Since 1998, London has been home to a monthly meetup of digital entrepreneurs called First Tuesdays.
At last night's sold-out event, the topic was travel technology, and the panel showcased top European representatives of key industry players Airbnb, Kayak, and Expedia.
The talk was exeptionally lively and informative as these things go, partly because of who the panelists were and partly because of the brisk and pertinent questions asked by the experienced moderator, Frank Bachér, VP of online at Sabre Travel Network and a former top executive at eBay.
Here are some highlights from my notes on the talk. Rather than do an FT-style article on the event, I've taken a more blog-friendly approach. I've paraphrased what speakers said, and I've integrated relevant comments from the panel cross-talk together with prepared statements for clarity.
KayakKeith Melnick, Chief Commercial Officer
Melnick said he had been with the metasearch giant since its early days in 2004. He has just moved his family to Europe, because Kayak is ramping up its international expansion, such as by expanding distribution agreements with regional distribution partners.
The major limit on Kayak's growth is its marketing expense, he says. Marketing is effective, and the company has been ramping up TV ads in European markets. But it costs money, and that puts something of an upper limit on the potential growth curve.
Kayak has considered adding feeds for short-term accommodation. Since January 2012, HomeAway's founder Brian Sharples has been on the company's board, and there have been discussions about incorporating its listings into Kayak's results.
Kayak has also had conversations with Airbnb.
Making a retail shop metaphor, Melnick says, "Hotels and flights are like the shirt and pants of online travel." Kayak eventually wants to sell other, high-margin items like rental cars and tours and activities, "which are like the socks in the shop."
But Kayak is currently focused on perfecting the sale of the "shirts and pants." In particular, it's focused on hotels, where the product is more complicated and the commissions are more generous.
Among the companies that impress Melnick is TripIt, which he calls a "very handy concept" for following up with consumers at all stages of trip planning and of the journey itself.
Michael Mortiz of Sequoia Capital once advised Kayak that it should focus its investments on one thing. Product, product, product.
By "product" he meant, making sure the core offering is what users want, such as a fast return on results and accurate pricing.
Kayak is focused on engineering friction out of its metasearch process.
While other companies are experimenting with semantic search, Kayak is wary that semantic search tends to deal with issues that are too high up in the travel decision funnel (at the dreaming and inspiration stage).
The company instead wants to target customers who are ready to buy, in other words, to provide ever more qualified leads to suppliers. It plans to get better at making inferences at what users want to know.
Its sliding-scale filters and tabs and sorting tools may be the best in the business, but most Kayak users don't try them because those tools are intimidating.
Another Kayak goal is to do a better job of persuading consumers to purchase by reducing friction in the process.
Projects like the recently debuted Flights with Friends, which involves Facebook integration help add a social layer to take some of the friction out.
The biggest friction happens with the hand off of the customer from Kayak to the supplier to finish the transaction. Many users find it is jarring to go from Kayak's interface to the supplier's. Kayak aims to try to have as much of the booking process remain within the Kayak interface as possible.
One aspiration is to enable customers to create payment information profiles on Kayak and pay using that existing Kayak profile rather than to have to create new payment profile with each supplier. That's being advanced in the US and being rolled out internationally.
Mobile presents its own challenges. There's less real estate for presenting advertisements, for one thing.
It's also tricky to have a platform-agnostic experience, so that, say, a user can search for flights on a mobile device and then save the results and to to their desktop browser and immediately pick up where they were on Kayak and continue through to complete a booking without having to rerun a search.
AirbnbChristopher Lukezic, Communications Director EMEA.
Lukezic joined Airbnb in September 2009 as one of the first employees of the company after writing the founders this email. Today he oversees the brand marketing and communications strategies for the company’s emerging markets.
Hipmunk is Airbnb's lone metasearch partner, but "it doesn't drive a significant amount of traffic", says Lukezic. That said, Airbnb is happy with Hipmunk and isn't planning to change the relationship, partly because growing traffic at volume isn't the goal.
"We have enough traffic as it is," says Lukezic. The company has to grow laterally and increase repeat business among its existing customer base before scaling further.
The biggest limit to growth for Airbnb is engineering talent, says Lukezic. Following the argument about "great hackers" made by Paul Graham, whose Y Combinator program helped Airbnb get off the ground, Airbnb believes that a great programmer might be ten or a hundred times as productive as an ordinary one.
But Airbnb executives must face the fact that there is a finite number of great programmers and each hacker can command high salaries in the San Francisco area, where the company is based.
So finding great and affordable talent -- especially "Tiger Woods-level engineers" who can fit in with the startup's ethos -- is the biggest limit on Airbnb's growth, says Lukezic.
The niche players that Lukezic is most impressed by include Gidsy, an AirBnB for authentic events (which Tnooz has profiled), and Vayable, a tours and activities marketplace (which Tnooz has profiled).
The startup, which has raised $120 million in VC funding, has been experimenting a bit with corporate managed travel.
For example, Google's company travel policy, in general, is to give employees a lump-sum estimate, and if the employee finds a cheaper way to get to a destination and stay there then the employee can pocket the difference.
Many of these employees have been turning to Airbnb as a way to save money and have a more authentic experience. This has given Airbnb a sense of the potential for an expansion beyond the leisure travel market.
Social is still misunderstood by many companies, he says. It shouldn't be a separate division or department of your company.
"Social should be the thread that runs through your company. If you're going to acquire a digital company, it better have social as a thread that runs through its core.
Because user behavior is changing and Google searches are less and less often going to be starting point for user searchers."
Airbnb is built on social. That's why Facebook let its engineers play with its Open Graph project from 18 months before it was announced to the public.
Airbnb was the first travel company to launch with the Open Graph integrated into the core product.
Another key advantage that Airbnb has over its rivals is that it tailors the user experience to what it infers about its users.
"For instance, if you've just signed up and have connected with Facebook but don't have many or any Facebook friends who are Airbnb users, then we will show you a reduced selection of properties, only the properties that have been best-rated by other Airbnb users.
Because we know these newbies will be more reticent and nervous and prone to feeling overwhelmed."
Airbnb believes its growth will be sustained on the growth of a broader societal trend toward collaborative consumption, as first world societies eliminate waste through smarter sharing.
Expedia Inc.Andrew Warner, Marketing Director EMEA
Since joining Expedia in 2010 Warner has taken the brand back to the number 1 share position in the UK.
The biggest block to growth for Expedia is that many of the interfaces it has to hook up with in Europe and in the developing world are on legacy systems. So it's a technological challenge and also a cultural challenge.
Today 56% of online travel searches in Europe begin at the search engine, which mainly means Google. The reality is that the cost of search engine optimisation means that there are economies of scale to be had. The bigger the company, the more advantages they have in the SEO wars.
That's why you're seeing a lot of consolidation by the major players, as well as the mining of niche markets, says Warner.
He points out that Expedia is also aiming for "intelligent filtering," advancing beyond today's basic predictive analytics of sites like Amazon ("other people who have bought X have also bought Y") to inferring what users may want to know based on their real-time search behavior.
"For example, if we know you've just run a search for a trip with four passengers, we could infer you're traveling as a family and offer relevant advice.
If you're searching for a route from Atlanta to Berlin and have entered your search terms in a particular way, we could suggest they try fly into a different airport to save money. These aren't the best of examples, but hopefully they convey the idea."
Put another way, Expedia aspires to be a "travel concierge," providing users the best recommendations at the time the users require them and are prepared to act on them.
So the user prompts in a mobile app will be different than in a desktop environment.
Perhaps, someday, if Expedia knows a mobile user is searching for hotels within 10 kilometres of himself or herself at midnight, it makes sense to offer a very simplified list of properties and not accentuate reviews or try to upsell the user on car rentals because it's likely they just want a bed as soon as possible.
The goal of doing a better job of contextualizing information and inferring information about users is to upsell consumers with additional products like travel insurance and car hire.
Geographical constraints will also dictate user experience. In India already, about 30% of users prefer the smartphone applications to complete their booking versus desktop. Companies in particular markets are showing savviness about catering to local preferences, such as Baidu Travel in Korea.
One factor driving this interest in intelligent filtering is that market research surveys show that many users are becoming overwhelmed by the online travel purchase process. A subset of users are becoming overwhelmed by online choices and fearful they'll make a bad decision, which leads to paralysis instead of conversions.
Increasingly, the itinerary is becoming the common touchpoint. Travelers tend to treat the itinerary as sacrosanct, and keep coming back to it in stages during the pre-trip and actual journey stages.
Expedia is thinking increasingly about how to make the itinerary more dynamic, assuming that the best place to deliver messages to consumers will be through updates to the itinerary.
Warner says that the first online company to master having a seamless end-to-end, pre-trip to post trip experience, will break away from the pack and gain brand dominance, which will allow them to have more flexibility in pricing.
"The Un-Tourist" is a marketing demographic that Expedia has been watching take shape. As the success of the Airbnb model shows, people are eager to have the insights of a local when it comes to recommendations of what to see and where to shop and simply to feel like they're getting to know a place authentically through its people.
Some hotels are trying to respond to the Un-Tourist demand for more authenticity. Accor has been developing its Adagio Apparthotels product, which gives customers studio-like lodging, for example.
Where Expedia comes in to this is that it needs to identify which of its users are Un-Tourists and find a way to point them to the products that may be more appealing to them.
I used to work at Microsoft as a planning director and Bill Gates had a quotation. “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don't let yourself be lulled into inaction.".
Warner thinks that quote is relevant to several trends we're seeing now demographically and behaviorally and that are being cultivated or addressed by niche players in the travel market.
B2B is another market Expedia sees as ripe for development, through its Egencia arm. Why are so many companies still paying $60 a pop for managing corporate travel when it could be done more cost-effectively?
There's still huge upside potential in Europe and developing markets. Expedia has been rapidly hiring in India, for instance.