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Thursday, February 26, 2015

Good Mischief - Blazing a Trail

"Whether your ship is big or small, always blaze a trail."


I believe in trail blazing and leaving a legacy. It is the air that I breathe.

Whether your company is the industry leader or you are a new entrant, or somewhere in between, adding incremental features or benefits to your prospective clients just isn't enough to blaze a trail.

Talk to your customers. Talk to the ones that you were never able to close. Talk to those that you have lost. Talk to those that are mad at you.

They are the keepers of the secrets of your success. They will tell you what they need to blaze their own trail.

Blazing a trail is "good mischief". Go see what mischief you can stir up today.


Chicke Fitzgerald
Chief Mischief Officer

Team Mischief - Who is your wing man?

A wing man is someone that will always stand by your side and who will have your back. 

In this photo, even though the main airplane seems to be totally self-sufficient, with a huge radar component embedded in the fuselage, this pilot still needs his wing men.

I am so blessed to have a number of people in my life who play this role. 

You know who you are.

Who is your wing man?

Having one or more key people in your life that you know will always be there is critical.  These people may or may not be a part of your direct team.  

It is good mischief to have a wing man [or woman].   I call them the board of directors of my life.
They are the first people that I call when something good happens or when there is a crisis.

Write down those names right now.  And write them a handwritten note telling them how much you appreciate having them in your life.

Chicke Fitzgerald
Chief Mischief Officer  

Monday, February 23, 2015

Marketing Mischief: Travelport 2014 Results - $3.5 billion left on the table

Travelport today broadcast their investor call to talk about their results.  I am struck by two things.

First, Gordon Wilson shared that their "attachment rate" of a hotel to an air ticket is up to 43 hotel segments out of 100 air tickets sold.   While on the face, this sounds really wonderful, the focus on selling hotels to an air traveler is actually the core problem of the travel industry and a major opportunity for the GDS companies.

In the US alone, out of the 1 billion trips taken that involved an overnight, 87% of those were by car and NOT by air.  Therefore, if you are measuring your attachment rate to air, then 43 out of 100 is a miserable number.

In the US, there are 130m trips by air, so 43% of those are just 55.9m trips.

That leaves the hotel bookings for 870m trips on the table.  At Travelport's average segment revenue of $4.10, by my calculations, that is $3.5 billion left on the table.  

The continued focus on the air traveler will eventually be the death of the GDS, as someone else will snatch up their dominant market position, gained by this air focus over the last 30+ years.

Second, I noted that without the sale of Orbitz Worldwide in 2014, Travelport would have lost $265m.  

That is a sad state affairs for a mature business, but it is a result of focusing on a stagnant sector of the business (the air traveler) and ignoring the part of the market that is completely underserved.  Marketing mischief at its finest.

Nuf said.


Thursday, February 12, 2015

Brand Mischief - Just how many brands can one OTA manage before consumers catch on


We have all shopped at the grocery store and seen competitive brand such as Tide and Gain sitting next to one another on the detergent shelf, with one as a premium brand and one as a budget brand.   The same with Pampers and Luvs.   Makes sense.  Get the high end and the low end.  Either way you win.  

P&G's 23 brands span beauty, baby, family, home care, health and grooming.  With those brands, the company has revenues of $82b and a market cap of $242b.   Their brands are each worth roughly $10b.

Expedia is one of the top online travel agencies (OTA) in the country.  It is traded on the NYSE: EXPE and has a market cap of $11b just for its own brands, which include Expedia.com, Egencia (corporate travel), Hotwire.com, Hotels.com, Trivago, Venere.com, CarRentals.com, ClassicVacations.com.  Expedia also owns more than 56% of Chinese site eLong.  .  

The company has recently gone on a brand spending spree to bolster traffic, revenues and of course profitability.  It now boasts nearly as many brands as P&G, but all selling the same basic products, with hotel rooms and airline tickets at the top of the product list.

In late 2012, Expedia bought a majority stake in relative newcomer, Trivago for $632m.  Recently Expedia purchased Travelocity from Sabre for $280m and just today announced they were buying rival Orbitz for $1.34b.  

Bravo Barney Harford and company for getting 25% over your market cap for the company.  And for Barney, who used to be an executive with Expedia, it is a bit like coming home, but the home is getting a little crowded.  

By the time Expedia had acquired Travelocity, they had shed their Travelocity for Business corporate travel counterpart and LastMinute.com.  They had also sold Travelocity's Partner Network to none other than Orbitz.  So the partner network, which Expedia didn't want, is now theirs by default. 

The interesting thing is that when you look at their traffic, you wouldn't think that there should be such disparity in valuation of Travelocity and Orbitz, but the fact of the matter is that Expedia had already taken over the operations of Travelocity more than 18 months ago and all that was really left was the brand itself and a very small team focused on branding and marketing.    

So now we have just two major players in the US in the OTA space.   Priceline, whose primary brand has approximately 23 million unique visitors a month and Expedia.  Combined, just the two new sister brands give Expedia nearly 22m additional unique visitors per month, not counting all the "children" of Orbitz.  Those include Cheaptickets, EBookers, Orbitz for Business (who competes head to head with Egencia), HotelClub, RatestoGo, Away.com, Gorp.com, Adventure Finder and Trip.com.  

Had Expedia hung on to TripAdvisor, rather than spinning it off in 2011, it would now be head and shoulders ahead of Priceline, with TripAdvisor's 80.6m unique visitors per month.  Spin off remorse???  

Even funnier, if Travelocity had not shut down iGoUGo last year, Expedia could now compete with TripAdvisor head on.  

All I can say is I hope that they have a lot of brand managers and a big pot of money to drive traffic to their now more than 20 brands that all sell hotel rooms, air tickets and car rental as their primary product lines.



But my concern goes beyond the brand spending that will be necessary to compete with the Priceline/Booking.com/Kayak machine.  How long before the consumers catch on that these sites are all owned by the same company and provide precious little differentation.  Oh and did I mention that all of their brands focus on the air traveler and only 11% of all overnight travel in the US is by car? 

Brand mischief at its finest.

Stay tuned,

Chicke Fitzgerald
Chief Mischief Officer

 


Tuesday, February 10, 2015

IPO MIschief - The GDS Industry: An oligopoly where all three players have gone public twice. Really?



Consistently, as I look at the statistics on my blog, one of the top blogs is the one where I talk about the biggest GDS (Global Distribution System) company.  This week was no different. 

I can only imagine that the rumors about Sabre buying Abacus are fueling the renewed interest in my 2011 blog "Who is the biggest GDS".  Or perhaps it is the fact that Orbitz is on the market and anyone thinking about an Online Travel Agency (OTA) has to first understand the Global Distribution System (GDS) market.

For those that don't know, the three main oligopolists are Sabre (based in Dallas), Amadeus (based in Madrid) and Travelport (based in Atlanta with executive offices in the UK).  I know that term sounds obscene, but truly, I looked it up!

One of the things that you may not know is that all three of these companies have had not one, but two public offerings.  That is right, two IPOs each.   Personally I think they should have to call them SPOs (secondary public offering).  

Really, I don't think that it matters a bit which GDS is bigger.  Big can be measured in the most users, the most countries served, the most bookings processed or the most revenue or profit.  But what really matters is what the market believes that the company is worth.  
  
For the GDS companies that is not only what the public markets think, but what they have been able to get the Private Equity community to invest and what kind of an exit the PE companies can get from taking the company back to the public markets after going private yet again.

I have to admit that I completely missed Travelport's most recent $480m IPO, where they sold approx. 68% of the stock.  The offering is Travelport’s second attempt to go public in four years and that doesn't count their first IPO in 1997, which brought in $783m. The company said in 2010 that it planned to raise almost $1.8 billion in a London IPO. The share sale was later canceled due to volatility caused by the European sovereign debt crisis.  When measured by revenues and by profits, Travelport comes in third.  The company comes in second when measured by booking share.  Overall, a solid 3.

Earlier this year Sabre went public, selling 20% of the company for $721m.  Their first IPO was in 1996 for $545.5m.  TPG and Silverlake took the company private in 2006 for $4.8b. The company currently has a market cap of $5.4b.  They are second in revenues and profits, third in bookings and #2 in valuation.  Overall, a solid 2.

By all measures, Amadeus is still the biggest - the most bookings, the most revenue, most profitable and is valued the highest by the marketplace, by a huge margin.  Amadeus also went public this year, for the 2nd time.  Their offering was a resounding success, raising $1.74b in Europe's largest IPO since 2008.  This likely accounts in large part for their market cap of $17.9b.  


While the full year 2014 results won't be available from the three companies for another 3 weeks, I decided to put together an infographic today that gives a snapshot of the GDS companies.  I promise to update it at the end of February when all their results are in.

Stay tuned.





Monday, February 09, 2015

Execution Mischief - Choose your Tools Wisely


On Friday we talked about what happens when you develop a plan and do not have an execution plan. The statue of the bicycle was a visual representation of what can happen when you beautifully bind your plan and put it on the shelf.

I loved one of the comments that I received via email from a colleague in Sri Lanka who said "that is like keeping the plan on a high pedestal and daily making an incense fumes offering to the plan". He also likened it to "a patient who after the written prescription is given by the doctor, only reads it three times a day", never getting it filled.

Today we are talking about execution of your strategy. The tools that you utilize to develop the detailed plan and to get things moving are as important to a strategic plan as the strategy itself.
Our graphic today points out that you can't take the same old tools and believe that they can work in every situation. We call that execution mischief.

Of course if you don't have nails or screws or staples, then having a hammer or a screwdriver or a staple gun is futile.

The starting point is getting a plan in place that is a stretch, but that it is still achievable. Clarity and specificity are a must.

The plan must cover WHO will be responsible, WHAT you are trying to accomplish, WHEN it will be done (broken down into milestones), WHERE each initiative will be done (internally, with the customers or with your suppliers) and HOW you will get each initiative done.

If you are implementing a strategy that impacts the entire company, then you need an integrated plan. That is best accomplished by talking through the plan with a small, dedicated group that represents each of the impacted areas.

There are firms that specialize in integrated planning. Make sure that if you hire an external resource, they provide an executable, measurable plan as the work product from your planning sessions.
If you are trying to roll out a plan that is complex or spans more than three months, you need an experienced project manager (PM) that can stay on top of all of the tasks and move people along to meet their commitments. Sometimes it works best to hire someone from the outside to be the PM, reporting to someone in the C-Suite, as that way they will not be put off by the team members as an internal staffer might be.

No doubt abut it, your strategy and the budget must be aligned. But at the risk of mixing metaphors, your budget can't be the tail that wags the dog. Starting with the budget would be like hitting the hammer with the nail. I think you would agree that is total mischief that will never help you build anything.

Your team will believe in your ability to execute if you have the right tools in your hands to meet the task at hand and if you allocate resources to actually measure your results against the plan.

Investing in an integrated planning process will save money later on. Products will get to market faster, customer service will improve quicker and profits will materialize sooner.

Saturday, February 07, 2015

Strategic Mischief - Confusing form with motion


When I saw this picture, I just had to write a blog about it. Ridiculous and beautiful at the same time, everyone knows that this bike is art, not transportation. 

Having been a strategic consultant for some of the top companies in the travel industry for the better part of 20 years, I have worked on lots of business plans. I have watched many firms put an enormous amount of energy into research and planning and have presented to more boards than I can remember, only to watch those same companies slide slowly and comfortably back into the status quo.

The only difference is that the status quo is not beautiful. 

Moving forward requires not only the form of a strategic plan, but motion, known in strategic circles as execution. 

An execution oriented plan is different and this is where most companies fall down. They know what they want to accomplish and perhaps even by when and they have a financial model that shows what they would be tracking along the way, but they miss the measurable, executable detailed planning part. That is because it is hard. But it is not impossible. 

At Solutionz we help companies develop that integrated plan for motion across all business disciplines within your company. It takes just 3 days and that is the magic of it. 

Taking longer to do a plan doesn't produce better results. In fact, we believe that is what causes companies to stumble. 

Don't confuse the beautiful blue bike on the street with riding it to get where you are going. A bound business plan on the shelf is no better than the statue of the bike. It is strategic planning mischief at its finest.

Fund it. Staff it. Measure it. Do it. Celebrate it.



Chicke Fitzgerald
game changing strategist

Wednesday, February 04, 2015

Product Mischief - Build it and they will Tweet


Oh some do get lucky. But most don't.

Great ideas can come from anywhere. Inspiration is funny that way. And we have all seen the viral ideas that just seem to take off, as if by magic.

Sometimes you just know in your bones that you have built the most amazing thing and that once you release your product, everyone (and I do mean everyone) will go wild and share it with the world.

Yep, your business plan shows your unique visitors growing by leaps and bounds, reflecting how amazing your product is and how it will be received. You just know that you know.

That is product mischief at its finest.

By the way, if you look in the mirror and you see Kevin Costner, grab a Snickers bar quickly, because this is not Field of Dreams.

I am the last person to discourage innovation and enthusiasm. I'm working on a pretty amazing product myself (stay tuned). But I also know that if I am going to have a revenue line on my model that depends on traffic, I had better also have an expense line for marketing spending that produces results.

Find a great UX and SEO partner and get some great advice on driving traffic from people that understand your industry. You'll be glad you did.

And if you need some help, don't forget to call.

Chicke Fitzgerald
http://www.solutionz.com
 

Time Off - Good Mischief or Bad Mischief?

MasterCard has a new commercial that is airing that has kids talking about how they don't get why their parents don't take vacations.  When you look at the picture below, I'll bet you are asking yourself the same question.




I just finished booking a week's holidays at a fabulous resort in Mexico for my 25th anniversary.  Yes, we are taking the kids (they would kill us if we left them home) and NO, I am not taking my laptop. 

Taking time off is definitely good mischief.  But you have to REALLY take it off.  So to my well-meaning clients, make sure that you don't need anything between July 19th and the 26th.   I'm giving you ample warning!

When was the last time you took a real block of time off and left work at work?

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