untargeted search people (ie Google) develop the more targeted tools of meta-search.