I must confess to be a “Brand” convert, believing nothing is more important than building brand traffic to reduce ever increasing Google advertising cost and its nice to be Chairman of a brand like Teletext Holidays, which I’ve interacted with an for over 25 years now.

Teletext is lucky to enjoy unprompted brand recognition levels of 40%, which puts it on a par with UK travel giants such as TUI, Thomas Cook and Expedia. This alone delivers significant volumes of direct brand traffic via SEO and PPC channels, reducing average customer acquisition costs compared to other OTA players such as Travel Republic, On the Beach and Love Holidays.

Unfortunately, our customer “Consideration” is much lower as many customers lost touch with Teletext when it ceased to power the pages behind their TV and moved fully online. We are obviously addressing this with above the line TV advertising and sponsorship deals such as the recently announced tie up with newly promoted Sheffield United (Another historic giant on the rise).

Legacy brands such as Teletext Holidays also offer a key advantage that customers already know what the brand stands for. Extensive research shows that customers view Teletext as a “late deal” offer site for beach holidays booked by phone.

To offer the “by phone” service we outsource call fulfilment to Truly Travels Indian based call centre, at a considerably reduced cost versus an equivalent sized UK call centre. Conversion levels are extremely healthy compared to any UK call centre, and our ability to switch and directionally sell products means we have enjoyed strong margin growth, however the NPS scores were not at an acceptable level when I joined and have been a KPI that we have been looking working hard to improve.

It’s my belief that in today’s world of social media and review scores, focusing on the customers that do not book with you has never been more important as word of mouth and review scores can kill or make a brand. However, like many call centres our metrics and focus was primarily on conversion levels and profitability per call alone.

In order to find a cost effective solution to this problem we looked towards our sister technology business Zen3, and worked with them on the development of their Sayint Speech to Text system which has revolutionised our approach.

Sayint allows us to record every inbound and outbound call into the call centre and then translate these in too written words, so that they can be data mined using the latest big data AI (Artificial Intelligence) algorithms.

Sayint has allowed us to create “Sentiment” algorithms weighting basic factors such as call length, hold times, silences etc. and then overlay them with scoring based on the presence of both positive and negative phrases. Some examples of negatives are phrases such as “Can you repeat that, pardon, that’s more expensive, I don’t want that” and phrases like “Can I talk to your manager”. Over a period of time we have built algorithms that we use to automatically rate a call, in terms of customers satisfaction levels.

These allow us to generate a ranking by agent and an understanding of which agents are scoring well for service whether the customer books or not. The correlation between top seller and generator of highest customer satisfaction over all is often not what you may expect. The tool also allows managers to walk through calls with an agent, using drill down tools that allow them to enter the written conversational record where that negative phrase occurred, so they can then listen to that exact section of the call and coach a better approach.

This has allowed us to focus management review and training precisely where it was needed, which in turn has increased the average satisfaction levels on non-booking calls by 26%, as well as increasing call centre conversion by 15%.

It is however the improvement in satisfaction levels on non-booking calls that Teletext continues to focus on because this is both where its ability to increase profits lies and the biggest numerical influence on its average review scores in sites like Trust Pilot and Feefo. Good scores in these areas in my opinion make customers more likely to click on your brand adverts when they see them or book with you if they are looking for that third party reassurance.

Sayint also has allowed Truly to reduce its call audit team from 10 to 4 whilst increasing the volume of audited calls by 400%, by being able to accelerate the speed at which keywords in booking calls can be found.

Like most large call centres, I know we have and continue to have quality issues to deal with due to a relatively high staff turnover, but at least management now have a tool in Sayint that gives them the measurability and visibility to force the required action to make improvements.

At the recent Travel Weekly lunch briefing, Easyjet CEO Carolyn Macal admitted that EasyJet Holidays tended to get lost in the priorities of an airline carrying 58m customers and needed a separate management team to focus on it.

Having provided the technology powering Easyjet holidays for the last three years and the launch platform for Jet2 Holidays, I feel reasonably well positioned to contrast both company’s approaches.

Philip Meeson has relentlessly driven the growth of both the low-cost airline Jet2.com and Jet2Holidays on a very personal basis. Philip quickly realised that having a tour operation to complement his low-cost airline distribution, offered some major strategic opportunities.

Yield management

Low cost airlines use a yield model where they move prices up from launch, as buckets of seats are sold, depending on how its computerized algorithms estimate the required rate of sale, based on historical sales patterns by destination. However, the yield program also looks at the comparative price of other low cost airlines, since this obviously impacts the rate of sale. Price competition between airlines based on highly transparent flight only prices often suppresses yield.

Jet2 quickly realized that “package holiday” sales not only gave it another distribution channel, but because prices are “opaque”, gave it the ability to dump the prices of seats on slow moving routes, in a hidden way without impacting the higher volume flight only prices.

Early sales.

Low cost carriers tend to achieve higher average sales prices, the earlier the sales pattern is on a route, as early sales allow it to move seat only prices up faster and still achieve the targeted load factor.

Package holidays have an earlier booking pattern than flight only and thus have been credited with allowing Jet2.com to achieve higher average yields than some of its competitors.

Route development.

Initially Jet2.com saw its holiday program as a volume top up on its traditional flight only routes, but as volumes have grown, it now deploys aircraft based on its holiday company’s requirements and tops up sales with flight only.

The above points only work if you have a “One Company View” of profitability, with one yield team making the crucial seat pricing decisions and flowing those prices into both companies equally or with hidden discounts to the tour operations. For example, agents are often forced to sell Jet2 Holidays simply because the tour operation has access to lower priced seats than they can package up themselves using Jet2.com.

However, in my opinion the most significant decision Jet2.com made was in recognizing that the management of a tour operation is a very different skill set to managing an airline. They therefore recruited experienced operators like Steve Heapy,

who in turn picked up a lot of the staff Thomas Cook made redundant when they closed the Air tours operation in Rochdale.

The proof is very much shown in the results with Jet2 Holidays on the way to taking the number 2 spot in the UK away from Thomas Cook, with holiday carrying of over 2m passengers, whilst Easyjet collaboration with Hotel Beds has generated a much lower number.

In September 2017 the deal with Hotel Beds comes to an end and it will be very interesting to see what Easyjet decide to do next. At the end of the day, they still have the most customer focused brand in the low-cost sector and in my opinion could easily become one of the top 3 UK tour operators. But, only if they achieve the focus that Carolyn has now recognized is required.

When mass market tour operating came to the fore, back in the 1960’s-70’s, the key holiday element was the charter flight, as it often provided the only cost effective route to get to the holiday destination. This led to a tradition where hotels and tourist boards put greater value on relationships with tour operators, giving them better “Package” rates and marketing contributions.

However, the rise and rise of low cost carriers such as Easyjet and Ryanair has flooded the beach leisure market with capacity and effectively turned the flight element into a mix and match bus service, where Online Travel Agents (OTA’s) can offer 100’s of flight combinations for most days of the week. This has negated any real advantage of owning your own charter fleet and turned it into a disadvantage at times, fueling the growth of OTAs using Dynamic Packaging (DP) technology.

The visionary management of TUI, saw this threat early and over a 10-year period repositioned the Thomson and First Choice tour operations into “differentiated” hotels, which they control and have exclusive distribution for, protecting them from the attack of the OTA’s who have taken control of the “Commodity” price driven market. As we all know Thomas Cook were slower to react, but under the leadership of Chris Mottershead are beginning to make progress on their own drive for differentiation.

The growth of OTA’s in turn fueled a growth in Bed banks who consolidated demand and negotiated rates with hotels. The best rates often came from their “Castles” where they paid hoteliers “Early” via large deposits, using working capital funds generated by paying other hotels up to 90 days post departure. The collapse of “Low Cost Travel Group” with massive debts exceeding £100m, severely “burnt” hotels and has caused a major tightening of payment terms. At the same time OTA’s due to competitive pressure have reduced customer balance collections for 8 weeks to up to 2 weeks before departure. Hence, there is simply less cash around in the sector to fund either “Castles” or Early Booking discount payments to hotels.

At the same time the threat of terrorism has re-shaped customer demand with the loss of Egypt, Tunisia and effectively Turkey focusing demand into Spanish destinations. Last year saw record occupancy levels in the Balearics and Canaries, which of course has led to higher prices. However, the bigger impact is how hotels are now seeking to yield manage.

Historically, hotels signed paper contracts with various tour operators allocating their stock between them at fixed rates and then “stop selling” when tour operators reported back sales and hotels realised they were fully booked. This model was replicated when “Bed Banks” replaced tour operators, with hotels able to yield downwards via special offers, but rarely able to increase prices.

Spanish hotels are using the current buoyant market to take control of their own destiny by forcing Bed banks and OTA’s to access their stock via “Channel Managers”. These allow hotels to hold their stock centrally and change rates daily. These rates are either “pushed” to bed banks, to update the rates in their system or availability/price is “pulled” via XML queries on a live basis.

This is a massive shift in power and is a big threat to bed banks as OTA’s can easily cut them out of the chain and connect directly to the hotelier. In a market place where the hotelier is confident of selling its product, why would they bother giving the bed bank a better deal to protect a distribution network they now openly question whether they need?

Cash is still an important commodity in the purchasing chain, but with less cash available hotels are now just as focused on yield management, which in turns requires them to control their stock. Any element of the chain that restricts this or does not add value is likely to be removed.

The best way to counter this threat is to be so big and to dominate the leasuire bed sector so much, that OTA’s direct can simply not complete with you buying power or distribution.

Hotel beds owners TUI did not have the pockets or the will to consolidate the bed bank market to achieve this and it has taken the entry of a major VC to hover up and combine Hotel Beds, Tourico and GTA into a “Super bed Bank” that can easily ride through the storms ahead. However, VC’s are normally only motivated by the “Exit” potential, so don’t be surprised if this new group is quickly sold on. Its now a strategic gem that Pricelines, Expedia and the ultra agrressive Chineese are likely to fighting over shortly.

So yet again we see a continuation of a travel threme. The big get bigger and smaller players need to be gobbled up or simple disappear.

Attending the Phocuswright conference in Los Angeles during November 2016 provided a fascinating insight on the strategic intentions of the Chinese travel giant C-Trip.

The Chinese market is entirely mobile focused, with smart phone penetration at 80% and the desktop market being bypassed as prosperity has exploded in the last 10 years. Countless research reports emphasise that although customers may download hundreds of Apps, they quickly focus down to using only 5-6 Apps daily, meaning that for their travel needs they expect a “one stop shop” service, with their every need being provided by the brand they choose to remain loyal to.

This degree of coverage and brand loyalty may seem odd to online Western customers, who have grown up with the range and diversity of specialist products, available with one click via a Google search on your laptop or desktop computer. However, as the Western world goes through its own mobile revolution, we are already seeing Facebook, due to its high mobile utilization, explode as a remarketing tool and one stop shops like Amazon take center stage for our shopping needs.

Just two years ago the Chinese market was a profit graveyard, that scared off even the deep pocketed USA travel giants like Expedia, as the dash for the dominance of the app market, in the mobile centric Chinese market reached its zenith.

However, two years later and the Chinese travel market is virtually unrecognizable, having become highly profitable on the back of a complete market consolidation by the giant C-Trip, taking majority stakes in its nearest rivals E-Long and Tunnar. This profitability, access to capital and ability to take a long-term view of profitability, suddenly provides serious competition to the global expansion ambitions of the USA giants Priceline and Expedia.

The first demonstration of this was C-Trip’s $180m investment into MakeMyTrip as the entry point to Indian Travel market. Like China this market requires a much longer term view of profitability and a massive investment to consolidate the currently heavily loss marking travel sector. C-Trip has experience of both the requirements and the benefit of this type of consolidation, which enables them to play the strategic long term game.

The publically quoted USA giants, seemingly must play by different rules, with every acquisition needing to be profit enhancing in a much shorter time frame. Hence, their acquisition strategies are more focused on adding products that they can market to their existing client base or globalizing the demand of e.g. Priceline’s acquisition of Rental Cars, Expedia’s purchase of HomeAway and Trip Advisors deal to take Viator.

At Phocuswright, C-Trip declared that their eyes are now set on the European market and immediately followed the conference with an eye watering £1.4 billion purchase of the UK’s Skyscanner.net. This is clearly just an entry point, providing a large volume of customer eyeballs and an essential building block of any European travel App e.g. a comprehensive market view of flight prices across the world. However, logic dictates that this will be followed by acquisitions in the online accommodation sector, ground transportation and potentially Dynamic packaging OTA area.

Don’t be shocked if we see a future shopping list including the likes of online hotel specialist Hotelopia (Ex TUI owned Hotel Beds), Bla Bla Cars or country specific OTA leaders like On the Beach in the UK. At the same time C-Trip will also be looking to hoover up popular app utilities like the National Rail app. There may even be opportunistic acquisitions like the specialist division of TUI, Travelopia which is currently on the market.

Major deals of this nature, will also herald a major upturn in the Venture Capital interest in the travel sector, as VC’s look to consolidate undervalued individual companies, which are too small to attract C-Trip’s attention, into a consolidated proposition that looks more attractive.

Therefore, for the first time since the spending sprees of the major integrated tour operators, the mid-term future could be looking good for travel owners, despite the current headwinds we are facing due to geopolitical unrest and the adverse head winds provided by Brexit.

As a child of the Cold War years between the capitalist USA and the socialist USSR, I was struck by how the ultimate internet capitalists Google, are now under attack from a rapidly expanding Facebook Social revolution within the mobile space.

Facebook’s presentation at last week’s PhocusWright conference in Delhi, India, spelled out just how dominant the Facebook group are becoming in the mobile app space.

Although the average smartphone user has 27 apps on their phone, 80% of usage is concentrated within just 4 apps, with the Facebook group owning the top 4 downloaded apps in Facebook, WhatsApp, Messenger and Instagram. However, the most prominent platform, Facebook, with its 1.5 billion active users has struggled to prove its commercial benefits to business.

Gaining likes and fans, has simply not delivered a ROI, and even Facebook’s massive remarketing capability is delivering questionable results. Yes, Facebook does provide the fastest remarketing platform, with users dipping in and out of Facebook frequently via their mobile phones.

However, these customers are in a social mode and accessing the internet via a smartphone. Is this an environment likely to drive booking conversion? I personally don’t think so, and would this marketing exist without Google to complement it?

The explosion of Messaging with 60 billion daily messages, which out guns traditional Text SMS messaging three to one, may provide a more commercial tool for business.

Facebook recently announced a set of “Chatbot” tools for business, which could revolutionise how businesses interact with their customers. Just as customers simply look up friends in Messenger to start chatting to them, they can now do the same with businesses. In turn business can use Artificial Intelligence and machine learning to allow electronic “Concierges” to chat with customers in order to answer their questions at incredibly low cost.

Post booking customer service is an obvious area to explore, with FAQ’s being databased and used to answer questions in a semantic language way, where customers can pose free form questions and enter into an extending conversation, until their questions have been fully answered.

However, it’s the contextualisation of the mobile sales process that interests me most. Much of our mobile usage takes place whilst travelling on trains, or in public places where phone conversations are less practical or desirable. However, imagine being able to start a travel enquiry by having a “chat” about potential destinations and dates? Chatbots can engage with customers to refine requirements before queuing the sales lead to a call centre agent, to make a call at an agreed time to run through pre-qualified options using co-browsing technologies. Change is coming fast!

Using 50m users as a benchmark allows us to see the massive acceleration in technology roll out and adoption speeds. Radio took 38 years, TV 13 years, but internet 4 years, Facebook 3.5 years and iPods 3 years. However, in today’s mobile enabled world, games like Temple Run 2 only took 13 days!

Secondly, we are beginning to see the spread of Apps into environments outside of the smartphone space. Shortly we will be seeing car dashboards and smart TV’s in hotel rooms, equipped with apps so that we can simply login to media apps, like Spotify, BBC iPlayer and Sky Go, to allow our music and TV services to be personalised to our specific tastes and requirements. Inevitably, this will lead to apps becoming more integrated into our daily lives, which in turn will drive further use of this ecosystem and, in particular, single login tools such as Facebook’s.

So although, to date, the Socialists at Facebook have lagged behind the massively profitable Google, relying on the potential of their huge reach to fund expansion. But the tide of the war seems to be shifting and massive profits will follow if Facebook can use the rapid migration to mobile to drive transactional revenue via Chatbots and commercial messaging.

The Cold War between the Facebook and Google ecosystems may be just about to really heat up.

Trying to accurately predict a UK lates market usually requires a crystal ball and a lot of luck, given the sheer number of influences that impact the UK travel market.

Unfortunately, the rise of ISIS and resulting terrorist attacks is having an increasing impact on the lates market, with the virtual removal of Egypt and Tunisia as winter sun late hot spots and the potential impact on the larger summer lates sector still to come.

January’s early bookings for summer 2016 have remained resilient, despite further terrorist incidents, with travel agents reporting 10% plus growth year on year. However, UK demand is polarising towards the perceived safer Spanish destinations, whilst other destinations such as Turkey and Greece lag well behind.

Turkey may hold the key to how the Summer 2016 late market turns out, as it looks destined to provide the highest volume of cheap late accommodation, combined with poorly loaded UK flight capacity.

Germany is seeing an even more polarised version of the UK trend, with industry commentators forecasting 2 million less German victors to Turkey, post the recent Istanbul and Ankara attacks. Some of these holidaymakers will simply not travel, but Spanish hoteliers are already putting up rates in the expectation of selling out due to buoyant German and UK markets.

This polarisation is likely to lead to very expensive late deals in Spain and very cheap deals to destinations such as Turkey and Greece.

Ironically, it is the big tour operators with their fixed capacity models that will suffer the most from this polarised lates market. It is much harder for their yield departments to manage a program with hundreds of seats flying empty close to departure and therefore the traditionally well-controlled market for charter seats to Turkey and Greece, looks ripe for exploitation by the major OTAs.

OTAs are geared up to exploit distressed markets, as they take no commitment and simply apply relatively fixed mark ups. This allows them to exploit the distress of airlines and hoteliers with committed stock, to create the low prices required to persuade customers to travel to less popular destinations.

However, further terrorist activity in these destinations could create a situation where customers will not travel at any price, creating a problem for all players, with little sellable stock being left available when we reach the lates market.

The impact on holiday demand as a result of UK weather has never been more pronounced. If we experience sunny weather leading up to the key school holiday period, many parents now opt to simply holiday at home, as the kids are perfectly happy playing on the Xbox, messaging friends over WhatsApp and watching hundreds of TV channels via Sky.

June’s European Football Championship in France, with easily accessible ferry crossings and low cost camping options, as demonstrated by 2008’s Euros in Germany, could dramatically impact lates demand. If Dad uses up precious holiday days in June it leaves less for the family beach holiday, leaving Mum to holiday at home with the kids.

Things could play out in many different ways in Summer 2016 with, not surprisingly, the location of the virtually inevitable Terrorist attacks being a key influence. It could be a great year for OTAs, but I think it’s more likely that we are all in for some sleepless nights ahead.

The shiver of collective OTA fear during the Google Destinations presentation at this week’s Phocus Wright conference in Fort Lauderdale was palpable.

Google has applied its vast technology resource to produce a product which could easily dominate the top of the travel search funnel; it’s called “Google Destinations”. With an emphasis on inspiration via content aggregation, and a laser focus on price comparison using cached pricing data, Google at first glance appear to have produced another killer application.

The key advantage Google has over any other travel player is its total dominance of search, which gives it the ability to deliver huge customer volumes to any new tools. So when Google launches a new travel product, we had better take notice.

Apparently 45% of travel searches start with a destination-led query e.g. ‘holidays to Majorca’. Google, via a visual carousel, will place “Google Destinations” at the top of organic listings and are therefore set to divert traffic from traditional link-driven search, to a content-rich format.

Once a destination has been chosen, customers will be delivered to an aggregated super page of relevant content, featuring destination and attraction information, video, weather etc. This is supplemented by a popularity index to show the best time and date to travel based on weather and price. Admittedly great content, but nothing too scary so far…

It was the ‘What’s next?’ section of the presentation that created the shiver.

Google are using cached flight and hotel data to create daily best-value destination and route pricing. This is presented as a simple slider, showing the cheapest periods to travel to the destination across the year within a month by month view or a more traditional specific date search. Alternatively, customers can utilise a budget slider to see which destinations fall within their budget and desired dates.

Once customers have decided on their destination and date of travel, they can drill down through results using traditional filters such as star ratings and UGC review scores, as well as continuously comparing prices between non-stop flying and via flying, or their chosen duration verses slightly longer or shorter stays e.g. the price to add an extra weekend on a 7-day trip to extend it to a 9-day trip.

Once the route and dates have been decided, the customers will be deep linked into the existing Google flight and hotel searches, which currently still link out to suppliers’ sites. However, it was 100% clear at the conference that instant booking and payment via Google Pay are fast approaching.

The scale of the data being aggregated and the speed of results being presented back are amazing. When combined with Google’s ability to deliver simple user interfaces, this creates a very impressive product that, in my opinion, could quickly become a game-changer.
Google continues to avoid the regulatory downsides of being an OTA by maintaining a media model where bookings are made directly with suppliers. However, the customer tools Google are providing squarely compete with the functionality delivered by the traditional OTA sites.

Google again stated that the motivation for the new “Destination Search” is to improve both customer inspiration and remove friction from the mobile booking process. I have to say they are doing a great job.

A less obvious but key motivation may also be to rebalance the power game in a USA OTA market, where 2015’s mega consolidation game resulted in Expedia and Priceline controlling 65% of the market. In a mobile-dominated world where real-estate is restricted, these two advertisers completely dominate. The new destination search will allow Google to flow bookings to a much more diverse customer base by acting as a virtual OTA, whilst maintaining its media model.

You may ask, “Why are Google bothered about other advertisers when competition between the big two keeps click cost high?” Google have always taken a long term view and realise that if they stop providing traffic to smaller players, these will be forced to work more closely with their biggest competitors i.e. social media giants like Facebook. Secondly, if competition in auctions is controlled by two players, competition could mysteriously disappear.

Being the best market place for advertisers, whilst reducing consumer friction in the mobile world remains the Holy Grail for Google, and they appear to be on the right track. Unfortunately, bi-product may be direct competition with OTAs.

If the only differentiator between the two offerings is how payment is made, it appears inevitable that OTAs will soon be complaining in the courts about an abuse of power by Google, in terms of how prominently “Google Destinations” is promoted within search results. An answer that its decided by a “secret source algorithm” may not cut it as a justification.