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The online hotel booking market is relatively packed, and standing out from the pack is difficult for any brand. The leadership at thirteen-year old Tablet Hotels, takes the position that each new entrant that may promise something new or unique is actually either a validation of its model or an opportunity to further evolve.
Tablet Hotels features a limited number of hotels in nearly 900 destinations around the world. In a market like London, for instance, you’ll find fewer than 60 properties, as opposed to over a thousand on Booking.com. The promise of Tablet is a specialty property at the lowest possible cost, and it has a history of delivering.
In addition to the listings, Tablet’s site also offers a magazine and a series of travel guides that offer a mix of inspiration and information that it hopes will help guests make smarter decisions before and after booking.
Skift sat down earlier this month with Tablet Hotels CEO and co-founder Laurent Vernhes in the company’s New York office.
Skift: Can you talk a bit about the origins of Tablet Hotels?
Laurent Vernhes: I got the idea to create Tablet out of need. I spent about ten years working as an expat in various parts of the world, but mostly Asia.
I was traveling every week to a new location. Some consultants in the U.S. will go to Cincinnati for three months, and then to Cleveland, and then to Kansas City, or something.
In my case, it was Bangkok, then Kuala Lumpur, Bombay, Jakarta. I was living in hotels, literally. When I decided to have that kind of career, my fantasy was to have a life like James Bond. I would have women all over in all of the cities
Very quickly, I realized it was not going to be like that.
Traveling for business is not that exciting. You have to work very hard to make it exciting. It’s hard work. I didn’t give up. I tried very hard to make traveling for business as a life exciting.
I realized that part of that was picking your hotels carefully because the of region. Basically, there are two types of hotels. There are hotels that are commodity products; it’s all about amenities, price, location. Then there are hotels that have soul, some personality, something, whether it’s design, or it’s with service.
If travel is your way of life, it’s important to find a hotel that has soul. It can be a big hotel, a small hotel. It’s not the matter of size. It’s not a matter if it’s part of a chain or not part of chain. You just need to find a hotel.
I was doing a lot of acquisitions of small companies on behalf of a very big company when I realized that I wanted to be like the guys whose companies I was buying. I wanted to be one of those people rather than CEO of a large division or large entity within the multinational thing. There was no dream there for me.
The dream was to be one of these people that had that freedom of thinking for yourself and doing something about it. I wanted to be like them. I’d say that I wanted to be an entrepreneur. The most interesting thing for me was to create the product I needed. That product was, basically, the ultimate hotel guide, which would restrict your selection to hotels that have a soul of some kind and eliminate all the commodity versions of hotels.
Skift: When you stepped in a little over ten years ago, it was pre-flash sale, pre-Jetsetter type of thing. You had legacy, stuff like Conde Nast Johansens and Small Luxury Hotels and things like that.
Laurent Vernhes: Marketing companies.
Skift: There was probably some overlap in some of the properties. But, how did you step into it and say, “I don’t want to do that marketing thing?”
Laurent Vernhes: I knew these marketing companies. There is nothing wrong with them. But I knew why I couldn’t rely on them. I couldn’t rely on them because they were charging hotels to represent them. They were marketing companies. They were also not comprehensive in terms of their selection.
There are a lot of great hotels that wouldn’t be in these books because they just didn’t want to pay these companies to be in the books. They were not entirely reliable either because their business model was built up on having as many hotels in the book as possible. So they were trying to find this balance.
As a traveler, that was not getting me the answer I was looking for. In fact, their business model was not marketing to travelers but marketing to travel agents. That’s what they do. They go to travel agents and say, “We have this collection of hotels why don’t you…we have this seal of approval.” That’s what they do. They were not meant to be catering to travelers directly.
As a traveler, I wanted a guide that had total integrity in terms of the selection. Therefore, it couldn’t charge hotels for being in the guide. Otherwise, you defeat the whole idea. It couldn’t be funded by advertising because who is going to advertise on your site? It’s going to be the hotels. If you do that, then it’s the biggest possible conflict with your editorial mission.
That’s why we became quite innovative actually at the time. Since then we have a couple innovations. The innovation was to merge editorial and commerce. In our case, we are a hotel guide merged with an online travel agency, and that was really new. Only the Internet could allow that, and there is no conflict. You sell what you recommend.
In our case, if our users tell us, “This thing is going down. You should remove it,” we’ll remove it. The hotel didn’t pay us to be on the site, so we’re completely free to do that. We just sell what we think is great, and our users confirm our work, members or travelers confirm it’s great.
Skift: How do you keep that pure because that’s the challenge, right? You guys have a financial incentive to include as many things as possible, so how do you always come down on the side of the consumer?
Laurent Vernhes: No, but it’s not. The financial incentive is not to add as many hotels as possible. The financial incentive is to take as many bookings in these hotels as possible. It’s a big difference.
Skift: You talk about removing something. How often do you need to remove something?
Laurent Vernhes: On a regular basis. Currently, it’s around 1,800 hotels on the site. Over the past 10 years, we’ve probably removed over 300 hotels. Hotels go through — just like anything else in life — they go through changes.
Skift: You’ve been around for ten years. What’s been the key to your survival during that period? This industry has changed dramatically since when you started. Other people have come around and gone away.
Laurent Vernhes: The key to survival has been that integrity I was talking to you about. The soul of the curation was that we wanted to be the best hotel guide we could be.
Now the word “curation” is a big buzzword — curation, curation. We’ve been doing curation from the beginning. That’s what it was all about. I used to call it “editing,” being an editor, editing a guide. Now Jetsetter, in particular, uses that buzzword of “curation.” What’s new about that? Nothing is new, except they are pushing it because they are not doing it.
If you look at the hotels there, half of them are great, the other half…
Skift: Need to fill the rooms?
Laurent Vernhes: …are hotels that agreed to do these crazy private sale things. Because they are cold calling hotels, “Do you want to do this?” “Do you want to do this?” In that case, they need to supply a never-ending stream of private sales.
In a way, that’s the difference between copycats and the company that they are imitating. Often the company they are imitating has the soul, and the copycats don’t. It’s just opportunity. Often companies that are the true pioneers disappear because they don’t manage to turn that soul into a sustainable business at the other end.
That soul kept us going and kept us relevant to people. Then the question is how do we maintain our competitiveness as a business? Are we going to increase our competitiveness?
A couple of things. One is, in terms of features, people like private sales, so let’s give them private sales. Except we give them private sales just in the hotels we cover. We’re not going to go desperately looking for private sales from any hotel that will do it because that’s not our main business model.
We follow the trends. Now HotelTonight, I think, is very interesting, and we’re hoping to launch Tablet Tonight in the next couple of months — Tablet Tonight, Tablet Tomorrow, why not? We can. Now we have. The reason why we can do this is because, in the process of all these 10 years, what we’ve developed is something that’s not visible but critical, is the technology.
We have so much technology. It takes a lot of technology to make technology disappear. In other words, to make your user interface ever more easy to use, you need to build a lot of technology. A lot of this technology is creating ever more efficient ways to have access to the best availability and the best rates in the hotels we want. That’s the role of technology, to make that seamless, to make that easy for the hotels, to make the data easy to use from a user interface for travelers. It takes a lot of technology.
If you are creating “Tablet” now, we wouldn’t be able to…we would have to invest a very large amount of money in technology to just match the user experience. That’s something we didn’t have in the beginning. Now we connect the extranet, direct connects with all kinds of sources of inventory, they push inventory to us, all this stuff. If we hadn’t built that, we would be dead by now.
Skift: Have you guys built your own inventory system that the hotels tie into?
Laurent Vernhes: That’s what’s enabling us. Now, like this Hotel Tonight thing is really interesting. It’s giving a way for hotels to get rid of inventory. It’s great. Everybody loves it. Can we do it? Yes.
Skift: Are you taking the same approach that you took with flash sales where it’s: We see a trend, people like these deals, but we’re going to continue working with our core of recommended hotels? It’s the same thing where it’s like, people want to do it now, we’ve got the hotels and the relationships, just add the element of time…
Laurent Vernhes: We are doing it in the hotels we are selecting. It’s still within our universe of being a hotel guide, and we only features hotels we believe in because they are our hotels. They are unique and they have a soul. Within that, we stay within the guide, but we need to add all these features that help people get better prices and get what they want basically.
Skift: Your relationships with hotels, I’ve probably, over the past five years, I’ve probably booked through you guys, or my wife has, at least eight or nine times and whatnot.
Laurent Vernhes: Thank you.
Skift: I would say in almost all the cases, if not all the cases, we received an upgrade. We’re not Tablet Plus members or anything like that. What do you guys do? How are you delivering customers in a way that makes them want to give me an upgrade even though I paid a pretty cheap rate?
Laurent Vernhes: It’s a few layers, actually. We approach these hotels as partners because we are in there for the long-term with them. If you approach hotels as a commodity product, they are interchangeable. If it’s not this one, you say, “OK.” Put yourself in the shoes of Expedia. “OK, Starwood. You don’t want to do a deal with us. It’s OK. We’ll do this other chain. Same thing. What’s the difference? We don’t care.” That’s the way that they negotiate.
We don’t negotiate this way because we like this hotel because it’s so unique. We’re not going to tell them, “Tough luck. Let’s do a deal with the other one. We don’t care.” Because we care. That’s the whole idea.
Skift: There’s only one that you love.
Laurent Vernhes: We love this one, so we’re going to work harder in creating that working relationship. What I’m going to try to squeeze them at every opportunity. We think of it as a partnership. We have a good relationship with hotels, Where Expedia is just completely ruthless about the whole thing.
I think Booking is smarter. They do it in a more sophisticated way, but basically they are completely ruthless.
There’s nothing wrong with being that. But that’s not very consistent with what we are trying to do which is we pick these hotels because they are great. We need to think about it as a partnership not as, “Well, if it’s not this one, it’s the next one.”
Second, we want to be not just the best place to find the best hotels, but the best place to book these hotels. What do we do about the booking portion that means that you’re going to get treated better when you book through us than when you book through the same hotel on Expedia? Obviously some hotels are a mini-travel agent, online travel agents. What can we do to make sure the hotel is going to treat our client better”
The initial premise is that we don’t try to squeeze the hotel, and this goes a long way actually. The second thing is that we increasingly are doing proactive customer service. We are calling these hotels and telling them, “We have this client coming. It would be good if you did this and that.”
Our ambition is to be the best place to book a hotel, even better than booking the hotel directly with the hotel.
Laurent Vernhes: Not as much as Expedia.
Skift: How do you guys go up against that and get discovered?
Laurent Vernhes: We can’t match their marketing money, unfortunately. We have something that they don’t have which is a high level of loyalty and that goes back to our product and our mission.
It’s fair to say people don’t have a personal relationship with Expedia. They feel more often like they have a personal relationship with Tablet.
We’re not a commodity site. We don’t write marketing copy about the hotel. When we write the descriptions, it’s not the typical description you would read on an online travel agency site.
There is one hotel that we put on the site, if they disagree with the description and we tell them if there is anything factually wrong about the description, let us know, we’ll correct it.
There is this hotel and they were unhappy with the way we were talking about their hotel. There was nothing factual about it. They just didn’t like the tone. This is our site. If you don’t like it, then we won’t talk about you. If you disagree then we shouldn’t display your hotel because clearly there is a disconnect here. So we removed the hotel from the site. That kind of integrity is what’s creating the loyalty. It’s helped us a lot and people see that in us.
Skift: What have you learned especially in the last year with last-minute bookings that has caused you guys to say, “OK, we need to do Tablet Today?”
Laurent Vernhes: We used to have a last minute section of the site. We dropped that. We dropped it for reasons of pure programming because that portion of the site was killing the site itself because the programming was so bad. It was doing well. So we had to remove it because it was diminishing our ability to scale the site. Now we’re coming back to it. For sure, last-minute bookings are a very significant portion of bookings. It’s a key battlefield in terms of prices and availability. We need to offer hotels, tourists, to give us the best availability and the best rates for last minute bookings.
In fact, if you think of bookings for today and tomorrow, already it’s about 12 percent of all of our bookings are tonight and tomorrow already. The behavior of travelers is strongly biased towards last-minute bookings already. It’s something that we haven’t done enough in terms of getting hotels to give us even better rates for that portion of the supply.
That’s what we’re building now.
Hotel Tonight has done that very effectively and very well. We need to match that or exceed that. In fact, so we’re going to do it for tonight, for tomorrow, and for the next 14 days.
Skift: What’s the launch on that?
Laurent Vernhes: I hope June. We launch about June-ish.
Skift: What percentage of your users are Tablet Plus members?
Laurent Vernhes: The percentage that’s interesting is what is the percentage of bookings made by Tablet Plus members, and it’s over 20 percent. That’s significant.
Skift: What’s your rate of keeping Tablet Plus members?
Laurent Vernhes: It’s over 80 percent. We’ve made great progress on that. Tablet Plus is where we experimented with a lot of proactive customer service. We email people before their stay. It’s unprompted. It’s gone a long way.
Skift: You guys survived the flash sale onslaught.
Laurent Vernhes: We did, and the flash sale flameout.
Skift: Was there a period during that when you guys were panicking or like, “How are we going to do this”? People weren’t talking about you as much as they were talking about everybody else.
Laurent Vernhes: We launched our flash sale too, so we got a bit of traction from having that too. We were not panicking because we were growing. I always thought private flash sales were a great marketing tool, more of a marketing tool than a production tool. As a marketing tool, it served us too.
But I was looking at these companies doing just that, and to me, the only way they were going to survive was if they ended up copying us or trying to. What I mean by that is, have something for everyday, not just be flash sale, but be a good online travel agency.
You’ve got to be able to turn that marketing gimmick into becoming a true online travel agency, a good one. It looks like they were not successful at making that transition because it’s actually more difficult to be a good online travel agency than to run a flash sale operation. It’s a lot more difficult.
Jetsetter, they had a ton of money, and they burned and burned and burned. I could see they were trying to switch to basically full-on copying us, but for some reason, they underestimated what it takes.
I had to calm down some of my colleagues because they were looking at this and thinking, “Oh my God. They are going to take over this whole thing.” I had to tell them, “Look, it will only survive if it’s a real business. Right now, all we know is that they are really good at spending a ton of money. The jury’s still out on whether or not they can build a sustainable business.” Frankly, when I was looking, I didn’t think they were.
If you’re patient enough, it’s a matter of survival. The question was how much more money they had to spend to make it to a level of sustainability. The problem with VCs is that the more money you spend, the less patient you are, the more you want your site to be dramatic.
Even if you get to some level of where it actually makes sense, but if it’s not comparable to the vast amount of money you spent, you let it go. I’m very familiar with these dynamics. I’ve done Tablet the hard way. No VCs, completely independent.
We never had that money to spend before. Now we have more money because we are a bigger business. Obviously, as you grow, you get the means to do things on a bigger scale, but we never had that “Oh, we have five million to spend on getting the word out,” ten million or whatever it was. They’ve gone through a lot more than that, but I don’t know how much was for marketing. Who cares? [laughs]
I know because I used to buy companies. I know about building a business, a real business. I know it’s not easy. You don’t do it just like that. It’s not as easy as just throwing money out there to get the word out.
Skift: You’re self-funded, no VC money. What’s your endgame? Do you want to retire and pass Tablet down to your children or is it something where you want to sell?
Laurent Vernhes: No. It’s a good question. Somehow, I bumped into creating a family business. That was not the objective. I mean family as in the family of people who started this business. I don’t mean the family with children.
Since we don’t have a large outside investor, it’s become a traditional family business, so the option is there to actually keep it that way. I don’t want to load my kids future with that future. “This is the future. Good luck with it.” No, I think they have to create their own future.