Wednesday, December 29, 2010

The hubbub over American Airlines online

I find it interesting that the travel industry, and online travel in particular, believes that it has the birthright to display 100% of all travel supplier content. Conversely, that suppliers should take for granted that all distribution channels should have the obligation to distribute their products on their terms.

In any other retail environment, there is no such expectation. While I would like for Walmart Neighborhood Grocery to carry every brand, the vendors have to agree to Walmart's terms in order to be on the shelf. And just because Procter and Gamble want their soap products on Target's shelves, Target is under no obligation to give them shelf space if it prefers to instead sell their generic brands.

Distribution relationships, or should I say healthy distribution relationships, are based on two parties that value one another.

Demand aggregation is a key role of distributor. Expedia and Orbitz spend millions annually to drive visitors to their sites. They have the rights as free market companies to name their terms and to value the shelf space. Likewise, Ameerican has the right to decide where their products are sold.

Just don't cry over distribution relationships that a strained and even destroyed when you figure out later that your own distribution channels are not free.

And online players, when the AA loyalists boycott visiting your site for hotel bookings, don't be surprised.

Next we'll revisit the 'lost love' between traditional distributors and travel suppliers.

Tuesday, November 23, 2010

Project 85 gaining momentum

Solutionz and Mandala Research have launched a syndicated study of the drive market.

What is the drive market?  
There are over 1 billion overnight trips taken annually in the US and over 85% of them are by car, motorcycle, RV, truck or van.  Hence the name Project 85.

This holiday weekend, AAA reports that over  94% of all travel will be from those that are driving.

Why is it significant?
In addition to representing 85% of all overnight trips, according to the US Travel Association, it also represents 78% of the $485 billion in travel spending.

Doesn't the travel industry serve this market today?
Almost all technology in the travel industry is focused on the questions that one asks when you are flying to your destination - WHERE are you going and WHEN will you arrive?   This is not the complete dialogue that is needed with the drive market.

Who is sponsoring the Project 85 Study?  
AARP, ASTA, Avis Budget Group, AOL, Wyndham Hotel Group, Travel Guard, Experian Hitwise, WCities, the American Association of Museums and the Destination and Travel Foundation (USTA and DMAI).

For more information, download the complementary white paper, Dare to Differentiate.

Monday, October 11, 2010

Stop the Madness - Some simple steps toward profitability

Today I have been working on finalizing a market assessment report for a client and I have to tell you that I am once again astounded by our very own airline industry. 

Please don't get me wrong.  I like to fly.  Well, not really.  But I used to like to fly.  We had legroom, hot food, decent wine and yes, upgrades to first class. 

That was back when the airlines were making money and wait.  They have never made money.  Not if you count cumulative losses as an industry. 

The U.S. Airlines have lost a cumulative total of $41.9 billion since I got into the industry in 1979.  No, I am no economist, but just exactly how long can this fly?

I have been known to be quite vocal on the topic of distribution, which is presumably why you are here reading my blog.  So I will just highlight a couple of blog entries on The Beat that address my observations and ideas:

Agency Distribution - Do the math!

Hey Mr. Arpey, How's it working for you?  Are you making it up in volume?

Revisit the Fare Structure

One day I'll get a call from an airline who would like to hear my ideas.  That would be right after the GDSs call me to help them with a drive market strategy to help the industry serve the 85% of the billion U.S. travelers that drive instead of fly.  

..... don't worry about me.  I'm not holding my breath.

Wednesday, September 29, 2010

How TripIt and FourSquare have changed my travels (aka Robert Cole are you following me?)

My travel is forever changed by Social Media.  I now have a running battle with Robert Cole as to which one of us is following the other one (literally)! 

A few weeks ago I was in Washington DC for the launch of a new project with a new client and a few days in advance, saw a notice on Tripit that Robert was traveling.  So he was my first official "meetup" due to social media. 

For those not familiar with, it is an amazingly useful tool that allows you to email your various and sundry itineraries to their email address (once you have your account set up of course) and they will extract the itinerary components out of it and put it into a trip file.  Tripit also has an application on LinkedIn so you can alert those who follow you about your travel.  You control what you feed to Tripit, so if for some reason (can you say clandestine M&A activities?) you don't want anyone to know about a trip, you don't have to send it to them.

You can also set up "friends", hence my affiliation with Mr. Cole, and be alerted as to their upcoming travel plans.   If you happen to be planning on travels to the same city, then voila!  The meetup can occur.

TripIt was founded in San Francisco in October 2006 andlaunched in September 2007. The company has raised $6.1 million from investors that include O’Reilly AlphaTech Ventures (OATV), European Founders Fund and SabreHoldings.  Greg Brockway is the President and co-founder.

Then last week I was invited to attend an analyst conference for global outsourcing firm NIIT in Boston.  I have been playing around a bit with Foursquare on my iPhone and as I checked into the Boston Airport and to the Hilton, I saw a note from Robert commenting on how it was great to stay in a hotel where you could literally walk from the airport terminal.  I actually laughed out loud.  Twice in the space of three weeks I connect with the same person via social media, in two different cities using two different social media tools.  What are the chances of that happening? 

Foursquare is a relatively new on the scene, launched in January of 2009, but is growing like wildfire.    It is amazing what $20+m in venture funding can accomplish.  Last month they had 1.5 million unique visitors to their website and are #18 in the social media category on the mobile "app" download list published by

Foursquare is considered a "geo local" application and competes with the likes of Gowilla (paling in comparison with just a quarter of a million unique visitors to its website and #90 on the social media app download chart).  

Here is a list of some of the other players in this space.   Of course, to succeed, it is all about volume and about your ability to "go viral". 

Foursquare is moving out of the digital realm and cementing their viral success with "check in here" window clings for businesses that have a lot of Foursquare check-in activity.  Smart.

The moral of the story is that I am not alone in the impact of social media on my travel.

Social media and geo local applications are changing travel on both a local level and for traditional travel on a global level.

If you don't yet have a smart phone, get one.   If you aren't using at least some of the more popular applications such as foursquare and tripit, get on the bus.  It is leaving with or without you.

Tuesday, September 28, 2010

Survival of the Fittest or Survival of the Funded?

“It’s not the strongest or the most intelligent of the species that survive; it is the one most adaptable to change.”
Charles Darwin

Most credit Darwin with promoting the concept of survival of the fittest. Although fitness and strength are clearly important in business, it is adaptability and flexibility that generally prove to be the greatest assets. And now is a time when these skills are essential, as change is rampant in our industry – on all fronts but most of all in travel marketing and distribution.

This week, four years from the time that LeisureLogix was originally formed, we are finally having to put to rest. 

For those of you that know me personally, you will know that was a strong concept, an intelligent approach and that it was adaptable to the change in our industry.  But two years ago after we launched the first iteration of this product on Travelocity under the name RoadTripWizard, the funding that we needed to take the product to market and to further develop the product for global distribution had not yet been secured.

The curious thing is that less than 30 days after launching on Travelocity, we were the first winners of the now coveted PhoCusWright Innovator of the Year award for the product, a vote from our peers in the travel industry.  And less than 30 days after that, the company was all but shut down, with just a skeleton team left to get the company sold.

In 2008, in the 9 months before we let the last person go, as the crash of the economy made it clear that getting further funding or selling the company was not likely, we accomplished amazing things.

My colleagues [and dear friends] Rebecca McGoye, Connie Goscinski-Smith and Kit Cox helped to completely retool the business model to shift from eCommerce to advertising, as well as to position us for social media and social commerce.  The site was relaunched as in September of 2008, but was used primarily for demos to potential partners and investors. 

Although we were not driving traffic to the site (on purpose that is), we were still experiencing astounding page views per unique visitor.  In 2008 we had 30 pages per unique visitor and in 2009, that went up to 36.7.   And in 2010, with a lot of the key functionality like profiles and saving trips no longer functional, that number actually went up to 38.4 pages.  These numbers are enviable for anyone that understands the ad model, particularly since the site also supported the eCommerce model for air, car, hotel and attractions bookings.  

Now mind you, from the time the idea was conceived to the time that we let the last person go in the fall of 2008, we had raised $7m, the bulk of that from a single lead investor, without whom we could never have succeeded in building the game changing technology.  But, unfortunately it was not enough to get to the next level of development and to take the product to market. 

So today I would argue with Darwin, that it isn't survival of the fittest, or those most adaptable to change, but survival of the funded that matters most in today's business environment.

At least that is true for  This week, it will join the other great, underfunded applications in that great innovation graveyard in the sky.  But one thing is different with this one.

The idea will NOT die.  My lead investor is still a believer, despite the fact that the venture to date has not been a commercial success. 

This week a number of colleagues have applauded my tenacity, but without my lead investor's support, even in failure, I couldn't take the next step.

We are still awaiting U.S. patent approval for our industry changing ideas and are confident that we stand alone in what we conceived and what we built.

The LeisureLogix team cracked the code on multi-dimensional, contextual, filtered search.  We delivered multi-faceted results in a single search result based on who you are at the time of search, not based on past performance or a single dimensional profile or even the contents of a CRM system.

We succeeded in knitting together location-based content, journey planning, travel booking, mapping and navigation.  We created the next generation of dynamic packaging - taking a story from ANY medium (TV, radio, magazine, newspaper, web or just word of mouth) and made it "adoptable" and "customizable".  Amazing stuff really. 

The whole experience from start to finish, although one of the most difficult of my life, was richer for me than any other thing that I have experienced in my 30 year career.  I wrote about it in my contribution to Bootstrap Business, co-authored with Tom Hopkins, Jack Canfield and John Christensen.  To order, click on the image.

While operating in an uncertain business and economic environment is uncomfortable at best, ignoring change is not an option for travel and tourism companies, or the technology companies that serve the industry.

We are moving forward.  The dream will live on.  It too will be richer for the experience - with full integration of mobile and social.  Interested in being a part of creating the true industry game changer?  Tap into the mobile generation.

Friday, August 27, 2010

It's time again for "If Airlines Sold Paint"

This humorous parody of airline pricing is being republished because of a story that appeared in the Wall Street Journal recently entitled "You Paid What For That Flight?"

Alan Hess, owner of American International Travel in Bountiful, Utah originally wrote the following tongue in cheek satire titled “If Airlines Sold Paint”.

We have taken the liberty of updating his soliloquy. This story is a succinct picture of the pricing madness as (rightfully) perceived by the consumer. This may help non-industry people get an idea of the insanity that we have to accommodate in the distribution technology for the industry.

Buying paint from a hardware store ...

Customer: Hi, how much is your paint?

Clerk: We have regular quality for $12 a gallon and premium for $18. How many gallons would you like?

Customer: Five gallons of regular quality, please.

Clerk: Great. That will be $60 plus tax.

Buying paint from an airline ...

Customer: Hi, how much is your paint?

Clerk: Well, Sir that all depends.

Customer: Depends on what?

Clerk: Actually, a lot of things.

Customer: How about giving me an average price?

Clerk: Wow that's too hard a question. The lowest price is $9 a gallon, and we have 150 different prices up to $200 a gallon.

Customer: What's the difference in the paint?

Clerk: Oh, there isn't any difference, it's all the same paint.

Customer: Well, then, I'd like some of that $9 paint.

Clerk: Well, First I need to ask you a few questions. When do you intend to use it?

Customer: I want to paint tomorrow, on my day off.

Clerk: Sir, the paint for tomorrow is $200 paint.

Customer: What? When would I have to paint in order to get $9 paint?

Clerk: That would be in three weeks, but you will also have to agree to start painting before Friday of that week and continue painting until at least Sunday.

Customer: You've got to be kidding!

Clerk: Sir, we don't kid around here. Of course, I'll have to check to see if we have any of that paint available before I can sell it to you.

Customer: What do you mean check to see if you can sell it to me? You have shelves full of that stuff; I can see it right there.

Clerk: Just because you can see it doesn't mean that we have it. It may be the same paint, but we sell only a certain number of gallons on any given weekend. Oh, and by the way, the price just went up to $12.

Customer: You mean the price went up while we were talking?

Clerk: Yes sir. You see, we change prices and rules thousands of times a day, and since you haven't actually walked out of the store with your paint yet, we just decided to change. Unless you want the same thing to happen again, I would suggest you get on with your purchase. How many gallons do you want?

Customer: I don't know exactly ... maybe five gallons. Maybe I should buy six gallons just to make sure I have enough.

Clerk: Oh, no sir, you can't do that. If you buy the paint and then don't use it, you will be liable for penalties and possible confiscation of the paint you already have.

Customer: What?

Clerk: That's right. We can sell you enough paint to do your kitchen, bathroom, hall and north bedroom, but if you stop painting before you do the other bedroom, you will be in violation of our tariffs.

Customer: But what does it matter to you whether I use all of the paint? I already paid you for it!

Clerk: Sir, there's no point in getting upset; that's just the way it is. We make plans based upon the idea that you will use all of the paint, and when you don't, it just causes us all sorts of problems.

Customer: This is crazy! I suppose something terrible will happen if I don't keep painting until Sunday night?

Clerk: Yes sir, it will.

Customer: Well, that does it! I am going somewhere else to buy paint!

Clerk: That won't do you any good, sir. We all have the same rules. And you may be able to buy paint for your bathroom and bedrooms, and your kitchen and dining room from someone else, but you won't be able to paint your connecting hall and stairway from anyone but us. And I should point out, sir, that if you paint in only one direction, it will be $300 a gallon. You might as well just buy it here, while the price is still $13.50.

Customer: I thought your most expensive paint was $200!

Clerk: That's if you paint around the room to the point at which you started. A hallway is different.

Customer: And if I buy $200 paint for the hall, but only paint in one direction, you'll confiscate the remaining paint.

Clerk: No, we'll charge you an extra use fee plus the difference on your next gallon of paint. But I believe you're getting it now, sir.

Customer:  Ok, I will be painting the full room, painting all the way around from where I started.

Clerk:  OK, that is $200.  Do you want a handle and a lid on the can?  That is $50 extra.

Customer: That is insane! Here is $250.  I think I'll drive on my next trip.

Clerk: Thanks for flying - I mean painting - with our airline.

We think you will agree that airline pricing is indeed insane, and in many ways has contributed to the current financial state of the airlines, as it is expensive to maintain so many fare types and to monitor compliance to the plethora of fare rules.

Add to that the negotiated and net fares that have emerged in the post-zero commission world, and the procedural and technical challenges just keep getting more and more complex.

Lastly and most insanely, add the endless add-ons to pricing for seat selection, aisle and window seats, etc. etc. and the insanity is complete.

Friday, August 20, 2010

Individual Relationship Management (IRM) trumps CRM

Part 2 of a 2 Part Series on Individual Relationship Management (IRM) versus Customer Relationship Management (CRM) which is flawed

By Guest Author, John Fleming, Executive Advisor to Solutionz 

Individual Relationship Management - IRM - is not a technology, but a cultural foundation that must exist in a company before customer intimacy can become a reality. 
While there have been many attempts at one-on-one marketing in the past leveraging CRM technology, IRM transcends that and takes you to the next level of customer intimacy. 

IRM requires that you understand the context and situation that your customer or prospect is in at the time that you are interacting with them (the who, what, when, where, how and why behind the interaction). This is the only way that you can be assured that what you are presenting is relevant and meaningful, reinforcing your relationship with the customer and building the engagement at the same time.

CRM will provide benefits operationally as the vast experience with the various CRM tools has demonstrated. And, in many instances the frontline and the customer will have a more meaningful interaction because a new level of attention overlays the transaction. 

Yet it does not answer the IRM questions posed above. And, as such the delivery system (see model below) becomes more static and fails when it comes to being agile enough to adjust to changing relationship circumstances. 

This may be fine if your business is based on operational excellence such as McDonalds, or Amazon. But, if for example your business is based on sustaining a growing member/customer base or attempting to achieve a preferred service provider status; then it is imperative that the individual relationship be a focus of the service engagement. And, note that we are now talking about an engagement rather than a transaction. 

The IRM process must begin with a complete understanding of customer expectations and whether done by survey or focus groups, or whether your front line provides you their observations and insights, this step in achieving an IRM-based culture can't be skipped.  

Inspired by the models and thoughts contained in Service Management by Richard Normann
The engagement of both a service provider and a customer in a relationship that will result in an exchange of value between both parties. Truly, a mindset that both parties have to win or have to feel better about the relationship after the engagement than before.
As stated earlier this outcome is the result of focused effort to build and sustain a cultural foundation that is based on serving customers or serving those that do at every level of an organization.
For more information about achieving Customer Intimacy through deployment of an Individual Relationship Management (IRM) strategy, please contact us at (813) 925-0789.

Thursday, August 19, 2010

The flaw in Customer Relationship Management (CRM) as the sole approach to Customer Intimacy

Part 1 of a 2 Part Series on Individual Relationship Management (IRM) versus Customer Relationship Management (CRM)

By Guest Author, John Fleming, Executive Advisor to Solutionz

For well over a decade, customer relationship management (CRM) practitioners have touted the marriage of customer information with demographic, psychographic and behavioral propensity data to help you get closer to your customer, member, guest or prospect.

While this has taken customer intimacy way beyond what was possible before the application of technology to the challenge of knowing your customers better, there are inherent flaws in this approach.

CRM, being technology driven, largely collects customer data from past transactions with the assumption that past behavior begets future behavior. And, by putting this information at the hands of the frontline while engaging a customer will help the sales or service teams be more informed, increase cross-selling and up-selling, increase close rates, reduce expenses and in general contribute to a firms operational excellence.

The benefits of CRM accrue to the organization. If it were a net sum analysis one can see that what is gained by the firm is at the expense of the customer. This is an exaggeration of course as customers are not led in and tied down as we pry their money from them but they are guided toward options with varying degrees of energy to buy additional options. Service contracts anyone? Or the softer online approach of: “Customers who bought this also bought:…” and the list plays out before you.

This is not a “relationship” this is a system to optimize the output from each customer contact. It does not consider the different preferences of customers at different points in time or with different products, or as we suggest, in different circumstances and with different intent and with different companions.

"Do I have a relationship with 17 million people?" asked Jim VonDerheide, vice president, CRM Strategies, for Hilton Hotels , I don't think I do," VonDerheide said, answering his own question. "Do I interact with 17 million people? You bet." 

The focus of CRM is optimization of transactions and processes and has little to do with managing a relationship.

But, let’s look at the customer side of the transaction. They are always the other side of the sales/service engagement. It would not occur without them. Yet, few of us has the same need or personal mindset every time we are on the customer side of the transaction.

We could be alone or with several kids tugging at our coat tails; we could be with a spouse or a business associate or buying for one of them; we can find ourselves an endless number of personal preferences or personality modes.

To make the customer experience one that meets or exceeds the customer’s expectations we would ideally be able to adjust to these individualized circumstances and ‘relate’ to the customer in a manner that would leave them in a better mind set than when we started. And, feeling that they would want to come back and better recommend us to others. The challenge then is to be able to relate to each customer transactions as a positive engagement of two parties who collectively strive for relationship that can be repeated time and again. Not just an interaction.

The bottom-line challenge is that CRM is one-dimensional, as is the typical customer profile. People are inherently multi-dimensional -- behaving one way [aka having different preferences] when they are alone, another when they are with their spouse/partner, another when they are with friends and yet another when they are with family. Add to that the dimensions of intent and situation and it becomes immediately apparent as to why traditional CRM really cannot reliably predict behavior.

Stay tuned for tomorrow's blog which will present part 2 of the argument for IRM - Individual Relationship Management.

Saturday, August 14, 2010

Driving - New Lost Cost Competition for Airlines? (turns out it is not so new)

For the last 4 years, it is a well known fact that I have been a champion of the drive market. 

This week I was looking back at a book that I co-wrote in 2001 with Kathy Misunas - Multi-Channel Distribution The Essential Guide.  I found this chapter.   Turns out that we first started talking about this then.  

In April of 2002 when this was published, nearly 60% of all travel was by car.  It is now over 85%.  This is not a temporary trend. 

If you would like to learn more about this, click on the image below register to download this free white paper about the opportunity to differentiate by serving this market.

Monday, July 26, 2010

Opportunity = Work

I love this quote by Thomas Edison about opportunity.

"Opportunity is missed by most people because it is dressed in overalls and looks like work."

One of the unique things about opportunity is that in order to benefit from it, you must be in a place where you can both recognize and act on it.

With corporate planning cycles measured in months versus weeks, when opportunity presents itself, how do you react?  Can you reallocate resources from lower priority projects?  Do you have a "skunkworks" group that looks at new opportunities as a part of their regular work cycle?

Opportunity is out there waiting.   Don't be put off by the work necessary to evaluate the benefits of moving away from the status quo.

Make sure that your strategic planning process allows for tactical shifts along the way as new opportunity presents itself. 

If you would like to explore Solutionz' integrated 3-day strategic planning process, which can take you from a concept to an actionable, measurable Microsoft Project Plan in less than 36 hours, see our website.

Friday, July 23, 2010

Top 10 Distribution Fallacies

Fallacy #1 - Consumers will purchase how and where I want them to.
Although this seems hard to believe, there are still suppliers and intermediaries who believe this to be true. They are myopic in their approach to customers and do not believe the power has shifted to the consumer, nor do they understand the role that this fact plays in their future distribution success.

Customers choose the channel and the vehicle used to purchase travel. They vote with their wallets.

Fallacy #2 - If distribution costs come in line, the industry will be healthy again.
Distribution is a portion of marketing, and marketing is a key cost component for suppliers, but other costs (like labor and capital) have a much greater impact on the bottom line, as does revenue.

In many sectors of the industry, pricing and yield management functions are flawed. Suppliers are shifting distribution to lower cost channels, but are getting less for their product on average as a result of the focus on price as the channel differentiator.

Distribution cost control can help the P&L, but it does not ensure the health of the industry.

Fallacy #3 - Revenue is King
All revenue is not good revenue. As you operate on a P&L basis, if your costs constantly exceed your revenue, you will eventually fail.

Top line growth may appear beneficial, but cost (vs revenue) as part of the success equation cannot be denied.

Profitability is king, long live the king.

Fallacy #4 - A customer is a customer is a customer
Customers come in all shapes, colors and sizes. Once you think you know your customer, they change behavior [and channels] without notice. Sometimes it is a shift due to a change in purpose of trip or who they are traveling with.

Segmentation of your customers and targets and understanding their purchasing behavior are important steps toward establishing a rational multi-channel distribution strategy.

Fallacy #5 - Technology is a business driver.
Technology may be an enabler, but it is not a driver (unless you are a technology company).

Your business should seek out the best solution (both functionality and cost) based on your needs or those of your customers, but new technology offerings should not overly influence your business strategy.

Create your strategy and then obtain technology solutions as part of your operating plan to facilitate the implementation.

Fallacy #6 - Business travelers will pay whatever we charge.
It has been proven [in the recent past] that businesses are indeed price sensitive and that they can and will shift their travel spending or even eliminate it altogether.

With the price transparency that the Internet facilitates, business travelers are finding the fares and rates that are clearly intended for the leisure/occasional traveler. This is dramatically eroding overall supplier revenues, and in many cases the savings in booking fees and commissions pales versus the loss in revenues .

Fallacy #7 - GDS (and travel agents) are dinosaurs.
GDS and travel agents may be part of the travel distribution heritage, but they are not extinct. If the longevity of the dinosaur is any indication, both the GDS and travel agents will be with us for some time to come.

Although challenged by the hyper-growth of the Internet and the shift of business to new players, each are utilizing the Internet in new, heretofore unforeseen ways to expand their businesses.

Fallacy #8 - Build it and they will come.
Although this phrase is normally attributed to technology vendors, it can be applied to almost any business.

A key problem with many new products and services is that market research and/or customer input isn’t completed in advance of introducing the product. And other issues could be that the business model and/or the market penetration process are not well thought out.

Customer acquisition won’t necessarily follow a decision to shift (or even eliminate) channels. It certainly isn’t automatic!

Fallacy #9 - "Going direct" is always the cheapest channel.
Many businesses do not consider all their costs when making this assumption. Direct distribution may offer lesser costs than some other channels, but if customers desire to purchase via these other channels, it may not be the cheapest route – especially if you lose the revenue.

Fallacy #10 - The Travel Agency Channel is the first one that I should eliminate
While this may be true for some suppliers, (i.e. for airlines or other suppliers that have eliminated base commissions), others may find that the agency channel has become a more cost effective channel, even with GDS usage/costs. [Don't forget that this may be the only variable cost channel left - where you only pay if you sell something.]

Analysis of your revenues and your costs for this channel are essential. If you sell higher priced or margin products and services through this channel than you are able to on your own Web site, then you may be losing more in revenue than you are gaining from the reduction in booking fees and commissions.

And if you heavily utilize wholesalers and consolidators, or the new “merchant” model where you may be giving up 20-30% off your rack rate pricing, then this group should be your first target to review, not retailers.

This timeless list of fallacies was first published [sans the parenthetical comments] in 2001 in The Essential Guide to Multi-Channel Distribution, by Chicke Fitzgerald and Kathy Misunas.

A Potent Combination - Customer Centricity and Multi-Channel Distribution

Customer Centricity meets Multi-Channel Distribution
Plotting out your strategy for distribution can be a daunting task. 
  • Do you focus on your consumer direct distribution via your website?  
  • Do you invest in social media?   
  • Do you explore social commerce?  
  • What about your call center? 
  • Do you still invest time and energy in the travel agent channel and the GDS? 
At the end of the day, whether we are working with suppliers on their distribution strategies, or working with travel intermediaries on how to most effectively reach their customer, there is one approach that is the winner every time. 

Put the customer [aka guest] at the center of the equation versus your products and services and you will find it much easier to see the patterns of how each channel is used and then you can take the next [and in my mind the most critical step] and see which channel has the best yield.

If you are a supplier and not doing channel profitability analysis on a regular basis -- before you start headlong into a strategy of channel shift to consumer direct distribution -- then you owe it to yourself to stop and invest time in that essential step.

And if you need help......  you know where to find me.

Monday, July 19, 2010

.....You had me at differentiate

To download DARE TO DIFFERENTIATE, click HERE.  Once you register, you will receive an email with instructions of how to download this free "not-so-white paper".

Monday, July 12, 2010

Why differentiate?

The more competition you face, the greater the need to highlight the differentiation -- the unique advantage of your product or service -- in order to succeed in the marketplace.
Evan Carmichael, entrepreneur and speaker

Industry leaders do not get where they are by deciding to commoditize their products and services.
Successful companies in all industries have long engaged in head-to-head competition in search of sustained, profitable growth. They have fought for competitive advantage, battled over market share, and struggled to balance differentiation with both risk and available resources for development.
The companies in the travel industry are no different.

Over the course of the last 30 years, the various constituents of the travel industry have knitted together an amazing distribution ecosystem, marrying members of the value chain with consumers to support both business and leisure travel, serving individuals and groups alike.

The value chain includes a wide range of travel suppliers [air, car, hotel, tour, cruise, rail, attractions, insurance, destinations and content companies], marketing products and services to consumers through wholesalers, consolidators and retailers, both offline and online.

Travel is sold through retail establishments, call centers, through catalogs and newsletters, online, mobile and even via social media tools. By and large, the consumer is the one who decides how they elect to buy (e.g. through which channel) and from whom. Billions of dollars are spent annually using traditional and online advertising and marketing methods to try to sway that decision.

A host of technology, service and content companies provide a wide set of tools and aggregation services to assist in the marketing and sales of the travel products and services over a number of channels.

The model for the industry is largely the commerce model or stated more simply, the sale of products and services for a fee. Various constituents benefit from that transaction, from the retailer that typically earns a percentage based commission on the sales price, to the GDS company that earns a booking fee for putting the supplier’s product on their global “shelf” in front of thousands of retailers, to the supplier themselves who earn the net of those fees.

Destinations make money from bed and restaurant taxes and membership in their destination marketing organizations.

Technology companies make license fees and service fees from the provision of the tools needed to support the value chain.

Online players enjoy commissions, as well as augmenting those revenues with advertising.

I could go on and on, but while the models in our industry could use retooling, the model itself is not currently a source of differentiation.

But it could be.

Sustained, profitable growth often comes from stepping outside the status quo and looking for new opportunities for differentiation, including new models and new markets.

- an excerpt from DARE TO DIFFERENTIATE -  Register HERE to download FREE

Friday, July 09, 2010

Inside Business segment on the Solutionz Group

Fred Thompson hosts the Inside Business show and in this segment showcases the Solutionz Group.  If you need more information, check out our website.

12 Step Program for Air-Centric Travel Industry Executives

The Air-Centric Executives Anonymous Creed
  1. We admitted we were powerless over our past behavior in focusing only on WHERE and WHEN the customer was traveling—that by focusing on just the 15% of travelers that fly that our future revenues had been limited for our stakeholders.
  2. Came to believe that a Power greater than ourselves could restore us to sanity.
  3. Made a decision to turn our customer focus to the whole traveler, that drives as well as flies to their destination, whether on business or for leisure and “life” travel.
  4. Made a searching and fearless moral inventory of ourselves as companies and our reliance on the status quo and the cash cow.  I [we] have vowed to adopt a long term, sustainable business model that is multi-faceted - beyond booking fees and transaction oriented commissions.
  5. Admitted to God, to ourselves, and to another human being the exact nature of our self-centered and product-centered viewpoint.
  6. We are entirely ready to brainstorm how to get from where we are in our focus to true customer centricity, removing these corporate defects of character.
  7. Humbly asked our customers to forgive us our shortcomings and learn more about what they really do when they travel by car and how we can shift our efforts to make that easier.
  8. Made a list of all ways that we have focused instead on our own products and services and our profits, to the exclusion and sometimes to the detriment of our customer (B2C) or the customer of our customer (B2B).
  9. Made direct amends to our clients that need a drive market solution, by shifting our focus away from WHERE and WHEN they are traveling to WHO they are traveling with, WHY they are traveling, WHAT they like to do when they are on this particular type of trip and HOW they are traveling.
  10. Continue to take a “focus” inventory and when we are wrong promptly correct it.
  11. Seek continuous input not only from our customers, but from our front line that support the customer.
  12. Having had a spiritual awakening as the result of these steps, we tried to carry this message to the rest of the air-centric travel and tourism industries, and to practice these principles in all our product, program and technology development efforts.


  • Wednesday, July 07, 2010

    Stop the Obsession with the Air Traveler

    Did you know that 85% of all overnight trips in the U.S. are taken by car?  And that 78% of all spending on travel in the U.S. is done by people traveling by car?  Hitwise reports that 6 out of the top 10 search terms in the travel category include mapping and driving directions.

    So in light of all that, how to we account for the travel industry's obsession with the air traveler?

    The obsession that the travel industry has with the air traveler is superficially logical.  The foundational technology for the retail side of our industry was built by the airlines.  And the air traveler spends more per trip; stays away longer and quite frankly, the mechanics behind planning a point-to-point trip are much easier than one taken by car.   

    However, with air travelers representing just 15% of all overnight trips in this country and just 22% of all travel-related spending, if you are looking for a competitive edge and if you need to grow, you owe it to yourself to evaluate the untapped drive market.

    To download a COMPLEMENTARY copy of a new paper on the drive market, entitled DARE TO DIFFERENTIATE, click HERE.  

    Friday, May 21, 2010

    AAA reports that Memorial Day traffic will be up - with the drive market representing the lion's share

    NEW YORK ( -- Memorial Day travel is expected to increase this year, thanks to healthier economic conditions, according to a report released Thursday by motorist group AAA.

    A total of 32.1 million American are planning to travel, a 5.4% increase from last year. They'll spend an average of $809 on their holiday trip, 1.1% less than last year.

    "While the economy continues to be rocked by waves of occasional uncertainty, improved economic performance from one year ago should cause more Americans to take vacation this Memorial Day holiday weekend," Glen MacDonell, director of AAA travel services, said in a prepared statement.

    AAA travel agents have been reporting double-digit spikes in the percentage of travelers making advanced bookings for tours, cruises and hotels, he added.

    The report said 87% of travelers will be driving to their holiday destinations, a 5.8% jump from last year -- thanks in part to gas prices that AA expects to stay under $3 per gallon, on average.

    While airfares are unchanged from a year ago, air travel is expected to rise 2.4% to 2.14 million. Another 2 million Americans will travel by rail, buses or watercraft.

    Vacationers staying in hotels will get a slight price break: Hotel rates are 1% to 4% lower than last year, AAA found, with travelers spending an average of $99 to $142 per night.

    Thursday, May 20, 2010

    What are people searching for in the travel category?

    Hitwise collects data.  A lot of data.  They observe behavior and patterns.  One of the top industries that they track is the travel industry.

    One pattern that has not changed substantially over the past 3 years [the time that I've been tracking it], is the percentage of search that is devoted to the drive market.  Out of the top 10 search terms in the travel category, six of them have to do with maps and driving directions.

    This is not at all surprising, particularly when 85% of all trips over 75 miles from home in the US are by car, and not by air, and 78% of all overnight trips are by car.

    What is surprising to me (still.....) is that the mainstream travel community (online, offline, technology providers, GDS) still focus on the 15% of overnight travelers that fly and virtually ignore the traveler that drives.

    Could this still just be the "Irresistable Pull of Rational Behavior" that I wrote about in August of 2008?

    I would love to hear some feedback on this topic.

    Tuesday, May 18, 2010

    Correction on yesterday's post on online travel agency decline

    CORRECTION TO 5/17/2010 POST

    According to ARC, the current air ticket sales stats actually show the OTAs still growing year-over-year, with the RATE of growth declining a bit (see the chart in the original post).  Clearly the rate of growth in business travel via the Megas is making the OTAs growth look more mild, but the OTAs are not actually in decline.  

    Monday, May 17, 2010

    ARC Reports that online travel agency ticketing is declining

    After several years of online agencies leading growth in air ticket sales, the last few months show a distinct decline for the online sector.

    In this month's travel agency channel segmentation report, the Airline Reporting Corporation reports that online travel agency transactions are down.  Picking up the slack are the "Mega" agencies (Amex, Carlson, Hogg Robinson, BCD). Growth is also picking up for "other" (aka non-mega) offline agencies.

    Overall air ticket sales by the 15,559 US agencies is  down month over month by 5% as of the end of April, with domestic sales declining 6% and International sales declining 3% month over month.

    Monday, April 26, 2010

    Travel Game Changer - What does Google's potential acquisition of ITA mean?

    Last week, Bloomberg released a story "Google (NASDAQ:GOOG) Said to Be in Talks to Buy Travel Company ITA".  They report that venture funded ITA may be seeking as much as $1b.

    Who is ITA Software and why are they appealing to Google?

    Whether this rumor is indeed true, what would this mean for the GDS & OTA industries?

    How would this acquisition impact Google?  Would it create new opportunity for Yahoo (NASDAQ:YHOO) and Bing if Google's travel advertisers decide to boycot their new direct competitor?

    This article by Chicke Fitzgerald is being republished.  It was originally published on GLG News, intended for the investment community.  For my travel industry friends, you will have to take off your traditional travel industry lenses and put on your Google lens before reading this.  
    April 23, 2010

    Just last week I was meeting with one of the major GDS companies as we talked about possible scenarios in the marketplace, I held up (apparently presciently) the book by Jeff Jarvis, What Would Google Do? and suggested that if a company with Google's deep pockets truly decided to get into this business, it would be a game changer.

    Let's begin the analysis with who in fact is ITA Software?  The company is based in Cambridge Massachusettes and was founded by ITA CEO Jeremy Wertheimer and a group of computer scientists from the Massachusetts Institute of Technologyin 1996.  

    In the early days, they were called a GNE (LON:GNE), or GDS New Entrant, competing head to head with Farelogix and G2Switchworks.  GDS stands for Global Distribution System and originally, ITAs mission was to connect the travel agency network directly to the supplier network, bypassing the established leaders, Sabre, Amadeus, Galileo and Worldspan (the latter two are now known as Travelport).  Over time, that model has shifted and ITS now primarily a provider of software and services to online travel companies and airlines.  Farelogix is still operating true to its original mission and G2Switchworks was acquired in 2008 by Travelport.

    According to the National Venture Capital Association, ITA has raised $111.4 million in venture capital.  Their investors include General Catalyst Partners and Sequoia Capital.  Hoovers reports that their annual revenues are $51m.  

    ITA Software's primary product, QPX, is a search and pricing system built into airline and travel companies' Web sites. The Web sites are typically used by travelers to search for flights, fares, and related information. Some of the company's clients include major airlines like United, American, and Continental, and online travel companies like Orbitz and Hotwire.

    So the next question is why would they be appealing to Google?  What would make a company step into a space owned by some of their largest advertisers -- channel conflict of mammoth proportions?  Some would look at the obvious ability of Google to simply disintermediate the online travel agencies and even the metasearch players (such as Kayak and Microsoft (NASDAQ:MSFT) Bing's Farechase) with ITA's QPX product.  Powerful yes, but key enough to tick off your customers?  We can be absolutely certain it is not ITA's airline software that is appealing to Google. 

    Knowing Jeremy Werthheimer and his amazing technology team, I am putting my money on Needlebase being the real driver of this transaction.  ITA has been developing this product in stealth mode over the past few years.  While one of my travel colleagues touted this as a travel tool for non-air types of inventory, if you read their product capabilities, this is really all about taking disparate data sources and making sense of them in an astounding way.  Their frequently asked questions states "Now, with Needle, we're aiming to revolutionize other forms of vertical search, too.  By dramatically lowering the time and cost required to aggregate a comprehensive database of any domain, we hope to extend our impact beyond air travel to literally any domain where the data is currently too disaggregated, unpolished, or difficult to use efficiently."

    The next question is how this transaction would (at least theoretically) impact the GDS companies and the major online travel players. 

    eCommerce is not new to the travel industry.  For over 30 years, the GDS companies have been at the center of the travel distribution value chain, electronically marrying buyers through the travel agency community (online and offline) to a wide range of global travel suppliers.  They not only aggregated the sellers (the inventory), but also the companies that serviced those that travel for both pleasure and for business.  The GDS business yielded well over $10b in revenues last year. 

    The online travel players have been selling travel online for over 15 years and came on the scene in the mid-1990s as a disintermediator of the traditional brick and mortar travel agency.  PhoCusWright's Online Travel Overview Eighth Edition for 2009-2010 projected low single digit growth in this sector, to $93b in 2010, with their offline counterparts producing $145b in leisure and unmanaged business sales.

    Clearly if Google steps directly into the travel value chain, they will disintermediate more than just the offline travel agent, they will get squarely in the face of the online players as well.  And since the GDS power both of those channels, there would most certainly be a major impact to their transaction volume for air ticket sales, which is what drives their business model. 

    But if Google is really after Needlebase, then the impact and the threat won't be nearly as great to the "old guard".

    Nevertheless, rumor has a way of skewing behavior, irrespective of what is really true.  Travel suppliers and OTAs may begin spending more with Bing and with Yahoo!, just as a matter of principle.  So just the thought of Google becoming Google Travel or GTravel, may drive away advertising dollars.  So the rumor itself may become the self-fulfilling prophesy that actually drives Google to leverage the travel assets of ITA.

    As always, I continue to ponder the irrational behavior of all of these players, continuing to focus on the air traveler and how to meet his or her needs, whether traveling on business or leisure, as this represents just 15% of the trips taken each year in this country.  The other 85% of travel is done by car and demands a solution that integrates content, planning tools, booking tools, mapping and navigation.  Needlebase could be an interesting part of that equation.

    Stay tuned.  And if you need something to occupy you this weekend, read Jeff Jarvis' What Would Google Do?

    Analysis Author

    Chief Executive Officer
    Solutionz Group International, Inc.

    Friday, April 23, 2010

    GDS - Private to Public and Back Again - eCommerce Pioneers continue their evolution

    Amadeus IT Group SA (Amadeus) is one of the world’s leading IT solutions providers for the travel and tourism industry, offering transaction processing capabilities to travel service providers and travel agencies.

    On Tuesday of this week Amadeus announced plans to launch their IPO April 29th on the Madrid Stock Exchange.  They will seek to raise 910 million euros ($1.23 billion) to pay off debt.

    Amadeus competes head to head with Travelport and Sabre, both privately held [by Blackstone and TPG/Silverlake respectively]. 

    In fact, this should be called an SPO (secondary public offering), since the company began in 1990 as a privately held venture, backed by SAS, Iberia, Air France and Lufthansa and then went public with its true IPO in October 1999.  That original IPO realized EUR 848 million.

    The company is majority-owned by WAM Acquisition, whose shareholders are London-based private-equity firms BC Partners and Cinven and the carriers Air France, Iberia and Deutsche Lufthansa. Amadeus has over 9,000 employees.

    While the total offer size is EUR1.36 bn, Amadeus intends to raise EUR910 mn from the primary offering. At the mid-point of the offer price range of EUR9.20 – EUR12.20 per share, the company will have to issue 86.75 mn new shares to raise the intended capital.

    Along with the primary offering, the company’s existing shareholders are offering 36.96 mn shares. At the mid-point of EUR10.70, the selling shareholders will receive EUR395 mn. The common shares are to be listed on the Madrid stock exchange on 29 April 2010.

    Amadeus was the last of the three GDS companies to go public in the late 1990s and the last of the three to become owned by private equity when they were acquired by BC and Cinven in early 2005.  But now, they are the first back to the IPO gate, due to the cancellation of Travelport's offering in February. 

    Amadeus has shown the strongest results over the last 10 years of all three companies, so being last to the public and then private markets the first time around hasn't hurt their odds of success. 

    Source:  Company Reports and Hoovers

    And sorry Sabre and Travelport -- while double digit growth is great this past decade, triple digit growth wins.

    Good luck Amadeus on your IPO.  If history repeats itself, your compatriots won't be far behind.

    Friday, February 12, 2010

    The Future of the GDS as privately held companies (reprinted from GLG News)

    Analysis of original article from Business Week

    Travelport cancelled its IPO and debt tender offer this week, citing "volatile equity market conditions". Travelport started the share sale on Feb. 1 with a marketing process to sell between 383 million and 528 million shares at a price of 210 pence to 290 pence apiece. The IPO would have been the biggest in the U.K. since 2007, giving the company a so-called enterprise value of 8.8 times earnings before interest, taxes, depreciation and amortization.

    The real question in looking at the future of the Global Distribution Systems is a broader one than just the IPO/Debt Tender Offer of Travelport. Even if market conditions improve and travel demand rebounds, their future is still in question if they continue to embrace the 30 year status quo for this industry.

    Sabre and Apollo (one of the predecessor brands to Travelport) were first launched into the travel agency market when the respective brands were divisions of American and United respectively. Beginning in the late 80s and culminating in 1990 TWA's Pars brand and Delta's Datas II brand were later merged into a separate company called Worldspan. About that same time, Amadeus was formed in Europe as a joint venture between SAS, Air France (EPA:AF), Lufthansa and Iberia (MCE:IBLA), while Galileo was formed by a separate group of European carriers. In Asia, around the same time, Abacus was formed by 13 carriers.

    Nearly 20 years later, we have just 3 global players (4 if you count Abacus separately, as Abacus is hosted on the Sabre platform and Sabre has part ownership of the Asian company) - Amadeus, Travelport and Sabre.

    Over 30 years after the formation of the travel agency global distribution system divisions, these companies still are true to their roots, with the airline traveler as their primary target. In all of these companies, they still rely on booking fees and other IT revenues from airlines for over 90% of their revenues.

    As airline fares have declined over time, the fees charged by the GDS companies have increased substantially and as a percentage of the total fare are now seen as "exhorbitent", even though the GDS customers (the travel agents) continue to consistently bring in a higher yield average ticket than their online counterparts (including direct distribution by the carriers themselves.

    In the US, 85% of all travel is by car, yet the online and offline travel communities, as well as the GDS companies have completely ignored this key market, the drive market. Hitwise reports that 7 of the top 10 keywords in the travel category are mapping and driving directions, yet the GDS companies have let that traffic all flow to the mapping companies, who do not do a good job of true "trip planning", versus just point to point mapping.

    The arguments given by the GDS in why they are not moving in this direction would have you believe that it is a completely different market. Yet our research shows that it is exactly the same traveler under different circumstances. They still need hotel reservations along the way, but the GDS does not provide the tool set that helps the travel agent plan a trip that does not include an air segment.

    I have always been an enormous fan of the GDS companies and their ability to bounce back from war, rumors of war, terrorism, global outbreaks such as SARS and natural disasters and even economic crisis. Those external threats tend to have a limited impact over a limited period of time and like the IPO market, are cyclical.

    The threat facing these companies is not external, it is internal. Unless they realize that they are making 90% of their revenues on just 15% of the market and that there are new models and new products that can help them tap into the other 85%, potential investors are going to look at the external threats, including direct distribution by airlines to consumers and weigh their willingness to invest, whether in an IPO or in debt instruments.

    The GDS companies have dominated distribution for nearly 30 years in the airline arena. I'd love to see them dominate the drive market for at least as long. When they are ready, I'm ready to help.

    Editors Note: The GDS systems (then known as CRS) were first installed in travel agencies by the airlines in 1978. By 2000 all of them had filed public offerings. In the last decade, all of them were taken private (Sabre by TPG and Silver Lake, Galileo (later merged with Worldspan) by Blackstone and Amadeus by BC and Cinven. Of the three, only Amadeus still has partial ownership by 3 of the original airline owners, Lufthansa, Air France and Iberi

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