Wednesday, December 31, 2008

DOING MORE WITH LESS SERIES - I dare you to grow!

Are you happy with your company's 2008 performance?

So, you've just cut 10% or more of your staff and are looking at the 2009 business plan. You remember, the one you spent 3 months getting approved beginning back in July, long before things started to self-destruct in the economy?

Things have to change to get even close to the projections for the first quarter and if you stick with "business as usual", you definitely won't get where you thought you would, since your resources have been trimmed so substantially.

So where do you start?

1. MAKE A LIST OF WHAT TO STOP DOING - Look at EVERYTHING that you do that doesn't directly serve the customer and generate revenue and see if you need to keep doing it. I talked to a woman this week who works for a hotel company in Hawaii (where visitors are down substantially) and she told her boss that she was going to have to stop producing certain reports. He said ok, then a week later came back and asked her where the report was.

2. FIGURE OUT HOW TO DELIGHT YOUR CUSTOMERS - At a time when everyone else is cutting, invest in customer service. Start by talking to your front line and ask them each for 3 ideas of how to absolutely delight the people that buy from you. Implement at least 10 ideas.

3. IDENTIFY ONE NEW MARKET FOR YOUR PRODUCT - 40 years ago someone who had a great sit down family hamburger restaurant would not have thought that it would be possible to serve their food to someone that would eat while driving. Huh? Knock a hole in the wall and put in a speaker system so they can order from their cars? The product is the same. It is just wrapped a little differently, but it is still a great hamburger. What hole do you need to knock out of your business to serve your product to a new market?

4. CARE MORE ABOUT YOUR EMPLOYEES - OK, now I've really gone off the deep end. I know. As a die-hard iconoclast, I am going to stick to my guns on this one. Your employees, and even your executives have just gone through something terrible. One round of cuts, maybe two, maybe three. Each time wondering if they were going to be next. And watching their friends lose their jobs. Watching you get rid of the really talented work horses, keeping the not-so-great, low paid 20-somethings that don't know the meaning of true work ethic and who don't really understand the customers or the marketplace. Oh, they will learn, but you really have to turn your eyes to those left behind and talk to them about how to make the work environment better. Actually items 1 and 2 will help alot and if you actually listen AND implement, then move on to item 3 together, they may actually get excited about coming to work again.


If all else fails, and you need some help. Give us a call.

Chicke Fitzgerald
choose growth, choose solutionz

Tuesday, December 30, 2008

DOING MORE WITH LESS SERIES - Email Management 101

OK, admit it. Your email box is out of control.

Here it is December 30th and you are trying to decide whether to just delete the 4000+ emails that are still sitting there (or move them to a folder just in case you need something that is there) or to plow through them just to check to see if you missed something important.

Here are some tips for making your email more manageable in 2009.

1. EMAIL LISTS - Take the time to get off of the mailing lists that you don't care about. This one seems obvious, but most of us just delete the messages versus taking the time to click on the Unsubscribe link at the bottom of list generated emails. While some are easier than others to get off of, it is worth the time to ensure that you don't have to deal with the same emails day after day or week after week if you don't read them.

2. PERSONAL EMAIL - If you don't have a personal email address (such as GMail or Yahoo), get one. Your business email address is the domain of your company and they have complete freedom to review anything going back and forth to that email box and if you leave the company they can elect to forward it to someone else in the company to ensure continuity in the business. Plus if you get laid off or are job hunting, it is best to have an email address where people can contact you separate from your current employer. List that personal email on Facebook, LinkedIn, Plaxo, Twitter, etc.

Let your friends and relatives know that while you love hearing about their lives, that you would really like to be taken off their list for jokes and chain letters. Here is text that I recommend.

Dear xxxxx, I hope you have had a great holiday season. I'm working on streamlining my life for 2009 and that includes getting control of my email. I welcome personal notes from you that help me keep in touch with what is going on in your life, but would really appreciate it if you would take me off of your mass email list for jokes and such. Here's wishing you a prosperous 2009. Stay in touch.

3. CORPORATE EMAIL ETIQUETTE - If you manage a large team or are having to do more with fewer resources, 2009 is the time to enforce better email etiquette.

First of all, institute a new way to communicate via email and get your entire organization to agree on some basic tenets that will help everyone.
  • Practice word economy - remember that many of your colleagues are reading emails on their blackberry or iphones. Pretend you are on Twitter and only have 140 characters to work with. If an email causes you to scroll down more than once, you probably should just be sending a short note asking for a phone call to discuss the situation.
  • Ask yourself if a 5 minute conference call could be more effective than a set of serial emails going back and forth between multiple individuals
  • The TO: line is just for people that need to be actively involved in the decision or directly impacted by the information in the email.
  • Really think before you CC: people - Finish a discussion before copying in those affected by the outcome. If you want their input, they should be in the TO: line or on a conference call.
  • Resist the urge to send a "thank you" email or other banalities, particularly responding with REPLY ALL, filling up a mailbox unnecessarily
  • If you require ACTION from someone, highlight that item in the email with BRICK RED text and use the >> symbol: >> PLEASE REPLY BY TUESDAY AT NOON
The best suggestion I've ever heard on email management came from my friend Kathy who in her communication with her staff required that each email indicate whether the originator was looking for a "nickel" answer (simply yes or no), a "quarter" answer (no more than a paragraph providing clarification or direction) or a "dollar" answer (long enough that it can't be read on a blackberry or that requires consideration and thought in reply). You can ask your team to simply include 5c/25c or $1 in the subject line, or you can use Priorities (Low, Medium and High). In order for this to work, it has to become a cultural thing within your organization that is enforced by everyone and allows you to sort your email and work it appropriately.

4. EMAIL RULES - Take time to learn how to use your email rules function within Outlook or Entourage. It will help you to sort email into sub-inboxes that will give you better control.

5. EMPTY EMAIL BOX AT END OF THE DAY - Vow to end each day with an empty email box. An easy way to do this is to create sub-folders that help you manage your work for the next day:
I hope that this helps you in getting organized. Now I need to go and deal with my own email box........

Happy New Year!

Chicke Fitzgerald

Monday, December 29, 2008

DOING MORE WITH LESS SERIES - Meeting Management 101

No doubt as you look at moving into 2009, you have already cut out resources. As I said in yesterday's post, some of you have cut the fat, others have already cut into the muscle and some have truly cut to the bone, impairing your ability to maneuver normally.

So the order of the day for 2009 must be to change the status quo, particularly in how you get things done.

Here are 3 tips to ward off the insanity in your business that can come with trying to do more with less. Remember that insanity is defined as doing the same things and expecting different results.

Today's tips center on eliminating group-think as the default way to get things done. While collaboration has its place, large meetings have become the way that people in corporate America spend their days. If they aren't in meetings, they are on interminable conference calls. You may be surprised to find out how much of the meetings are devoted to actually talking about when to schedule the next meeting.

Ask yourself when exactly it is that your people get their work done? If the answer is nights and weekends, you are well on your way to burning out your remaining players before the year has even begun. Plus if in your cuts you retained the "20 and 30-somethings" because they made less, then you may find that they aren't very tolerant of the 60 hour week work ethic.

So how can you do more with less? Start with Meeting Management 101.
  • Meeting Moratorium - So step one is to declare a moratorium on meetings for one day. If you have a wry sense of humor, just post an -Out of Order- sign and watch the behavior of your people. But what we truly recommend is asking them to take one meeting-free day to find other ways to get things done more efficiently and for each of your team to come up with three ways to make money or operate more efficiently in 2009.
  • Shorten Default Meeting Length - Moving forward, make the default meeting length just 30 minutes. Meetings and conference calls should start at a quarter after the hour and end at a quarter to the hour. If you only have 30 minutes for a meeting, it will force a new discipline of arriving on time, being prepared and focused. The other half an hour can be spend doing meeting follow up items and preparing for the next meeting.
  • Use skilled facilitators and a formal process for multi-hour or offsite work sessions - While there is a time and a place for multi-hour work sessions, they should be professionally facilitated to ensure a firm outcome with a detailed plan for how to get the project to the next step, with specific assignments and timelines agreed to in the meeting, versus scheduling yet another meeting to get things done.
  • Reduce the Number of People Allowed in a Meeting - Again, if you err on the wry side of life, you can just remove half the chairs from your meeting rooms and put them into storage. A better way though (although we think chair removal is still a good idea) is to ask the meeting organizer to think about who really needs to be in the meeting and who just needs to be made aware of the outcome versus being a part of the discussion. A good way to think about this is who can influence the outcome, who can change the outcome by getting the work done and who has to simply accept the outcome. The "influencers" need to be in the initial meeting. The "changers" need to put together the plan once a decision has been made, including informing the "acceptors".
Corporate culture has to change moving forward to get to a place where people are enthused about coming to work and energized by the environment again. Out of that enthusiasm and energy will come profitability.

Chicke Fitzgerald

Sunday, December 28, 2008

Rx for troubled times - Growth planning

As you wind down from what can only be called the most challenging year since 2001, getting ready for some rest and hopefully spending time with friends and family, I would like to plant a seed with you.

There is no doubt about it. Times are hard. elevator panel

You have a choice as a leader in this industry. When you stand in front of an elevator, you can choose to press the Up or Down button.

Today you can choose what 2009 will look like for you and your company.

Conventional wisdom says, cut back. It says that decline will happen, as if you are a victim. You are going down whether or not you choose that button.

Uncommon wisdom says that cutting spending is prudent but
building revenues and planning for growth in better times ahead is smarter. It says to invest in innovation. There is no better time. You can choose the up button for you and your firm, even if other people elect to just hunker down and play the hand that has been dealt to them by the economy.

Solutionz would like to recommend a Rx for lean times that leads to growth.

MOVE ON REVENUE GENERATION -- you have the products and services; now is the time to explore tools to service new markets, and determine how to do more with less.

BE CAREFUL HOW DEEPLY YOU CUT - As you cut back on spending, it is inevitable that staff cutbacks will rank highly as a way to improve the bottom line. Earlier this year, many of you already cut out the fat [non-performing staff] and in the fall you began to cut into the muscle [experienced and talented staff ready to take a package]. Now you are having to look at cutting into the bone of your organization [seasoned middle managers not afraid to roll up their sleeves or worse, cutting your sales force]. Keep the "total picture" in mind when making cuts - work ethic, tenacity, experience, expertise and maturity versus pure salary.

SHIFT CHANNELS - effectively choose high yielding, and variable cost channels. Recognize that this may not be your own direct channel. We can help you do the math.

INCUBATE NEW IDEAS - with low risk and sustainable benefits. Getting an outside perspective can help, particularly at a time when internally morale may be low and resources may be scarce.

CONSIDER ACQUISITION - As you look at how you can innovate and how you can grow, consider a merger or acquisition as a way to expand your capabilities and your reach. We specialize in assisting you in targeting partners and also in assimilating the merged entities post transaction.

VISUALIZE MOMENTUM AND GROWTH - Plan only for decline and that is where you'll go. Plan for and focus on growth at the right pace and you'll be at the head of the pack - well funded, growing, and strong.

When you are ready to choose growth, choose Solutionz to help.

Chicke Fitzgerald

Friday, December 26, 2008

Happy Holidays from the Fitzgerald Family

Happy Holidays. Here is the Fitzgerald year in pictures in lieu of our normal holiday letter.

See you next year!

Chicke Fitzgerald

Monday, December 22, 2008

Intelligent Chaos

Really wonderful art is an excellent example of "intelligent chaos". This painting by Miranda Moss is one of my favorites that depicts to me the glory of travel.

Actually Miranda named this painting "Signs of Life", so it would appear that she wasn't even inspired by travel when she painted it.

Another great example of intelligence coming out of chaos is when a chef takes a pantry full of ingredients that are seemingly random and unconnected and in a flurry of bowls, pans and pots, whips up a brilliant creation. When I cook, the kitchen can often be called chaotic before brilliance emerges.

One of my favorite examples of intelligent chaos is a tapestry. As it is being created, a jumble of colors, including those that are not considered "beautiful" are used and if you view it from the wrong perspective (the backside), it would seem to be just a jumble of knots. But turn it around when it is finished and a beautiful picture emerges, viewable originally only in the creator's eyes.

I choose to look at the travel industry right now as that jumble of knots - business models that are tired, technology that only addresses a small slice of travelers, costs that are out of whack with revenues and companies that are cutting into the bone, crippling their ability to remain competitive.

Together, we can turn this chaos into intelligence. Out of chaos comes opportunity. Let's find the signs of life together.

Chicke Fitzgerald

Thursday, December 18, 2008

What is happening on the agency distribution front?

This week ARC posted their November sales statistics. For those not familiar with ARC, it is the Airline Reporting Corporation and they report airline ticket sales through the travel agency channel (including offline and online agencies).

Here is the top level of what I observe in what has happened this year to date:

  • TOTAL SALES - Total sales in November ($4,057,562,197) was down 24% from October. While we normally see a decline in sales this time of year due to seasonality, but the year over year decline in this case was 20%, which shows how significant the recession impact is on our industry. This decline impacts the airlines themselves, as the agency channel represents not only a higher yield on ticket sales due to higher ticket values, but it is also their only variable cost channel. It also impacts the agencies, due to the fact that many agencies still earn a commission or override compensation based on total sales.
  • TOTAL TRANSACTIONS - Transactions were down in November year over year 19.68%. This trend has a direct impact on ARC themselves (as their compensation is based on transaction processing), but it also signals a direct impact on the GDS companies, as each ticket/transaction represents a multiple of approx 2.2 segments. GDS compensation is generally directly proportionate to the number of segments booked by the travel agency community (both online and offline).
  • DOMESTIC/INTL SPLIT - ARC began reporting domestic and international sales split in 1993, at which time international only represented 24% of all sales. Since commission cuts were instituted at the turn of the century, the percentage of international over domestic has grown dramatically and in November was 45% of all sales. Agents generally earn more on international tickets, so this trend makes total sense.
  • AVERAGE TICKET VALUE - DOMESTIC - The average ticket value in November was $327.34. This is down 5% from October, so we are finally seeing some impact of the decrease in jet fuel. In August, when the price of oil was over $140 per barrel, the average air ticket was $344.27. This is good news for the consumer, but not for an agent that gets paid a % based commission.
  • AVERAGE TICKET VALUE - INTERNATIONAL - The average ticket value in November was $767.94, down 8% from October. The average international ticket price in August was $875.04, so we are seeing relief here as well. This is good news for the consumer, but not for an agent that gets paid a % based commission.
  • NUMBER OF US AGENCIES - Year to date, the number of agencies is down just 2%, with a total of 17834 as of the end of November.
  • SALES PER AGENCY - The November sales per agency is down significantly at $227,518, down 24% from October. Sales per agency has actually been growing year over year, primarily due to the consolidation in the industry (resulting agencies are larger) and also due to the growth of the online agencies.
Please let me know if you have any questions on my observations.

Chicke Fitzgerald

Wednesday, December 17, 2008

Innovation in Challenging Times

I was reading a newsletter today from the Association for Competitive Technology. In it they stated:

During the Great Depression, Du Pont's research team invented Nylon and Douglas Aircraft developed the revolutionary DC-3. Hewlett Packard invented the pocket calculator during the recessions of the early seventies. During the economic slowdown of the late 1990s, Apple developed the iPod and iTunes and hundreds of successful, innovation-focused firms were created.

What I've learned as I prepare for my new book Bootstrap Business to be published this spring is that in difficult times, you still need to spend along the same percentages that you did in good times. What that means is that you should not shift all of your spending away from R&D, but just look across the board at spending cuts that still allow innovation to occur.

It sounds like Du Pont, Douglas Aircraft, HP and Apple knew about this secret as well.

What are you doing about innovation right now that will put your company "on the map" like the firms mentioned above? Double check the R&D budget line for 2009 and shift your focus to innovation. It is much more inspirational than "hunkering down".

Tuesday, December 16, 2008

Struck by simplicity

Every once in awhile, my musings take me to a place where I see just how simple everything really is. We don't need pundits to bring the basics home to us.

Lately I've been helping my 10 year old daughter with her science and social studies homework (math is greatfully left to Dad). In both subjects, there are natural laws - cause and effect. They don't change. They are immutable.

Laws of business and laws of the economy also are immutable and effect does follow cause.
  • If you spend more than you make, you will lose money and eventually have to either cut your spending or go out of business.
  • If you borrow more than you have assets to cover, if the lender calls in the note, you will be in deep trouble
  • If the media scares us all into hoarding every last penny that we have [e.g. don't spend], the recession will deepen until people begin spending again
  • As you make decisions to cut things out of your life and stop spending, people will lose jobs
  • As people lose jobs, they will stop spending and more people will lose jobs
And so it goes. The cycle will continue until someone (including you) breaks it. I suggest we each do our part and not wait for the government to be our savior. I suspect they won't get to bailing me out for quite a long time, so I'd better figure out a plan now!

  • Be prudent in spending cuts. Cut in the places where there is fat and where you don't directly touch your customers. If it takes 5 days to issue a contract to your sales people to close a new deal, cut out unnecessary processes. If you have elaborate policies that reinforce saying NO to employees or customers, see if you can retool to encourage and reward saying YES.
  • Changing your organization to a Customer Centric Culture is a great way to grow when everyone else is cutting services. Start your analysis from the customer and move out throughout your organization. Cut from the outside in, with the customer at the center.
  • Be creative in how you fund new initiatives. Where before you hired a team internally to get something off the ground and then expected that same team to go from build mode to caring/nurturing the business, look at bringing in outside expertise to speed up the build process.
  • Be wise about spending both corporately and personally. Cut out the frivolous stuff (realizing that the local Starbucks may have to close at some juncture if we consider our afternoon Frappucino as frivolous), but keep the economy moving. Spend money with local, entrepreneurial businesses if you have a choice between that an national chains. The national chains will bounce back much more easily and generally have much more fat to cut before having to consider closing.
  • And don't forget to travel so we can stimulate the industry that we serve. Stay close to home if you must, but recognize that now that gas is under $1.50 per gallon in many places, driving is a much more appealing alternative to flying. If you drive, please use to plan and give me your feedback so we can continue to improve the product.
Living in fear rarely produces a good result. Look forward to the days when you are well funded, growing, strong and an industry leader. Focus on building momentum, not hitting the brakes.

Start today by making a list of 100 things you can do to grow your business. Do your part today to stimulate the economy. And if you need help, don't forget to call.

Chicke Fitzgerald

Monday, December 15, 2008

So who exactly is minding the store?

Yes, it is disconcerting to see the number of resumes now floating around our industry. I seem to get a new crop every week. My heart goes out to those of you who are affected by recent layoffs.

What troubles me even more than seeing really really good people and friends lose their jobs after 20+ years is seeing really really green people left behind (and I'm not talking about eco-friendly...). Or worse, really really mediocre people.....

Recently one of my friends had told our networking group that one of the Big x Consulting firms (does anyone know how many there are now, as we used to say Big 5, then Big 3...) was in her company on a major process analysis project and that they expected layoffs just before Christmas. What perfect timing. What are these people thinking?

This used to be called down-sizing, then right-sizing. Now it seems to have deteriorated into "let's get rid of anyone that knows their stuff and gets paid a lot of money".

I understand the politically correct term is now "made redundant". I'm wondering what it is about expertise and experience that is redundant?

Although I know companies aren't laying off because they want to, it will eventually begin to hurt and even to debilitate.

The first round cuts into the fat, the ones that weren't performing anyway. The second round begins to hit the muscle, leaving the organization limping along in many cases. I am always amazed when organizations begin cutting their sales and distribution staff. Where do they believe new revenues will come from to help them recover from this difficult time and how will they know that they are making the right changes in their distribution?

I believe that where we are now is the "cutting into the bone" time, when the workhorses that have kept the organization together in good and bad times have now been let go. This can be crippling.

What will the industry look like when all the seasoned professionals have been laid off? Who exactly will get the work done after the executive teams lay out the strategy?

As you are looking at your strategy for "downsizing or rightsizing", remember that the 20-somethings don't have the same work ethic as some of us older players. At 5:01pm, look around.... And that business plan that you put together for 2009? How will you accomplish everything now?

Perhaps what we will see out of this is that companies will actually learn operate more leanly and with more entrepreneurial spirit, only using high level, experienced resources when they are needed versus paying payroll for certain functions 365 days a year. We will see.

The only consolation is that as a consultant, business should grow as a result.

I'm gathering as many of the resumes for the really talented ones and putting together a real "A Team" so that we can be ready.

And remember, as a friend of mine reminded me this week "Good people are worth more in bad times." So take heart. Better times are ahead.

Thursday, December 11, 2008

Waiting to exhale

Photo courtesy of sphynge on Flickr

Do you remember the movie "Waiting to Exhale"? The story line followed four women and their relationships.

It is a rainy day in Tampa and I'm left to muse as I wait for the sunshine. As I wait, it occurs to me that many of us are doing a lot of waiting for brighter days.

I'm thinking that the "waiting to exhale" in this case is an industry that is frozen in place, not making any moves for fear that the move may be the wrong one.

Here are some of the things that you may be contemplating:
  • Do I continue moving your distribution from the travel agent channel to my own web site? How can I tell the real cost/benefit of this move?
  • Do I discount my product to try to attract more travelers? What is the long term impact and is there another way to sell my product during tough times?
  • I've heard you talk about the drive market as an untapped opportunity. How do I reach out to the drive market (85% of all travel in US) versus the air traveler?
  • Do I continue to provide significant supply to the online channels on merchant model? Is it time to start looking at having these channels take some risk?
  • Do I lay off my sales staff and hope that somehow business will come to me during these tough times?
  • What projects do I cancel now that I don't have the staff to execute my original plans? How do I prioritize?
You may not know that Solutionz provides phone consultation services, in addition to traditional consulting. If you just need an hour on the phone each week to talk through the key issues and brainstorm a plan moving forward, we have a program that will meet your needs during these lean times and that will get you ready for the day that we all bask in the sunshine of a stronger economy.

Call me.

Chicke Fitzgerald

Wednesday, December 10, 2008

Calling all travel agents - Let's recreate Agnes.....

Cartoon Credit: Mike Baldwin, Cornered, used by permission through CartoonStock™

I have been in the travel industry since 1978. I started in a travel agency in Milwaukee WI, working for Bay Travel in the suburb of Whitefish Bay.

We had a leisure agent who at the time was older than God himself and who had been everywhere and done everything. Her name was Agnes.

Every time I see this cartoon by Mike Baldwin, I think of Agnes.

Agnes was the quintessential travel agent. She knew how to start the dialogue from whatever worked for the client.

If they knew who they were traveling with, and didn't particularly care where they went, she would drill down into what they liked to do when they were together. Note, she didn't profile them separately when they were traveling as a couple, as modern CRM and profile systems do.

No, Agnes knew what they liked when they were traveling as a couple, as a family, in the summer, in the winter, when they were wanting to relax and when they were seeking adventure or just following their inbred sense of wanderlust. She knew that it wasn't always the same things. The type of hotel might change, restaurant recommendations, attractions, entertainment. Well you know. You don't always want the same thing either. But the industry and our technology has button-holed us into strict profiles. Business and Leisure if we are lucky. Beyond that, you have to wade through the options yourself and weed out what you don't want.

If they wanted to drive versus fly, Agnes didn't care. She knew that she would make up the lost commission (yeah, remember when selling an airline ticket guaranteed you a 10% commission?) on booking their hotel rooms for them. She didn't use the newfangled Apollo™ computers. She felt more comfortable talking to the various travel suppliers to ensure that what they were offering was a perfect match for her clients.

If they did know where they wanted to go, Agnes would help them have the best time possible there. She scoured the brochure rack (now I'm really dating myself) and would recommend things that she had done in those very places. While the term "social networking" had not yet become vogue, I suspect that Agnes was a master networker and had a card system where she could cross reference what other clients had been to the places that they were interested in.

She didn't assume when they walked in the door that they wanted the cheapest thing. She didn't assume they wanted to go to Orlando, Hawaii or Las Vegas. She would handle their trips to family reunions, soccer tournaments, concerts, weddings, funerals. Agnes just wanted to help and she wanted to make sure that her customers would come back to her.

And if you didn't know when you wanted to travel, Agnes was ok with that. If you knew that you wanted to travel in the spring, she'd suggest things that were good spring things. And if you said you wanted to go to a dude ranch in the winter, she wouldn't suggest Montana, but instead would find something for you in Arizona or New Mexico. And if all you knew was that you had 4 days for a trip, she'd be able to tell you what you could and couldn't reasonably accomplish in that timeframe.

Best of all, when all was said and done Agnes would type (yes on an IBM Selectric™) a custom itinerary, including things that couldn't be booked, but that she knew they would want to know about. Even when she saw that Apollo™ could print an itinerary with the air, hotel and car segments, she knew that her clients needed more. I even saw her attach a map for the clients that wanted to drive. I didn't even know that AAA existed at that time, so from my own limited experience, Agnes producedthe first custom "TripTik™".

Imagine if we could recreate Agnes........

Wish no more. View our latest YouTube video from LeisureLogix

Calling all travel agents.

Let's choose to grow. There is a lot of opportunity out there.

Chicke Fitzgerald

Thursday, December 04, 2008

Online Behavior Commentary: Let's look at consumer direct for hotels

Two days ago I wrote a blog about the decline in traffic for the OTAs. It is only fair to similarly characterize the traffic results hotel brands and online players wholly devoted to the sale of hotel rooms.

The following chart from Compete reflects the 12 month results for traffic to, and The supplier and OTA patterns look similar, with seeing a much steeper decline from their high of nearly 8m unique visitors in July to just under 5m in October. Sorry for the quality of the graphic. To view it for yourself, access the free traffic comparison service on Compete.

The most important stat to note is that is seeing a 12.4% decline year over year as of the end of October and both hotel brand sites are seeing double digit increases. All three sites saw month over month decreases for October.

PhoCusWright reported in their last Online Travel Overview (seventh edition) that supplier bookings have been growing at a much faster pace than OTA bookings. Since traffic is a harbinger of booking activity, the Compete traffic reports above certainly corroborate PCW's observations.

For a supplier to move business from an OTA to their own site is a smart move, as it saves commissions and switching/GDS fees. Let's just make sure that you aren't throwing the baby out with the bathwater and also discounting agency distribution. See the story below about the growth of the agency channel and the higher yields possible through agency distribution, even in light of paying commissions AND switching/GDS fees.

Chicke Fitzgerald

3rd Quarter Hotel Performance shows agency channel remains strong

Chicago based Travelclick recently posted 3rd quarter results for electronic bookings. The term "electronic bookings" includes bookings made via the GDS and via Pegasus, whether by a traditional travel agent or via the internet, which primarily includes OTA bookings. It excludes consumer direct bookings made via the hotelier's own internal system and excludes merchant model bookings, which are generally made via the OTA's own inventory system against a block of rooms versus live inventory access via a GDS or Pegasus.

The year to date results show that bookings via the Consumer Internet channel are declining year over year at a rate much greater than their travel agent counterparts. When matched against the traffic statistics in yesterday's blog, this is not surprising.

In the 1st quarter, consumer internet room nights were down 6.9%, while travel agent bookings were up 3.2%. Travel agents produced an average daily room rate $58.78 higher than consumer internet bookings, which were both up year over year. As a result, overall revenues from the consumer internet channel were up .2% and travel agent revenues were up 13.1%

In the 2nd quarter, consumer internet room nights were down 22.7% and travel agent bookings were up 3.5%. Travel agents produced an average daily room rate $62.20 higher than consumer internet bookings, which were both up year over year. Due to the rate of the internet decline, overall revenues from the consumer internet channel were down 16.7%. Travel agent revenues were up 12.5%.

In the 3rd quarter, consumer internet room night were down 36.2% and travel agent bookings declined for the first time since 2003, by .3%. Travel agents produced an average daily room rate $48.07 higher than consumer internet bookings. Consumer internet channel revenues were down 30% and travel agent revenues were up 3.5%.

Now will someone please remind me why are we trying to shift business from the travel agency/GDS channel to consumer direct?

Chicke Fitzgerald

Wednesday, December 03, 2008

First major downturn for online players

After years of growth, the online sites are all experiencing their first significant year over year decline. Various sources are reporting different statistics, but all of them are headed in the same direction - down. With the Fed now fessing up to the fact that the recession began in December of 2007, this is not surprising. reports that in October, Expedia was down 8.1% month from September and 14.3% year over year. Travelocity is down 14.6% from September and 21.3% year over year and Orbitz is down 15.5% from September, but just 9% year over year. Compete reports on traffic, not bookings or conversions. Sorry for the quality of the above graphic. To view it for yourself, access the free traffic comparison service on Compete.

For the same period, Priceline is actually up month over month at 2.1% and up year over year at 32.8%. Kayak shows a month over month decrease of 12.1% and a 8.9% increase year over year.

Comscore is reporting more pessimistic numbers with Expedia coming in at a 25% decline, Travelocity 16% and Orbitz 23%, all year over year. Their stats on Priceline and Kayak show a 24% and a 93% increase year over year. The Kayak numbers are a bit suspicious, in light of the tremendous delta from the Compete numbers.

Bottom line, is that October is the beginning of a normal cyclical low for the year, reflecting normal seasonality, so the month over month numbers shouldn't be seen in isolation from the year over year numbers.

The year over year numbers are clearly signaling a vote of confidence for the opaque model and metasearch. The OTAs as a whole need to either hunker down and tighten their belts, or they need to search out new sources of revenue. I will hold my tongue on that one........ if you follow this blog on a regular basis, you know what I have in mind.

Chicke Fitzgerald

Monday, December 01, 2008

GDS Companies 30 years later

This year was the 30 year birthday of the GDS industry. Didn't get invited to the party? You are not alone. There was little or no fanfare to celebrate this industry milestone.

I will do my part in the celebration by offering a spectacular discount on my Travel Distribution Library. This set was originally published in 2002.

The first book is on the history of these "E-Commerce Pioneers". The second book was a snapshot in 2002 of the then 4 GDS companies and their international counterparts. The third book is the Essential Guide to Multi-Channel Distribution and most of these premises remain timeless.

Originally $2395, I will offer the readers of my blog $2000 off, or a total price of $395 for the set of 3 books in this closeout sale. If you have people in your company that have recently joined the industry, this set is highly recommended.

And yes, I'm trying to clear the shelves for my new book - Bootstrap Business, coming out this spring.

Just go to the Solutionz website to get details on each title and when you order, select BLOG in the discount box.And if I can get the 3 GDS companies to provide updated stats, there may be a 30th anniversary edition of the ECommerce Pioneers book. We'll wait and see on that one!

Happy birthday guys.....

Chicke Fitzgerald

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