An interesting thing happened on the second day of the Association of Travel Marketing Executives Conference in Boston. Day 1 had summoned in the Summer of Love for social media in travel; Speakers and audience members alike were abuzz with the potential of tapping into social graphs, engaging with customers and increasing the relevance of customer touch-points. Day 2 introduced a healthy dose of skepticism and pragmatism to the mix.
The 2010 Association of Travel Marketing Executives Conference was held at the The Hyatt Regency Cambridge June 15-16, 2010
Allow me to provide a bit of commentary before summarizing the highlights.
Two keynoters in particular provided some stark contrast to the unabashed optimism of the previous day. First, Brett Keller, Priceline CMO casually asked “Social is a little hyped up, don’t you think?” What a buzzkill…
Later, Wyndham Worldwide EVP Marketing Flo Lugli closed her talk by describing a fundamental function of her job: protecting her team from the distraction of new revenue generating projects. Total bummer…
Actually, framing these two talks with the rest of the conference landscape provided a complete picture of the state of travel industry marketing. That last comment in no way takes anything away from the great content and outstanding presentations provided by Henry Harteveldt, Susan Black and the other presenters; quite the contrary.
Because of the quality information provided throughout the breadth of the conference, the Priceline and Wyndham perspectives provided critical insights into the challenges facing the industry.
It worked out well that Brett had missed the first day of the conference – That eliminated the risk of tailoring his message or softening his stance on social media in deference to existing audience perceptions. While I disagree with his downplaying the impact social media can have on customer engagement, for Priceline, he was right on target.
Priceline has never been an experiential, end-to-end travel player. Within the 7-step travel cycle of Inspire-> Research -> Plan -> Validate -> Book -> Travel -> Share (Repeat), Priceline’s heritage has been about all about delivering deals and converting the transaction.
Priceline is not looking for “Likes,” followers or fans; its key performance measures are ad impressions, clicks and bookings.
And this is where I see the Priceline philosophy totally in alignment with the sentiments of Day 1’s social media proponents: the most essential process is to define clear objectives, execute efficiently and tirelessly measure results. Every company is different and customer relationships run the gamut. Priceline is focused on generating bookings and that focus has served them well.
Priceline should be embracing social media to engage its legion of fans and reinforce its market position. Competing purely on price is a dangerous positioning strategy. If Priceline relies purely on price to differentiate itself, a more efficient new entrant willing to narrow the gap between consumer pricing and the cost of the underlying travel components can put Priceline in a world of hurt. If Priceline believes that its reverse-auction / opaque product business model makes them immune to such a threat, that complacency could be even more dangerous.
For people dismiss Priceline as a niche player in the travel industry, think again. Take a look at the five year trend of Priceline’s market capitalization ($8.47 Billion) compared to Expedia’s ($6.23 Billion.) That’s right, Wall Street values Priceline 36% ($2.24 Billion) higher than Expedia.
Priceline's Market Cap exceeds Expedia's by nearly $2 1/4 Billion
Brett wisely cautioned the massed crowd of Twitter followers and Facebook fans that blind idealism in the panacea of social media is definitely risky (and perhaps foolish) when compared to proven sales generation.
It is clear that resources should never be allocated to social media if there are operational gaps that negatively impact the product offering, or hinder the ability to provide quality service delivery. There is no substitute for effective operational execution – it eliminates the need to apply social media reaction cycles.
One additional editorial comment, I strongly disagree with Brett Keller’s conclusion that price drives conversion. He got that totally wrong. Value, not price is the defining factor in travel conversion.
Where Priceline’s Keller was driven in his single minded focus on booking conversion, Wyndham’s Flo Lugli stressed the importance of focus to create a solid technology foundation and resisting the distraction of new projects.
Flo went as far as saying that even the tough decision of sidelining revenue generating projects was essential to ensure resources were allocated to ensure that the core systems are in place and able to support mission-critical functions.
Despite the opportunities and compelling figures presented by the mobile panelist, Lugli matter-of-factly stated, “I don’t want to spend any money on an iPhone App if my websites are falling apart.” With consumers embracing new distribution channels, mobile applications, location based services, social media and a vast array of promotional deals, Lugli understands that none of those strategic or tactical opportunities can be successful without a reliable technical infrastructure to support them.
With 7,000 properties, a dozen brands and a global footprint, despite the economic downturn, Wyndham is investing heavily in its organization to ensure those systems get built right. Flo announced that they are actively hiring an additional 70 staff to support the effort.
By deferring new, sexy, innovative projects, Wyndham may need to play catch-up in the near-term, but their discipline will undoubtedly position them over the mid-term to surpass competitors who elect to make technical trade-offs to opportunistically engage in trendy initiatives.
With all the industry focus on how to harness the latest, and in some cases, bleeding-edge technologies, it is refreshing to see organizations that have a clearly defined strategic direction and are dedicated to accomplish those objectives.
While responding to “What’s new and exciting?” with “continuing what we do best” or “strengthening our organization to succeed in the future” may not generate a big wow factor, Priceline and Wyndham both have smart leadership and solid strategies. Ultimately, while Priceline could be more social media friendly and Wyndham more technologically experimental, every travel industry should recognize the importance of strategic planning and the focused execution of those plans in many cases dictates success, often more than the various tactical initiatives that those plans may encompass. Kudos to both groups for sticking by their guns.
Now, back to our regularly scheduled programming – the recap of the ATME Conference.
On Day 2, “The New Now & The New Next” agenda, continued, this time including perspectives from marketing leaders at Priceline and Wyndham, a panel covering mobile marketing, eCommerce lessons from retail and how Boeing approaches social media to engage its client’s clients.
ATME Chairman Joel Chusid welcomed back the audience, and again, dove straight into the program.
Priceline Chief Marketing Officer Brett Keller handled the morning keynote with the theme “Deals Gone Wild”
- No one selling regularly priced hotels anymore. We looked overpriced at half off
- Fueling of online travel discounts is not going away anytime soon
- Priceline.com traffic grew 33% from 2008 to 2009
- 14% fewer US travelers booking travel in 1Q 2010 (source: Compete.com)
- TV Advertising spend on the rise across travel brands
- Airlines have cut TV advertiisng spend 1% in Jan-April 2010 vs. 2009
- Southwest represents 80-90% of airline TV spend
- OTA share of hotel bookings in 1st Quarter of respective years: 28.3% in 2008; 27.8% in 2009; 34.7% in 2010
- Priceline.com launched a Big Deal price guarantee – will match the price, plus add $25
- Everyone has the best price guarantee but majority of people don’t claim them
- OTAs copying brands like us, offering opaque product to give customer best possible package price
- “Social is a little hyped up, don’t you think?”
- Low price is & will continue to be the primary motivator in booking conversion
- Similar deals becoming pervasive across Online Travel Agencies
- “Successful marketers must continue to innovate messaging and merchandising”
- True intent is nearly impossible to target in social media for travel
- Search engines better measure of intent to travel than social media based on the consumer’s search
- TripAdvisor delivers 10X avg monthly hotel referrals to OTA sites than FB/YouTube/MySpace/Twitter combined
- Facebook offers limited ad targeting, expensive at $1.00+ Cost per Click
- “I can’t get excited about Twitter”
- Promoted Tweets may have potential for Priceline
- Being too early can also be called being wrong
- Priceline will not give up on Social Networks
- Priceline would invest more in social media w/ FB & Twitter if they open their platforms to deliver consumers w/ travel intent
- “Mobile I am much more bullish about”
- Mobile is a great driver of last minute bookings
- Can book a hotel faster on the Priceline iPhone app vs. website
- Priceline’s mobile app bookings more than doubled on East Coast vs West Coast during March 2010 NorthEast snowstorms
- Over half of Priceline’s mobile bookings are for same day travel
- Priceline to launch rental car mobile deal app, including ability to book a rental car from a plane as it is taxiing to the gate
- Travel co’s need to build internal expertise in mobile app development
- Not enough travel companies embrace the most popular mobile phone … Blackberry or explore mobile ancillary revenue
- GroupOn’s success and growth in promoting destination, hotels and attractions
- Google Meta may be the most interesting customer acquisition vehicle this decade
- Google will need to include opaque offerings to maximize consumer demand
- Strong brands w/strong loyalty & added value/deals will break conversion tie
- With meta-search, if your pricing is outdated even by 10 minutes, you’ll lose
- Price parity between OTAs drive customers to book by brand affinity and positive site experience
- Speed is most important aspect of a good site experience, followed by navigation
Jeff DeKorte, Senior Vice President Digital, Rand McNally introduced the members of the mobile marketing panel:
- Google’s Rob Torres made a return engagement to lead off the session:
- Google says “Mobile is First”
- By 2013 Google expects more people to access it from mobile than traditional web
- In travel, purchase intent on Mobile ads is 5x higher than on desktop ads
- 1/5 people have smart phones, was 1 in 10 in same period last year
- Mobile growth rate is 8x faster than web in 1990’s
- People are booking on smart phone devices. 160million projected. 80 million to hotels
- Mobile travel bookings projected to grow 700% in 2 years
- Google’s Android operating system as catalyst of growth in mobile travel
- Android phones increased hotel searches by 3,000% over last 2 years
- Mobile is not a desktop. You need a mobile strategy. Booking window is shorter. Search queries are 2-3 words. Need to create mobile landing pages
- Travel marketers need separate campaigns for mobile and desktop search to reflect different user behaviors
- Mobile is not just geo-location. Time of user access (during lunch, evening) is important in mobile strategy
- Click Through Rates much higher for mobile ads – approaching 20% in some campaigns
- Adding a phone number to an Ad increases Click Through Rate by 5-30%
- Calls from Google Mobile were 22% more relevant and 31% more likely to convert to a booking
- 25% of iPhone & Android users spend 2 hours per day using apps
- Apps are good but it is not a strategy. Make sure you’re talking to your customer. There are 1000’s apps
- Really likes Trip Journal – £1.99 iPhone App is an innovative travel tool
- Marketers can target high end mobile devices plus geo-target in advertising campaigns
- Ndav Gur, Founder of Worldmate:
- Travelers NEED mobile technology
- Users not wanting any fundamental functional difference between desktop and mobile experience
- Most people who book on mobile devices are booking last minute
- WorldMate delivers multichannel experience: when you stop on Smartphone, you can resume on an iPad
- Worlmate takes holistic view of travel customer needs; convenient all in 1 services, ex. itinerary, FX, linkedin, weather
- Worldmate has 5.5MM reg users, specializes in mobile
- Cathy Doran of Greater Boston Convention and Visitors Bureau:
- Boston iPhone App includes event ticketing & dining reservations – want to add GPS capability
- Suggestion for mobile app development: “Get a great developer from MIT to work on it”
- Selling management on an iPhone app was easier because of well-informed, tech-focused top exec
- Boston CVB looked at iPhone app as a low cost, low risk project compared to work on web site
- Boston CVB currently charging $0.99 for iPhone App – will probably offer it for free in the future
- “What Boston CVB did right was determine what their mobile App users wanted” Rob Torres – Google
Forrester Research Vice President Henry Harteveldt then interviewed Bob Kupbens, Delta Airlines Vice President-eCommerce who previously served as Vice President of eCommerce for Target Corporation to compare travel with the retail industry.
- At Target, online was a way to get people into the stores
- Delta listened to retail experts about ecommerce
- Delta website was focused on things that weren’t valuable to customers
- Amazon has the “klunkiest recommendation engine” of retail sites
- American’s “Your Choice” program is the direction airlines need to go
- Travel marketers have plenty of products and information to tailor sales to traveler needs
- Both “below water”product enablement and “above water” customer tailoring must work together
- Re-evaluating all touch points & customer interactions to make it digital & more effective
- Travel industry needs to “wrap their heads around how customers want to engage”
- Target provided quality product at low price. “Sexy comes from design, brand and credibility”
- Have to take advantage of customer empowerment capability of digital media
- Delta just launched Delta Assist on Twitter for real time help by agents
- Not a big fan of 3rd parties owning Delta client data. Tendency is not to overshare. Don’t want unplanned customer engagement by 3rd party – erodes brand.
Flo Lugli, Senior Vice President Marketing, Wyndham Worldwide then spoke about hotels getting better at eCommerce
- If you don’t have the right underlying tech architecture, your website won’t be effective
- Technology platforms must be driven from a business perspective, not to support internal information technology purposes
- Big challenge for successful eCommerce in hotel industry: Competing capital priorities
- Wyndham has 9-11 different property management systems. Some are not 2-way interfaces, others not even good 1-way interface. Fragmentation impedes eCommerce
- One of the biggest challenges is access to property content – controlled at each of the 7,000 hotels. Must request information from each hotel.
- Channel shifts, almost half of all reservations go directly to hotel.
- Wyndham corporate is compensated only for reservations processed centrally, not for property direct bookings
- Hotel websites are somewhat lacking. Overall customer satisfaction is 71% (barely a “C” grade)
- Only 64% of tasks attempted are completed on average hotel industry website (Source: iPerceptions)
- Greatest barriers to making online hotel reservation online: price, reservation problems, technical issues, no availability
- Four areas of immediate improvement for website conversions: relevancy, responsiveness, discovery, ease of use
- 45 million potential hotel guests do not book a specific hotel because they can’t find the right product at the right time. Lots of opportunity
- On hotel websites, only 60% of visitors are able to get the property info sought
- New hotel websites debuting – Marriott & Choice have launched. Wyndham is redoing architecture, CMS & management organization
- Wyndham hiring 70 people to help them boost eCommerce benchstrength
- “I don’t want to spend any money on an iPhone App if my websites are falling apart”
- Likes new Marriott web site & Choice web site and iPhone appss
Mims Wright of Black & Wright moderated a panel focusing on new distribution channels featuring:
Established Players –
Sandra Johnston, Manager, Business Development, US & Canada, Cheapflights;
Shirley Tafoya, President, Travelzoo;
New Up & Comers –
Drew Patterson, CEO, Jetsetter.com;
Kristen Kopplin, Vice President Marketing, Travelscream
- Cheapflights has expended into 8 countries, views that as key reimagining to its business
- Travelzoo’s Shirley Tafoya #atmeconf: Concentration on going global, test & retest the deal to B sure: great value, easy to book & available
- Over 120 Groupon-like sites luanched recently, says Travelzoo’s Shirley Taffoya. Incs chlg 2 keep email subsc loyal
- Travelzoo’s Shirley Tafoya #atmeconf: New website coming soon, stay tuned…
- Jetsetter positioned as a flash sale vhicle (about 5 days) and exclusive for members
Boeing Managing Director, Airline Marketing Jeff Cacy closed the conference by providing an informative update on the state of the airline industry and their use of social media:
- 85% of Boeing’s business comes from outside US
- Boeing tries to see the invisible before it happens
- It’s about the air travel experience. Boeing brand promise is “revolutionizing flight”
- 15% of
BoeingAirline customers yield 50% of Revenue - Boeing has a backlog of plane orders to 2020
- Dreamliner airplane name chosen by the public via social media / AOL in 2003. Now have a blog for cust story UGC
- Important to be relevant to customer’s customer
- Newairplane.com – 90,000 e-mail list; 2 million logged in for first Dreamliner flight
- Internet forces us into transparency; are you controlling the perception?
- Airlines doing a good job of merchandising: @AirNewZealand @JetBlue @Virgin
In short, ATME 2010 was a very successful conference. Perhaps not quite enough name calling, fisticuffs & hair pulling to satiate those seeking pure entertainment, but good informative content. Much more like having a nice satisfying meal than a flashy presentation without much taste or nutritional value.
Since pictures are always worth 1,000 words and presenters are always looking to use images to catch the attention of the audience, thought I would close with a couple that will stick with me.
NOTE: Henry Harteveldt’s mutant-bacon images were disqualified from the competition. Why? because I’m certain, somewhere in the Old Testament, the Bacon-tini was clearly identified as being a creation of pure evil and a harbinger of the apocalypse. Look it up, it’s in there somewhere…
First, Rob Torres provided a gentle reminder of where mobile phones started in 1988. What a steal at only $1,500! I suppose the only justification could be that it weighed 28 ounces. Looking at it on a price per ounce basis, we are in the same ballpark, right? By the way, since I am in the market for a new smartphone, take a look at my blog post covering the leading candidates and vote in the poll: What Smartphone Should I Buy?
Rob Torres of Google reminded everyone that Mobile has changed just slightly since its inception. Check out that price!
Flo Lugli provided a montage of images that illustrated exactly what happens when you build a big, important project on a weak foundation. The project itself may appear substantially complete, but without a solid foundation, chances are that it may become very difficult to accomplish the original objective.
Flo Lugli of Wyndham Worldwide reminds everyone how important a strong foundation can be. Aside from the one problem, everything else looks pretty good, right?
Moral of the story (and the conference)? First, what we think is incredibly cool technology today is going to seem embarrassingly outdated 20 years from now. Second, if we do not dedicate the time to building a solid technological and strategic foundation, we should anticipate that big problems will be encountered down the road. The New Now & The New Next are rapidly changing the travel industry.
In case you missed it, here is a link to a post recapping the presentations from Day 1 of the ATME Conference.
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