The day I landed in Los Angeles, there was a heavy smell of smoke in the air. The California wildfires were raging and the winds were blowing smoke towards the city.
It didn’t stop the city’s residents from getting out and about. The LA Live area was teeming with crowds. A Lakers game was on, there was a concert and ice skaters were whizzing round on the rink made up just for the Christmas holidays.
I also noticed heavy police presence. Around the perimeter were bomb-sniffing dogs and their handlers, while officers patrolled the area with their weapons. Just the week before there had been the shooting in the Californian city of Thousand Oaks, which claimed 12 lives.
My mind harped back to the same time last year when we were in Fort Lauderdale for the same Phocuswright conference in the aftermath of Hurricane Irma and the beach was filled with debris from the storm. And a month after, I was in Las Vegas, which was still reeling from the shooting on the Strip which claimed 59 lives.
As a traveller, you can’t help but be conscious of the dangers and risks associated with being in the wrong place at the wrong time. We’ve all certainly become more conscious and more resilient – and as they say in Hollywood, the show must go on, and so must travel.
The Phocuswright conference with its theme of “Power Paradox” certainly did and over four days, it covered a lot of ground from young leaders to women leaders and startups as well as conversations with investors, new players and giants of the industry.
Brad Gertsner, Altimeter Capital (left) and Bill Gurley, Benchmark Capital: Uber and Amazon Prime have done a good job of optimising the bottom of the funnel.
Bill Gurley on last mile mobility, bottom of funnel and voice
To Bill Gurley, considered one of technology’s top deal makers, the big story goes beyond travel to last mile mobility. An early investor in Uber, he noted there had been a total of $100b raised in the ride sharing category in 2018 – in a category that didn’t exist eight years ago.
“Anytime investors see this kind of growth, we assume other big things are happening,” said the partner at Benchmark Capital.
Beyond Uber whose valuation is three times larger than United Airlines, Hurley said there’s a bigger story afoot. “People thought it was about people giving up taxis, now it’s about people giving up cars. That’s the big change in the US, there are five parking spots for one car in Los Angeles, cities in this country were built on cars and car parks”.
How will this change given that for the first time, the number of driving licences issued at age 18 is dropping? “It’s not just about taking away the car but everything associated with it – which will be redirected elsewhere. We now have scooters everywhere, being left at sidewalks and we haven’t thought through all the regulatory and demographic stuff,” said Gurley in his interview with Brad Gertsner of Altimeter’s Capital.
Companies such as Uber and Amazon Prime have done a good job of optimising the bottom of the funnel “which is incredibly hard”, said Gurley, citing a statistic that 40% of customers of Ubereats have never used Uber.
With Uber now being run by former Expedia CEO, Dara Khosrowshahi, and fellow Expedian Barney Harford, Gurley said, “It is bringing the intelligence of funnel and loyalty that they’ve seen in travel companies to Uber.”
He suggested that Airbnb should just spend $200 million on optimizing the bottom of the funnel by investing in digital locks for all its homes.
He also does not believe that high ticket expenditures like travel will be “going to voice anytime soon”. Added to that is the paradox of choice, which makes online shopping for anything from clothes to travel extremely bewildering. “I don’t think voice works until you get the curation right.”
His views on Google are that the search giant is a long way from a place of trust “because they are so dependent on advertising, the first 14 things it serves up are ads. It will be a difficult transition. They let advertisers compete in a virtual cage – how do you transition that to a voice world?”
Haydn Sonnad: Skipping college to be an entrepreneur. “I can always go to college later.”
The hopes and dreams of a new generation
Mobility was also on the mind of possibly the youngest speaker to ever take Centre Stage at Phocuswright. Haydn Sonnad started Tesloop, a Tesla ride sharing service, when he was 16 and three years on, at the age of 19, he’s taking the business in a different direction, to that of a marketplace offering data-driven services to Telsa car owners initially.
It was hard to give up on the original idea, the confident and articulate teenager admits, but clearly a physical operations faces limitations for growth that a software platform doesn’t. And while he also admits that there’s nothing to stop Tesla from starting a similar service, he believes consumers will prefer an independent platform versus one that’s proprietary. Plus, of course, his new data service, Carmiq is first and, being smaller, will execute faster.
What I found more interesting was his personal story, how at 16, he was so infatuated with the notion of electric cars and transportation that he decided to skip college to start Tesloop to make “safe and affordable transportation available to everyone”.
Confessing it was his mother he had to convince more than his father who invested in Tesloop along with other investors, his thinking is, he can learn so much more in the business world than in college, plus if he fails, say five or six years later, he’ll still be able to enter college. Speaking to Sonnad Sr on the sidelines, it is clear he has his father’s full support. “He’s learning so much more doing this,” he told me.
Thus better to grab the moment now than later, is Haydn’s rationale. Saying that accessibility to and availability of technology had made it possible for someone like him to become an entrepreneur at an early age, Sonnad also said the presence of role models in the US, who have built successful world-changing businesses, was also inspiring for his generation.
Asked what problems he felt his generation had to fix, he cited healthcare and education with his wish to make it affordable to everyone, just like “safe and affordable transportation”.
One other reason why he chose not to go to college was because he felt it didn’t make sense for kids to take on so much debt for their education that they have to spend a big part of their youth repaying their loans.
His wish was for the establishment in the industry to judge entrepreneurs by their ideas and ability to execute, rather than age. Ah, isn’t that a universal wish for everyone, regardless of age?
Phocuswright’s Maggie Rauch takes Jerry Hu, Alibaba Group, and Cindy Wang, Ctrip, through their product stages.
The Chinese rule in execution for a mobile world
When it comes to execution though, you have to tip your hat off to the Chinese brands like Fliggy and Ctrip which are already operating in a mobile world, with their apps allowing customers to search, compare, shop, get recommendations across multiple verticals – from flights to rail, hotels to tours & activities and packages, share and pay.
Both Fliggy (part of Alibaba) and Ctrip are also expanding into the offline world. Alibaba has opened a hotel in Hangzhou (the hometown of its founder Jack Ma) while Ctrip has started a hotel management company, Rezen Hotels Group. And both are expanding beyond China.
Jerry Hu, vice president, corporate relations of Alibaba Group, may say that Fliggy is not an OTA but is part of the Alibaba ecosystem but there is no denying the power of being part of a company that can achieve $30.8 billion in sales on one Singles Day. “If you buy a bikini on our site, we will send you a brochure on beach holidays,” he said, noting this was called “grass planting”.
Cindy Wang, CFO of Ctrip, said that Ctrip’s focus on travel enables it to compete with marketplace players like Meituan or Fliggy. “If you have 80% of your traffic coming from your own app, it’s an advantage for cross-selling opportunities.”
Rail is a huge segment for both Fliggy and Ctrip. With the government’s mission to have high speed rail cover large parts of the country, rail will be able to penetrate third and fourth tier cities and “Ctrip can inspire more people in these secondary cities to travel”, said Wang, adding that when consumers book hotel and rail together on Ctrip, they get a 10% discount.
Alibaba’s Hu noted that “high frequency beats low frequency” and with three billion people travelling on rail versus 400 million by air, “it doesn’t matter if you make money or not, what’s important is the high frequency”.
Both companies are also ahead of the curve in offering tours & activities, a hot sector globally. Alipay, which describes itself as a “lifestyle super app” offers Fliggy’s tours & activities to its customer base of Chinese travellers in 40 markets – and if you talk about optimizing the bottom of the funnel, Alipay is one company that’s done it well across not only South-east Asia but globally.
There is no doubt that everyone’s watching how these Chinese brands are executing not only domestically but also internationally, and drawing inspiration from them.
Mark Okerstrom, Expedia Group, on its global expansion plans, including Asia
Giants look for growth beyond the US and in different verticals, meanwhile TripAdvisor gets social and personal
It is interesting to compare the strategies of the Chinese players with American companies such as Booking Holdings and Expedia Group, the two dominant players in the US.
Unlike China, which still has a lot of headroom for growth, even though there is some softening, the US market is more matured. As Mark Okerstrom, CEO of Expedia Group, noted, “The tailwinds of growth are not in the US.” However he believes there are still pockets of opportunities to be harvested domestically.
Booking Holdings has the advantage of having the accommodation giant, Booking.com, which is enjoying global success. The fact that its parent company took its name is indicative of the pride of place it has within the group, something Glenn Fogel, CEO of Booking Holdings, attested to in his interview on Centre Stage.
Both companies are growing through acquisitions and are taking big bets in alternative accommodation and tours & activities. While Booking Holdings has bought Fare Harbour, Expedia Group runs tours & activities internally and seems to be happy with status quo for now. Okerstrom pointed to Homeaway which is seeing strong international growth.
Both are approaching China through investments and partnerships with local giants, Booking Holdings having invested in both Meituan and Ctrip. Okerstrom said that its focus is on parts of the Chinese population where it can deliver value and that’s outbound as well as inbound, admitting that he doesn’t think it could win anytime soon in the domestic market. Booking.com, meanwhile, is digging deeper into the domestic market with the appointment of a Chinese managing director, Marsha Ma, who’s working hard to build brand awareness through partnerships with companies such as Spring Airlines.
Asked for a wishlist of acquisitions, Okerstrom said “if relations with China were better, a big player in China to be part of Expedia” and something in the corporate travel space to abet the growth of Egencia.
That same week, TripAdvisor, making its biggest gamble yet, rolled out its new product, a travel feed of personalized recommendations, based on users’ social profile, pulled from content from brands, influencers and their own networks.
Stephen Kaufer, TripAdvisor president and CEO, called it the new “go-to resource for travel”, which will allow travellers to search for places to go or where to stay, discover recommendations from friends, family, publishers and influencers and plan and book their trip.
You could say that in a way, TripAdvisor is trying to roll in everything into a mobile world, the way Ctrip and Fliggy have done and executed successfully in their home market.
Whether it can work across multiple markets and different customer nationalities and types, that’s unsure. Just as the Chinese playbook may not translate well outside China, the American playbook may face similar constraints outside a single, homogenous market.
As a beta-user, I confess I’ve yet to fully dig into the new TripAdvisor and unearth its full promise and potential. For starters, I am already juggling with too many social networks and feeds and when I was in Los Angeles, I did try exploring the city with the new product but there was a lot of stuff to trawl through and because I guess it doesn’t know enough about me at this stage to make it relevant for me, in the end, I surrendered to Google maps and used its “nearby” feature to discover restaurants, shops and things around me.
Will time change that? Clearly TripAdvisor is betting it will, yet we know the hardest thing to change is customer behavior.