October 2016, Las Vegas
Skyscanner strategy and the shifting metasearch landscape
As rumours that Amazon Alexa could soon be launching in the UK surfaced last week, Pamela Whitby heard how new distribution channels like voice search and virtual assistants are changing the face of meta
Does travel metasearch drive more direct bookings for airlines, hotels or car rental firms? Is it really an alternative platform to Google and the big bad OTAs? OTA versus meta: is there really a difference?
Not everybody thinks so.
Dan Wacksman, Senior Vice President, Global Distribution, Outrigger Hotels and Resorts, argues that “metasearch cost-per-acquisition (CPA) is really just OTA” and that you should “only shift share to this channel when the numbers work”. He also doesn’t buy the argument that meta drives more direct bookings.
Of course, Wacksman has a point. In the early days, the standard metasearch model was for partners – hotels, OTAs, airlines and so on – to pay a cost-per-click. However, with the arrival of facilitated booking like TripAdvisor’s Instant Book, partners must now hand over a cut of the booking value.
Metasearch has undoubtedly become more mainstream, not to mention so successful that even Expedia is considering an IPO for Trivago which CEO Dara Khosrowshahi recently told analysts “is now five times larger and the growth rates are 40% plus since we bought it”.
At the same time, hotels and airlines, not to mention other travel industry suppliers, are grappling with the rising number of distribution channels, among them apps, voice search and virtual assistants.
So is meta really just the big bad OTA wolf in a sheepskin coat and, if not, what exactly is the point of it in today’s rapidly shifting landscape?
For Shane Corstorphine, GM Americas, Skyscanner meta is absolutely not OTA in disguise.
“Our DNA today is as a platform, where thousands of partners can come in, rather than as an intermediary comparison site that arbitrages between Google or some other distribution channel and the partner.”
Hotels and airlines spend millions, if not billions, on their brands and on the experience and contact with the customer. It’s important that metasearch doesn’t interfere with that
Shane Corstorphine, GM Americas, Skyscanner
Unlike Amazon in the retail space, Skyscanner doesn’t want to own the customer, nor does it want to fulfill the booking. It sees itself as an alternative to other paid sources of distribution rather than an intermediary.
“Hotels and airlines spend millions, if not billions, on their brands and on the experience and contact with the customer and I think it’s important that metasearch doesn’t interfere with that,” Corstorphine says.
He adds that: “If the user is booking with Spirit, British Airways or whoever, then that must be absolutely clear.”
That’s all well and dandy, but if metasearch engines are willing to work with every partner under the sun, what does that mean for hotels and airlines? Without any checks and balances, it means that any OTA upstart can join the party and that isn’t always great news.
One hotelier, who preferred to remain anonymous, had this to say: “When we give room rates to our wholesale partners, they are supposed to bundle the rates with airfare and sell it as a package. What happens is that other sites, like Amoma, will buy the room rate from our wholesalers and sell it as a standalone room product at a lower rate than we are selling direct”.
In the airline business, where price is an even more important differentiator for consumers, it’s a similar tale of woe. One Middle Eastern airline told EyeforTravel that cheap travel OTA sites like GotoGate pose a similar problem for their business. Customers book with a site like this but when there is a customer service issue, the airline takes the rap, losing brand equity as a result. GotoGate’s travel terms and conditions are very clear and the message can be interpreted as: ‘Any problems, don’t come crying to us’.
Not only does this mean lost revenues, it also undermines trust of the consumer in the airline.
Skyscanner is aware of such practices and asks hotel and airline partners to raise the flag with them wherever possible.
“Our job is to provide search for users and to match them with the best product. But where price parity is being broken we will work hard with partners to try to resolve that issue,” says Corstorphine whose says their goal is not to frustrate hotel or airline partners.
As research shows, he says, more often than not users do like to book direct with airline or hotelier.
Clearly, there is a huge amount going on in metasearch strategically, and today it’s not just about bums on seats or heads on beds. According to Corstorphine, its role is becoming one of a platform to enable partners to rapidly access new distribution channels like app, voice or virtual assistants.
In this rapidly changing environment Skyscanner has been aggressively signing new partners (it’s currently in talks with about 50). One important strategic move last year was its partnership with British Airways (BA), the first airline to use IATA’s new distribution capability (NDC). The move allowed users in some countries to browse elements such as cabin details, baggage allowance and upgrade options on BA flights, and then book using Skyscanner’s facilitated booking tool.
At all times, however, says Corstorphine it is “entirely obvious” to the user that they are booking with BA.
Facilitated bookings should be ‘entirely obvious’
These B2B partnerships are a fast growing part of Skyscanner’s business and another ‘industry first’ of 2015 was the integration of its flight API into Alexa, Amazon’s cloud-based voice service.
Among other things Alexa lets users select a playlist, write the shopping list and search for flight information without having to touch a screen, and rumours are that it could soon launch in the UK. Not stopping at just the one travel partner, Amazon has also integrated Kayak’s API because, after all, it wants to connect with, not just a handful of partners, but the world.
Aside from apps, Skyscanner sees this rise of voice search and virtual assistants as growing trends that cannot be ignored.
Today Apple's Siri, Microsoft's Cortana and Google Now are already a feature of most smartphones. And then you only have to look to how it’s taking off in China, where 20% of users booking via mobile have made at least one using voice search, for a glimpse into the future. In a recent MIT Technology Review Andrew Ng, chief scientist at search engine Baidu, and associate professor at Stanford, said that voice “may soon be reliable enough to be used for interacting with all sorts of devices”.
No such thing as a beautiful API
When booking a flight through Alexa, the user is not aware that Skyscanner is powering the back end and they don’t need to be.
This, argues Corstorphine, is the future of metasearch.“Our goal is to connect the user and the partner and to provide as little friction as possible in this process,” he says.
There is no such thing as a beautiful API in travel
If that sounds a little too easy, think again. “This is not a straightforward thing to do,” says Corstophine, adding that, “there is no such thing as a beautiful API in travel.”
Right now Skyscanner in the US is talking to about 50 different partners all of which are at different stages evolution funnel. As strong advocate of NDC, Skyscanner says that airline compliant partners (like BA) “can very quickly be integrated from a facilitated booking point of view”.
Where Skyscanner is also hoping to steal a march is in the ancillary arena; the upsell is a major focus for all travel suppliers “We need to be as good, if not better, at upselling ancillary offerings than we are at converting the hotel or flight,” says Corstophine.
This, again, cements his earlier point that meta is no longer just about direct conversions (heads on beds, bums on seats). With close to 1000 A-B tests running at any time, Skyscanner says that it can test at scale how to make the customer experience better in a way that hotel and airline partners often can’t. (Though they can’t really say the same about big OTA partners, which also have significant clout).
Something for hoteliers like Wacksman, who argue that you shouldn’t “be blinded by the argument that metasearch is driving more ‘direct’ bookings”, to sleep on?
Join the distribution debate at TDS North America (Oct 6-7) next month when Skyscanner, Outrigger and other big travel names will be sharing their insights into the future of this fast-growing sector.