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Against a backdrop of relentless technological change and global disruptions, from Brexit to the refugee crisis and U.S. travel bans, executives from metasearch sites, online travel agencies, hotels, airlines, restaurants, and tour operators gathered in London earlier this week to detail how they are transforming their companies and respective sectors.
There were many themes that permeated Skift Forum Europe, which saw some 460 attendees, at Tobacco Dock in London Tuesday, but reinvention of various strains was a consistent theme throughout.
It’s easy to fall into the trap of thinking that industries are already mature or markets are saturated and dominated by first-movers, and that there is little left that can be changed, but the conference bashed that kind of sedentary sentiment.
Consider the metasearch sector, which was represented at the Forum on stage by the leaders of Skyscanner, Momondo Group, Kayak, Trivago, and Google Travel. This price-comparison sector — largely for flights, hotels, cars, and occasionally for vacation packages and cruises — has been around since the beginning of the 21st century, but it is facing an identity crisis.
Should metasearch sites be extensions of airline websites, as Gareth Williams of Skyscanner argued, building airline storefronts in a manner that has parallels to Alibaba’s Tmall? Or should the metas have a mix of assisted bookings and third-party links but emphasize their heritage of providing consumers with a means of comparing prices in a wide-ranging view of what’s out there in the market?
Steve Hafner of Kayak and his soon-to-be protege Hugo Burge of Momondo Group espoused the latter view to varying degrees. Priceline/Kayak is in the process of closing on an acquisition of the Momondo Group.
Similarly, what can be more basic than the concept of a hotel, restaurant, or travel agency, but all are in the throes of a metamorphosis.
While InterContinental Hotels Group CEO Richard Solomons expressed an openness to looking at new opportunities, like Kayak and Momondo Group he wants to fine-tune the sector that got him there — hospitality — while figuratively scratching his head at rivals such as AccorHotels, which is acquiring digital tech companies and home-sharing sites while turning hotels into community centers where you can drop off your dry-cleaning.
Restaurants used to be associated with a physical space, but the foodie revolution finds customers traveling out of their home base to experience another culture and sample the culinary offerings and stalk the chefs at a soon-to-open pop-up Danish restaurant Noma in Tulum, Mexico, said Ben Liebmann, COO of Noma.
Meanwhile, TUI Group, which was breathtakingly slow to embrace the digital age, wants to transform its retail stores in countries such as Germany, where 70 percent of sales come from these brick and mortar entities.
“What we see growing is the potential for retail,” said Erik Friemuth, TUI Group’s chief marketing officer. “The challenge with that is people then say, ‘The way you present retail currently is maybe not fitting my need.’ That is then about the question, ‘How can we come up with new experiences to better serve the needs of customers who are not super happy with online but also have some challenges with retail?’”
There were several other themes that took hold over the course of a one-day program that included more than two dozen one-on-one conversations (mostly) and a few panels. Speakers talked about the burdens of Brexit in terms of handling employee recruitment and travel, the need to develop new types of community, and incorporate design-oriented thinking while leaning on data and new technologies to develop enhanced value and products that resonate.
The Metas aren’t united on a way forward
While Skyscanner’s Williams argued that the future of the sector lies in two-sided marketplaces that resemble specific airline websites in the form of storefronts built for each carrier’s marketplaces, Burge of Momondo Group said it would be confusing for consumers when the meta site collects credit card details but passes the consumers off to the airlines for customer service.
Burge contended that while much of metasearch tech and product is similar from one competitor to the other these days, he said sites can differentiate themselves if they create an emotional connection with consumers.
Kayak co-founder and CEO Hafner said that is precisely why his company is acquiring the Momondo Group, because the latter out-executed Kayak when it comes to brand-building.
“I quibble with [the] idea that everyone [in the online travel space] is the same,” said Hafner, disagreeing with Burge, who by this time was sitting in the audience. “We’re not selling flavored water; brand is a big component of that. Momondo has out-executed us in Europe on the brand dimension.”
Williams of Skyscanner said he’d rather hire engineers than marketers, offering the view that great tech beats marketing even if rivals out-gun you in advertising. “Software defeats marketing,” he said, adding there is no sense in “making Google rich.”
That kind of thinking might at first glance appear anathema to Trivago managing director Johannes Thomas as the newly public hotel-metasearch site spent 87 percent of revenue on marketing in 2016.
Is Trivago’s marketing model unsustainable?
“That’s a silly argument. Trivago has as many engineers as it has marketers,” Thomas told Skift Editor-in-Chief Jason Clampet. “You need data to learn, so you need to get users to use your product to make it something that can scale.”
He said it’s smart to lead with marketing spend, as long as you match it with engineers analyzing and responding to user behavior. “You can’t get enough of data. It lets you learn faster. It will tell you quickly what works well…”
Speaking of learning, Google launched a packages product in the UK and Germany, and it’s a milestone of sorts. The product is the first time Google debuted a product in Europe ahead of the U.S., said Google Travel Vice President of Engineering Oliver Heckmann.
Hotels on Distribution Dissonance
While the battle between hotels and online travel agencies over direct bookings stole a lot of headlines in the last two years, executives from IHG and Design Hotels contended that distribution issues are important, but not necessarily central to their concerns.
IHG’s Solomons said distributing through the Expedias and Booking.coms is expensive, they are essential to attracting business from customers who aren’t brand-loyal. Solomons said he’s looking for opportunities in the mid-market sector, and without going into detail he indicated he’s perplexed at the strategies of some of his rivals, which are branching out widely — and some would argue wildly.
“For us we’re a hospitality business, not just hotels, we’re hospitality,” Solomons said. “We want to be great at that and we don’t want to be distracted into other businesses…”
Claus Sendlinger, CEO of Design Hotels, takes a broader view, arguing that hotels are not just hotels anymore. “It’s a space where technology and community meet” as Design Hotels tries to create “organic communities” with curated programs and events at its properties.
Sendlinger, too, isn’t overly focused on distribution, saying the emphasis should be more on attracting the right person who values the brand and getting that customer into the property.
Mr & Mrs Smith co-founders Tamara Heber-Percy and James Lohan appreciate the value of both curation and knowing what customers want.
“Loyalty is a tricky word these days, especially with a customer who has the Internet at his or her fingertips,” said Heber-Percy.
She said there are three types of “loyal” hotel customers: those who are addicted to their points, those who value service, product, or a particular brand, and those who are loyal only to price and price alone.
“People who will stay loyal as long as that brand is delivering — those are the customers we focus on,” she said. “If you go after the price-sensitive market, you are always going to pay for them with the online travel agencies [OTAs] and metasearch and Google. That relationship is very tenuous. We focus on customers who appreciate curation and customer service.”
Redefining Air Travel and Tours
Two companies, Norwegian Air and GetYourGuide, separately offered a seemingly innocuous thought — they want to give customers what they want.
Norwegian CEO Bjorn Kjos noted that the airline, which is reinventing transatlantic flying with its low-cost, long-haul flights, is free from the constraints of global alliances because he can just pick routes where customers want to fly.
— Charlotte L. Davies (@Lottmus) April 4, 2017
At the same time, GetYourGuide co-founder and COO Tao Tao criticized Airbnb’s approach to tours and activities, namely its new Airbnb Trips product. Tao said Airbnb is offering curated tours covering where Airbnb thinks consumers want to go instead of things they actually want to do. Airbnb Trips avoids tourist hotspots such as the Empire State Building in New York City or the Louvre in Paris in favor of curated, local experiences.
Travel Media Sites Need Both Advertising and Trust
Travel media sites have had to transition way beyond print and into video and new forms of advertising, including branded content for an array of platforms.
Lonely Planet CEO Daniel Houghton said print, television, online video, and apps have helped the company appeal to the modern traveler by reaching them on their platform of choice. Trust in the brand, and the information it provides to travelers, remains vital as companies experiment with a variety of platforms and types of media.
“We have more opportunities than ever to interact with people,” said Houghton. “One of the things that doesn’t get talked about enough is that travel is the one thing you don’t really want to mess up. Trust is something that has always existed with the Lonely Planet brand so with anything we’ve ever done, we haven’t changed that at all. As long as that’s there, the love for the brand and the trust in it have been constant.”
Suitcase Magazine founder Serena Guen also participated in the media panel, discussing the challenges and opportunities facing an upstart travel media brand.
“We’ve seen in the past couple of years about 50 new print travel titles launch and that signifies the sense of people being inundated with information from the internet,” said Guen. “A print magazine allows our audience to not only escape [that deluge of content], but we can also tell our stories in a much more beautiful and creative way. We’re saying: this is the only thing you need, you don’t need to go and search for hours because we’ve done the work for you. The fact that general travel magazines [have become] so faceless made it hard to trust them.”
Across sectors, companies on stage at the Forum and those represented in the audience were engaged in a form of soul-searching: Whether they knew it or not, they were grappling with the question of how to define or redefine their companies’ future in technologically and politically turbulent times. Do you drill down and improve the core product that established your company in the first place or do you pivot into adjacent areas or not-so related sectors?
Both will require new ways of doing things, different attitudes and approaches, and each roadmap has its risks.