4 ms·

15 Years of Booking Travel Online: What’s Next?

23 points by ted0 14y ago

potatolicious 14y ago
> "collect roughly ~13% in commission from hotel and airline bookings" Hotels probably, but I seriously doubt this for airlines. After all, a 13% commission would likely put the airline in the red for that booking. Flying is one of the lowest-margin businesses in existence, and makes discount retail feel like a walk in the park. > "HipMunk also launched their hotel location-based mobile app this year. It is very well-designed but I’m really not feeling it." I really agree, and it's really too bad, because I love their flight-booking product and I'm really rooting for the team, but both their hotel booking site and mobile apps are IMO worse than the incumbents, which falls well short of their "kicking everyone's ass" bar that they set for flights. Confusing button placement, unclear comparison tools, incomprehensible color-coding, and a location-centric search... I just can't get behind it.
- ted0 14y ago
  re: hipmunk. It just doesn't 'feel' right. The ideas all seem right but it just doesn't work for me.
- gcb 14y ago
  Yeah, I'd ignore all the industry "insight" here and consume that as a user opinion on travel sites.
- bigiain 14y ago
  +1 I used to run a site that averaged ~29% after credit card fees on hotel rooms, but we never managed to swing a deal that wouldn't have seen the credit card companies making more money than we did on flights. (Maybe their "13%" figure is averaged over high-margin hotel rooms and low-to-zero margin flights?)
  - ted0 14y ago
    I understand that in a lot of cases, the rate is higher than the 13% that I cited. That is definitely an average that I've pulled from a few different sources. Would be interesting to hear other averages...
    - bigiain 14y ago
      FWIW, my information is quite out-of-date, I left that industry in '08 (I started in it in '96! http://web.archive.org/web/19961019065611/http://www.oztravel.com.au/ http://web.archive.org/web/19961019065611/http://www.oztrave... )
calbear81 14y ago
Airfare commissions (especially domestic) are much lower and in many cases are on a flat fee basis like $3/ticket. Travel agencies try and push more packages because you get to wrap in a high margin product like hotels/cars (15-20%+) or by creating a package, they can access wholesale rates for airfare which gives them a larger margin.
- ted0 14y ago
  You are right - I should correct that. I only did the research for hotel commissions and didn't intend to portray that the average rate for airfare is also ~13%.
- robryan 14y ago
  Yeah, airfare search is a really bad starting point if you want to start a profitable business without massive startup costs. Hard to get access to data from airlines and a stack of other services competing for the thin margins.
  - bigiain 14y ago
    Yep - it's really hard to compete with the airline's own website prices for "simple" ticket purchases, and it's really complicated to automate "complex" ticket purchases; and the travel industry has "corporate travel agents" who've got enough experience to be really good at getting a "close enough to optimum" solution to complex ticketing requirements, and they've got much of the high-margin flight bookings market tied up. (At least, that was the state of play back when I was last involved back in '08…)
calbear81 14y ago
Excellent write up Teddy! Sorry about the e-mail validation strictness, I've logged the bug and will it fixed soon so .is and any other valid domain doesn't get marked as invalid.
- ted0 14y ago
  Awesome! Thanks. You're quick :)
  - bung 14y ago
    Will mention you may have a font problem in Chrome, hard on the eyes.
    - ted0 14y ago
      On teddy.is or room 77?
_delirium 14y ago
Expedia really has 8,900 employees? I guess I have no idea what they really do, so that might be reasonable, but I would've guessed an order of magnitude lower. I had assumed it was a mostly automated business, with all the big infrastructure run by third parties (ITA, Amadeus, etc.).
- ted0 14y ago
  9,480 now, 2180 of which are in China at their subsidiary, eLong. http://www.expediainc.com/company.cfm http://www.expediainc.com/company.cfm
- potatolicious 14y ago
  Flights are the easy part - hotels are hard. Many vendor relationships need to be maintained, deals negotiated, etc etc, all of which is fundamentally hard to automate. 8,900 employees doesn't mean all engineers, or even technical folk. I've noticed that every travel company I've ever seen is incredibly sales/vendor management-heavy, and these folk outnumber technical folk by a vast, vast margin.
andycroll 14y ago
I think there's significant potential for the creation of profitable niches (and product innovation in those niches) in the travel industry: families, last-minute, experiences, luxury. There is very little money in flights, so if that's your business you need to have a long VC-backed runway (pun sort-of intended). On the hotels side there is huge opportunity. (Disclosure: I'm the CTO at http://impulseflyer.com http://impulseflyer.com so I have a vested interest in the industry)
- ted0 14y ago
  One site that I did not mention is Gilt's Jetsetter.com. They have great curation and a number of awesome deals.
  - andycroll 14y ago
    We're in the same ballpark. JetSetter started as very 'Gilt' (members-only, flash sales) but they seem to be making a huge push toward the OTA (online travel agency) model. And they've had some internal problems recently - http://www.tnooz.com/2012/05/15/news/jetsetter-ceo-out-after-board-request-and-reports-of-internal-squabbles/ http://www.tnooz.com/2012/05/15/news/jetsetter-ceo-out-after...
jerednel 14y ago
I think curated experiences are the way to go for profitable travel niches. A site like AirBnB can connect people to places that are somewhat alternative, yet desirable locations: think Williamsburg, Wicker Park, etc..but adding experiences such as adding Free Parking, tickets to a play, or a prix fixe dinner in to a package you can purchase with one click seems to be a good value add on top of the accommodations. Sites like Orbitz will recommend things, but usually AFTER you have already expressed interest in your hotel and destination. And Jetsetter has some very interesting deals but I don't think the average couple/family can just go on a 7 night expedition milking their own goat milk and doing yoga on the mountain tops of Nepal or whatever experience they're pushing. Give me a nice pad in a cool 'hood with free parking and maybe a dinner at the latest Michelin recommended restaurant. That would be a site I would check frequently.
- ted0 14y ago
  I agree. Room 77 is actually doing free WiFi in all of their properties this summer, which is a pretty savvy move. As far as curated experiences go, I think some mashup of Gilt City and Jetsetter would be a wise move for Gilt.

23 points by ted0 14y ago

> "collect roughly ~13% in commission from hotel and airline bookings" Hotels probably, but I seriously doubt this for airlines. After all, a 13% commission would likely put the airline in the red for that booking. Flying is one of the lowest-margin businesses in existence, and makes discount retail feel like a walk in the park. > "HipMunk also launched their hotel location-based mobile app this year. It is very well-designed but I’m really not feeling it." I really agree, and it's really too bad, because I love their flight-booking product and I'm really rooting for the team, but both their hotel booking site and mobile apps are IMO worse than the incumbents, which falls well short of their "kicking everyone's ass" bar that they set for flights. Confusing button placement, unclear comparison tools, incomprehensible color-coding, and a location-centric search... I just can't get behind it.

ted0 14y ago
re: hipmunk. It just doesn't 'feel' right. The ideas all seem right but it just doesn't work for me.
gcb 14y ago
Yeah, I'd ignore all the industry "insight" here and consume that as a user opinion on travel sites.
bigiain 14y ago
+1 I used to run a site that averaged ~29% after credit card fees on hotel rooms, but we never managed to swing a deal that wouldn't have seen the credit card companies making more money than we did on flights. (Maybe their "13%" figure is averaged over high-margin hotel rooms and low-to-zero margin flights?)
- ted0 14y ago
  I understand that in a lot of cases, the rate is higher than the 13% that I cited. That is definitely an average that I've pulled from a few different sources. Would be interesting to hear other averages...
  - bigiain 14y ago
    FWIW, my information is quite out-of-date, I left that industry in '08 (I started in it in '96! http://web.archive.org/web/19961019065611/http://www.oztravel.com.au/ http://web.archive.org/web/19961019065611/http://www.oztrave... )

calbear81 14y ago

Airfare commissions (especially domestic) are much lower and in many cases are on a flat fee basis like $3/ticket. Travel agencies try and push more packages because you get to wrap in a high margin product like hotels/cars (15-20%+) or by creating a package, they can access wholesale rates for airfare which gives them a larger margin.

ted0 14y ago
You are right - I should correct that. I only did the research for hotel commissions and didn't intend to portray that the average rate for airfare is also ~13%.
robryan 14y ago
Yeah, airfare search is a really bad starting point if you want to start a profitable business without massive startup costs. Hard to get access to data from airlines and a stack of other services competing for the thin margins.
- bigiain 14y ago
  Yep - it's really hard to compete with the airline's own website prices for "simple" ticket purchases, and it's really complicated to automate "complex" ticket purchases; and the travel industry has "corporate travel agents" who've got enough experience to be really good at getting a "close enough to optimum" solution to complex ticketing requirements, and they've got much of the high-margin flight bookings market tied up. (At least, that was the state of play back when I was last involved back in '08…)

calbear81 14y ago

Excellent write up Teddy! Sorry about the e-mail validation strictness, I've logged the bug and will it fixed soon so .is and any other valid domain doesn't get marked as invalid.

ted0 14y ago
Awesome! Thanks. You're quick :)
- bung 14y ago
  Will mention you may have a font problem in Chrome, hard on the eyes.
  - ted0 14y ago
    On teddy.is or room 77?

_delirium 14y ago

Expedia really has 8,900 employees? I guess I have no idea what they really do, so that might be reasonable, but I would've guessed an order of magnitude lower. I had assumed it was a mostly automated business, with all the big infrastructure run by third parties (ITA, Amadeus, etc.).

ted0 14y ago
9,480 now, 2180 of which are in China at their subsidiary, eLong. http://www.expediainc.com/company.cfm http://www.expediainc.com/company.cfm
potatolicious 14y ago
Flights are the easy part - hotels are hard. Many vendor relationships need to be maintained, deals negotiated, etc etc, all of which is fundamentally hard to automate. 8,900 employees doesn't mean all engineers, or even technical folk. I've noticed that every travel company I've ever seen is incredibly sales/vendor management-heavy, and these folk outnumber technical folk by a vast, vast margin.

andycroll 14y ago

I think there's significant potential for the creation of profitable niches (and product innovation in those niches) in the travel industry: families, last-minute, experiences, luxury. There is very little money in flights, so if that's your business you need to have a long VC-backed runway (pun sort-of intended). On the hotels side there is huge opportunity. (Disclosure: I'm the CTO at http://impulseflyer.com http://impulseflyer.com so I have a vested interest in the industry)

ted0 14y ago
One site that I did not mention is Gilt's Jetsetter.com. They have great curation and a number of awesome deals.
- andycroll 14y ago
  We're in the same ballpark. JetSetter started as very 'Gilt' (members-only, flash sales) but they seem to be making a huge push toward the OTA (online travel agency) model. And they've had some internal problems recently - http://www.tnooz.com/2012/05/15/news/jetsetter-ceo-out-after-board-request-and-reports-of-internal-squabbles/ http://www.tnooz.com/2012/05/15/news/jetsetter-ceo-out-after...

jerednel 14y ago

I think curated experiences are the way to go for profitable travel niches. A site like AirBnB can connect people to places that are somewhat alternative, yet desirable locations: think Williamsburg, Wicker Park, etc..but adding experiences such as adding Free Parking, tickets to a play, or a prix fixe dinner in to a package you can purchase with one click seems to be a good value add on top of the accommodations. Sites like Orbitz will recommend things, but usually AFTER you have already expressed interest in your hotel and destination. And Jetsetter has some very interesting deals but I don't think the average couple/family can just go on a 7 night expedition milking their own goat milk and doing yoga on the mountain tops of Nepal or whatever experience they're pushing. Give me a nice pad in a cool 'hood with free parking and maybe a dinner at the latest Michelin recommended restaurant. That would be a site I would check frequently.

ted0 14y ago
I agree. Room 77 is actually doing free WiFi in all of their properties this summer, which is a pretty savvy move. As far as curated experiences go, I think some mashup of Gilt City and Jetsetter would be a wise move for Gilt.