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Travel Tech Essentialist #14: Think Different

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“The only constant in life is change” ~ Heraclitus
 

Travel Tech Essentialist

November 17 · Issue #14 · View online
A short newsletter every two weeks with my pick of the top 10 Travel Tech stories and innovations shaping the world's largest and fastest growing industry.

“The only constant in life is change” ~ Heraclitus

1. Eventful Q3 earnings for online travel companies
Since announcing their Q3 results on Nov 6, Expedia, Tripadvisor and Trivago shares have fallen by 30%, 23% and 26% respectively. Expedia and Tripadvisor pointed to changes in Google’s algorithm for their disappointing results.
  • Expedia net income fell 22% year-over-year and adjusted EBITDA was flat. Expedia CEO: “We saw incremental weakness in SEO volumes and a related shift to high-cost marketing channels“. Read more.
  • Tripadvisor revenue fell 7%, EBITDA declined 12% and net income dropped 28%. “Our most significant challenge remains Google pushing its own hotel products and siphoning off quality traffic that would otherwise find TripAdvisor”. Read more.
  • Booking had year-over-year growth in room nights (11%), revenue (8%), net income (10%) and adjusted EBITDA (5%). Booking CEO: “We saw some headwinds in the SEO channel that did create some modest pressure, but it’s a small channel for us”. Read more.
  • Trivago reported a 1% decrease in revenue, 97% drop in net income and 59% decrease in adjusted EBITDA. Trivago’s founder and CEO announced his departure effective December 31 2019. Read more.
2. Blame Google when things don’t go your way
Blaming Google has become commonplace among online travel public companies after announcing disappointing results. In The Selective Scapegoating of Google, I write that Google might be a reason why some companies are struggling, but it’s also been a key reason how today’s online travel leaders got there in the first place.
3. Aggregation Theory applied to OTAs
Ben Thompson is one of the most insightful minds in tech and media. Last week he wrote a must-read article —The Google Squeeze — on aggregation theory, OTAs and Google. He highlights how Booking is one OTA that seems to have the right approach in competing with Google: Booking knows it can’t depend on the Google channel, that its future is best secured by innovating and building a customer experience that convinces users to go to Booking directly. Just like Amazon has done in retail.
4. SoftBank’s big reality check will impact Oyo
Oyo has been on a wild expansion spree. As with WeWork, Oyo’s strategy, backed by SoftBank, has been to grab market share at all costs and worry about cutting losses later. SoftBank has led more than $2 billion in funding rounds for Oyo, pushing its valuation from less than $1 bn to $10 bn in two years.  In July, SoftBank’s chairman Masayoshi Son gave Oyo an additional boost by backing a loan to Oyo’s 25-year-old founder to invest $2 billion into Oyo. This approach might no longer sustainable.  In the wake of the WeWork IPO failure, Son has removed himself from decisions about future investments in Oyo. And in its earnings presentation on Nov 6th, SoftBank announced its new policy on portfolio companies: 1) Portfolio company finances to be self-financing, and 2) No rescue packages.
5. Skyscanner pivots to a flights marketplace approach
After 17 years as one of the most successful flight metasearches, Skyscanner now offers a three-pronged approach to connecting users with air tickets: 1) book with Skyscanner, with Skyscanner handling payments and customer service , 2) direct-booking service, only handling the payment but the airline or OTA partner continues to own the customer, and 3) traditional list of partners that a user is passed over to online in order make the booking. The marketplace is initially only for flights.
6. AirAsia starts selling other airlines through a partnership with Kiwi.com
OTAs are able to convert traffic from Google and other channels at a higher rate than airlines because they offer all destinations and all carriers. Airlines are leaving money on the table when visitors don’t find their destination in the airline’s booking engine. AirAsia has now added flights of other carriers through a white level partnership with Kiwi.com, enabling AirAsia.com’s users to find and book travel on more than 100 airlines to destinations currently not served by AirAsia in Europe, Australia, New Zealand, the Middle East, and the Americas. With this innovation, AirAsia is becoming more than an airline. Others are no doubt watching carefully. Read more.
7. Lastminute.com takes over the London Eye sponsorship from Coca-Cola
One of London’s most iconic landmarks will be lit up in Lastminute.com’s corporate pink as the OTA takes over as London Eye’s headline sponsor in a three-year deal that kicks off in February 2020. Read more.
The soon-to-be Lastminute.com London Eye
The soon-to-be Lastminute.com London Eye
8. The Sphere is the new Funnel
The consumer’s journey from ideation to purchase – typically thought of in stages – has never been shorter. Many online marketers however, continue to view the customer journey as a linear path to a purchase – often referred to as a conversion funnel. Tedd Evers (Triptuner) thinks it’s time to say goodbye to the funnel and hello to the sphere
9. Deals 💰
10. Large and small startups
  • Uplift is a Silicon Valley-based company that makes travel more accessible, affordable, and rewarding by enabling travel providers to offer flexible payments to their customers. It has raised $221 million and partnered with major brands such as Carnival Cruise Line, United, Kayak, Southwest, American Airlines and Volaris.
  • Airhopping, based in Valencia, is similar to an interrail but for air travel, offering the possibility to add multiple destinations for the price of a round trip ticket.
👍 If you like this newsletter, I would appreciate if you forward it to a friend or colleague. And hit reply (or via Twitter) to send me feedback, ideas or suggestions. Until next time,
Mauricio
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