Kayak Private Sale: Surely to mean increased cost and complexity for Kayak. A zero percenter no more

Dennis Schaal over at Tnooz broke the story that Kayak is launching a program called Kayak Private Sale. In a post titled "Kayak gets clubby with exclusive hotel deals" he revealed that Kayak is planning on launching exclusive deals. These deals will be negotiated directly with a property and made available for Kayak exclusively. A few days later Dennis had an update in his post "Kayak exclusives to include flights, hotels, vacation packages" including confirmation that these exclusives would extend to flight and packages as well as hotels. Bookings will be at the supplier site based on a click/referral from Kayak.

This is a very interesting step from Kayak - but not for the reasons you first think. In the words of PhoCusWright boss Phillip Wolf one of the hallmarks of Kayak's success was that it was a "zero percenter". That is a site where zero (or near zero) percent of the site content is controlled or produced by the owner. The main disadvantage of being a zero percenter is that you don't control inventory, price or the customer experience. The main benefit of being a zero percenter is the dramatic operational cost advantage you have over an online retailer. No need for a supplier contracting team as a small biz dev team is enough to secure content. No need for a fulfilment team as the supplier/advertiser takes the booking. No need for a customer care team as the supplier/advertiser talks to the customer. This saves millions in costs. This is how you can be one of the biggest travel sites on the planet but with less than a 100 staff (last time I heard).

But (as I said in my comment to Dennis' first post) signing and managing exclusive deals takes time and a team. Call it a revenue management team or a hotel market management/contracting team. Either way it is a group of sales and revenue professionals who need to talk weekly/daily to suppliers. In the OTA world this means local market people - lots of them. Plus if you are going to load exclusive deals you are going to need to talk to consumers when those deals are not what they are supposed to be. This means more people which means higher cost. All of this adds up to a significant operational and cost change for Kayak

I am looking forward to seeing how this plays out. Am I missing something?

BOOT to present at ad:tech March 17 in Sydney

ad:tech Sydney is on this year March 16 & 17. The BOOT will be presenting on March 17 at a session titled.

What Is The Impact Of Social Content On e-Commerce?

Other panellists include

* Tim O'Neill, Joint Managing Director, Reactive
* Mike Hickinbotham, Social Media Senior Advisor, Telstra
* Michael Gorman, Vice President for Strategy, Acxiom Global Multichannel Marketing Services
* Dan Ferguson, Online Channel Manager, General Pants

EveryYou and Customer Reward: When an upgrade is not the right response

My EveryYou concept is about developing specific and targeted recommendations (which can include rewards) of one based on the unique combination of desires, needs and interests of each individual at any moment in time. I had a chance this week to experience an example of the deficiency of customer profiling and standard practice and thus a place where a more individualised (EveryYou) approach would have been much better.

I have just bought a house – should be celebrating. But due to a twist of fate and timing I have to spend the next two months in a serviced apartment before I can move into the new house. It is nothing too dramatic but gave me a chance to sample the serviced apartment market. I won’t mention the provider but they very kindly offered me a complementary upgrade to a bigger apartment with a view. Of course I was pleased to accept. Just prior to check-in we settled all the details of the stay including the deposit payment and my confirmation that I would be brining by wife, seven year old and three year old.

On check-in we discovered that the upgraded apartment was much bigger than expected, had great views over the park and had the bonus of a separate study/office. But we had to move out immediately. As large as the apartment was, it was completely unsuitable for children under 12 let alone 7 and 3. Firstly the bedrooms were on two separate floors. Meaning that my wife and I would have to sleep on a different floor to the children – not acceptable when one of the bedrooms is right next to the front door that cannot be locked. Secondly the study/office (on the second floor) had two windows at child accessible height that could easily be opened and pushed outwards. Easily exposing a young curious mind to a ten floor drop and instant death. Either we put the children in a bedroom next a door where the three year old could leave the apartment without us knowing or in a bedroom near a study with easy access to a deadly drop.

When we spoke with the front desk, they could not understand why we wanted to move (clearly not parents) and especially could not understand that we wanted to turn down the upgrade and take a smaller (but safer) apartment. This exposed two things to me. Firstly how “the upgrade” is one of the few (if not the only) pre-check in reward that a hotel/serviced apartment has set for sharing with consumers. Secondly how in the serviced apartment market the staff are not as well prepared as hotel staff for non-standard request.

Under a generalised profiling system of customer rewards, it is clear that the vast majority of customers would love to receive an upgrade. But trusting generalisations and profiling can lead the hotel/apartment sales rep to use it as a reward when deeper analysis would show that other rewards would better impress and therefore make more loyal a customer. If my wife and I were on our own or with adult travelling companions (ie the "weekend holiday away with friends" version of me) then the upgrade would be perfect. But if the accommodation provider had spent the time analysing and using the data they had on me for this trip (ie the "parent" version of me) then they would have determined that the reward I would have been more interested in would be a twin room as the second bedroom or an apartment closer to the swimming pool or free car parking. On another occasion (ie the "business traveller" version of me) it would be free wifi rather than a bigger apartment that would be the perfect reward. Generalised profiling is no match for taking the time to use data provided by customers and technology available to suppliers to target rewards/recommendations suited to not just the individual but the version of the individual that happens to be travelling at the time (EveryYou). Using these techniques would prove to my landlords for the next two months that a upgrade is not always the reward it should be.

Qantas to Amadeus – what the hell was that???!?

In 2007 Amadeus and Qantas were riding high. A joy filled press release heralded that their relationship would bloom for another ten years. The then CIO John Willett was full of praise saying

"The development of Altéa [Amadeus' airline customer management system], which has become the leading customer management solution for airlines, has been a milestone for the industry and we expect that the next 10 years will help us to innovate further,"

A year later there was a new CIO at Qantas (Jamila Gordon) and the good times continued. The companies announced that the Altéa system was fully implemented. Gordon was filled with the joy and expectation that can only be found in press releases

"Exceptional customer service is a key competitive weapon and you can only deliver this by understanding the needs of individuals which is what the integrated Altéa system provides." She added, "As the operating environment for airlines gets tougher, it is essential that technology is able to both deliver greater operational efficiency as well as support the implementation of policies that build customer loyalty and drive increased revenues."

Remember those words “deliver greater operational efficiency”.

Fast forward to Jan 3 2010 and the Amadeus and Qantas bromance took a blow (though it does not look fatal) when the Amadeus Altéa system appeared to suffer a world wide hour long blue screen of death crash-a-doodle-do. Automated check-in came crashing down. Customers were stuck and airline crews abused. Qantas firstly called it “intermittent” (SMH) . But later an ABC commentator found out that the system had crashed on three separate occasions during the outage period. Delays, angry customers and twitter rant–a-thons ensued.

Unlike the PR love-ins of the previous announcements, Qantas was very happy to very publicly blame the whole thing on Amadeus. Newly appointed Qantas spokesman David Epstein used all of the tact that his former Labour party bosses are famous for by being very polite in his finger pointing but stating clearly and cleanly

"We are seeking assurances this won't happen again,"

(according to a report from the ABC)

The Herald Sun very neatly summed up the response from Amadeus to the blame game “Amadeus could not be reached for comment”. I bet they couldn’t.