Roman Peskin: “Now two guys in the garage are sawing a product that will blow up the market”

Online travel (Online travel) is one of the leading practices in DataArt. This is a set of projects: from simple services for travelers to breakthrough new technologies that everyone will talk about in the future. Roman Peskin, VP, Hospitality Consulting at DataArt, the former founder of DealAngel and VP Hotels at OneTwoTrip, told a lot of interesting things about this industry in an interview with our editors Daniel Lurie and Vadim Mazin.

- As I understand it, the competition for traditional ticket sales on the Internet is very high, and the margin is very low. Sometimes agencies trade almost at a loss, in order to buy market share for themselves. That is, it is actually marketing expenses. This is true? How is the travel market tripled now? What is not really on it as it seems to the general public?
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Russian agencies sell themselves almost at a loss, namely Russian ones. In the world, almost no one does this. There are a couple of agencies that are trying in the Western markets to act in the same way, but here it is not accepted.

Airlines are trying to push the policy that you can not sell tickets to yourself in the negative and discourage the agency commission. For several years, Aeroflot and Transaero have insisted that it is impossible to sell tickets at prices lower than that of the carrier. But, as a rule, agencies still sold tickets to themselves in the negative and "shared" the commission. Some gave even more than their commission in order to win market share and show the growth of their turnover - such a kind of pyramid, like MMM, was obtained. The first victim of this approach was Eviterra almost two years ago.

Why do they do that? They are trying to make money on the sale of additional services (insurance and the like), and besides, everyone wants to buy hotels from them, on which a very decent commission is earned. In air transportation commission and margin are insignificant, if at all. In the home transport market, there is practically none at all. Somehow you can earn only on long intercontinental flights. And this concerns not only the Russian market.

In the first world, airlines have long ceased to pay a commission at all. Until recently, Aeroflot paid a decent commission, which caused a boom of Russian start-ups. OneTwoTrip, Anywayanyday and some others have risen on this. When Aeroflot canceled the commission, most of these companies had difficulties, except for the largest consolidators, who now continue to pay Aeroflot. That is why so much attention is now to hotels, where the commission is ... it reaches 25%. In Russia, however, they have not yet learned how to sell hotels online well. The dataArt Oktogo / Travel.ru do it relatively successfully. The “island”, a sensational startup, also shows some achievements, but they are incommensurable with an incredible amount of venture capital, which they attracted. Today, the Russian hotel market is completely owned by Booking.com.

In the global market, the situation is reversed. Everyone has recovered from the recession, travel a lot, buy tickets and book hotels.

- On November 17, Google Flights was launched in Russia. What does this mean for the local market?

I think so far nothing, and for a long time nothing. They have been launched in the States for many years, and I still do not know anyone who uses their product to search for tickets. Although, if they do become popular, it will be at least interesting, considering what kind of battle there will be between agencies that give their entire commission to users and airlines. If this practice continues on Google Flights, they have a chance to take a place in the minds and wallets of Russians along with Aviasales and SkyScanner.

- What are the main trends now in the global online travel market?

There are several trends here:
Next year, in the US, 52% of half of the armor will be made on mobile devices, this is the eMarketer forecast. People are increasingly booking tickets from mobile devices. Tablets are more used for search and inspiration, and more armor comes from phones. At the same time, phones are often booked for the very near future: for today, for tomorrow. One of the most successful companies in this niche is our client HotelTonight.

The hotel chains have become more active. Large networks are openly fighting with PTA for people to book directly from them. Sites have become better, their direct prices have become better, all networks have canceled loyalty points for those who book through third-party sites. Hotels do this for two reasons: not to pay commissions by intermediaries and to sell additional services to the client. The most advanced networks began to invite to their site special low rates for “logged-in” users, members of their loyalty programs.

Standard OTA, such as Booking.com and Expedia, will not go anywhere, as they remain the best and cheapest distribution and marketing channel for small hotels and chains. Priceline (Booking.com), Expedia and TripAdvisor, by the way, are the largest advertisers on Google, by a wide margin from the rest. No one can afford to spend money to promote hotels more than they do, so dozens of travel startups regularly bend.

Increase the value of metasearch. This is Kayak, this is Trivago, this is HotelsCombined. Their growth is associated with the second item. These are services that allow you to compare prices from different sources, and book where it is more profitable. The last two years - the real era of metasearch. Large companies, one after another buy themselves such services. The same Priceline bought Kayak, which became one of their main assets. Expedia responded with Trivago. Yes, and TripAdvisor from the site guest reviews turned into a metasearch. Aviasales is phenomenally popular on the Russian market. In the airline industry in Europe, our customer SkyScanner is the undisputed leader in metasearch.

The boundaries between traditional (hotels, hotel chains) and non-traditional (sharing services like Airbnb) are becoming increasingly blurred. We already understand that Airbnb will soon start selling hotels, thereby combining the two approaches. And Expedia acquired almost its competitor HomeAway for almost $ 4 billion and invests in a non-traditional sharing economy. Booking.com got even more interesting: they didn’t buy anybody, but simply began to accept as partners, apart from hotels, also apartments. And many customers prefer to book accommodation on Booking.com, since the portal itself is responsible for booking. Airbnb is facing legal difficulties in a number of places. For example, in New York they are outlaws. Recently, research results were published that Airbnb had a negative impact on the development of the hotel industry.

Also trying to develop the scope of tourist activities. Everyone understands that air travel is already a completely digitalized industry, hotels are mostly too. And such a field as excursions practically does not spread at all online, with the possible exception of the American company Viator, which has been doing this for 10 years, and was finally swallowed by TripAdvisor. And again - there are dozens, if not hundreds of startups, which are still breaking spears about the traditional difficulties of this market. And well-known in the Russian market can be called the company Excursiopedia, it is difficult to speak about their success.

All efforts are directed to ensure that in any way around Google on the path to winning the client. There is a new fashion for concierge applications. Magic, GoButler, Pana and others offer to book hotels and flights via SMS or chat-like applications in a dialogue with the client. I think this trend will last for some time, and some of them will survive, most likely, those who will be able to position themselves in the market of services for business travelers.

- Will the services for travelers be integrated into some “digital hypermarkets” along with services outside travel?

Not. I do not see that travel is well integrated into other areas of e-commerce. There have been attempts, but success is not noticeable. This business turned out to be too specific. In particular, Amazon, not having time to do travel, has already announced that they changed their mind. While everyone was afraid of such a player entering the market, there the guys evaluated the situation and decided to wash their hands, and this is their second attempt. A few years ago there were attempts to enter the travel market from Groupon, but they were also unsuccessful. There is an Ozon with their online travel destination. But at the same time, Ozon itself seems to be profitable, and their travel-direction, to put it mildly, is not very.

- What about integration at the same Priceline level? I, for example, go on vacation to Southern Italy, from Naples to Sicily. I go to the conditional Priceline, indicate the direction and approximate dates, and in response I get a full offer: here's your hotel, here's a car, these are the restaurants you need to book, these are the museums to go to. Will that be?

Attempts to eat. Now there are many startups that are exactly what they are trying to do, linking together a lot of APIs and various data. Rome2Rio is a good example. But people, apparently, do not need it. People first buy a ticket, only then they are looking for a hotel, they think for a long time. The fact is that all this happens at different stages, at different times. Tickets are booked for the maximum time, the hotel is already booked closer to the departure. And where to go and what to do, people think already on or place, or the day before departure.

Therefore, the scope of excursions online is not very developed. Still, of course, plays a role that the suppliers of excursions themselves are not very close to digital yet. Historically, excursions, even bought online, were tied to a voucher. You buy a tour online, you print a voucher and you already use it for calculations with the guide. And then the guide already carries this voucher to the travel agency and gets his money. No voucher - no money! Actourex is a completely new startup that is currently working on solving this problem, I very much hope for their success.

“What about a fresh look at old data?”

There is a tendency now to build travel planning products or something related to excursions. Now there are a lot of startups who are trying to do something using the open APIs, which the main OTAs do not have. Chance to survive in this field a bit. The main reason is that the average consumer travels very infrequently. And promote the brand for something that is usually used once or twice a year and without which you can easily live, unjustifiably economically. You need to spend an incredible amount of money to bring the new brand to the consciousness of the consumer. The likelihood that a single consumer will remember about some kind of niche tool for planning travels at the moment when he is going on vacation is insignificant.

These are the “vitamins” of the online market. People buy vitamins badly, and there is high competition in the vitamins market. But painkillers people buy well. Uber is a painkiller, so today they cost more than $ 50 billion.

- Are there any examples of successful startups that have withstood and managed to take their market share?

Airbnb and Uber cannot be called a start-up language, but they are certainly mega-successful. HotelTonight, with which DataArt works, is also an obvious success - this is the mobile-only service for booking a hotel on the same day. The reason for the success of all these companies is that they did not try to take away a place or compete for a busy market share, but in fact invented a niche for themselves. Hipmunk, with their innovative hipster interface, first took off somehow, but now it has stopped growing, although it is still holding up. And this is an example of the fact that it is extremely difficult to build a successful business in a niche occupied by giants today: Expedia, Priceline, Tripadvisor.

“Recently, I read a big discussion with Travel.ru’s creator Asi Patrysheva about why she uses the services of a travel agent — despite the fact that she herself could be said to be a forerunner of automated ticketing in Russia. Asi has three children, and they fly with their whole family along some unusual routes - and no one has yet decided to automate the purchase of tickets for such unusual cases. Are there any other such niches in the travel market that online travel has not yet reached? What questions have no answers yet?

There are few users like Asya Patryshev. Nothing is impossible. If there were a lot of them, the main OTAs would take into account their needs, would make a more advanced interface, allowing them to search for more complex routes.

There are already many opportunities on airline websites to create complex routes for themselves. Most major Western airlines have rather advanced online designers.

If there was a demand, there would be an offer. But it is often to do what a travel-agent can do by cramming commands with the hands in the GDS in the console, making it either difficult or economically unjustified to build such interfaces on the browser interface.

Travel managers can sleep well. In addition, people are beginning to want service. The service will continue to be in demand, and the demand for it will continue, as long as people have a desire to avoid many hours of searching for the "right" tickets.

- What niches are not yet occupied? What hasn't online travel got to yet?

It seems to me that the following “big” innovations, and more importantly, investments, are waiting for us in the field of business travel. This market is still almost virgin and not covered. For the last 15 years, nothing new has happened there, practically, while everyone was busy with attempts (or dreams) to divide and redistribute the consumer market.

There are no startups there yet. Most classic startups are inspired by their ideas, their needs. They want to go on some wonderful holiday, they don’t find a tool that would suit them and decide to create it. They do not work in large corporations, do not fly 200,000 miles a year. And those who work in large corporations and fly at the expense of the company at 200,000 miles a year, usually do not know how to engage in startups, or they are paid so much that they have no motivation to raise a startup and rush into the maelstrom of survival on bread and water.

In addition, there is a higher threshold of entry. The hopes that a large number of customers will immediately come running to you, simply because you have such a cool UI, are naive and people with corporate experience understand this. In this area, you need to deal with serious, that is, long, sales, persistently pester the thresholds of large companies, selling their services. And this few startups want or can do.

The greatest potential for innovation, it seems to me, is right here. Most likely startups will come here, but more mature, with older founders who have a corporate background.

- What are the features of this particular segment?

This is managed travel. This is very different from how you book your own tickets when you go on holiday to Turkey. Even if this is only partially managed travel, when the travel-manager seems to be doing everything for you, orders the tickets, reserves the seats, but at the same time uses consumer resources such as booking.com or OneTwoTrip.

There are only three “hippopotamuses” of corporate travel-agencies (Travel Management Company) in the world: AMEX, BCD, CWT. The turnover of each of them exceeds $ 25 billion a year. And there everything happens differently: your corporation enters into a service contract with such a huge TMC, as a rule, for this, your company must spend at least $ 5– $ 10 million a year only on air travel. Then there is the TMC sector, which specialize in a sector between $ 1 million and $ 5 million in annual travel expenses, Egencia is a good example. But today there are not many tools and services for companies that spend from $ 50,000 to $ 1 million on travel. At some point this will change.

- Now the travel industry is closely looking at developments in the field of IoT (Internet of Things). These technologies can be used in the hotel business, and at airports, train stations, and not only. What innovations in travel related to the Internet of things are waiting for us in the near (and not only) future?

First of all, navigation in buildings, we are currently working with a number of airlines to introduce navigation services inside airports. Undoubtedly, tied to the location of advertising and sales. Surely it will soon be possible to take a bus or train and buy a ticket, immediately tied to the route, already on board.
For one kilent, we have already developed a system that allows you to give up keys and cards in hotels - the door to the room can be opened using a mobile phone or Apple Watch.

- Wearables already in full use?

For me, the Apple Watch on travel is a great helper. When I fly boarding passes, I always have Apple Watch, than in some "backward" airports, I cause a real sensation. On Crete, as I passed the control of my boarding pass with my watch, the entire airport staff came running. The guards did not even know that they can go by the hour. Doors in the hotel for hours, too, can already be opened. Like to call a taxi. I expect Apple to continue to get into travel. Payments, identity checks, tickets, etc. - all this will actively migrate into the hours, just as it happened before with the migration from desktops to phones. There will be some kind of platforms between Apple / Android and maybe some FitBit, but this is quite expected, as a result, the consumer will only benefit.

- What are the prospects for mobile technology?

The role of mobile technology is now very large. Roaming is becoming cheaper. I use a mobile phone from the American T-Mobile, I have free data roaming around the world and free WiFi-calls. And no problems.

In the EU, the problem has already been solved. A few years ago, the Eurocommissar for Communications ended the introduction of a policy whereby cellular companies cannot charge for roaming within the European Union more than a certain ceiling rate, regulated by law.If you have a Czech SIM card and you come to England, you have no problems. I even noticed that using a Czech SIM card in England is cheaper than in the Czech Republic itself. Because the ceiling prices for roaming are regulated by the European Union, and in domestic markets are not regulated.

Mobile armor every day more and more. The screens of the phones are getting bigger, the phones are becoming more powerful, it's easier for them to do almost everything the same as on the desktop. And more and more services are oriented on them.

- Companies in many industries are now abandoning native applications in favor of mobile sites. How about this in travel?

Yes, more convenient mobile sites. But this does not mean giving up applications. To drag a person onto the site is not a one-time task. Tighten it again will take almost as much effort. But if you made your way through his shell and convinced him to put the application in - it is yours. Especially if the application can send notifications.

Applications are not only and not so much a sales tool, but a marketing and customer retention tool.

It is clear that many applications are simply mobile site wrappers, like that of TripAdvisor. Also, most of the major hotel chains. Many people do not want to approve their code in the AppStore or Google Play with every update.

In terms of user experience, the native application, of course, wins. Therefore, companies for which the UX is one of the selling points of the bill use native applications. In the same HotelTonight you can always book a hotel in just three clicks. As well as the user experience Uber cannot be implemented in a non-native application.

- In many industries now - an increasing emphasis on content. Services are trying to link with the content. What do you think is the role of content in travel services?

Here is a hyper successful example - TripAdvisor. First, they collected great content, and then this content was very cool monetized. And the content was not created by them, but by their users. When TripAdvisor began to advertise accommodation facilities, they became the largest travel site in the world. Now they are already a meta search engine, and a website for booking, and even direct reservations with hotels are supported. Gone full cycle - a rare success story. Gogobot and many others try hard to push them, but with limited success. Except, perhaps, FourSquare, which turned into a discovery / review app after first collecting a bunch of “social chekins” using gamification. Risky strategy, but it worked for them. Among the many were, for example, the acclaimed Gowalla,but they were swallowed for nothing by Facebook and now check-ins from FourSquare are flowing there.

But Lonely Planet, Fodor's, Frommer's and all other traditional travel guides still do not understand what to do online. I talked to many of them, and everyone complains that books are getting worse and worse, travelers are used to getting all the content for free online. In this form, it is a dying business. The Russian "Poster" also minimizes print media. None of the traditional publishers I know in the West could monetize their content online. Further banners and widgets that advertise flights and hotels from leading OTA, their creativity did not go.

- And finally, a very brief but important question: what else will surprise us in travel?

The most fascinating in the field of innovations, start-ups, new technologies is that no predictions and analytics will ever tell us what is really going to happen. This is the beauty of the free market and access to it by creative people. It is quite possible that now two guys somewhere in the garage are sawing some product that will blow up the market next year. So it was, and so will be. And this is the only thing that I truly believe.