With the speculation that Expedia maybe a takeover target for Google (see Yahoo Finance) I thought now would be a good time to revisit how important Google has become to many travel companies.

Changing the face of travel distribution (UK leisure travel)
First a bit of history - a few years back (not that many) UK leisure travel was dominated by the high street (and a few call centres). Google came along and enabled, for the first time, businesses to put their products in front of consumers at less cost of distribution than through other indirect channels. Much of the growth in online travel has been due to organic (i.e. free) traffic from Google over the past 5 years.

Indeed, it has not just been a change in distribution habits from existing companies, but whole new companies have formed that would not have been in existence without Google. For example I know many smaller tour operators who, with 5 or so staff, can run profitable businesses. Previously they would have had to have a couple more staff for marketing purposes - and have produced a costly brochure - which would have made the small business model less viable . i.e. Google has enabled smaller travel businesses to flourish.

It hasn’t just impacted small travel businesses - I know travel businesses employing “thousands” where a strong proportion of their sales can be accounted to Google organic traffic. These companies, large and small, are now “addicted” to Google web visitor traffic and without that tap continuing to flow they could be in trouble. Some senior executives at these large companies don’t even realise how important Google has become to them so haven’t mitigated any risk this exposes them to.

Google becomes commercial
The question with Google isn’t really about traffic…. it is about free traffic. I would argue (without having any knowledge of what Google are doing!) that Google are dominant in “search traffic” while other websites, such as Yahoo, have “display” traffic…. Due to travel being so product search dominated, this is why Google is so important to the travel industry.

It is a fairly obvious point - but Google is a business. They have to make money. Indeed, they can’t just “sit still” but their investors want to see constant growth. It was only last month that the financial press reported that Google had missed 4Q profit target (as set by analysts). So Google are under pressure to perform. Travel may be  the answer.

Introducing specialist search
Google have 3 kinds of specialist search for travel (some with us for a while, some recent to the scene)

Flight search
Go to Google.com and search for “JFK to LHR” (without quotes). You will get a result set that looks something like this:

Yes you can “pay to play” (with the PPC adverts showing at the top) however there are also direct links to partners (CheapTickets, Expedia, Hotwire, Orbitz, Priceline and Travelocity) where you are navigated straight into a product page showing appropriate flight availability (or date entry search for that flight city pair). Regardless of whether this link is commercial or not (and I expect it is) Google will know how successful these mini-searches are.

If I were a flight selling travel agent, I would be concerned where this may be leading. The traffic is not coming your way (unless you want to pay for it and are a large player).

Hotel search / reviews / map
From an individual hotelier’s perspective hotels tend to undertake SEO on four aspects:

• The hotel name (normally quite easy unless you have a non-unique name)
• The location (town name, city name etc)
• Local attractions (harder - as there are multiple hotels all looking for the same slot)
• Events (harder still - because they are based around a certain time period)

However Google have begun to upset this a little recently (to the benefit of consumers but the detriment of hotel travel agents). Now if you search for a hotel - such as “De Vere Southampton” (without quotes) you find this at the top of the results:

This is all useful information to consumers. Clicking through to the top result (where it says 102 reviews, directions and more) you find this:

On that page you can find:

• Consumer reviews from 3rd party websites (including the capability to add your review straight into Google)
• Listing of hotel details (such as rating, number of rooms, services available etc)
• Photos & Videos of the hotel
• Contact details - including web address, postal address and telephone number
• Directions (on a map)

A full list of sources for these hotel reviews can be found on the search engine guide website .

This google page is impressive stuff - no need to for the consumer to go elsewhere for information - but perhaps only for pricing.

If I were a hotel selling travel agent, I would be concerned where this may be leading. The traffic is not coming your way (unless you want to pay for it and are a large player).

Search within a search
A new addition to Google’s impressive line up:

Search Google for “Hilton” (no quotes) and you find this:

The “problem” for big companies with “search within a search” are as follows:

• Competitors may soon be putting PPC adverts against what the consumer may think is an “internal” search (circumventing the trade mark search restrictions that many big brands have in place)
• Google can alter the results order (rather than Hilton when a user does a search on the Hilton website). For example if, on the Hilton website, a user searches for London - Hilton may choose to put certain pages first…. (for example information pages, commercial pages, a particular hotel etc) - however now that the user is first doing their detail search outside of Hilton’s site…. Hilton have no control over what order the first results will be in.

The Expedia / Google deal (rumour!)
So where does this leave the rumoured Expedia / Google deal.

I think it would be an interesting move for both companies. It would be most damaging to the larger OTAs (excluding Expedia) as they would lose a potential visitor stream and gain an even stronger competitor.

However it is with the product owners (the airlines, the hotel chains etc) where the most influence will occur. Historically, with thousands of small travel agents all selling their products, no single distribution channel had any leverage to negotiate the margins down or the commissions up. An Expedia/Google consortium may be strong enough to have an impact.

The one European OTA that would benefit from Expedia and Google tying the knot would be Opodo (a consortium of European airlines). It would take them from being a side show to key to how the airlines could react to commercial influence being exerted by a single, strong, Google/Expedia travel consortium. Which of course is why Opodo exists in the first place….. it is a Thames Barrier company for just this strategic eventuality….. useless until very useful indeed.

Incidentally, the University of the Highlands and Islands (Scotland) have a course coming up (in Inverness, July 9th 2008) called “Would your business cope if Google stopped sending you traffic?”. I think the risk of this outcome is slight - however there is every chance that Google will stop sending free traffic (or at least change the proportion of free vs paid) and this could be just as bad, commercially, for those that have been reliant on the free traffic gravy train for too long. I suggest companies try to break their addiction to free marketing before it is too late.

If you want to be notified next time something is published sign up for email alerts or subscribe to the RSS feed. Thank you for reading!

Last week Tim Hughes from “The BOOT” (a blog about the business of online travel) highlighted, in this post, that 2 well known hotel online travel agents (OTAs) allegedly maintain lax security on their customer credit card data.

In particular Tim mentions

• Booking.com (part of Priceline - Nasdaq:PCLN) - Europe’s leading online hotel reservations agency by room nights sold (Based in Holland)
• CentralR.com - An online hotel reservation company based in Ireland

The prolem that Tim outlines is a process problem not unique to how the two named agents operate. In essence the business process is as follows:

1. Customer makes online booking on an online hotel reservation website (or partner site)
2. The end customer gives their credit card information to the central website
3. The credit card details are transmitted (sometimes by fax) to the end hotel. The hotel can then use these credit card details in order to charge a customer in the event that they cancel or “no show” their reservation. The detail that is transmitted to the hotel contains all information required to charge a card, including the ID number found on the back of cards.

So what is wrong with this?
All companies that handle credit card information have to comply with the PCI (Payment Card Industry) credit card standards.

• These can be found on this website
• Download the standard (PDF) (base of this page)

Adherence to these standards isn’t voluntary - but mandatory. They are agreed by both Visa and Mastercard and are the industry standard.

Some sample standards that can be found in the document….

1. The CVC2/CVV2/CID numbers are not permitted to be stored
2. Sensitive information must be encrypted during transmission over networks that are easy and common for a hacker to intercept, modify, and divert data while in transit (Alex’s note - this I assume includes fax machines)
3. Identify all users with a unique user name before allowing them to access system components or cardholder data (Alex’s note - NOT generic usernames or one username per hotel)
4. Change passwords at least every 90 days
5. Physically secure all paper and electronic media (including computers, electronic media, networking and communications hardware, telecommunication lines, paper receipts, paper reports, and faxes) that contain cardholder data
6. Maintain strict control over the internal or external distribution of any kind of media that contains cardholder data including the following:
1. Classify the media so it can be identified as confidential
2. Send the media by secured courier or other delivery method that can be accurately tracked (Alex’s note - this onus is on the sender, not the recipient - so the hotel booking agency can’t say that it is down to the hotel how they secure their incoming faxes)
7. Screen potential employees to minimize the risk of attacks from internal sources (Alex’s note - unless the employee is a store cashier who only have access to one card number at a time)
8. If cardholder data is shared with service providers, then contractually the following is required:
1. Service providers must adhere to the PCI requirements (Alex’s note - i.e. hotels must adhere)
2. Agreement that includes an acknowledgement that the service provider is responsible for the security of cardholder data the provider processes

and I could go on…..

The last standard is an interesting one…. it seems to put the onus on the hotelier to adhere to PCI standards…. so perhaps this is what the hotel OTAs are relying on.

Conclusion
It seems that as a result of working with many small and independent hotels that somehow letting the hotel receive the card details is the only way that these large OTA hotel booking agencies are able to operate their business.

Is their whole business model at risk?

After all, hotels are known for employing temporary staff…. and as comments in Tim’s original post point out many hotels store credit card numbers in excel files on desktop computers…. The credit card providers are becoming tougher and tougher with ensuring PCI compliance so watch out hotels……

On both sides of the Atlantic the Brits and the Yanks seem to have been gripped with the concept of Halls of Fame. According to Wikipedia a hall of fame is

a type of museum established for a field of endeavour to honour individuals of noteworthy achievement in that field. In some cases these halls for fame consist of actual halls or museums which enshrine the honourees with sculptures, plaques and displays of memorabilia. In other cases, the hall of fame is more figurative, and simply consists of a list of names of noteworthy individuals

Over at ABTA HQ (London) there is a UK travel industry Hall of Fame. No sculptures….. but the plaque is nice. Undeniably British.

I have no idea what that logo is on the plaque though….. is the British Travel Industry sponsored by Fat Face? (A UK clothing brand that I have a cupboard full of)

Over in the States they have a Hall of Fame just for travel technology people….. The Hospitality Financial and Technology Professionals Hall of Fame  . Here are the latest honoured individuals:

So how do you become a member of a hall of fame?

In the UK the process is fairly straight forward…. E-Tid and Travel Weekly (both travel industry media) write to Chief Executives within the industry and ask them who, in their opinion, should be honoured. A long list is then compiled and put to a judging panel. However, you are too late for this year…. the 2008 winners have already been decided with an awards ceremony at Grosvenor House Hotel on 21st April.

Over in the States, you can download a PDF nomination form (entries have to be with them by April 14th 2008). That does seem a little more open than the UK process but I wonder why they use PDFs rather than a web based submission process. After all, this is a technology award! On second thoughts, online submissions have the possibility of going wrong….. so PDFs are a solid choice.

[Thank you to ABTA for the photo and background info]

Any other countries have Halls of Fame for the travel industry?

This is big news folks.

There have been rumours, more rumours and even more rumours about what Google plan to do within the global travel industry. Even the UK’s Travel Technology Initiative are getting excited / concerned about what Google may be planning - dedicating a session at a recent executive forum just to discussing concerns about Google’s plans. (see their blog post)

I have posted about the concept of Troogle before (Google Travel) - and indeed Google have constantly denied any interest in the travel industry (except of course selling advertising and providing location based information - which they are very good at)

Anyway, exclusive to this blog, I can announce that Google’s first jump into the travel industry for real is to become a product supplier (and no I am not talking about their corporate jet).

Forget about being a travel agent - they have announced they want to completely disintermediate the travel industry and control the end product themselves. Coupled with their advertising strength this will be a combination not to be underestimated.

The first industry they are targeting is the hotel and hospitality industry. Google will soon announce that they are launching their own hotel chain. Their first hotel will be a combined hotel and conference centre next to the Googleplex in Mountain View.

The big global hotel chains better watch out!

wink

Further information from ValleyWag

(OK - I made up the bit about the hotel chain - looks like just a single hotel…In fact this is quite a distorted post…. but I thought we all needed a bit of amusement)

In the UK we have an industry organisation called the Travel Technology Initiative.

I really enjoy their travel technology / travel website / travel distribution seminars and conferences that take place in London every 3 to 4 months or so. Being a company of limited means we can’t afford (time wise) to go to every travel conference that exists (doing is preferable than talking about doing)

Anyway, the TTI had an executive forum in December 07. Sadly I missed it because we did a code release the same day…..

They have now created a new blog to facilitate discussion on 10 core subjects that were rasied last December (with my comments on each topic below)

• APIS - When? What? How? APIS is advanced passenger information - and isn’t just a concern for airlines - but now for agencies and tour operators
• Is it worth having an internet booking engine? Probably not if you are tailor made tour specialist!
• Are online travel agencies going to become search engines that push transactions direct to suppliers? Yes - but there will be fewer of them
• Social media - threat or benefit? - social search could be interesting, social media not sure about
• Who needs travel agents anymore and are people better at selling travel? Well there are rather a lot of travel technology providers who need agents still….. as that is where they get their income from
• What will Google do to the travel industry? Provide lots of free traffic - and some paid for traffic. Long term, who knows. 
• Industry initiative for online brochure distribution - this is “better candlesticks”. Who needs a better candlestick when you have electricity?
• Does affiliate marketing generate worthwhile consumer leads? I have always said that ABTA will soon stand for Association of British Travel Affiliates….. (Recently ABTA stopped calling themselves after travel agents and are now ABTA - The Travel Association - so half way there)
• How do we get easy (and cheap) XML access to supplier inventory? Easy, cheap and travel technology do not go hand in hand!
• The challenges associated with dynamic packaging and how will call centre and online technology merge? Is this need business driven, consumer driven or technology provider driven?

I am not entirely sure that the blog format works when you want to discuss 10 subjects over the longer term. Maybe a forum where raising a sub-topic requires moderation would have been more appropriate.

However the principle is that you hop over to their blog and post a comment about any of these 10 topics.

TTI blog

According to Travel Weekly, Ryanair’s website will be down for 3 days while they make some pricing changes to their website (between Feb 16th and 18th) (Ryanair are an Ireland based low cost airline)

Read the Travel Weekly article

I have no inside knowledge of how Ryanair run their website but 3 days? Are they serious? That is rather a long time.

I can only think of a couple of reasons why a site would need to be down for 3 days……

• They are making a political point about how hard it has been to comply with the new website upfront pricing legislation….. but taking it to this extreme would be a bit much
• They are making a significant DNS change to their domain name…… but even then - this could have been handled is a faster way (I expect)
• They are making a significant reservation system change - and may be having to transfer old data from one system to another and then manually auditing the data transfer (when you have to transfer live data, often these changes have to be sequential and not done ahead of time)
• They have to reload pricing in a different way to how they currently load pricing - and this price load can’t be done in an offline system - only the live online system - but if they make the changes to live loaded prices prior to corresponding functionality changes on their website something breaks or causes user confusion.

Somehow there must be some manual process to cause a 3 day delay. My bet is on the 4th - which is probably why they have taken so long to get around to this project.

If I am right, the process will be something like this:

1. Take system down
2. Change loaded prices in live reservation system (manual process - could take a long time)
3. Upload new website functionality that corresponds to new style of loaded prices
4. Put system back up

Ummm……. At this stage I would start to look at a DataLoad - a mechanism to systematically upload data into any application - even legacy green screen applications….. if you could cut down the manual load process to a couple of hours this could get their site up after 24 hours (perhaps!). You can also do “trial runs” prior to the changeover event to ensure everything will go smoothly.

If someone from Ryanair thinks I have saved them a few million dollars in lost sales with this tip, please send contributions to me (and corresponding self-bill invoice). Thanks

I read last night about how WAYN (Where Are You Now) may be (may be) close to being sold to AOL for $USD 200 million (although WAYN deny it)

Now I have no particular amazing inside knowledge whether this is true or not, likely or not etc. Nor have I any idea whether this is a good price or not….. but sounds reasonable to me (100 million GBP) - if you look at what has sold at a slightly lower price…. this is probably in the right ball park.

However what strikes me is how it may be a good time for WAYN to convert from having a paper value to a real one. Dopplr is beginning to make some big PR moves and although they are miles away from WAYN in terms of user numbers, they look like opposition not to be underestimated - both have significant VC backing.

I wrote previously how this is looking like a battle between an incumbent website (WAYN) with a management team who understand about how to make money from selling advertising to the travel industry vs a much more web focussed company (Dopplr) who are instead of going to travel industry events - tend to be seen speaking at major web events - talking about widgets and data portability.

Here for example is Dopplr’s CTO talking at last autumn’s Future of Web Applications conference in London (I was there!)

The battle for the end game for travel vertical social networks hasn’t really started yet - and perhaps by working with an existing company (AOL) who want to get into social networking at any price - in a sector that can be monetised nicely - this will help keep WAYN ahead of Dopplr (i.e I don’t think this is about money or entrepreneur exits)

Dynamic packaging projects seem to be the flavour of the month in the UK at the moment. All tour operators seem to want to dynamic package - and if you are a travel technology provider who doesn’t have a dynamic packaging solution then you are behind the curve.

However I wonder whether we are using the correct terminology. Should we really be talking about dynamic bundling instead?

Here is the complete definition from Wikipedia (with my emphasis)

Dynamic Packaging is a method that is becoming increasingly used in package holiday bookings that enables consumers to build their own package of flights, accommodation, and a hire car instead of a pre-defined package.

Dynamic packages differ from traditional package tours in that the pricing is always based on current availability, escorted group tours are rarely included, and trip-specific add-ons such as airport parking and show tickets are often available. Dynamic packages are similar in that often the air, hotel, and car rates are available only as part of a package or only from a specific seller.

The term “dynamic packaging” is often used incorrectly to describe the less sophisticated process of interchanging various travel components within a package, however, this practice is more accurately described as “dynamic bundling“.

True Dynamic Packaging demands the automated recombination of travel components based on the inclusion of rules that not only dictate the content of the package, but conditional pricing rules based on various conditions such as the trip characteristics, suppliers contributing components, the channel of distribution, and terms of sale.

Ed Whiting, writing on his Travel Remark blog, defined a dynamic package as:

A dynamic package combines and prices the components (flight + hotel) from various sources in real time or near real time.

Now Ed knows a lot more about dynamic “stuff” than I do - however doesn’t his definition sound more like dynamic bundling?

If you were feeling mischievous you could write a letter of complaint to the Advertising Standards Agency - because what a number of travel technology providers are actually selling are dynamic bundling systems!

My vote though would be for someone to go and edit Wikipedia!

I have written before about how it is a classic head to head between WAYN (Where Are You Now) and the new kid on the block - Dopplr. Both have aims to connect travellers whilst travelling - and to help users understand where friends may be over the coming months - assisting friends to meetup etc.

WAYN have the users (about 8 million) and some VC backing (from Howzat Media - who know pretty much what there is to know about monetising non-product travel websites through creating advertising opportunities for the traditional travel industry).

Dopplr aren’t out of beta yet - but are well backed by west cost USA web VCs (not travel ones).

Here is a preview of the new Dopplr website made by Matt Dickman. Thanks Matt.

You may also like to go and take a look at this neat Dopplr video that you can find on the ValleyWag blog. It is a pretty good parody. Made me smile. Video link

So why am I covering this (again)? Well its VC vs VC (always fun to watch), Europe vs USA (fairly fun), established vs new (can the established brand retain their userbase when faced with capable opposition?).

Besides - with two nice videos - this is an easy blog post to write! (I have spent all day dealing with issues relating to global sales tax handling within various travel products….. and frankly that has used up all my energies!)

Read my previous coverage about WAYN and Dopplr

I have been thinking about web based community forming recently - with a focus on communities within the online travel industry itself (rather than forming communities of consumers)

One stumbling block that I have come up with is a core difference between highstreet travel agents and online travel agents.

High street travel agents - helpful
Lets assume that a travel agent in Southampton has a problem with how to solve a particular issue - it could be a tricky customer, a commercial issue, a question about a product or destination etc. A travel agent in Glasgow (who doesn’t compete at at all with the Southampton based travel agency) may be able to assist - and, via some form of web based community, provide an answer (or at least lots of opinions). This could lead to a mutually beneficial system. Forums or social networks could be built up based on this mutual benefit.

Online travel agents - competitors
However, in the online travel industry, everyone pretty much competes with each other. There are no geographic barriers, even between countries. Another website is just one click away. Everyone is chasing the same Pay Per Click keywords. Therefore will online travel industry professionals help each other with problems via an online community? Very unlikely - unless you are a consultant or service provider of some kind - then it is probably because you want to show you know what you are talking about - in order to gain commercial benefit.

So - the people who ought to be pushing online communities (i.e. people with an online background) won’t form communities. Those who would most benefit from a community (the highstreet travel agents) don’t have one….

At least the airline pilots have a nice community where they can talk about their section of the industry! See the Professional Pilots Rumour Network (PPRuNe). Their forum is also very good for discussion on commercial topics - for example EasyJet buying GB Airways - you get some insight that you don’t get from any other travel industry news website (or community)