Skift Take

Can a metasearch company serve two masters: its affiliate partners and its own brand? HotelsCombined is dancing that dance and will let us all know the answer eventually.

Founded in 2005 in Sydney, Australia, metasearch company HotelsCombined built its business through affiliate partnerships but recently has been on a brand-building expedition of its own.

While, and Trivago may jockey for voice in U.S. TV advertising, HotelsCombined has been busy touting its brand on TV in Korea, Russia, the Middle East, France, the UK, Ireland and Australia, and to a lesser extent last year in Japan and Brazil.

Skift spoke with HotelsCombined COO Hichame Assi about the challenges of building a brand from the far reaches of Sydney even as the company, with its affiliate slant, says it offers hotels in more than 120,000 destinations and operates in more than 40 languages, supporting some 120 currencies. The interview was conducted as part of our trends report The State of Travel Metasearch in 2015.

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An edited version of the interview follows:

Skift: It’s evident that 2013 was a big year for metasearch because of the Priceline Group’s and Expedia Inc.’s acquisitions. What are some of the major things that went on from your perspective in 2014?

Hichame Assi: I would say the facilitated booking trend is obviously a key kind of item that started to take more shape across meta. I know Kayak kicked it off a few years ago and they seem to be retracting from it. I’m very sure TripAdvisor is doing it and some of the others are looking at. I think that’s probably the most interesting part of it, this convergence between meta and towards becoming online travel agencies, but not fully.

I think mobile has really made a difference for the first time. Everybody has been talking about it that this is the year of mobile, this is the year mobile. I think 2014 was definitely one of the years of mobile. I think 2015 will also be a year of mobile where we’ll see a massive shift from desktop and traditional devices to mobile.

I think Qunar alone is probably worth a mention. What they have managed to do in China is really mind-boggling and the way that they are really starting to compete head-to-head with entities that were there a long time before them with much bigger resources. It’s  really what you want to watch. I think when you think about facilitated booking, they implemented that quite a long time ago in China and they’ve got thousands of properties already connected and they’re growing.

Skift: Where does HotelsCombined stand with facilitated booking?

Assi: We tested it in the past and it didn’t really work, but we think maybe the parameters of the test weren’t ideal and it wasn’t probably the right time for us. We’re evaluating it now just like I think everybody else is to just make sure that it’s worthwhile for us to do it. I’m sure you probably are aware that our strength has been off the back of our affiliate program and a lot of our businesses is through white label partners so it doesn’t always make sense to have facilitated booking on those entities.

But recently we’ve been building more brand recognition and it’s starting to make more sense I think for us to maybe test it again with more commitment.

Skift: What percentage of your business would you say comes from affiliate programs?

Assi: I can’t really say. We don’t really share that kind of information. I think it’s an even split between the direct business and affiliate business, but it’s shifting much more towards our own brand.

Skift: On the facilitated booking, everyone talks about how it’s designed to increase convergence for customers especially on mobile. How much does it change the game economically for HotelsCombined or for some of your competitors?

Assi: I think it has potential to be an economic game-changer, but I would say more in increments rather than drastically. That’s my perception. It’s hard to say, obviously. It depends which markets our competitors are focusing on because mobile penetration and usage differs widely. It’s also worth noting in our case we’ve got about 41 languages so we have the most international metasearch and most of our partners do not have that many languages.

Skift: You feel that you’re the most international player. Do you have a significant presence in China and what about the U.S?

Assi: We have presence in China. We have a Chinese brand name, We have an office in Beijing and we have even TV advertising in the Chinese market. In terms of the U.S., because we have been present there for a long time in a very kind of low-key way, we haven’t done anything proactive on the brand side. Nothing like Kayak or Trivago have done recently, but we are still obviously present there. In terms of geographic spread, I think we probably have the most access to market.

Skift: You mentioned that with facilitated booking there’s somewhat of a convergence between the online travel agencies and the metas and we are now seeing some of the online travel agencies even putting metasearch links below or alongside flight search results and hotel results. How far do you think this convergence will go?

Assi: I honestly don’t know. It may meet in the middle one day or not, it’s unclear. It’s really interesting to watch it.

Skift: Do you think metasearch has lost some of its sizzle since 2013?

Assi:  The hype around meta in 2013 was definitely higher than 2014. In terms of growth, I’m pretty sure 2014 was a very strong year for all the metas.  I’m sure everybody is in double-digit growth. If you look at what Qunar alone has done, it’s tremendous, and our competitors around Europe, in Russia, Brazil, and the U.S. etc., everybody is growing.
I think it’s still growing strongly. Maybe it’s been knocked off the kind of high pedestal or level of sexiness by vacation rentals, Airbnb and Uber and these guys who get a lot more

I don’t think it has lost its sizzle.

Skift: We were talking about convergence and I was looking on one of your sites and I see messaging about one room left or two rooms left. I’m not used to metas calling that sort of thing out. You see online travel agencies do that sort of thing. Why did you do that and how do you really know that there’s only one room left or two rooms left?

Assi: I mean we obviously has a dynamic configuration with all the online travel agencies and the chains that you’ll see on the site. They send the information through dynamically so it is really referring to their particular pool of inventory as opposed to everything. We believe that that kind of persuasion messaging is actually very key to building a bit more urgency and it does help conversion.

Skift: What do you think is the biggest thing that HotelsCombined accomplished in 2014 and what is the biggest challenge ahead?

Assi: I think our biggest accomplishment is we now have a very significant presence in places like South Korea, the Middle East and Russia, Israel and we’re building a little bit more presence in places like the UK. It’s been hard working out of Sydney, which is very remote to global and international brands and that’s what we have been focusing on. We’ve made some big steps, but there’s still a lot more to go. We’re nowhere near where we want to be, and 2015 is really about building that out further.

I think one of our challenges has been around the affiliate model, and many of the online travel agencies and the hotels that we talk to do not know our distribution strength of well over 2 million bookings through the year. Many hotels don’t even know who we are.

Skift: In retrospect, do you think emphasizing the affiliate model was a mistake?

Assi: No, we still believe in the affiliate model and we still support a lot of our key affiliates, and in fact, we’re putting more effort into customization and making sure that we’re delivering. I don’t think it was a mistake at all. It’s just how we grew pretty organically, and in that respect, it’s one of our strengths as well. But it’s really just now that we were ready to use the growth to start looking beyond that and to a global brand.

Skift: You’re advertising in China on TV. Are you advertising on TV in other markets?

Assi: Yes, we currently are advertising in Korea, Russia, and the Middle East, both in the Arab world and in Israel. We are also in France, the UK, Ireland and Australia, obviously, so it’s quite spread. Last year, we were actually in Japan and Brazil, and we’re evaluating how that goes.

Skift: Are you content being a private company?

Assi: We’re happy and profitable and it’s been working well so far. We have the autonomy to do everything we want, but we have had interest over the years. It didn’t work out exactly based on our expectations. That’s it. I mean we’re looking to see how things develop.

Skift: Is an IPO in 2015 possible?

Assi: It’s unlikely, no.

Skift: I don’t know if you have this expression, but are you licking your chops waiting for rate parity to be diluted?

Assi: We’re cautiously optimistic. With the price parity discussions going on in Europe and around the world I think hotels are going to have a bit more control of their pricing and that’s going to make it much more interesting for them and for the end user.

It’s hard to say what the potential will be for differentiation. I think it would be interesting to see how hoteliers will start to manage their distribution a little bit more on meta over the next couple of years.

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Tags: advertising, hotelscombined, metasearch

Photo Credit: Hichame Assi is the COO of HotelsCombined. HotelsCombined