Are high volume sites such as Facebook ripe to be made into the Sunday Newspapers of the future?
Friday 19, March 2010
A slight hangover, a coffee, orange juice, a girl friend, in bed till late…. and of course a couple a trees worth of newspapers, full of travel deals. Yep, through the kids and chaos of my present life I can just about remember those sunny Sunday mornings of old.
By Tim Gunstone, Managing Director, EyeforTravel
Proof, I guess, that selling travel has always been a wheeler dealer business, based on interesting and attractive products and good routes to market. And recently, a few notable deals have recently been struck in the online world between travel companies and high volume sites.
eBay and OctopusTravel
This potentially lucrative deal is a real indication that eBay is at last moving into the travel space. For years the auction site flirted with travel products but never really bought into the sector. I could never understand why - maybe it was the ABTA / ATOL type costs and hassles. Now OctopusTravel are on eBay UK’s front page. It will be fascinating to hear how this partnership is working out is when OctopusTravel’s managing director Gareth Gaston and Philippe Rinn, Director of Partnerships at eBay speak at our Travel Distribution Summit in June. link
Expedia and AT&T
AT&T Interactive and Expedia recently entered into a distribution agreement so visitors can check hotel rates, room availability and book rooms on AT&T Interactive’s YELLOWPAGES.COM and YP.COM local search websites. Expedia’s white label service and affiliate network is expanding rapidly, despite the 2008 clash with Ryanair over the sale of hotel rooms on Ryanair.com. I’m sure similar distribution deals with other high traffic sites will be announced in the near future by Expedia and Travelocity.
The mobile web, Nokia, Android and Apple
With the devices and related operating system so important to the growth of mobile web browsing, its market leader Nokia, currently the biggest provider of smart phones, who seems to be buying not partnering. Dopplr, a web-based service that enables travelers to create trip itineraries and share them with friends was bought in September. What Nokia’s plans are for the site remain to be seen, but such investments show a clear interest in the travel vertical. Apple are as mysterious as ever (although some of the most popular apps are of course travel related) and I doubt Google’s Android would partner with travel companies as they plan to work on the search model. However I will be talking to Google’s Mobile team this June to get a better idea of their strategy. link
But what about Facebook, Amazon and the other high volume sites? Yahoo bought Kelkoo and Farechase for their travel content years ago and despite rumours of a Google move into travel vertical search, Google’s revenue from the travel industry must be big enough for a big partnership to be counter productive. But what about the other two biggies, Amazon and Facebook? With Amazon being the recognised king of online retail, it’s a real mystery why it has it not targeted travel, the biggest online vertical market.
But even more puzzling is Facebook. If we ignore Google’s non search sites, this March saw Facebook’s US traffic overtake Googles (link). However despite this incredible growth in traffic the revenues Facebook is generating are estimated to be just 1/20 of Google’s US$23 billion. Mark Zuckerberg recently described Facebook as "free cash flow positive". I don’t know what that means but I am sure the phrase would scare my accountant!
Surely a number of strong travel partnerships would allow relevant products to be pushed right at that illusive and vital inspirational stage of the trip planning process as friends talk about trips as they interact on the site. A truly profitable result for everyone. Reflecting on how MySpace and other social sites have so quickly fallen from grace, surely Facebook should take advantage of their current phenomenal success and get round the deal making table. Maybe they are already. When Facebook UK’s Commercial Director speaks to the industry at our Summit in June, perhaps we’ll all find out…
Maybe Facebook and Amazon should look at the ruthless but brilliantly profitable Ryanair. Ryanair.com has a vast audience and is a money making machine. Right now 20% of revenues come from non core flight revenues. In the first 6 months of 2009 that was Euros 598 million (£525 million) from 26 million passengers. Working this out (on a back of a envelope) that’s over £20 per customer. Now I can’t find out for certain if this includes their £5 check-in fee, £5 cc charges or £15 baggage fee but I imagine it does. However based on the 2 Ryanair flights I took in 2009, roughly half the passengers didn’t check in bags, even fewer bought food on the flight. That’s still a substantial amount made from partnerships. I would guess that maybe as much as £5 per customer is being made from the commission earned from Ryanair’s many partnerships. Headed up by Sinead Finn, (who used to run Ryanair’s phenomenally successful site) commercial partnerships are currently in place with Hostelworld for hostel bookings , Alan Rogers for campsite bookings (though how anyone can afford to carry a tent on Ryanair is beyond me) Hertz for car hire, Perfect Getaways for villas and AXA for their highly annoying travel insurance.
Ryanair continues to turn a profit no matter how bad the economy gets. Partnerships are vital for travel sales. On the web potentially more than ever. High traffic site owners like Mark Zukerburg should take notice.
All these topics will be debated and discussed at the Travel Distribution Summit in London this June 17-18. It’s the world’s biggest gathering of online travel executives. The attendees include Facebook, Google, Google Mobile, Spotify, Ebay and representatives of all the major airlines tour operators hotels and travel agencies. People responsible for the sale and distribution of millions of Euros of flights hotel rooms and holidays.
Of course with over 1000 attendees serious distribution deals tend to get brokered, formalised or even signed. To find at more go to http://events.eyefortravel.com/tds/
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