Feeds:
Posts
Comments

For all future posts, please make sure to visit our blog’s new home at itinerie.com/blog.

As we have been busy preparing to launch Itinerie, I have scoured the web to help us better understand the modern luxury traveller and the way they utilize the internet to organize their travel arrangements. As I delved into this online world, there was one aspect of this area that I found particularly intriguing – the way people are using the internet to select their accommodation.

There are a plethora of online forums, social travel networks, blogs and advice websites that offer the enthusiastic online travel researcher guidance on where to stay on their vacation. However from Virtual Tourist to Trip Advisor, I found that all the online resources had limitations in comparison to your old fashioned travel consultant.

I will explain. For example, Virtual Tourist and Where are you now?, are social travel networks where travellers share their travel tips. Upon browsing through the various forums and advice sections on the sites, I noticed the lack of quality of in-depth advice. With perhaps two to three recommendations, the volume of feedback/suggestions is too limited to allow the potential traveller to make an informed decision. I wasn’t confident that the traveller would be receiving good guidance on their hotel choices from a reputable source.

Another site in this space and perhaps the most renowned is Trip Advisor , a site where fellow travellers post their comments and rank everything from hotels to activities (an ad lets the visitor know the site has over 45 million trusted traveller reviews and opinions – pretty impressive). I have become increasingly familiar with this site on a professional level. Upon discussing accommodation options with clients, there has been a developing trend for clients to come back to me with ‘Well, Trip Advisor only ranks that hotel number 7 out of 49’. I now know that when I recommend a hotel, the client will more than likely check out it’s ranking on Trip Advisor and it better be in the top 10!

Now having visited the properties personally and having received excellent feedback on numerous occasions on hotel number 7 (and by the way lots of criticism on the service of hotel number 3), there seemed a discrepancy between Trip Advisor and my own experience. This encouraged me to do a bit more of an analysis on the specific limitations of Trip Advisor.

Firstly, the majority of the travellers on Trip Advisor have only visited one hotel in their specific destination therefore they have nothing to compare it to. That is a bit like going to one restaurant and declaring it the best in town, without visiting any of the others.

Secondly, let’s take two different reviewers. Reviewer number 1 is only used to 4 star hotels and rates the 5 star hotel they stayed in as 5 out of 5, the best they have ever been to. However, reviewer number 2 is more used to the 5 star treatment and sees flaws in the hotel’s service and amenities. Simply stated, it is all relative.

This is not to say that the like of Trip Advisor aren’t useful. If a hotel is number 1 in the rankings with more than 350 reviews, you are more than likely going to be in safe hands.  However I am just pointing out the site has its limitations and the Trip Advisor rankings should not be taken as gospel.

So where does this leave people wanting reliable advice on accommodation?  In my opinion, personal recommendations from friends and family are always the best option. They know your tastes, likes/dislikes and preferences better than any travel consultant or online reviewer, however what are the chances that your friends have been to that small town in Patagonia? It is in this situation, that with their product knowledge and generally reliable advice, a travel consultant proves their worth.

To conclude, I feel the following true story demonstrates the pitfalls of using the internet to select accommodation…

My dad and his partner were intending to visit me in Argentina and I laid out a proposed itinerary with accommodation recommendations for their trip. My dad is a man used to traveling the globe and loves a good bit of independent research, (I did my thesis on marketing to baby boomers and understand their desire for this  – so didn’t take it as an affront to my professional capabilities!). Not wanting to be outshone by his offspring, he made some suggestions based on his ‘own research’ from the internet.

Fortunately I had recently inspected the 4 star hotel in Buenos Aires that he informed me ‘was a great deal, with spacious rooms and a perfect central location’. I was a little smug to inform him that if he wanted to stay in a spacious room with mould and be located opposite numerous adult shops, then he could go ahead and book…

Sometimes it is better to go with the old fashion travel consultant…

I just returned from my first “familiarization trip” earlier this week, during which I evaluated the various options in Peru for a future trip of ours (this trip and this spotlight in Tnooz is our excuse for the silence here).   As you can imagine, as a previous strategy consultant I was not used to this type of business travel, but after a tutorial from my partner, Nick, I was ready to go. I believe it is valuable for others (especially future customers) to understand what it is we do to guarantee our trips are of the highest quality possible.  Thus, I will lay out my experience here.

Prior to my departure, we worked with our Peruvian partner to set up the structure of the trip.  Based on significant research on our end (leveraging Nick’s extensive luxury travel experience) and recommendations from our partner, we outlined an express version (5 days instead of 7) of the trip we believed we would like to offer our customers.  My job was to run through everything that may effect a client’s trip, to get a sense of the travel times, the flow of the trip, the necessity / quality of tour guides, and other intangibles to determine whether our original hypothesis was the ideal way to experience Peru.  This hypothesis based approach resonates with how work is done at the management consultancy firm for which I used to work.  It is here, as it was then, a very effective way to answer any question.

In addition to determining the basic structure of the trip, I also worked to perfect the details.  This consisted primarily of evaluating which activities and hotels we should offer, but also I made note of other less obvious details, such as what side of the train to Machu Picchu offers better views or whether departure taxes had to be paid at the airport.

To decide what activities we will offer (our customers will be able to choose a selection from a large list) I needed to experience them first myself.  Due to my tight schedule, I had to try an abbreviated version of most of them, but nonetheless, they were useful and very interesting.  Half an hour with a photographer is plenty of time to determine whether our clients would enjoy spending three hours wandering the city with him learning how to compose better shots (they would).  I just wish I had had more time with him myself!

Choosing the hotels was a similarly enjoyable tease.  I had the pleasure of touring several luxury properties in each destination.  I saw the amazing views they offered from their bedrooms and their bars; I explored their beautiful grounds, which included things as diverse as full stables and endangered orchid gardens; I read the menus/brochures of the 5 star restaurants and luxury spa centers on the property.  (I wanted to indulge in a hydrotherapy treatment from one of the hotels myself, but unfortunately my schedule did not allow it!)  Regardless, I came away with a very good understanding of what each hotel offers and how they compared against the other locations in the area.

We leverage all this intimate first-hand knowledge in designing our trips, which allows us to create truly once-in-a-lifetime experiences for our clients.   We feel very confident in saying, none of our customers will go home disappointed.  Now, get ready, our first trip goes on sale in April!

It had been 7 weeks of discussions on various hotel options, the best activities, which clothes to take etc, but Frank had finally decided on his dream trip and had come into the office to pay for his 2 week luxury trip to Argentina.

As a travel consultant you establish a rapport with your clients and can chat about their lives, family, job, how Barney, the next door neighbor’s dog, doesn’t shut up till 4am in the morning. It’s a great side of the job and Frank was a particular favorite of mine for his dry and sarcastic humor.

After helping him fill in the relevant information, it was payment time (for a sum close to the equivalent of my year’s salary I might add) and I was running through the different options included in the payment form when he hit upon our small optional donation to a local charity in Argentina.

‘Ah, I don’t think I will be donating to that.. ’ said Frank in his typical dry manner, before proceeding to tick the opt out option.

For once I didn’t find Frank funny. Here was one of my favorite clients, for whom I had spent weeks organizing a fantastic trip, deciding that he didn’t want to donate the $2.50 to the local charity we supported.

This disturbed me. I could have understood if he had opted out due to the relevance of the charity or the transparency of where the money was going (both very valid reasons for not donating to charities) but it was the complete dismissal of the idea as unnecessary that really railed me.

It was Frank’s choice and his money, and I appreciate the argument that he would be supporting the local hotels, bi-lingual guides and nice restaurants by spending money with them.  However where was the benefit to the members of the local community  that weren’t connected with those industries? As a tour operator were we not responsible for his trip? As his travel consultant, was I not responsible for his trip? By him opting out of the donation, we were effectively saying it was fine for our clients to travel to destinations without a consideration for the local community who may live below the poverty line.

This, for me, is fundamentally wrong. It is surely our responsibility as a tour operator to ensure our clients have little negative impact on the destinations we send them, and where possible to actively try to contribute and improve the infrastructure of the destinations we visit.

Freedom and choice are virtues that we take for granted in the modern world, but I for one believe that, like throwing litter into the garbage rather than onto the ground, some things in life should not have an opt out option. That is why if Frank ever travelled with me again, the charitable donation would already be included in the price…

Compare booking a vacation today with how you (or someone you know) did it 15 or 20 years ago, before the internet had really taken off.  It appears that nothing is the same.  Imagine collecting recommendations from friends without Twitter and Facebook, researching destinations without Google, comparing and booking flights without sites like Kayak or, more recently, Hipmunk.  Surely, the vacation booking industry has undergone major innovation… Hasn’t it?

No.  While we use different tools today, we are performing the exact same tasks as we did before.  After deciding to take a vacation, we start the process with a broad survey of possibilities, often collected through friends and family.  Once we have a more manageable number of options, we research the details of each potential location, validating what we have been told and determining which is the best fit for us.  Finally, once we are pretty sure where we would like to go, we compare prices across airlines and hotels, and eventually book our trip.

As illustrated below (my first infographic – not sure if I should be excited or embarrassed), it is clear that most of the innovation in this space has been on the margin, in the tools we use.  Sure, these tools are now faster, easier-to-use, able to access more data, but is this real innovation?  I do not think so.  The process remains the same.

Not much has changed in the vacation booking process

While I argue there hasn’t been much innovation in this space on a whole, I do think there is one major exception.  As Sarah Lacy argues in a discussion with Paul Carr here, this exception is the hotel flash-sale sites.  These sites reverse the flow of ideas and information.  The potential vacationer doesn’t need to do any outbound searches for inspiration – ideas are provided to them.  No validation of hotels is necessary – all properties are pre-screened to ensure they meet the high standards of the site’s discerning customers.  Price comparisons are pointless – at 40-60% off, users already know they are getting the best deal out there.  These sites allow for vacations to be booked in a completely different process.  This is remarkable innovation.

The process with hotel deal sites is completely different

As is probably clear at this point, I am a big fan of these sites, but I believe they have one major flaw: they are too narrowly focused.  A vacation is made up by a lot more than hotels.  Even with these sites, users still need to resort to the outbound search process for the other components of their vacations.   Our startup, Itinerie, is seeking to address this gap in the market by selling full vacation packages with this same model.  Our sales will include nights in 2-4 hotels, internal transportation, tour guides, cooking classes, et cetera.  If you’ve booked a vacation with us, your Itinerie is already complete.

I read about a new one everyday: JetsetterVacationist, SniqueAwayTripAlertz, VoyagePrive, RueLaLa,  Hautelook GetawaysSecret EscapesHotelyo, and there are still many more.  Even Expedia is getting directly into the space, focusing on lower end properties with its ASAP.

Companies can’t seem to get into this market fast enough, which is fair, as all it takes is a slick website and a persistently charming sales rep to start the business.  Thousands of “luxury” rooms go unsold everyday, it’s not that hard to sign the hotels up on the promise of helping them unload some of that extra inventory.  And once you’ve got your website and your products, the economics are beautiful.  Sure there’s some sales and marketing, but for the most part you can just sit back and collect your commission as users and hotels connect on your platform.

Easy, right? No wonder there are already so many players in this market.  No, not quite. User acquisition is the hardest, and often most overlooked, step in the process.  The most successful companies in this space have leveraged big advantages in that arena.  Jetsetter, for example, was built off of Gilt Groupe’s existing userbase (1.5M at Jetsetter’s launch). SniqueAway and Vacationist are younger and as such still unproven, but they are both backed by large, well-respected brands: TripAdvisor and Travel+Leisure, respectively.

So what’s next? I think the proliferation of new entrants to this market is going to continue at least through the first half of 2011, most with some unique twist on the idea or a specific niche to target. In the long run though, this market will consolidate. Users, the critical variable in the equation, can only put up with so many daily, or even weekly, emails. In the hotel deal site space there has been no GroupOn – no company that captured the majority of the market before anyone else jumped in – but I have no doubt it will end with a similar, winner-take-most market fragmentation.

The company that will win this market will be the one that builds the largest and most dedicated userbase. While no doubt smaller companies will emerge along the way with innovative new product offerings and marketing strategies, players with pre-established userbases will quickly copy or acquire them in order to maintain their lead.  The nature of the product offerings still has a long way to go in 2011, but I think we’ve already seen the masthead of the future winner.