Travel business for dummies

Travel Blog Camp

Ivan Kovpak — Tue, 02 Dec 2008 15:04:20 +0000

While visiting the World Travel Market Exhibition in London (11-14 October, 2008, I will tell you about it in one of my next blogs) I took part in a unique Travel Blog Camp. I managed to meet almost every influential tourist bloggers:

Alex Bainbridge – event supertar, Darren Cronian-event organizer, Guillaume Thevenot –his blog is my favourite, Marco van de Camp – focused on Backpackers, Kelly Anne Pipes-travel writer, Karen Bryan , Guido J. Van den Elshout, Kevin May from Travolution and Molly Flatt.
Unlike all this guru of travel blogging, I am unable to invest so much time in the blogging and commenting other blogs on everyday basis. So, please find below my quick notes on the agenda, which, hopefully, will help you to understand one more aspect of the travel business world.

First was Alex Bainbridge, he said:

“I don’t like to be called a blogger… A blog isn’t just about creating a media site. It’s just me, I just want to have conversations. No one wants to read news on a blog. If there are five sites with the same news, no one is going to read them. I want an enjoyable conversation.”

“People want your opinion of the product. The reason I have my name there is because it’s me! It’s not that I’m vain… I’ve watched the traffic come from other firms’ offices, their legal teams, their brand representatives, and I wonder why they don’t write anything! Maybe something will arrive in the post.”

“I haven’t got the bandwidth in my brain to cope with Twitter.”

“I see comments as a bit of currency. If I see someone putting in effort, I’ll go and write a comment. These are my means of saying thank you for your post.”

“Blogging has driven me to extreme posting – it’s a bit like being an alcoholic!
(Thanks to Matthew Parsons for recording words of Alex.)

I agree with Alex, I also don’t like calling him a blogger. From my perspective Alex became a journalist (read below about difference between blogger’s and journalis’st conversation by Kevin May). Unfortunately, I didn’t hear him on the Editorial vs Advertorial in blogging issue?

Next was speech of Karen Bryan on categorization and future of travel blogs(full article). From my point of view, this is a good classification, but not full. I would like to add the following:

I have written two travel blogs, this one and my around the world trip blog. None of them is under this classification. This blog can be a good example of professional networking and educational blogs category. Around the world trip blog could be referred to as a personal travel blog, but on another hand this is online reputation tool.

Also one pick on possible monetization. Karen didn’t include monetization from link building.

Most controversial to majority of participants was Molly Flatt’s statements from STA Travel Buzz.

As Caitlin from Roamin Tales writes in hers blog:
STA Travel has done something quite brave in social media - and it prompted quite a bit of heated debate last night. The travel agency has employed a social marketing specialist 1000 Heads to create STA Travel Buzz, which is a place for STA’s customers, typically young travellers, to connect on the web. Molly Flatt from 1000 Heads gave the presentation.

Molly says STA does not comment on the site, even when there is negative feedback. She feels this would be intrusive and destroy the atmosphere of the site for users. “The idea of having CEOs monitoring conversations going on and commenting on things is my worst nightmare,” she says. “We’re not their customer service department and it would be a dangerous path to start down.” She defended her stance passionately but many people in the audience were against this stance, feeling that users would expect a response. What do you think?

I think, that having 1000 heads is external for STA, so they have budget and targets. As I can see the main objective for them is to increase STA visibility, and if STA customer care would like to react, I see no barriers to do this.

Last one was Kevin May, who did run conversation rather than speech. The main point of the conversation was the difference between bloggers and journalists. In soundbyte, he thinks that there is no difference between them, because both are content producers.

I agree and disagree with Kevin at the same time, it is depends on your perspective. From the point of content producing, yes, Kevin is right. But from the point of impact on the people minds, journalists have much bigger impact than bloggers.

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How to save your money? The air ticket booking.

Ivan Kovpak — Thu, 20 Nov 2008 12:16:16 +0000

You should say: “By booking on a site of the airline, because they do not take a service charge”. And you’ll be wrong. In my opinion, it is the most ineffective way to book an air ticket.

In the travel agency (not in each one but only in the ones which are accredited by IATA and have direct contracts with airlines and their own reservation system terminals) the service charge certainly will be taken from you (from 30 to 50 USD) but thanking to opportunity of the agency to put cheaper class of reservation on a waiting list (and the practice shows that you will approve it in 50% of the cases), you’ll save your money.

On the other hand, online agency (which offers tickets of traditional and cheap airlines) will give you the most complete list of the flights between the place of your departure and arrival, including the cheapest ones (in contrast to the airlines) and won’t take a service charge from you (in contrast to the agencies). You could ask: what is their personal interest? Due to a large bulk online agencies get a bonus from the airlines (up to 7%) and starting from 2 USD per segment (in the ticket Istanbul – Prague – London – Prague-Vienna there are 4 segments) from the GDS. The fact is that lately it is obvious tendency when the tickets of the budget airlines aren’t cheaper than the tickets of traditional ones.

Thus, as you can see, it would be cheaper to book with travel agency or online agency. Even in case of the group booking the agency is in more preferable conditions because it knows how to bargain with them and how to get a better rate than the one you will get directly.

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How to save your money? Hotel reservation.

Ivan Kovpak — Fri, 14 Nov 2008 10:06:48 +0000

Nowadays practically all hotel networks (Hilton, Marriott, Inter Continental, Crowne Plaza, Holiday Inn, Ritz Carlton, Concorde, Radisson SAS, Sol Melia, Concorde etc.) and more and more individual hotels use Rate Parity Rule in their activities. What does it imply? I will explain it using exact examples. A price on a site of the hotel “Excellent beds” in Helsinki is 100 USD per room. And you can find the same price in online agencies, in GDS and, as a rule, a little bit higher price in travel agencies (agencies must add a service charge to a hotel’s price, because of the commission from the hotel, it varies from 5 to 10%, which they can not get earlier than in two months). Online agencies never add an extra charge to the hotel’s prices. First of all, they have lower trading expenses per one reservation, secondly, they have special discounts from hotel’s chains and hotels (except one thing, which will be mentioned later), cause hotels are supervising the prices of online agencies and in case they break the rules they’ll be cut off the program of special discounts.
So almost forever when you are booking a hotel owned by hotel chain, it would be better to do that with a help of a hotel reservation site. You won’t receive a discount, but you’ll surely be able to make a choice within your expectations. Moreover, if you usually book hotels using the same site, you could participate in a bonus program, which is an analogue of a discount.
The other way to save money is to purchase on a site of online agency a package consisting of air ticket and hotel reservation. In this case the site doesn’t show separately a price of the hotel and sell it all together with a discount, as a rule, up to 5-7 %. In this case the hotel can’t raise a claim to the site, that it’s selling their rooms cheaper.
But there are some exceptions from that rules.
First of all, if you are going to a beach-holiday, it’ll be cheaper to buy a tour from the tour operator, than to reserve directly in hotel or in online agency even if the hotel joins previously mentioned chains.
The question is that operators working with beach-area destinations buy out from 10 to 50 rooms in hotels-partners for the whole season and as a rule they pay completely in advance, getting as a result a discount up to 50% and their net margin very seldom exceeds 5%.
Secondly, if you are served by a luxury travel agency, they could have an individual contract with deluxe hotel and it can be even better than you could find with the help of online agencies. Moreover the VIP agency could have contracts with hotels, which you can’t even find in tour operators’ and online agencies’ offer.
Thirdly, professional travel agency can find the best price of the hotel for you, in which the Rate Parity Rule doesn’t work for the time being.

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Travel business in Europe in 10 years. Hotels.

Ivan Kovpak — Tue, 28 Oct 2008 12:29:31 +0000

Though the need for long distance travel appeared not long ago, but the need to stay sowhere when you’re not at home exists for a long time. Over the past 200 years,the hotels themselves have not experienced great changes. It is still the same bathroom, a hallway, a bedroom, and a living room sometimes. Just some modern technical equipment appeared and changes in furniture design and quality happened(it became less durable). It proves the fact that hotel business is the most stable of all the segments in tourism industry, and if to speak of the fact that the number of travelers is to double until 2020, it is the most economically attractive segment.
In other words, this is the sector where the disruptive innovations are impossible, but there are only supportive ones. One of the latest developments in the world is the appearance of new class hotels: 5* hotels with a reduced number of additional services (a usual 5* hotel has a wide range of them). This innovation has been linked with the need to reduce the number of people doing work that can not be automated (concierge, maid, waiter, etc.) to capture the growing cost of such work.
Summing up, we can say that because of the increasing demand, as well as increased costs of maintaining the rooms, even with an increased rooms quantity, the cost of hotel rooms in the next 10 years is going to grow.

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Travel business in Europe in 10 years. The global reservation systems.

Ivan Kovpak — Wed, 22 Oct 2008 12:14:03 +0000

There are only 4 global reservation systems in the world today, GDS for short: Amadeus, Sabre, Galileo, Worldspan (which was bought by Galileo this year). They can rarely be seen by the end-user, but you usually can observe their traces in the form of reservation numbers on your tickets. All the 4 GDS were founded by airline alliances, and then were sold on the stock exchange at the request of competition authorities. GDS does not make margins, and they are not mediators in the typical sense, they are more like transport channels for information, and they receive income in the form of airlines fees. In fact, GDS completely and smoothly (GDS may not drop down as the Internet does) provides business process of reservation and data analysis. I must say that technologically it is not an easy task, so the major airlines had to pool their efforts and investments together to solve it. In order to explain the complexity I am giving an example. There are 100 passengers flying on a plane . Everyone must be given a seat, the registration process must be ensured, the tickets may be issued in 10 different classes, and each of them can fly in his own direction. During the reservation process you must know if it is a man, a woman or a child flying, what is the closing date of the issued ticket, whether it has the loyalty card, and what agent exactly (or the airline company itself) sold the ticket. The ticket price varies in each item (place) and it should be taken into account. And if you add here that some passengers are flying to the U.S. and you must provide the FBI with this data, you’ll see only 20% of the tasks that deal with GDS.
15 years ago 100% of airline tickets were sold through GDS. Today, in the Internet century, not more than 75% are sold this way. This is due to the fact that airlines want to reduce their costs, the budget companies try to bring GDS sales to a zero (Ryanair, Easyjet can be only bought on their site), as they are still in need of agents, and without GDS they sell only through their websites or large online agency partners.
GDS have the clearest vision among all sectors of tourism industry. Their share will likely fall down further. They will try to stop this process through the purchase of large online agents and minority shares in airline companies.

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