Agents should match convenience found online, says Steve Endacott

Should traditional bricks and mortar travel agents expand their number of high street travel shops or shut them?

Like many strategic questions, the answer depends on what you are selling and how cheap high street shops become as non-travel retailers abandon high streets.

Thomas Cook simply does not need as many shops. If it sells its airline arm this is likely to result in a reduction in its tour operating capacity as the number of committed seats falls and it evolves into a more flexible capacity model.

Fewer holidays to sell, equals fewer shops and hence its shop closure program. However, should the independent sector be filling any gaps created?

There is no doubt that the internet and the “always on” experience offered by smartphones is dramatically impacting our shopping experience.

Why bother heading down the high street when virtually anything you want to buy is a click away via Amazon, eBay or the recently revitalised Google Shopping channel.

Music, electronics, white goods, mobile phones, estate agents and even clothes to a lesser extent, are rapidly moving online.

This is leaving great swaths of the high street empty because high rental costs and business rates make the high street an expensive channel, compared to online sales.

This equation however, is not as simple in the travel sector, where the shear range of products online and the emotive nature of holidays provides a natural counter balance.

The average online conversion of visitors to bookers, is less than 1%, as customers on average visit 23 sites and revisit the site they do book with, three or more times before booking.

Every year the cost of generating these leads from Google increases, with this year’s inflation rate running at above 20%.

Compare this to a high street shop, where conversion of people walking through the door ranges from 15% to 30%.

Now consider a world where landlords are losing tenants at the fastest rate ever seen.

This makes it inevitable that high street rental costs are going to collapse and local governments are also likely to be forced to cut business rates in order to prop up declining high streets.

So at a time the internet is becoming more expensive, the high street is set to become more attractive.

However, with low-cost carriers like Jet2 and EasyJet set to dominate the commodity beach holiday sector via direct online sales, the high street winners are likely to be independents specialising in more complex long-haul, cruise or high-value holidays.

But with a reduced number of people walking down the high street, it’s also important for travel agent shops to evolve their customer acquisition strategies.

In my view the advent of cloud-based phone systems mean that the next generation of high street retailers should evolve to service the following functions.

• Walk-in traffic. Still a key business driver.
• Brand building. A high street presence is a great local brand driver in itself and fulfilment centre for localised advertising within social, rugby, cricket and football clubs, as well free local papers if they still exist.
• Call centres. Why not have online bookable or phone to book web sites, supported by a call centre based in the high-street shop? Look at how successful Trailfinders are.
• Homeworkers office. Explore staffing the shop with homeworkers, whom work in the shop two days a week on a rotational basis and from home the rest of the week. They can then either travel to customers home’s, book over the phone or arrange appointments in the shop, for face-to-face consultations or to handing out brochures.

Moving forward, high street agents need to be as convenient to customers as the internet and this requires changing working practices to offer longer opening times and the ability to start a holiday purchase in a shop, but complete it by phone.

So, evolution may be required, but I’d advise renegotiating rents, not shutting shops.

Tough trading extends online, says Steve Endacott

I often flippantly describe online travel agents (OTAs) as “parasites living off the misery of others”.

Ironically, this is actually a positive description of their asset-light, non-risk model, where they buy flights and seats to package into holidays.

This lack of commitment allows them to exploit drops in flight and hotel prices in a market where customer demand is weak. These lower prices attract customers, so demand gradually matches supply price.

Unlike traditional tour operators’ committed models, OTAs do not take a hit to profits from unsold seats or being forced to sell seats below cost to fill aircraft.

The pain being taken by major tour operators Tui and Thomas Cook is clear in their recent financial reporting.

Cook has clearly decided to throw the kitchen sink at this year’s financials with a £1 billion write down, increasing winter losses to an eye-watering £1.5 billion. But a deficit of 12% on summer sales shows how tough summer 2019 trading is following a hot summer in 2018 and Brexit lingering in the background.

Historically, OTAs’ profits appear to have been relatively immune to downturns in demand and UK OTA On the Beach’s recent 12% rise in winter profits to £11.9 million strikes a positive note.

However, On the Beach’s strong growth in low-cost ‘brand’ traffic, driven by growth in repeat bookings and effective above-the-line advertising campaigns, hides a worrying underlying trend.

This trend is the 20%-plus price inflation seen on most Google pay-per-click (PPC) travel terms.

As search demand has declined by 10% in line with general UK market demand, OTAs which have been brought up on continued upward growth in turnover and passenger numbers are competing even harder to maintain growth, pushing up bid prices.

The impact on profits are further inflated by having to replace low-cost SEO traffic, which naturally declines in line with demand, with more-expensive paid traffic in order to just stand still.

This is why most OTAs are currently naval gazing at their process and customer care, as customer retention and positive brand building have never been more vital to continued profit growth.

After years of summer relaxation, confident that the pain of others will balance the books against lower demand, it may be that OTAs have now joined low-cost airlines and tour operators in fearing a hot summer and a continuing Brexit hangover in the UK.

Don’t be Beta Max in a VHS word. Get into voice activated search Now!

My teenage kids laugh at me, when I tell them that “Voice Search” is the future and in 10 years time typing into phones will be passie. Now that’s a Millenial view!!

For my generation, it was impossible to see beyond CD’s, to MP3 players, to streaming services like Spotify, so they be right, but I think they’re wrong and travel business’s should be putting resource into understanding how they can exploit the disruption that a shift to voice search may create.

The uptake on voice search is like to be very contextual to a users location and environment.

The home will be the first battle ground, as it provides a private environment reducing “Voice Embasement” (VE), with voice activation via simple commands like “lights on” or play Coldplay straight forward to deliver. Voice controlled TV’s will be next, with food shopping to follow shortly after once Tesco’s etc launch voice controlled shopping lists, linked to home delivery services.

The car provides private environment where typing is illegal but voice is not. Voice dialing, navigation or music selection are tools are uncorporated into most new models rolling of the production line.

Its inevitable that once people become used to the utility provided by these services that VE will decline and most interactions with mobile phones will become voice activated rather than typed. Just stop and think about it?

Its fine to talk to another person on your mobile walking down the street, but not to ask for directions or recommendations for a holiday?

Simple travel needs like booking hotels near X or flights to Y, will migrate to voice activation first, just as they where first to move from phone booking to online booking. The shorter and simpler the booking journey, the quicker it will migrate to full voice booking.

However, will booking a holiday be completed by full voice booking? Well in the 1990’s, did we think 60% of holidays would be booked online. The answer is a simple no, as its hard to see far ahead in a rapid evolving internet based world.

Although nobody can predict the future, here are three obvious things to consider.

• Impact on search. Users have been trained to type as few words as possible to find companies that offer holidays that may meet their needs, as they know to then expect a “Search” box’s which harvests their key requirements, such as destination, departure airport, duration and party type. With voice activated search it will be much simpler to state all your requirements initially and get straight to results. So expect an explotion of long tail searchs with its knock on impact to PPC bidding and SEO optimisation.
• Voice back to typing? Initially, voice is likely to be restricted to the “research” stage of booking e.g. “Find me cheap deals to majorca from Gatwick for 7 nights for a family of 4”. Results can then be returned, but what next? Will customers switch to typing and booking online or prefer to carry on talking to a call centre via their mobile.  I think the answer will be heavily dependent on their location. For example, yes if they are driving to work but no if they are on a train or in the office.
• Pay more attention to Bing. Google is the dominant engine for typed search, but crucially Apple’s Siri, Amazon’s Alexa and Microsofts Cortana voice search results are all powered by Bing. It is going to a bit like the 1980’s battle between Beta Max and VHS!! For my money the Google voice recognitions software is much better than Bings current efforts, so Google may take the VHS slot.

Voice activation feels a bit like the Mobile debate 6 years ago. The experts all told us it was coming, but it was still hard to imagine the impact. Well start imaging guys, beause change often leads to disruption and disruption provides opportunities for first

BA CEO Alex Cruz’s, customer service is more Ryanair than British Airways.

I may be the only Silver Card holder who hates BA, but I sadly doubt it!

British Airways historically focused on servicing business class passengers focusing on service and flexibility, but seem to have completely lost their way under Alex Cruz’s guidance.

As a regular traveller on the BA shuttle between Manchester and Heathrow, I have learnt to my cost, that booking a return flight rather than two singles is a big mistake. Even though its exactly the same price either way, if you book a return and then your plans change and you don’t take the flight down, they automatically cancel your return and it simply disappears off the App without a word of explanation.

Having learnt this lesson, when my plans changed for a recent trip and I decided to stay south and fly directly from Heathrow to Los Angles, rather than from Manchester, I rang BA to notify them that I would not be catching the Manchester to Heathrow leg but would fly direct from Heathrow. A simple enough tweak for a business traveller I thought.

Oh, no. This is a major change requiring all four sectors to be re-ticketed or they cancel all my flights. The flight cost change was a reasonable £181 which I was willing to accept, until the agent then informed me I had to pay 4 X £60 change fees taking the total to a ridiculous £421.

So to summarise to not take one flight would cost me more than a return flight from Manchester to Heathrow on exactly the same flights as originally booked. How can BA justify this rip off?

BA still refused to budge even when I escalated the issue to the Silver Card customer service team, making a mockery of loyalty cards.

This experience follows 12 months on from BA forcefully down grading me from business calls on a 12 hour flight to Hyderabad, which was handled appallingly. Having not been notified at check in, in the lounge or at the gate, I was left to find my seat was not in business, when I walked past business!

On querying this with the purser I was told that I had been downgraded, because business had been over booked and that I should write in to complain. When I then sat in an empty business class seat and refused to move until compensation had been agreed, I was immediately threatened with the police being called! Then having moved it took 6 months to get the difference in fair back because BA demanded a copy of the boarding pass showing I had been downgraded.

Working in the travel sector, I recognise that it’s a complex world and mistakes can be made. However, BA’s policies seem antiquated and there is clearly no longer a focus on customer retention and a customer service approach make Ryanair look a friendly airline in comparison.

I may have no choice but to continue to fly BA from Manchester to Heathrow, but please beware that this is one very angry and upset Silver card holder, who will never recommend flying with BA to anybody, until it reverts to its old customer centric self and unfortunately this may require a change of leadership.

Initially, when Google launched its “Hotel Finder” product, it fan faired how the product would allow more hotels to advertise their own direct web sites, delivering providing lower prices to customers and lower commission payments for hotels as they cut out layers of the distribution chain.

Today however, Google hotel finder continues to be dominated not only by the big OTA’s, Booking.com and Expedia, but more surprisingly by other Meta price comparison sites such as Tripadvisor and Kayak.

 So what’s with the Meta on Meta game?

 Google initially resisted allowing other meta sites to advertise on its services, as it felt that the customer friction from a “Russian Doll” booking process, where customers clicked from one site to another to another, would be highly unsatisfactory. However, as deep linking of hotel and date details improved, this friction was reduced and the benefits of offering the lowest price outweighed these concerns.

 But what’s in it for the other meta’s? The simple answer is a combination of bid arbitrage and brand halo.

 The aim is obviously to charge the meta’s own advertiser more than the meta pays Google and amazingly at times this is clearly possible. However, the longer term game clearly revolves around “Brand Halo”.

 All hotel meta’s such as Tripadvisor, Trivago and Kayak are investing millions into “above the line” TV advertising. Within this media they are generally advertising to a relatively unqualified audience, who may or may not be looking to book hotels in the near future. However, it is done not for the immediate ROI, but to build brand awareness and to introduce new bookers to the brand that then can be retained to book time and again.

 Advertising on another Meta such as Google Hotel finder, delivers 100% qualified audience of potential bookers and even if the arbitrage is negative and the initial booking is acquired at a loss, it is often a less expensive acquisition tool than above the line advertising.

 Hence, the key is customer retention and what drives this.

 For hotel meta’s its clearly the utility delivered by price comparison and the belief that one visit to the site delivers the best price for a hotel. 

 They also have the advantage over Hotel direct sites, of offering a massive range of both beach and city hotels, increasing the likelihood of a repeat purchase, which in turn gives it deeper advertising pockets, with an initially negative ROI’s being acceptable when hotel direct sites will rarely advertise this aggressively.

 The intersecting question however is which Meta site does the customer go to next year? Google hotel finder or the end Meta?

 The same dilemma applies to all Hotel OTA’s advertising on Meta’s and hence the push from beach hotel OTA’s to add extra utility by offering flights, transfers and holiday insurance during the hotel booking process. The more of these products customers buy from OTA’s, the greater the chance of building “Utility” and stickiness, over pure Meta sites that just provide hotel only price comparison.

 So at the end of the day Google is likely to be dominated by those with the highest customer retentions levels and subsequently deepest advertising pockets as it’s a deeply capitalist bidding market place.

 However, the depth of the pockets depends on both customer retention and potential upsell revenues, so don’t expect the same results across beach and city destinations as the specialist beach OTA’s have a number of advantages over their more generic hotel competitors.

 I think it will remain a fascinating battle ground over the next few years!