Steve Hafner, co-founder and chief executive of Kayak, is living up to his reputation for being one of the liveliest annual on-stage interviewees at the Phocuswright Conference.
On-stage he says that he was chatting with the two make-up artists beforehand and asked them what they use to book flights. They said, "Google."
"That was not a great way to come on stage.... But Google has come long way. They have a pretty good product. It's really fast and intuitive to use. It's uncluttered with ads, which Kayak is a bit guilty of. It's fun to compete with them."
In perhaps the newsiest bit of his talk, he says that by the end of the year Kayak will end its relationship with ITA Software by Google as a supplier of flight data. The metasearch giant has relied on Google since its earliest days. It will instead use data sources from the major global distribution systems, online travel agencies, and some suppliers.
When asked about whether Google is unfairly promoting some of its services over its advertisers's, Hafner says it is.
"I think it is totally unfair, you know if we were all the CEO of Google we would be doing the ... same thing. Look, they built a great service, people go use Google, if they want to provide answers to people showing travel intent on Google they are well within their space to do that...."
"Unlike TripAdvisor, we at Kayak have never relied on Google for a lot of free traffic.
"Our goal is to make a better product than Google and to advertise so that people come directly to Kayak."
"Our product is more comprehensive than Google's. We show airlines and suppliers that they don't. We're more accurate. But we're not as fast. So it depends what you're in the market for as a consumer."
Little over an hour before Hafner began speaking, Airbnb says at its conference about five blocks away that it would start adding flights, via its new Trips effort. Hafner says he isn't worried because he believes the attempt will be "unprofitable" for the startup.
"I'm not really worried about Airbnb getting into flights any more than I worry about Hotels.com getting into flights by adding a flight tab.
"Airbnb is an interesting story overall. They pioneered this new category and brought this content online for people to consume.
"But the reality is that most of that content is professionally managed. Most of that content will find its way onto other demand sources like Booking.com and Expedia/Homeaway.
"Their problem is they have this two-sided marketplace where they're charging the provider of content and they're charging the guest and. Basically they take a search fee, a tax. I think that's going to be competed away.
"Normally I don't give free advice. But if I were one of the Airbnb guys, I'd worry less about experiences and more about the consumer fee."
When asked about TripAdvisor's struggles with its Instant Booking product, he reminds the audience that Kayak was a pioneer of facilitated booking.
"I think Steve and his team are a lot more aggressive and religious about Instant Book than we ever were. It has hurt their numbers.
The reality is that Booking.com, Expedia, and others you send clicks to are much better at taking travel demand and commercializing that into a transaction than TripAdvisor ever will be....It's a tough sell for consumers, and it has definitely hurt their P&L."
Hafner defends metasearch's distinctiveness in the market by saying that its comparison-shopping experience is often superior to that of online travel agencies (OTAs) because it can include low-cost carriers that often don't participate in the OTAs. He says this edge is more apparent in markets outside of the US, where budget airlines are more prevalent.
As with seemingly every other session of this conference this year, the question of chat as an interface comes up. Hafner says he personally prefers "real intelligence" to artificial intelligence, but that his company is investing in the technology for customer service resolution.
"It's not going to be, 'Hey, Kayak, where can I go for $300 next weekend?' or 'Hey, Kayak, buy it for me.'...
"But... If you look at my daughters and their generation, they don't like to talking to people on the phone or going on websites....
"I think there's a role for chatbots and voice-enabled search, and we have to invest in that, but it's a long-term play. It's going to be slow adoption.
"When we debuted our mobile app, I didn't think it was a good idea, but I'm glad we invested in that, because it was a great idea."
When asked about Lola, the messaging-based service that his Kayak co-founder Paul English is building, Hafner says that the target audience of the product is not people like himself.
"Paul might not even know who it is yet. But I have confidence that he'll crack it....If he gets traction, we'll try to do it better. And we're not alone in that. Paul will have to compete against folks like Expedia and Skyscanner."
Hafner says that hotels represent less than 20% of Kayak's booking volume but more than half of its revenues. He adds:
"That's why it's so irritating to see someone like Trivago come along and really push aggressively on marketing....
"The Trivago guys did a great job at building a pretty good product and then marketing the hell out of it.
"I'm surprised that most people at the conference aren't talking about the Trivago IPO filing. It's a great document to look at it. It's going to be interesting to see how they actually manage that business and how it will be valued in the public markets....
"I don't perceive Trivago as winning the hotel space. If you look at their filing, they make $650 million in revenue in a year and spent $600 million in marketing. If Kayak wanted that kind of P&L, we could easily have that.
"But the reality is we want to build a really great product experience and make a lot of money, too.
"We're one of the few players that does that. TripAdvisor is another. Trivago will be interesting to watch how they manage their growth trajectory over time as they pull back on their marketing."
How will the metasearch market shake out?
"It's a scale game. If you look at any of these companies, the two biggest items on their P&L are their marketing investment and their engineering and human capital.
"The bigger companies will tend to do well over time, because they can amortize their marketing spend over a bigger audience and they can amortize their engineering investment over a bigger audience, too.
"And in a world of AI and machine learning and any other buzz that you want to throw against it, bigger is better, right?"
"I think five metasearch players is probably a few too many. I would hope that Kayak is one of the consolidators. We might like to buy someone else. ... We're always shopping."
Videos of these and other sessions will be sampled at the Phocuswright Conference website.
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