Social media is either overhyped, underhyped, or somewhere in the middle

Across two conferences two sets of travel executives have highlighted the challenges in figuring out how much to invest in social media for online travel companies. At last year's PhoCusWright Steve Hafner of Kayak called social media "overhyped". A session or two later former Expedia CEO Rich Barton called it "underhyped". At this year's No Vacancy Glenn Fogel of Priceline called social media experts "charlatans" while Toga Hospitality CEO Rachel Argaman said the future of the internet was pages inside Facebook. Meanwhile Wotif provided the perfect case study to test this debate by launching $11 rooms for 11 minutes via social media.

In my latest Tnooz post I discuss this debate and look in depth at the Wotif promotion. Check out the story here.

PhoCusWright 2010 summary video including the BOOT asking Groupon's Rob Solomon a question

Three min video above from the PhoCusWright team with some commentary and summary points from last November's PhoCusWright conference. At the 33 second mark you will see me asking Groupon's Rob Solomon about build or buy for Groupon in Asia.

PhoCusWright: HomeAway boss Brian Sharples talks acquisitions and how far we are from instant conf in online vacation rental

The travel industry has conquered the sale of hotels online. The big four (Expedia, Orbitz, Travelocity and Priceline) as well as local players (Wotif, Rakuten, Ctrip, HRS) have been aggressively and successfully selling hotels online for nearly a decade.

I have often looked to the very under developed market for the booking of vacation rentals and wondered when it will be ready for the same level of online sales as hotels. When will the structural and supply roadblocks impeding online vacation rentals be removed to allow for the massive amounts of online research for vacation rental and pent up demand for vacation rentals translate into bookings. Actual online transactions rather than the listing and referral models that dominate.

With that background HomeAway CEO Brian Sharples took to the centre stage at PhoCusWright yesterday with his vision for the company and the vacation rental business. As a reminder HomeAway is the biggest of the vacation rental aggregators. They have raised more than $450mm in venture funding including a massive $250mm round in November 2008 - specifically targeted for acquisition spending.

Brian shared with us that they have been very active in spending that money having completed fourteen acquisitions 5 years. He made one of the most acquisition positive statements I have ever heard from an online travel CEO. "If you can't compete with it, buy it" was his rallying cry for growth through consolidation.

The potential for Vacation rental online is substantial given the difference in the online percentage of sales for vacation rental compared to hotels. According to the recent PhoCusWright report on the industry called "Vacation Rental Marketplace: Poised for Challenge" in 2008 the total vacation rental market was about $25bb in the US and $100bb globally. But only 12% of the vacation rental market is online. PhoCusWright predict that the online market in the US will hit just $4.6bb in 2010 compared to online hotels being a $100bb plus market.

But as the report and Sharples both say, the biggest impediment to the industry is the challenge of securing inventory from property owners. To enable consumers to be able to secure instant confirmation bookings rather just kicking of an email conversation with the property owner. To enable the aggregators like HomeAway to generate merchant level margins by shifting from being a listing business to a merchant.

Sharples indicated that he is determined to get to the merchant model. Two of the fourteen companies bought by HomeAway are property management technology companies. Sharples will use these to supply property owners with the means (and rewards for) providing real time inventory. He is backing that up by "first time in three years increasing our tech budget as a percent of revenue" That is not surprising. The biggest player in the online vacation rental market should be working day and night on finding a solution.

What is surprising is how far away the industry is from the solution. Sharples believes that "it will take 5-7 years for vacation rental to be properly online" (instant confirmation). Dara Khosrowshahi (Expedia CEO) was similarly pessimistic about how long it would take. During his executive interview the next day Khosrowshahi said that instant confirmation vacation rental transactions were 3-5 years away.

It has been five years since the launch of HomeAway (crunchbase profile), seven-eight years since Cendant first started to put together a consolidation play of European vacation rental sites and 11 years after Expedia bought Vacationspot and Rent-a-holiday. Yet according to two of the best placed execs in the market we are still half a decade (or more) away from instant confirmation bookings at scale. Clearest evidence imaginable of how hard it is and will be to crack instant confirmation on the most distributed and fragment accommodation sector.

BTW - for more on this sector but in a different region see my recent interview series with Australian vacation rental boss Justin Butterworth. Part 1 here, part 2 here.

Innovation Summit: the BOOT picks two out of four

A new BOOT post on Tnooz is live discussing the finalists and runners up in the PhoCusWright Innovation Summit.

Last night I tweeted my top four picks. Two of them made the final four. My picks were all transportation search companies. I chose air search companies Everbread and Vayant, meta-search innovator Hipmunk and online rail company SilverRail. The two runners up I chose were Facebook trip planner Gogobot and social media monitoring company Revinate (competitor to finalist TrustYou). Democracy at PhoCusWright had a different view and the attendees have chosen 2010 innovation finalists up SilverRail, Hipmunk, Goby Technologies and Kony Solutions as the finalists for the 2010 Travel Innovation Summit. Runners up were TrustYou, Cruiselabs and Groundlink.

Full post on Tnooz with my thoughts here.

For more background check out my posts from yesterday on Revinate and TrustYou, Everbread and SilverRail.

Innovation Summit: Everbread - air search change that sounds good but need to see more before I can be sure it is revoultionary

Everbread is in the middle of a perfect storm of PR and buzz. A storm combining the high profile of their CEO (Morten Lund - who famously invested in Skype), the constant chatter over the need for alternatives to ITA in the wake of the Google/ITA merger and efforts by their staff to demo the product anywhere anytime (including in a suit, by a pool in 35C/99% humidity in Singapore).

Assen Vassilev Co-Founder and VP Strategy and Business Development of Everbread spoke today at the PhoCusWright Innovation Summit about his Haystack product. Haystack is an air availability and pricing search engine. A search engine but not a booking engine. They are seeking to by a B2B engine provider who separates searching from booking and fulfillment.

Their claim to a difference between existing OTA search and engines like ITA is that they are able to display fare and routing combinations not seen before. Combinations of on-GDS and off-GDS fares and routes (ie LCC) from different airports supporting the destination or departure city. Combinations that go beyond interline and carrier alliance ties. In the demos I saw at WebInTravel in Singapore I was shown fare and routing combinations that were less convenient but cheaper than traditional search results. Different to anything I have seen from an OTA or meta-search company. During the presentation Vassilev claimed that Haystack often presented results that were both more convenient and cheaper due to the ability bring in different departure airport options.

I had high expectations of this presentation coming into the Summit. The shots shown to me in Singapore were unlike anything I had seen from any other search engine. Unfortunately after the Innovation Summit presentation I was left with some of the same questions I had in Singapore and a desire to see more. The presentation needed to show more of examples rather than build up the story behind the business and the need for search revolution. The audience would have been more impressed by a series of examples of successful savings and routings rather needing to be introduced to the concept. I recommend that Everbread start a campaign of getting examples out there.

Rod Cuthbert on the Critics Circle agreed calling the presentation "entertaining" but felt it "left him in the dark about the business". Gene Quinn (also on the panel) said that "so many people are looking for alternatives to the Google/ITA combination" and thought that Everbread had "potentially a very powerful solution" but that he "did not see enough of the engine."

The people I have met from Everbread are smart and engaging and the story is a good one but I need to see more proof before we can confirm the tag of revolutionary.

For more on Everbread check out these stories - Tnooz and TechCrunch

Innovation Summit: SilverRail - is now (finally) the time for online rail?

Rail is well overdue for online travel innovation. We are into the third decade of online travel yet it is still almost impossible to book online train tickets through the traditional online travel channels of OTAs and meta-search. [ side not - At least in the west it is. In India online rail is a booming sector]

At the PhoCusWright Innovation Summit Aaron Gowell Founder and CEO of SilverRail used the of billions and billions of dollars in annual rail ticket sales to convince the audience of the potential for online rail.

He claimed that rail was a $300bb a year global market and the fastest growing sector in travel. Maps filled the power point slides showing high speed lines being built across Europe and China. Billions and billions in infrastructure spend. There are clear examples of long distance rail beating the airline business. The channel tunnel has stolen 80% of the market share in the Paris to London route. Hundred's of billions in investment and sales of rail tickets yet still 60% of the tickets are booked at the station.

Gowell told us that the only agency channel making progress in selling rail was corporate agencies. But most of those agencies have to transfer the call to separate call centres. As a result of this and complexity Gowell claims that corporate agencies are only able to do 4 bookings per hour vs 20 per hour for flights.

SilverRail also convinced us that they are well placed as a company to take advantage. They have some big name backers who contributed to a $9.5million series A round including Sutter Hill Ventures, Accel Partners, GrandBanks Capital and Brook Ventures. Gowell told me after the presentation that he has about 8 months of money left but is not worried as the potential is so great that he is confident that a new round of raising was not a problem. On revenue SilverRail are taking a transaction clip from the supplier - much like a GDS or switch.

Within 2 minutes of his presentation I was convinced of the potential for online rail. Unfortunately Gowell used nine of his twelve minutes to convince us of the market potential. This was more time than needed and cut short the time available for him to show us the SilverRail Product. What we saw of the product was impressive but I was left feeling like I needed to see more to be certain they would not end up like Wandrian.

On the critics circle (American Idol style panel at the Summit) Jim Hornthal of Triporati put a number of very important challenges/questions to SilverRail which I then had a chance to ask Gallow during an interview after his presentation.

Jim said: I am not sure what we need rail sold through OTA people are comfortable booking through the supplier direct (like the Low Cost Carrier model).

Aaron responded: model has changed dramatically in the last two years. Suppliers now need and are asking for distribution. For example you can now get a train from Germany to the UK. This is not a product that can only be sold on the Deutchebahn website. 2 years ago it was a hard sell to suppliers but now they are looking for us.

Jim said: There is not commission in rail so not attractive to OTAs

Aaron responded: packaging. With so much of the air spend shifting to rail (ie London to Paris route) the OTAs need to add more transport options to facilitate their packaging sales. Make their money out of the hotel.

I am a believer on the timing and potential for online rail. SilverRail put on a great show and have a very impressive list of staff and backers but (as like many at the Summit) I was left wanting to see more of the product and less of the power point.

update - here is what Bootsnall had to say about SilverRail

Innovation Summit: Movitas - I get the problem but not sure they solve it

At the PhoCusWright Innovation Summit Chuck Sacco VP Client Strategy of Movitas very cleanly and clearly described the problem his company was trying to solve - how to move the conversation and interaction between hotel and customer from the room to the whole property. Customers are constantly on the move on property with connected devices yet the main interaction between the property and the customer continues to be phone calls from the room or visits to the front desk.

While the problem was easy to describe, from the twelve minute presentation it was challenging to see how Movitas solved it. As a Bootsnall tweet said " kinda struggling to put what they do into one sentence.."

Sacco described the system as "developing for hotels a guest operating system"– a means for on property communications that connects a hotel and guest when the customer is outside of their room. For example a consumer can check in virtually using the tool and then go on to search local information, on property information, book tours, make reservations and pay their bill.

From the 12 minute presentation at the Summit it was hard to see how good a job Movitas is doing at meeting challenge as the presentation was delivered very quickly - too quickly. Lots of screen shots streamed a lightening speed. I would have preferred to have seen one or two examples of the product displayed slowly rather than the half a dozen or more screen shots and moving images flashing left, right, up and down. I am also not convinced that a hotel can persuade busy mobile road warrior customers to come to the hotel's own mobile platform when apps from Google, TripAdvisor, Orbitz, Kayak and more provide the vast majority of the functionality that Movitas was describing without the need for a new download or functionality learning curve.

The hotel guest is on the move and is connected - no doubt about it. They are hungry for information and content - absolutely. But they already have lots of apps and tools downloaded. I am not convinced that Movitas will be able to persuade hoteliers to persuade customers to add one more.

Update - here is what Bootsnall had to say about Movitas

Innovation Summit: TrustYou v Revinate - aiming to cut through Too Much Information for hoteliers

A running theme here at the BOOT has been the challenge the online travel industry faces from "too much information". A sub-section of this challenge is hoteliers trying to understand, track and respond to reviews and user generate content.

At the PhoCusWright Travel Innovation Summit we had back to back presentations from companies trying to help hoteliers with this problem.

Benjamin Jost - co-founder and managing Director of TrustYou presented a semantic search and sorting engine. A means for categorising and sorting through unstructured user generated reviews. This can be used to improve customer search and to allow hoteliers to understand and search the nearly limitless amount of data. His presentation focused on the "magic box" that made structured the mass blobs of text that make up the typical review. Results were technical but impressive how accurately the technology characterised and summarised positive and negative comments.

Kyle Duffy, VP of Global Accounts for Revinate showed a tool for allowing chains and properties to monitor all forms of social media for commentary on the property, area and competitors. Allows hotels to generate a social media score card and compare that to their direct competitor set.

Both are trying to solve a similar problem - helping hotels to sort through the mass or unstructured information that are on review and social media sites.

Both companies are young but doing well. Revinate is claiming it is already profitable. TrustYou say that have been in business for just 1 year but already have 1,000 customers and $1mm in revenue.

TrustYou focused their presentation on the "magic" behind the technology. Showing us the results from their machine. Revinate focused on the tools they provided to their hotelier customers to sort, manage and respond.

Revinate's presentation lacked the crisp clarity of the TrustYou and it was harder in the Revinate presentation to see how powerful the tech was in the background. That said, in focusing their pitch on the end tool for hoteliers Revinate provided a stronger business platform and model than TrustYou.

TrustYou had the better "geek factor" but Revinate looked more business ready. As a tweet from Hudson Crossing said maybe Revinate and TrustYou should get together.

PhoCusWright starts tomorrow - tweeting #phocuswright

PhoCusWright starts tomorrow. I will be tweeting via @hughestim and #phocuswright

Packing for PhoCusWright, organising meetings and reading up on Innovators

Two weeks to go until the PhoCusWright Conference in Arizona. This year's theme is "Chaos Calls - Navigating the New". Promo video here. The BOOT will be there from Sunday night, tweeting, blogging, networking and working away. Follow me via @hughestim or track #phocuswright.

First up at the conference is the Travel Innovation Summit. The full list of companies presenting is here. A couple have already caught my eye including:

• SilverRail - rail is long overdue for online innovation and Cameron Jones has recently joined them as their VP Commercial;
• Everbread - I have seen a demo of this product already and the buzz behind them is super strong;
• Vayant - though they have stood me up for interviews a few times they are also trying to change the way air searches are conducted;
• Hipmunk - best name in online travel ever (maybe 2nd best to Appolicious). Can the product live up to the hype? Will consumers adapt to new ways to search?; and
  
• Gekko.com - trying to turn review writers into affiliate businesses.
  

One of my favourite parts of PhoCusWright is the "PhoCusWright Surprise" which occurs when I meet an online travel start up(s) at PhoCusWright that I have never heard of but is (are) number one in their category by some reasonable measure. See stories on last year's surprises Localyte and geckogo.

If you are going to be there and are interested in setting up a meeting or an interview please email me.

If you are interested in attending you can register here but hurry. Ram Bandrinathan of PhoCusWright tells me that already the primary and secondary hotels are sold out and there are only a very limited number of conference tickets left.