The BOOT is back for 2009 with 5 predictions for the online travel industry

The BOOT is back for 2009. Tanned (a little burnt), rested (though could do with another big sleep in) and ready for action (kind of). Inspired by the Travolution article "Predictions for 2009" I am going to open up the 2009 edition of the BOOT with my predictions for the travel industry. Here are my five predictions for 2009:

1. There are more airlines to go bust. In fact before the end of 2009 a big carrier will go bust or be taken over as a saving measure. Alitalia is a gimme so I wont count the impending Alitalia failure/restructure as a successful prediction. Another big carrier (or two) will fail or be bought in 2009. Update - if you want a list of all of the 21 airlines that died in 2008 check out this post over at cranky flyer;
2. Domestic travel growth will surprise us all. I am a noted optimist when it comes to the travel industry surviving shocks and set backs. People will still travel in 2009 - they will just go short. Consumers will look for domestic deals and shorter trips to enable them to enjoy the travel and breaks they want without the long-haul price tag;
3. Consolidation is not yet finished: In 2008 TripAdvisor bought everything in sight, Venere first bought Worldby then joined the extended TripAdvisor family by being acquired by Expedia, Microsoft bought Farecast, Priceline bought Agoda, Wotif bought AsiaWebDirect and Travel.com.au and more. The consolidation in the online travel industry will continue through 2009. There are too many bargains out there;
4. 2009 will not be the year of mobile for the travel industry: Every year since 2000 we have been talking about the mobile revolution in online travel. This year I rejoined that chorus of mobile revolution fan boys while at PhoCusWright in LA. With the Global Financial Crisis (I am told there is even an acronym for this - GFC) in full swing I think the larger players will pull back from their mobile plans and focus on core products, costs control and customer loyalty. Mobile will have to wait until 2010; and
   
5. The dinosaurs will screw up and come out of the GFC even weaker: The big offline players have been screwing up online for a long time now. The good ones have managed to avoid destruction due to the booming economy and the sale of complementary products (land, car, package and especially cruise). The boom is over and the pain is hitting. Just recently Flight Centre announced a likely 33% drop in profits for 2009. In the past I have given advice on how you would know that offline players like Flight Centre "get it" and are ready to execute online. The GFC actually provides a fantastic opportunity to "get it" and join the online travel revolution. Expectations for performance are low during a bust giving offline players time to shift focus and make investments in areas they have previously ignored online. But I think the offline players will miss this chance. Instead of emerging from the GFC with a stronger online focus they will dig even deeper into the offline hole and emerge even further behind the online industry leaders. As evidence of this see the recent interview from new Stella Travel (Australia's number 2 offline player) CEO Peter Lacaze where he confessed to being an online sceptic. [Disclosure - in the past I have consulted to Stella on their online strategy].

UPDATE - Prediction number 6 - the last minute model will come back. I called the last minute model as being on hiatus in May 2008. It will come back as hotels start to hurt during the GFC.

Stay tuned to see what I get wrong and right here. The BOOT is back for 2009.

thanks to Tokyo Boy on flickr for the photo

Expedia at PhoCusWright - quotes, facts, figures and mattress stuffing

Expedia CEO Dara Khosrowshahi has just stepped off the centre stage at PhoCusWright. Here are the highlights of his presentation and Q&A session



On Global Expansion

• 19 Expedia branded sites worldwide. Currently two thirds of revenue is in the US, one third international. Want this to be fifty:fifty in five years;
  
• Need to do a lot of transation. Plan to translate 500 million words in 2009; and
  
• 10% of revenue is Advertising based. Is growing faster than merchant/retailer business but do not expect it to take over from merchant/retailer business as the main reevenue source for the company.
  

On merchandising and market managing

• Launched Expedia Travel Ad - a way to hotels to bid for sort order placement (think Google ad words). Note as per earlier post Hotel.de have been doing this in Germany for a while; and
  
• Have 400 Market Managers (hotel) world-wide that are working to get hotels to recognise that deals are needed but saw potential for those deals to come from the Travel Ad bidding, additional loyalty points, add ons etc to maintain price.
  

On acquisition, capital and the market

• On Acquistions: When asked directly about who he would buy next Dara said - "we are going to keep our money stuffed in our mattress". Later "we don't think we will go on the acquisition trail in 2009". He went on to explain that with the state of the capital markets and the difficulties in access public capital sources (including debt) he wanted to keep his cash on hand to get through the next five years; and
  
• On Going Private: Simply - there is no capital available for anyone to take Expedia private.

On integration and the merchant/retail model mix

• Will keep the demand portions un-integrated (ie Venere brand remains). But supply side will be integrated. In other words will see Venere inventory (negotiated retail inventory) on Hotels.com and Expedia.com in a mixed model.
  

Anyone else get anything else from the presentation.

Expedia buys Venere.com news at 11

Am on the blacberry so no details to give but announcement is clear. Expedia has bought the Italian dominant Venere.com. First foray of EXPE into the retail model and it must multiply their Italian biz by 3-5 times. More as details come through.