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Century 21 - New Business Models in Travel

Speaker Transcripts

Karen Gee

Selling the Dream

Thank you very much. First of all I would like to thank you for inviting me to talk here today. I know that the slot after lunch is traditionally called the graveyard slot, but, if you can stay awake I can promise you three things today. 1. Some interesting information. 2. A controversial viewpoint. 3. A game -yes, a game that you can take away back to your offices and have some fun with. I can't say fairer than that, can I? If you are sitting in the same spot that you were sitting before lunch, can I ask you to stand up please and move to another location. Come on, everyone on your feet!…That's better, now there's much less chance of you falling asleep after that lovely lunch we have just had with all that wine and food!

I think we are experiencing one of the most interesting times ever in the travel industry. It's a time of great change and great opportunity. Isn't the internet creating a revolution in our lives - it seems like everything is changing and having an amazing impact on our lives everywhere we look. Never before in the history of time has the marketing department and sales department of every company in the world spent so much time with their IT department. And what about the vocabulary that goes with it - isn't it amazing? I am learning new words and new meanings to existing words all the time. Take 'surfing' for example. I used to think it meant doing a kind of Hawaii 5-0 number but, actually, it means getting out there and exploring and seeing what is on the internet. Same for 'portal'. I used to think it was a kind of window on the side of a yacht, but it turns out it is a kind of gateway onto the net. The same for 'web' itself. I used to associate it with nasty spiders but, actually, I know it refers to a whole library of information that you can access from virtually anywhere in the world. Interesting times and times are changing. I can tell you that the internet has changed my own personal life dramatically - and I mean dramatically: I hardly ever go to the supermarket these days. I am a Tesco Direct shopper. I sit there with my laptop and my gin and tonic while someone else goes round and collects all the things and brings them and puts them in my kitchen. It's marvellous - I can recommend it. I am also one of these really smug people who has done all my Christmas shopping in October and about 80% of it was done on the net. It saves me time, saves me hassle and I really appreciate that when I have got no time and I have got money to spend. For me, the beauty is being able to shop at any time that suits me and not the retailer, and I can access a whole world of information that I would have difficulty getting hold of if it wasn't for the internet. All key benefits that apply to the travel industry as much as to any other business. In fact, I'm such an addict that, when I told my friends I was joining eDreams, they all exchanged withering looks and promptly predicted that I would be inviting them to a virtual dinner party instead of a real dinner party - I hadn't actually thought of that before, but it's a great idea!

So, let's look at what's on the agenda for today. First of all, I am going to tell you a little about eDreams and who we are. We are new into the market and you may not have heard of us. Then I am going to review the internet and the UK. Finally, I'm going to talk about getting on board and developing the consumer facing website.

So, who is eDreams? We are a brand new, innovative travel business. We have four offices worldwide - London, Milan, Barcelona and, importantly for an internet business, an office in Silicon Valley in the States. One of the great things about eDreams is the incredible experience and professionalism that we have within the organisation. The pedigree of the team is, frankly, second to none. We have an outstanding mixture of internet business experience and UK travel industry experience. It is the combination of these two that makes eDreams a powerful organisation and a force to be reckoned with. With experience from organisations like Netscape, QXL, Expedia and AOL on the one hand and Airtours, First Choice and Thomson on the other, the calibre of the team is very clear. We are delighted to have Peter Long and Michael Julian on board as non-executive directors, both of whom are very well-known figures in the travel industry. We also have solid financial backing, having recently secured $20million in investment capital to launch eDreams within Europe. 

The eDreams approach is quite different. We recognise that every customer has a different dream. Some like sand, others like snow. eDreams is about individuality. It is about understanding what the customer wants out of their holiday and helping them find the perfect fit, if we can. It is about what the customer wants and not what we have to offer. It is also about taking away the apprehension and anxiety of planning a holiday and replacing it with encouragement, excitement and anticipation. Product-wise, we plan to offer as wide a portfolio as possible. Everything from mainstream summer and winter destinations to more unusual niche options that will benefit from this kind of internet exposure. One of the most interesting features of the eDreams site is the Dreamguides concept. Dreamguides are real people, who have a passion and enthusiasm for a particular destination or activity. We have already recruited over 100 Dreamguides, covering topics from Asia to birdwatching and are actively recruiting many more. Each Dreamguide will have their own page on our site and will use it to publish information, advice and recommendations on their particular area of specialisation. Customers will not only be able to read this information on our site, but will also be able to ask specific questions by email. To ensure that the Dreamguide content stays strictly editorial, their compensation has nothing to do with sales and they have absolutely no interest or incentives to sell any products that we have. I will be honest and say that the Dreamguides are the feature of our site that is attracting the most interest - the response to them is overwhelming. Apparently, Peter Long himself has volunteered to be our windsurfing Dreamguide - we said we'd get back to him on that one! To answer the question that most people are asking, our current plan is to launch in the second quarter of 2000. 

So, now that I have whetted your appetite, let's explore a bit how you might be able to work with eDreams. We are currently recruiting a travel agency partner, to help us take calls and process bookings. Also, we are actively seeking partnerships with a wide range of tour operators and are targetting up to 100 initially. As I mentioned before, we are looking to include a very wide range of products. To begin with, however, we are looking just for air-inclusive tours. Some of the ground only options might be of interest to us, but they might need to be handled in a different way so we prefer to focus on air-inclusive, at least to begin with. Regardless of whether you already have a website then, we would love to speak to you and see if we could work together. OK. Commercials over - let's get on with the show.

On to the internet. I thought it was important to be clear in our minds what the market is like in the UK. I find it is quite easy to get distracted by some of the research that is coming over from the American market and, in my opinion, we are at a different level of evolution. So let's just remind ourselves. Well, there's a lot of good news. An NOP survey in June 1999 found a total of 10.6million adults - or 25% of the population - were using the internet. They forecast this to rise to 12.7million adults by end 1999. London Business School found that roughly half use the internet every single day and 57% use it to book or research travel. MORI, I am pleased to say, discovered that 56% are happy to book on-line. This is all good news and really confirms to us the size, scope and potential of the market. Now for the not-so-good news. Users are very fickle and expectations are very, very high. I was astonished to learn that 35% of net time is spent on just 50 sites. This means that your site doesn't just have to be good, it has to be fantastic. Wait time is excessive. London Business School found that in 1998 an estimated 2.5billion hours were wasted waiting for pages to download. 

As far as locking into the potential of the internet is concerned, I believe the UK travel industry has only just started.

One of the essential things to bear in mind is the consumer profile. The internet user profile and the holiday buyer profile are actually quite different at the moment. The web user is predominantly male - in fact, men outnumber women 2 to 1 at the moment - and profile wise, they are pretty much as you would expect - B/C1 adults, age 25 - 45. The holiday researcher is, nearly always, a woman. This has always been the case and this is borne out by the fact that women are much more likely to visit a travel site than men are. Just recently, we have seen the launch of several sites which are specifically designed to target women users - Charlottestreet, Everywoman and Handbag from Boots the Chemist are examples. I believe that the balance of male to female users will even out quite quickly, as sites become more female-friendly and the number of female users increases. 50% of users are aged over 35, but only 7% are aged over 55. Again, I think this will change dramatically. Just look at the number of healthy, wealthy men and women who find themselves finishing work earlier than their parents did. I call them the 'young retirees'. No-one could describe them as old - in fact, no-one would dare! They used a computer and the internet in their professional life and they will probably continue to do so at home. This group is well placed to make great use of the internet in their newly acquired leisure time. ( Please don't think of marketing these people with anything like the word 'golden' in the title - it's not going to work!).

What of consumer attitudes to booking on the net? We have already seen that over half of our audience are actually happy to make a booking over the internet. Well, that's great, but it's only half your audience. What about the other half? What are their concerns and how can we overcome them? The biggest concern is security. A recent WhichOnline survey showed that 50% of people think that the risk of fraud is high. There are also concerns about what use is being made of personal information. If you just look at the information you are sometimes asked to give in order to register on a site, there is a lot of personal detail there. People are concerned about exactly what is going to happen to the birth date information that they have just given; and, before you think I'm advocating not obtaining personal information at all, let me tell you that is not the case. Understanding your user - really getting inside them to understand who they are and what motivates them - is essential. What I would say is that you can do a lot to reassure your customers. Give them privacy and security statements right up front on your site. Think about joining an organisation like Verisign, who can check your procedures and allow you to use their increasingly recognised logo on your site. It's all about giving your customers a reason to trust you and making them feel comfortable. In other words, don't allow any obstacle between you and the customer, between the customer and the sale.

And now, here are what I believe to be the 7 steps to web heaven.:
1. Identify your target audience. I know that this sounds obvious, but I'm sometimes astonished at how little consideration some sites seem to have given it, in the mad rush to get on-line. Think about who your market is and always, always bear them in mind as we go through the other steps.
2. Specify your objectives. Again, I know it sounds really obvious, but think carefully about what you want your customers to do. Do you want them to make a booking, do you want them to register, do you want them to look for information and call you - or all of the above? Be clear because the answer to this as it has a direct influence on step 3.
3. What is the best architecture to support your objectives? The way in which a site is constructed, and the thought processes which drive the navigation process, should be driven by your business objectives, not the other way round. Fairly frequently, I find myself looking at sites whose navigation bears a striking resemblance to Hampton Court Maze. Frankly, sites like this will not have too many repeat visitors.
4. How should your site be branded? In case you didn't get that, I'll say it again - 'branding'. Branding is very important. I am greatly disappointed by some very respectable travel companies whose vision of the internet seems to be the same as their vision of Teletext. They see it as a way to sell their £99 late deals to Palma. Now there is absolutely wrong with £99 and there is nothing wrong with Palma but, come on guys, you know there is more to it than that. If your positioning is to specialise in offering last minute bargain holidays (excuse the pun) then no problem at all. But if it's not, then it's a bit like asking Gary Rhodes round to cook dinner and asking him to make toast. The internet is a very exciting medium and we should all take it seriously.

Just as a bit of fun, we are now going to play a little branding game. I don't want you to get too excited, because it's not a game you can play on Christmas Eve or New Year's Eve, but it's just a bit of fun. Mentally, I want you to imagine that we are going shopping and we are going to buy a lacquered tray from Hong Kong. It is black lacquer, it's got a red dragon in the middle - is everyone picturing this? So now we are going to go and buy it from John Lewis. Is everyone familiar with John Lewis? A mid-range, perfectly acceptable, department store. What I am going to ask you to do, I want you to just decide in your head how much that tray is going to cost at John Lewis. Just think of that number right now - okay, everyone got there. Now I am going to call out some price bands. Don't worry about what price band the person next to you is thinking of, and when I call out the price band that your number is in, just raise your hand. Alright. Starting at £0-20. £21-30. £31-40. , over £40. Most people seem to think about £21-£40. Right, we are now going to buy exactly the same tray, exactly the same condition, from a car boot sale - how much do you think it is going to cost?. Same procedure, I'm going to call out some price bands - probably slightly different bands. First one - the real cheapskates - who thinks less than a fiver? £6-10. £10-15. more than £15. The majority of people came in under £10. OK, we are going to play one more time. This time, exactly the same tray, but we are going to buy it from Harrods. Same procedure, think of the price and let's go again. First up to £20. £21-30. £13-40. , £41-50. Thank you very much. Bit of fun. Purpose of the exercise is to prove the value of branding. We paid a lot more for the same item at Harrods than from a car boot sale! Never, never, devalue your product. Never, never think of the internet as a clearance outlet - unless that is your particular niche - unless that is what your point of differentiation is. This is really important.

5. We have already covered this. Check your security and privacy statements. Check that they are sufficiently visible and reassuring.
6. Promote your website address, both on-line and off-line. I know it sounds obvious, but, unless people know where to come, how are they ever going to find you? There are lots of opportunities here, exploit as many as possible and learn and learn.
7. The final step is refine, refine, refine. You will make mistakes. Everyone does. As long as you learn from your mistakes and you build on them, it's fine. But, if you don't, it's a real problem.


Finally, a rather impassioned plea to the industry - to the whole of the industry, not just those that are here today. Those who are just paddling in the internet sea and those who haven't even taken their shoes off, I say wake up and embrace this wonderful, powerful technology, feel the sand between your toes, or risk becoming a dinosaur. We all know what happened to the dinosaurs - and I'm not talking about being immortalised in a movie by Stephen Spielberg. A website that gives less information than a brochure, where emails go unanswered for weeks on end, where information posted on the site has passed its sell-by date, that asks consumers to turn to their website for information that cannot be found, is simply not good enough. I believe it says 'unprofessional' and it does not help to convey the professionalism, real professionalism, that I know exists within the industry. Just look at some of the success sites. easyjet, lastminute, iglu - sites that we have been hearing about today, they have achieved something that is fantastic. They are simple, they are effective and, importantly, they are successful. Embrace technology or become a dinosaur.

For those who have not already made a start with e-commerce, the longer they leave it, the harder it is going to be. They should work with companies who can help and should ask their advice. Use companies like eDreams, to help facilitate the start onto the internet and use it as part of your learning. They shouldn't panic, but, equally, they shouldn't just sit there frozen in panic. The internet has massive potential for the travel industry and presents us with a huge selling opportunity. Don't copy someone else. Carve your own niche. Be clearly differentiated. This is the way to success.

Thank you.


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