Norwegian Cruise Line vies for more OTA business

Norwegian Escape

Norwegian Cruise Line’s introduction of a bare-bones “Sailaway” fare in March was a bid to improve business with OTAs, company CEO Frank Del Rio said in a conference call.

The Sailaway fares do not come with the standard value-add options, such as the choice of a free beverage package, and cannot be combined with any such offers. They provide only a guarantee of a category, not a specific cabin, and are about $200 less than other Norwegian fares for a seven-day cruise.

Del Rio said prices for cruises that had bundled value-add features were showing up on OTAs as uncompetitive because of the extra value built into the fares.

He said OTAs are one of the main distribution channels for selling close-in inventory.

“One of the drawbacks of this channel is the difficulty of effectively communicating non price-dependent offers to consumers,” Del Rio said. 

The Sailaway offers were intended to give OTAs a fare that would not be priced above offers from competitors for similar itineraries, he said.

“Sailaway rates are cruise-only rates, with no value-adds, that will allow us to capture business that we were temporarily not capturing,” Del Rio said. They represent less than 10% of Norwegian’s inventory, he said.

Why Google's designs on travel aren't good news for the big OTAs

by David Stevenson

by David Stevenson, FT columnist and Travel Weekly's City Insider

Is the travel industry going the way of publishing - unwillingly turned into a digital product which is under the effective control of a single dominant player, such as Amazon or Google?

Until fairly recently I'd have laughed out loud at this kind of techno babble suggestion.

Travel is quite clearly completely different from publishing and being honest I'd be a wealthy man worth many millions of pounds if I'd have pocketed a £1 from each and every person who said Google is coming after travel.

Well, truth be told Google hasn't actually done very much in travel to date and to compare its baby steps with Amazon's omnipotent control of the publishing sector has until now been frankly risible.

Yet over the last few weeks I've slowly started to change my mind. 

Big changes are afoot in the world of digital travel and we may eventually end up in a market place where Google has indeed built a dangerously powerful position.

My damascene conversion to the threat from Google has been prompted by a number of varying encounters and observations over the long summer months.

The first epiphany came via a friend in publishing who is trying at a very senior level to fight off Amazon's predatory pricing regime.

He observed - with a deep sigh - that all business battles are in essence a fight between brands and channels, all mediated by the customer's experience of both researching and then consuming a product.

In the good old days before the internet we physically shopped for product of course, and welcomed the choice and variety on the high street. In the new digital age the reality is very different.

We welcome lots and lots of brands producing varying products but in reality we actually only want a few channels to market and distribution.

No-one really takes pleasure in shopping in the digital 'mall' unlike the real world ones where there are nice coffee shops and fun places to visit and spend your money.

So the internet has the net effect of drastically reducing the avenues of distribution.

Book publishers thought the internet would be revolutionary and promising whereas what they've actually discovered is that everyone bar Amazon has failed to make a profit (and even they struggle) distributing the elusive 'content'.

So in simple language the internet eventually consumes its channels and produces one or two omnipotent distributors.

Amazon is quite clearly that channel in books, but what makes us think that Google could eventually offer up that role in travel?

Cue my next conversation with a major West Coast VC who is also a good friend and sadly for my first acquaintance a very happy investor in Amazon.

This  venture capitalists view is simple - Google wants to rip apart the existing model of digital travel (populated by all manner of OTAs) and create a new architecture with it and TripAdvisor at the top of the ecosystem.

And once it realises that its vision is slowly becoming reality it'll simply buy TripAdvisor - "I give it three years before it decides to spend a tonne of money on buying Trip".

But why on earth would Google want to own the world's dominant review site - one simple word should suffice, search. 
This elusive term - which means so many different things to different people - is being revolutionised by mobile which is turn opening up a land grab.

Google is determined to own lock, stock and barrel this mobile opportunity as  part of its strategy to own multiple channels to personalised data.

It's intuition is based on something I've been aware of for many years - travel is disjointed and profoundly annoying as a consumer.

Every day I look at my inbox and see multiple emails from the likes of Tripit asking me to organise my trips,

Hotels.com telling me about yet another private members only sale, Groupon shouting about some amazing local offer and TripAdvisor educating me about some of my favourite places.

In sum its confusing and disjointed and for the most part these emails end up in the deleted folder. But rather like the journalists who  use Google Alerts to keep them posted of all news about a favourite subject, what if Google could control all those flows of offers, and then personalise them to my own interests ? At minimum I'd let the message  into my inbox and may even be tempted to buy off its list.

This aggregation of research and search requires three essential components from a supplier :

a) I want it to inform me of the latest offers relevant to me
b) Tell me about products I trust, in places I like, supplied by people who I've used before or are recommended by friends 
c) Last but by no means least, some of us may also be interested in a constant social conversation about the product to help shape my friends views (though quite why anyone would actually want to do that is beyond me). This step may involve not only views but also content and video.

It's against this backdrop that a bunch of papers by US advisory firm Evercore stand out. Penned by Ken Seda and his colleagues these start to map out precisely what Google may be up to in the world of digital travel and search - and why the OTAs in particular have a great deal to fear.

The most recent report is from September and is entitled Google's Travel Plans in a Post-Atomic Era, but you should also make a point of reading the earlier Google’s Summer Online Travel Plans report from March.

Seda and colleagues think that Google has essentially decided to cross the rubicon and take on its big customers like Priceline and Expedia. These huge OTAs have been very reliable customers for the search giant but history teaches us that eventually Google decides it can do the job better .

Starting with a number of small scale initiatives  Google is pushing into the OTA territory, with products such as Limited Offers linked to Google's Hotel finder service.

Next up will come a yet to be branded 'captive demand platform' which will allow Google's hotelier customers the ability to upload their secret lists of loyal, valuable customers into the Google engine and then churn out very special rates to customers.

Finally all this will be connected back to Google Wallet, allowing the search giant to control the whole process of research and booking.

This activity opens up a number of possibilities  not least the rise of opaque pricing based on personalised information - a huge departure from the existing rate parity agreements signed with the OTAs, with the potential to push prices below the advertised price on Priceline and Expedia.

Key to this push by Google is the bait for hoteliers - they keep the customer lists and transactions and don't have to rely on the existing 'atomic' model managed by OTA merchants where between 15% and 25% of all revenues is taken as commission.

Data is now owned by the brand marketing channel, allowing them to aggressively market to their own private lists of customers.

According to Ken Seda at Evercore, the OTAs are going to lie down in this battle, with Priceline in particular fighting back by buying up specialist outfits such as Buteeq, HotelNinjas and Open Table - the game plan here is to effectively build another leg to the business allowing the OTAs to turn into white label customer intelligence and servicing propositions for hoteliers.

As these changes start to ripple through the industry I'd wager that we'll see some profound changes, not least for the rabble of OTAs scrapping around for business.

The key challenge is that the direct travel model is a classic 'middle man' squeeze waiting to happen. Technology teaches us that eventually the market finds a way to squeeze out the expensive middle man, even if they provide a valuable service.

Lurking beneath this push for market control is a cold reality - the OTAs who account 20% of travel ad spend while contributing to 8% of global bookings, and they simply charge too much. According to the Evercore analysts they reckon that Priceline and Expedia "charge hoteliers over 20% of each booking  on average (adjusted to account for just hotels), whereas Amazon and EBAY take closer to 13% and 9%, respectively)....".

Google is slowly but surely eying up this model and seeing a huge new market especially as mobile helps to redefine everything, almost instantly removing some traditional channel superiority.

This'll force the OTAs to plump for one of  three options - be the biggest and offer the most comprehensive selection (the Expedia model), start to look at white labelling and working with hoteliers to provide optimisation services (the fast emerging Priceline approach) or become the brand customers trust and base your product around search and knowledge via reviews (the Tripadvisor model).

And what of the implications for the rest of the travel sector ? The obvious issue here is that Google has woken up to the simple realty that all travel research is about search and that what helps us all search better is personalised, valuable information.

Cut the jargon and one simple fact jumps out - we all want to cut the time we spend online working out what to do next. 
Evercore cites a  Google Travel study presented to its Hotel Finder partners, which cited " that travellers spend an average 55 minutes to book a hotel and flight, visit 17 websites, and click 4 different search ads per travel search, with 90% of those travellers conducting the booking process over multiple screens. 

The point of its presentation seemed to be a need for a streamlined bookings path, one where Google can retain the traveller from Search to Research to Book".

And Google already starts off with an advantage - according to the Evercore paper again "22 billion hotel searches are performed on Google per month with 58% of travellers (64% of business travellers) beginning their travel experience on Google, according to Ipsos MediaCT/Google Travel Study.  However, there is some question as to how many of those that start their search on Google were actually led to a booking decision by Google”. 

My own slightly off-beat take on this is that most major existing travel businesses should give up thinking they can stop the Google juggernaut, back it in its fight against the OTAs and then build their own platforms on top of the search giants architecture.

And last but by no means least what happens to the poor old customer, befuddled by all the channels and brands?

Clearly the big game changer is mobile and the degree to which phones and tablets will become the main digital interface.

These relatively constrained devices will lend themselves to modern day equivalents of the old Compuserve walled garden i.e software based architecture that keeps the customer within the world of Google via browsing through Chrome and then paying through Wallet.

Or as Evercore's analysts put it "we see the integration of HPAs to Google Wallet, Maps and Now as creating a seamless travel experience for the user (from search, to research, to book  -- to travel and return)".

And just in case you thought this was all pie in the sky remember that according to analysts at Evercore, “10%-20% of all online-booked occupancy is [already] driven by Google properties, including Search and Hotel Ads (aka Hotel Price Ads).  Moreover, this measure roughly equals all OTAs combined".

My sense is that customers will happily live within these closed gardens because the net effect will be that prices - for most - will be driven down, not least by Google taking a hunk out of the OTAs revenues.

Sadly this downward pressure on prices will have two nasty knock on effects - more of that opaque pricing via personalised offers and a slow but steady move towards online forms of internet social stratification.

In the new world that is fast emerging, power will sit in the hands of those marketers with the right lists of wealthy travellers who also happen to be on the right loyalty card lists and have the right credit scores.

How many travel agents are there?

By Kate Rice

CNN.com recently ran a headline declaring, “The travel agent is dying, but it’s not dead yet.” The report based part of that inference on a single metric that is frequently used to measure the health of the agent channel: ARC’s number of agency locations.

According to Shelly Younger, manager of settlement services for ARC, that number has dwindled to 13,000 from a peak of 46,000 in the early 1980s. It began falling in the mid-’90s, when airlines capped and then cut the commissions that had been the foundation of the retail travel model.

But in fact, using ARC data to measure the number of agencies is no longer even close to accurate because it represents only those agencies that sell airline tickets under their own ARC accreditation.

Because agency business models have evolved rapidly in the last two decades, the drop actually better reflects two other trends: A lot fewer agencies are selling air, and many of those that are selling air are using the ARC accreditation of a host or partner agency.

ARC itself points out that while its count of agency locations has decreased, the number of agent-generated transactions has actually increased or remained flat, depending on the year.

The problem is that there is no other single metric that accurately calculates the number of retail travel agents in the workforce today, either.

“While we have seen the number of locations actually reduce year over year, much of that ... is based on mergers and acquisitions,” said Jeannine Hankinson, managing director of client services for ARC. “And we say that because we see growth within our transactions.”

Hankinson said ARC has seen transactions grow since 2009, when they numbered 136 million. Last year, ARC recorded 143 million transactions.

John Pittman, ASTA’s vice president of industry affairs, consumer affairs and research, suggests that the best measure of agent numbers is probably Bureau of Labor Statistics (BLS) data. By that measure, the number of full-time agency employees in the U.S. has fallen from a peak of 124,000 in 2000 to 64,000 in 2012.

A near 50% drop sounds pretty hefty until you add in one more number: The BLS says that the market now includes 40,000 independent agents, most of whom work from home. That brings the total number of agents in the U.S. to more than 100,000.

In short, there are still plenty of agents around, but their business model has changed so significantly that far fewer of them are using ARC numbers.

As air became less of an economic mainstay, agents began forgoing an ARC number. Instead, they turned to other industry accreditation. CLIA, for example, has its own agency CLIA number. In all, CLIA has accredited 10,700 agencies, and ARC estimates that together, these agencies employ more than 35,000 agents.

IATA also accredits agencies as ticketing locations; the number of these locations has declined, according to PhoCusWright. But it also issues the Iatan card, and there are about 103,000 Iatan cardholders in the U.S. To quality for an Iatan card, agents must have earned a minimum of $5,000 in commissions or salary or a combination of the two.

Another industry number, TRUE, has 2,300 cardholders.

ARC itself, recognizing the trend away from airline sales, in 2007 introduced its Verified Travel Consultant (VTC) program, which is far easier to qualify for than an ARC number is. VTC holders are not accredited to sell air, but they can use the card for other industry transactions.

“As we saw the number of our locations go down, we spoke to our customers, just to say, ‘Why are you leaving?’” Hankinson said. Agencies said they didn’t need an ARC number to book air, so ARC created the VTC number.

Many agents no longer need a full-fledged ARC number because they book air under someone else’s ARC number: a host agency, a partner agency or an air consolidator. It can be through major online booking portals for agents such as VAX VacationAccess, which enables non-ARC agents to book stand-alone, scheduled air.

In addition, agents can book air in tandem with a cruise or vacation package through any number of providers.

Cruise Planners, a franchise and host agency that is a member of American Express Travel Representative Network, is an example of this model. It had $206 million in sales last year but does not have an ARC number.

The 20-year-old group focuses on selling cruises and tours, a classic example of the way agencies adapted after airlines first capped and cut commissions.
Cruise Planners agents book air through a third party or by booking air through cruise lines and vacation packagers.

Cruise Planners has 900 franchisees, which might be one-person shops or have one or two associates.

In addition, there are other airline models. Increasingly, agent marketing groups are consolidating their air spending under a single ARC number. In part, that’s to make it easier for their members who do not have ARC numbers to book air.

But it’s also an effort to have clout with airlines to develop relationships that benefit both agents and their clients. In some instances, agencies can earn commissions on flights. In other instances, an agency can get waivers and favors with airlines because of the business it delivers.

According to PhoCusWright, the travel agency distribution channel accounts for one-third of the U.S. travel market, selling $95 billion in 2011. PhoCusWright is projecting sales of more than $100 billion this year.

VAX VacationAccess is another industry indicator. VAX is a major online portal for booking land vacations, cruises and air, both as part of a package and as a standalone. Some 100,000 agents are registered to use it, and the company estimates that about 75,000 of those agents are active.

In addition to actual data, anecdotal numbers from other segments of the industry illustrate the health of the retail channel.

Tour operators who sell either exclusively or almost exclusively through travel agencies are reporting double-digit growth of up to 30%. Funjet Vacations, MLT Vacations and Gogo Worldwide Vacations are all reporting double-digit increases in business.

Betsy Geiser, vice president of Uniglobe Travel Center, which has 500 home-based agents, and vice president of the Professional Association of Travel Hosts (PATH), estimates that the host agencies belonging to PATH represent about 30,000 agents. The majority of home-based agencies do not have ARC numbers.

Jackie Friedman, president of the host agency Nexion, which has 3,300 members, said that she thinks the number of agents is actually growing.

“There are so many people coming into this business saying, ‘This is what I’ve always wanted to do,’” Friedman said. She added that because travel lends itself to a virtual workspace, it has a very low cost of entrance.

Cruise Planners illustrates this trend.

“Eighty-five percent of the members we bring onboard have never been in the industry before,” Fee said. “They are doing phenomenally because a lot of them come from different businesses, so they bring that kind of business mentality.”

Cruise Planners celebrated its 20th anniversary with a party in Marlins Park in Miami that featured fireworks and a band.

“We were dancing on second base,” Fee said.
 

Growth of agency sales fueled need for ATC and ARC

The Air Traffic Conference (ATC) was formed in the 1940s at about the time that the components that would became today’s airline industry began to expand.

The ATC, an ARC-like entity, approved about 600 agents to do business with the airlines. At the time, there were four major carriers, and Shelly Younger, manager of settlement services for ARC, said that agents settled directly with airlines in those days.

Agents would collect the money from their clients, write out the ticket by hand, hold the money for a month, then turn it over to the airlines.

“They literally got to hold onto the cash for 30 days,” Younger said. Agents also had to submit all their ticket coupons and prepare a physical report of what they had sold.

Then, in 1956, Braniff Airways complained that working directly with agents was becoming cumbersome, because the industry was growing so rapidly. Braniff proposed creating a clearinghouse, the Area Settlement Plan, for settling agent transactions.

The concept promised greater efficiency for travel agents, too.

“Agencies had to settle and send money to all these different airlines,” Younger said. “It becomes cumbersome to mail coupons and checks back and forth. [The Area Settlement Plan] was an effort to centralize and make [the process] more efficient.”

At the time the plan was fully implemented in 1964, Younger estimates, there were about 5,000 agents and 37 airlines.

Agent numbers kept growing until they peaked at 46,000 in the 1980s.

Because the airlines were seeing some losses, work was begun on security procedures. Agencies were holding cash for airlines. Ticket stock was essentially as good as a blank check, and frequently agencies would be burglarized.

Airlines wanted to protect themselves against theft, fraud and agencies that might have problems with cash flow management. With the growth of the use of credit cards in the 1960s, ’70s and ’80s, credit card fraud became a problem.

ARC was created as an airline-owned corporation in 1985 when the ATC lost its antitrust immunity as a result of airline deregulation in 1978.

Today, agencies seeking ARC accreditation must pay a $2,000 application fee, provide a bond letter of credit for at least $20,000, have specially accredited employees and meet certain security standards.

— Kate Rice

Google updates the UK customer journey with latest travel data

By Travolution

The number of websites UK travel consumers look at before booking has dropped considerably, according to the latest Google data.

Nigel Huddleston, head of travel at Google, told the Abta Travel Convention in Croatia this week that the average is now 11 compared to around 20 just a few years ago.

However, the rise of mobile means around four to five sites may be added to that figure, he said. Mobile has a far smaller conversion rate and most firms adjust their figures to take account of this.

However, Google insight shows just how important mobile is becoming, with sharing - such as photos on holiday or ideas before booking - now becoming part of all of Google’s ‘Five Stages of Travel’.

“The fifth stage of travel – sharing – is now part of the entire process. People are sharing ideas at the very earliest stages of travel,” Huddleston said.

“We have research to suggest 86% of smartphone owners share photos on holiday and people look at social media every single day when on holiday.”

On desktop three out of four people use search and in any given month an average of 44% of the UK adult population is looking for travel online.

That figure is highest in February (48%) and lowest in September (39%), and on average people take 73 days to research their trip before booking.

In looking at 11 different sites, the average person completes 17 individual online sessions. Huddleston said this pointed to the increased important of brand association.

He said in the past a customer would return to a brand three times during the search and book process. A couple of years ago that figure was two.

The Google data shows that mobile and tablet accounts for 30% to 40% of total queries and four in ten people book offline.

In terms of research, 45% do it exclusively online, 8% exclusively offline and 40% combine the two, while the remainder do none.

Huddleston said: “We are one of the most sophisticated internet economies in the world, especially when it comes to travel.

“While the internet is really important in the initial search and journey overall, visiting stores and travel agencies comes up in the list of most influential aspects when it comes to purchase decisions.

“People want validation of their choice. If they want a family holiday by the beach they want to be two miles away on the other side of a motorway.

“Is it offering good value for money? Nobody wants to go on holiday and find out the person next to them has got it cheaper than they have.”

Delegates were told that, although advanced, travel has lost its leadership position online to the retail sector.

“One reason was we were forever trying to push our customers to the booking point when they were not ready to book. Very few sites do a good job of inspiring the customer.”

Huddlestone picked out easyJet’s recently launched Inspire Me tool as a good example of something he said Google was seeing more of.

Google has seen a huge rise in tablet traffic but around a third of this is being done while the user is sitting on the sofa at home, probably watching a second screen, the TV.

Huddlestone said the Brits love their smartphones and while it is more difficult to get conversions on these devices, sectors like hotels and some OTAs are doing well.

The data shows while 26% of Brits use smartphones to research, only 12% go on to buy on the device. Smartphone package holiday bookings account for just 3% to 4% of the sector.

Google is seeing increased use of other visual functions like maps and photo tours. It has added flight routes to Google Maps and 360 degree tours.

Voice search is the next big thing, Huddlestone said, before demonstrating how the experience is becoming a lot more intuitive and semantic.

“Technology is improving and we are trying to be a little bit more human in the ways we interact, a little bit like if you went into a travel agent.”

Bright On Travel: Optimise to convert and keep your customers and Google happy

By Travolution

Optimising for conversion rather than driving traffic volume must be travel firms’ main priority to make their marketing budgets sweat.

Paul Holdgate, the newly-recruited head of digital at Brighton-based agency CWTdigital told the first Bright On Travel event this week that travel has been too focused on last click.

The half-day conference was organised by CWTdigital to coincide with the annual month-long Brighton Digital Festival and supported by Travolution as media partner.

Holdgate said: “Google has made it absolutely clear through its two latest updates that will no longer tolerate any spammy links or content.

“What I propose is you stop chasing the algorithm and develop a consumer-centric approach.

“Take a step back and map out the customer journey - think about every stage from that first inspirational content point.

“Travel is so competitive we tend to focus on the last click, but what we need to do is sow the seed earlier.

“Your consumer wants content served to them through the right medium, the right platform and at the right time in their journey. Central to this approach is personalisation.”

Holdgate, who previously worked for Tui Travel’s specialist division, said websites should be respected in the same way by online retailers as shopfronts on the high street.

He suggested firms ban talking about offline versus online marketing and hone in on the targets and customers they need to be profitable.

At Tui, while driving traffic was important, optimising conversions was the key focus as marketing funds were tight and it was important to make them work hard.

“Rather than just focus on driving quality traffic, let’s get the percentage conversion right up and this will impact directly on your bottom line targets.

“Do not waste the opportunity, patch up the holes,” said Holdgate.

Delegates were advised to put user testing at the heart of their businesses, and apply analytics to understand what does and does not work.

“Back up findings from analytics and expert review and also expose the opportunities that you would never have thought about,” he said.

Companies should also continually involve product and marketing teams in a feedback loop to prioritise those products that drive most revenue, Holdgate added.

“Is conversion rate optimisation the new search engine optimisation? For me it’s the same thing. Have the right content and tone and you will have happy customers and please Google.”

The world-changer

By Arnie Weissmann

View more from the Amazon

Travel Weekly Editor in Chief Arnie Weissmann recently joined a jungle cruise offered by G Adventures on the Peruvian Amazon aboard the Queen Violetta, a riverboat leased by the operator earlier this year. View the slideshow by clicking here or on any of the photos.

There are a handful of companies in the world that are recognized for extraordinary levels of customer engagement: Apple, Amazon, Starbucks and Zappos define the set and are much admired (and dissected) as models of New Marketing. 

It's hard to find a parallel in the travel space. The large online travel agencies (OTAs) such as Expedia, Priceline and Orbitz have certainly changed the travel-buying habits of millions of Americans, but as their leadership knows quite well, there's very little loyalty to individual OTAs. They built their brands on the promise of low price and were all too successful in training consumers to believe that smart travellers not only shop online but shop around. 

While there are many travel suppliers that can point to strong consumer loyalty, with enviable repeat business rates, the industry is generally very old school in its approach to marketing and branding. Loyalty programs abound -- after all, the loyalty concept started in the travel industry, with airlines -- but the innovative marketing that produces a deeper connection between buyer and product has, by and large, been absent, with Virgin being the exception that proves the rule. 

Though not well-known in the U.S., there is one travel company, the tour operator G Adventures, whose different approach to marketing puts it, in many regards, within the same corporate set as Starbucks, Amazon and Apple. 

It certainly doesn't belong there as a result of its scale. G Adventures claims a respectable, but relatively small, $250 million in sales from 100,000 passengers last year. But its founder and chief executive, Bruce Poon Tip, has nonetheless been invited to address Apple and Google employees on his approach to customer relations, has become friends with Zappos CEO Tony Hsieh, secured a meeting with Netflix CEO Reed Hastings to discuss corporate core values and been invited to give TED talks about his marketing philosophy. 

Last week, his book, "Looptail: How One Company Changed the World by Reinventing Business" (Business Plus, 2013) was issued as a major release. The title may sound over-reaching for a company that you might not be all that familiar with, and Poon Tip is not exactly a paragon of modesty within its pages. 

But if you live in Europe, Australia or Canada, where G Adventures is better known, the claims might not seem so hyperbolic. The U.S. is currently only the fourth-largest source market for the Toronto-based tour operator, a ranking Poon Tip is eager to reorder. 

Poon Tip has brought the concepts of customer connectivity and social enterprise to travel in a unique way. On the surface, some of what G Adventures does looks very familiar: It's certainly not unusual for a tour operator to integrate aspects of philanthropy, sustainable practices and support for a destination's cultural traditions into its programs. And many other operators have launched sophisticated social media plans. 

But Poon Tip's innovation is to permeate his company with 2013 values, from the urge to give back to destinations to ironic attitudes toward escorted tours, incorporating "fun" in the workplace and tapping into the longing for belonging to something greater than oneself. 

Did I mention that the Dalai Lama wrote the introduction to Poon Tip's book? 

Road trip

As part of his effort to establish a greater North American presence, Poon Tip invited nine industry executives and their significant others to join a jungle cruise on the Peruvian Amazon aboard the Queen Violetta, a riverboat he leased earlier this year. 


He wanted to tell this captive audience of travel agents and consortia executives (and one outlier, a product development vice president from Marriott Vacations Worldwide) the G Adventures story, provide a G Adventures experience and listen to the feedback. I was invited to facilitate an onboard discussion around sustainability and travel. 

Poon Tip is proud of the G Adventures product, but he freely admits, "It doesn't take a rocket scientist to run a great trip." His insight was to differentiate his product by overtly telling travelers, as the title in his book trumpets, "Go on a G Adventures holiday and you will change the world." 

Change the world. Not merely that you will support a project or that a portion of the proceeds will go to charity or that if you elect to reuse your towel you will help the environment. When you book a G Adventures tour, he explicitly states, you will join a community of world-changers. 

There is nothing subtle about his messaging. And Poon Tip has little but scorn for companies that make a donation to organizations such as the World Wildlife Fund and then receive permission to put the WWF logo on their brochures. He sympathizes with companies like Marriott, which purchased huge swaths of Brazilian rainforest to protect and preserve as an offset to its global carbon footprint, and Royal Caribbean Cruises Ltd., which hired a respected environmentalist to head up its sustainability efforts. But he cites these as examples of companies "retrofitting" to a sustainability positioning. 

While he believes retrofitting is positive, his company, he told the industry group assembled in the Queen Violetta's dining room, "transcends travel." By including dialogue that doesn't focus on the trip, travel advisers can avoid selling commoditized travel and differentiate themselves from Internet competition, he said. 

"When I speak at Google, they never ask me about the trips," he said. "They want to talk about branding." 

And the branding is often tangential to actual tour content. G Adventure slogans such as "I'm not a tourist, I'm a traveler," speak to consumer attitudes that also reject commoditization. And they transcend generational demographics.

G Adventures was until two years ago known as GAP Adventures. It changed its name after a long legal battle with the Gap clothing chain. For Poon Tip, "GAP" was an acronym for Great Adventure People, but it had also caused him marketing headaches because people associated the company with "gap year" travel, which appeals to recent high school or college graduates. He sees the change to a more age-neutral "G" as the one bright outcome of a bitter experience. 

Another example of Poon Tip's branding approach was a contest in which consumers were invited to submit ideas for projects inspired by the slogan "What will you do today, for tomorrow?" There were four categories -- beauty, community, knowledge and freedom -- and authors of the winning proposals, judged in an elaborate event among finalists in the jungles of Costa Rica, received $25,000 grants to see the ideas, which were not necessarily travel-related, through to completion. 

World-changers

To back the brand claim that G Adventures changes the world, Poon Tip created a foundation, Planeterra, which not only supports relief efforts in locales that G Adventures operates but engineers businesses that he believes preserve traditions, improve the health of local people, create employment opportunities and may support the infrastructure of his tours, from restaurants to lodges to centers where traditional crafts are showcased. 

Some projects, such as a home for street kids in Cusco, Peru, existed before he began supporting them and do not receive G Adventures passengers. But in other instances, the services of Planeterra social enterprises are supported by and integrated into the infrastructure of his tours -- but pointedly, not available to competitors. 

"They can start their own woman's traditional weaving cooperative if they want to," he said. 

A short list of other Planeterra-supported projects includes training street kids in Delhi, India, to be G Adventures tour guides; a program that includes guest stays in homes of aboriginal people in Australia; and a day school for kids whose parents have died from AIDS in South Africa. 

Then there are the one-offs, in which past passengers who feel part of the G Adventures community are tapped for help. A one-night circus with street performers in Toronto to celebrate the company's 20th anniversary raised $75,000 to build an eye clinic in Cambodia (they had already funded similar centers in Tibet and Tanzania), and after identifying a need for clean water in an East African refugee camp, Poon Tip sent out a tweet to his @PlaneterraCares followers and raised $100,000 in a weekend, he said. 

Perhaps the most striking aspect of Planeterra initiatives is that Poon Tip does not support them with his own or the company's money. They are financed primarily by G Adventures passengers, although he has also received grants. 

G Adventure's blurring of the lines between the profit and nonprofit world has not been without controversy. He says he was booed by nonprofits as he stood to make a pitch for a grant before the Inter-American Development Bank. But he walked away with a $1 million grant, the first for-profit company to receive the bank's funding, he said. 

Another of Poon Tip's talking points is wealth distribution. In its most practical application, G Adventures focuses on sourcing as many employees, contractors and supplies in destination markets as possible. He pointed out that he supported the builders of the Queen Violetta in helping them "break the cartel" that dominated shipbuilding and operating on that portion of the Amazon. 

The group of industry executives on this tour visited a local school on the banks of the river and distributed school supplies. Poon Tip said that G Adventures visits schools on a rotating basis to ensure that no one "model" village gets all the benefit nor becomes dependent upon riverboat visits. 

But on a larger scale, and more worrisome, he said that only 5% of the money travelers spend to visit developing countries stays in the country, and that reality builds resentment and hostility towards the industry. "The travel industry will be held accountable," he said, and travel sellers need to understand this issue and other issues that tie into his company's philosophical positioning. Travel advisers need to be able to "speak with authority" about, for example, ethical travel and climate change. 

"To say it's too complicated is to go back to selling commoditized travel," he said. 

Ethics are complicated

Complications arise when tours are actually being run in countries where not every citizen -- or local escort or hotelier -- subscribes to Western values, ideas and ethics. 

Just such a conflict arose on our trip. On an excursion, our excellent local guides, who were trained naturalists, came across an anaconda -- or rather, they spotted about five inches of snake skin showing through a hole in the ground. They told everyone to be quiet and gather around. Using a machete, one of them hacked a seven-foot-long forked branch so the forked end extended only about five inches. Not knowing where the snake's head might appear, they prodded it through the hole, and when the snake popped through the ground a few inches to the left of the hole, one guide used the forked end of the stick to hold the snake's head down. 

The rest of the 15-foot long constrictor uncoiled to the right, and the other guide, calling for assistance from the group, grabbed its tail and held tight. The snake was held stretched out for about five or six minutes, with various group members holding on. 

Toward the end of the display, Nicole Mazza, executive vice president for marketing at TravelSavers, said, "Haven't we bothered this poor snake enough? Let's let him go." 

I later asked Poon Tip, who was present on that excursion, about the ethics of interfering with a wild animal to that extent, given G Adventure's positioning. 

"I was horrified," he said. But, he added, it was a complex scene. While he would have preferred it hadn't happened, he said that what we also saw was a reflection of the native culture of the guides, both of whom were born in the jungle. For them, this sort of treatment of an anaconda would not be considered unethical in the least. 

He said one guest asked him "if we had stressed the snake. I'm not sure an anaconda can be stressed. Every day they're hunting, and they're hunted." 

To Poon Tip's point about native culture, the guides were very excited and proud of the incident, with one of them later citing it as "the highlight of the day," ranking it above piranha fishing, the sightings of pink river dolphins, swimming in the Amazon, visiting a shaman and viewing macaws, three-toed sloths and other wildlife. 

And indeed, that afternoon two local members of the crew who had stayed behind on the ship during that excursion saw that I was downloading photos on an upper deck. They approached and asked to see photos of the snake, and had me estimate how long I thought it was. They were extremely impressed. 

Poon Tip said that perhaps a better example of local culture vs. respectful treatment of animals occurred at a lodge farther south in Peru. The property was thriving on the business G Adventures sent its way but also kept a few jungle animals captive on site. One night, the owner, drunk, chased after passengers, swinging a small anaconda over his head. 

Poon Tip immediately moved the business to another lodge. But later, the offending lodge owner wrote to say his business was failing and his children were going hungry. He begged for the business back and promised not to keep captive animals. At the same time, Poon Tip was getting reports that the replacement lodge had started to keep captive animals on site. 

He ended up first splitting the business between the lodges, then added another lodge that he helped to finance. 

In the end, he concluded, it was, at heart, a cultural clash between Western and indigenous values. 

"You can take the man out of the jungle, but you can't take the jungle out of the man," he said. "And at least they're no longer killing animals just so they can show them to passengers." 

Will agents sell the message?

On the final day of the trip, I moderated a roundtable among the industry guests. I was asked to focus on sustainability but found that I had as many questions about how the company was being received by this group of agents, who represented billions of dollars in leisure business. Some excerpts: 

Arnie Weissmann, Editor in Chief, Travel Weekly: Bruce appears to believe that your clients care enough about sustainability and related issues that you could sell a tour based to a large degree on your clients' capacity for caring. Do they care? And can you sell them based on that?

Karryn Christopher, vice president of marketing, Signature Travel Network: Not for all purchases. That's why you have a portfolio. 

Glen Wells, senior manager, Merit: I think most travelers wouldn't consider sustainability and the issues we've been talking about. But as travel agents, we have a duty to educate people. 

Nicole Mazza, executive vice president of marketing, TravelSavers:When I think about vacationing with my family, I do not think about sustainability. Not ever. But quite honestly, after listening to [Poon Tip] speak and what the brand stands for, if I have to choose where I want to go around the world, it's going to be one that I look at first. [Poon Tip's] belief system, what [he] stand for, really piqued my interest. 

But clients and agents need to feel this spirit and be able to share it with their clients. I am predicting [G Adventures] will become very cult-like, what Club Med was in its heyday, and it still is, in France. Their clients keep coming back because they love what they stand for. It's what G is positioned to do. 

Arnie Weissmann: Will a frontline agent who hasn't heard Bruce speak in great detail about the company be able to convey the G Adventures message?

Christine James, vice president (Canada), Vacation.com: Our frontline agents can take control of that sale and then drive that message to clients who are socially and environmentally conscious. 

Pelin Karaca, vice president for product development, Holbrook Travel: In our experience, if sustainable trips cost more, it adds additional pressure. The tourism industry itself, the whole industry, should be elevated so that it should never be a choice between sustainable or not. For the most part, though, people leave their beliefs at home. They just like to travel. 

Tiffany Glass, vice president for e-commerce, technology and member services, Vacation.com: It's very tough to lead on sustainability, but there are a few niches where you could. We see it in the millennials, but the millennials are not users of travel agents at this point. We also see it among empty-nesters. 

Lindsay Pearlman, co-president, Ensemble Travel Group: When it comes to sustainability, you have to say, "Does the consumer really know what that means?" They'll hear statistics like "the new [Boeing] 737 is 30% more fuel-efficient" or "the new cruise ships recycle gray water." Consumers don't really know what that means. The opportunity with G [Adventures] is that it does mean something when a consumer is having this experience. And that could be a deciding factor on future purchases. 

Arnie Weissmann: Scott, you represent a timeshare vacation company with thousands of products. Can this be sold by a call center? Can your people differentiate this experience?

Scott Bahr, vice president for product development and strategic alliances, Marriott Vacations Worldwide: We have 700 or so call-center agents picking up the phone, talking to 400,000 owners and their families. I don't think you can lead purely with sustainability. However, the core values that G has matches what we represent to our customers, and from that perspective, it makes a lot of sense to start with, "Who is this behind the trip?" And then we could talk about the trips, because the trips are secondary. If you can't convey alignment of values to your agents, and then from the agent to the person on the phone, you've already failed. And in our portfolio today, we have nothing that matches this product in terms of experience. 

Arnie Weissmann: Would anyone else sell the branding and positioning of G Adventures, and then the vacation?

Christopher: You market the experience, but you don't necessarily market the brand, because there are a lot of ways to have those experiences. 

Arnie Weissmann: Bruce, you're nodding, but I'm surprised you're nodding. You link G Adventures to all these projects. Wouldn't you expect travel agents to start off with that?

Bruce Poon Tip, founder, G Adventures: I would love them to, but no, that's unrealistic. In many ways, we're the extreme on the sustainable scale, and that can scare people. It's a marketing challenge, where people might say, "It's for young people." "It's for people on a budget." "It's not comfortable." We have quite a bit of our own educating to do in order to get to a stage where our brand is omnipresent. We're doing everything in our power to be that strong, but we understand where we fit on the tourism industry food chain. We're a niche product, and we'll always be a niche product, and out of 10 clients that come into your office, maybe one of them might be remotely interested in an adventure product. So, it's our goal that when someone comes in and wants something different, that our name pops up, because we'll have something for them. 

Arnie Weissmann: Earlier today, Bruce, you said you wished you were selling something that wasn't a niche product. Do you believe that five-plus years down the road, you will be as large and well-known as, say, Trafalgar or Globus?

Poon Tip: Yeah, I do. I'm driven to grow this business, so I know that, organically, we can go to a billion dollars. 

Refining brand and corporate culture

Poon Tip claims that he has had month-over-month growth this year that was never less than 35%. In addition to what he sees as a unique branding position, one other reason he's optimistic that he'll hit $1 billion in sales is travel itself is on track to become the largest industry in the world, thanks in large measure to economic growth in China, India, Russia and Brazil. Poon Tip points out that the biggest challenge is that travel isn't going to scale equally -- it might double in Peru by 2020 but grow tenfold in China, so the challenge is to pick markets intelligently. 

But most important to him is the further refinement of his branding and corporate culture, and much of his time is spent focusing on employees. The G Adventures office in Lima, Peru, which is the company headquarters for South America, is filled with a bright, young, energetic staff. They might have meetings in the "Legos Room," which features a table filled with small plastic bricks, or interview potential employees in the "Michael Jackson Room," complete with a statue of the singer and Michael Jackson-themed wallpaper. Interviewees spin a wheel and must answer some questions that are certainly atypical in most job interviews, such as "What was your best Halloween costume?" and "Would you rather be rich or famous, and why?" 

Poon has boiled down his company's core values to five words: People, planet, profit, passion and purpose. "I met with the CEO of Netflix. Their core values are 14 pages long. But if you're a cook for us, you'd never understand them. [Our] values could work for anything. Our vehicle is travel, but with these same values, we could sell mood rings." 

It's easy to see why a publisher would solicit Poon Tip to write a book. His head seems to be bursting with business concepts that he can reduce to pithy advice ("Happy people drive your brand to success. The Four Pillars to Happiness are: Ability to grow, being connected, being part of something greater than yourself and freedom.") 

From an industry point of view, Poon Tip's lasting impact won't be measured in book sales. He might yet, as his title promises, change the way businesses operate, but those claims today are a bit reminiscent of President Obama receiving the Nobel Peace Prize in his first year in office. 

Long term, his greatest impact on the industry might not necessarily spring from customer satisfaction or growth rates. Rather, the question is whether he will shake up the corporate behavior of a largely tradition-bound industry segment: tour operations. Tour operators have certainly evolved over the past decade, becoming more experiential and marketed, in part, through sophisticated social media, but the companies themselves follow business and branding models that have remained largely unchanged for years. 

Mazza's analogy with Club Med might be the fairest measure of G Adventure's ultimate impact. Club Med's success was driven by concept, culture, engagement and experience, and its influences created a multibillion-dollar subset of hospitality: the all-inclusive. 

Companies built on social enterprise are taking root in many industries, and it's a model that could well proliferate throughout this decade. While it would be difficult for large operations to "retrofit" along the lines of G Adventures, it's not impossible that they would create subsidiary brands that mirror its approaches to branding, marketing and social enterprise. 

Social media not driving transactions, says Expedia chief

The world's biggest online agency sees no sign of social media driving transactions, despite repeated assertions that Facebook has a big future in travel.

Expedia chief commercial officer Dhiren Fonseca told the World Travel & Tourism Council (WTTC) Asia Summit: "Not a lot of transactional volume is driven by social networks. Maybe it [booking travel] is not applicable [to social media]. Maybe people on social media just want to talk.

"There is a lot of experimentation, but no one has really cracked this." At the same time, Fonseca described growth in mobile hotel bookings as dramatic. He said: "We have seen the booking window compressed dramatically ­- 98% of our mobile bookings come two days [or less] before arrival.

"The increase in mobile bookings is great for consumers but a challenge for hotels. Imagine running a 600-room hotel and having no idea how full you are going to be in two days' time." Fonseca argued Expedia is less a travel company than a tech company, and suggested consumers recognise that.

"At our core we're a technology company that happens to be in travel," he said. "Getting a cheap hotel room is more important than knowing you can call Expedia to get help.

"I can envisage a world where the device you have brings a virtual Expedia with you. It knows when you arrive at the airport. It directs you to the bus. It guides you to your hotel. It notifies the hotel of your arrival."

Min Fan, chief executive of China's leading online agency, Ctrip.com, agreed with Fonseca on the value of social media. Fan said: "You cannot anticipate you will get traffic from these channels."

With agent reference back in Carnival ads, retailers applaud

By Tom Stieghorst

Carnival Cruise Lines’ return to referencing travel agents during a call to action at the end of its TV commercials got a warm reception from several travel agents, although one suggested it was overdue.

“I think that’s fabulous,” said Monica Ambriz of Anytime Anywhere Travel in Antioch, Calif., outside San Francisco. “Anything that gets the word out that travel agents still exist is good.”

Carnival said that beginning this fall it will include a call-to-action feature at the end of its 30-second TV spots. It said the feature will suggest that viewers “contact a travel professional, Carnival.com or 1 (800) Carnival.” It didn’t specify whether the call-to-action will appear as a visual or be spoken in a voiceover.

A longer, 60-second version of the commercial will not feature the call to action, but will end with a simple image and brand logo, Carnival said.

Carnival said it last incorporated a call to action in its TV advertising in 2010.

“We’ve heard loud and clear from travel agents that in order to build business together, we need to do a better job of guiding the millions of consumers we reach through our marketing initiatives to contact a travel agent,” said Joni Rein, Carnival’s vice president of worldwide sales. “We are so excited to introduce this message with our new fall television campaign and hope it will drive visibility to the value of using a travel agent when consumers decide to book a cruise.”

Rein said the inspiration for returning to a call to action came from the line’s travel agent outreach program, Carnival Conversations, launched in early July. It has held agent forums on ships in New York, New Orleans and Port Canaveral, with more scheduled.

Some agents expressed mixed emotions about the TV plug.

“It’s about time!” said Marlys Aballi, owner of Connection to Cruise in Redlands, Calif., who said she feels that Carnival’s website has taken priority over travel agent referrals for too long.

Aballi said she sells quite a bit of Carnival, especially the shorter cruises out of West Coast ports, and she emphasized that Carnival isn’t the only cruise line that has sought to increase direct bookings.

She said Carnival could be doing more to help travel agents. A small example she cited would be to move the white space provided for travel agent contact information from the back of its brochures to the front.

Suggestions like that are what Carnival executives say they had in mind when they launched Carnival Conversations. In addition to the road shows, there were sections for travel agent feedback created on the GoCCL agent website.

Ideas adopted so far by Carnival after the program’s launch include a move to simplify the number of fare categories and promotional codes and reforms to make booking groups on Carnival easier and more rewarding.

Carnival plans a major marketing push this fall to fuel its recovery from a price slump that followed the Carnival Triumph engine fire in February. Agents are being wooed as part of the overall strategy.

Jo-Ann Moss, a Cruise Planners franchisee in West Linn, Ore., outside of Portland, said she’s encouraged by the attention.

“I’ve got some clients who won’t sail on anything but Carnival,” Moss said. “I’m thrilled for their renewed appreciation.”

Thomas Cook launches 24/7 social media 'listening lab'

By Phil Davies 

Thomas Cook’s move to embrace social media has taken a step forward with the introduction of a dedicated 24/7 social media monitoring facility.

A specially trained social media listening team will provide real-time global brand reputation management, listening in over 180 languages to “chatter” around their brands.

The ‘Thomas Cook Listening Lab’ will identify social ‘brand champions’ who the company should be interacting with socially to help increase sales.

Data will also be collected to be used for future marketing campaigns and to provide insight on how to heighten social brand awareness.

The Lab will aid in crisis management, provide real time comparison of competitor brands and listen to all customer feedback.

The facility also features tools to engage with customers directly through countless social media channels.

Chief executive Harriet Green said: “We were the first major high street travel agency in the UK to offer online bookings, last year we had 310 million visits to our websites, ThomasCook.com was labelled #5 travel/e-travel site in 2012 eDigital Research Best Site benchmark and just this month our new mobile website was said to ‘set the standard’ and received a 10 out of 10 by travel technology consultant Paul Richer.

“As we expand our digital capabilities, my vision for Thomas Cook is to be the leading online tour operator and to have the highest share of bookings online.

“Our Thomas Cook Listening Lab will allow us to better position Thomas Cook as the leading travel authority by listening and monitoring customer sentiment, enabling us to discovering useful and valued information about our customers. The Listening Lab will further help our customer services team to better engage with our customers in active dialogues, and provide relevant, fresh and valuable content to key audiences.”

Global head of social media Jonathan Roberts added: “Being proactive and having to monitor thousands of social mentions a day can be difficult and time consuming, but with the Thomas Cook Listening Lab, coupled with social media listing experts, we are able to see and resolve social concerns with our social media customer care team.

“Monitoring is also instrumental in Thomas Cook’s success, whereby the real-time data collected through social media is ‘key’ in all future marketing, PR and advertising campaigns.

“We can also quickly see what is being discussed in real time about any of our major competitors or our own marketing campaigns, television adverts or product launches, and within hours, our marketing teams can create additional sales messages, and then direct fans via social platforms to learn more about special offers or holiday packages.

“Through the Listening Lab we now have the ability to target a specific customer base, for example if we want to target people in London who have recently tweeted, ‘I need a holiday’, we now have the tools to reach out to those people and make an informed pitch based on their online social profile; revealing their age, gender and likes and dislikes.”

The Lab features six large monitors, contains specially designed computers, with speakers, and a video conferencing camera that allows for meetings with regional marketing teams and to help co-ordinate with teams at live-location events.

There are four additional desktop systems for the purpose of social engagement with customers. The larger monitors show real-time tracking with various data visualisations and dashboards, aided by a variety of software integrated into a platform ideal for social media listening and engagement needs.