Tuesday's Travel InsideOut

Cruise industry lifer Larry Pimentel was brought in by RCCL to right the ship(s) after Azamara Cruises' admittedly rocky start. The new president and CEO of Azamara takes on a task that is a daunting one for companies across the travel industry, and not just cruise lines: How do you build brand awareness for a perceived good product that has yet to enter the consideration set for the travelers you are targeting.

Travel Weekly: Azamara CEO's big challenge: Developing brand awareness: When it launched in 2007, Azamara Cruises seemed to have everything going for it.

The cruise line's parent, Royal Caribbean Cruises Ltd., is the second-largest cruise company in the world. Its two R-class ships had a fan following long before the blue Azamara logo was emblazoned on their hulls. It was to be run by a Celebrity Cruises management team headed by industry veteran Dan Hanrahan. Read more

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Holy noncompetition! Virgin Atlantic and British Airways colluded over certain fuel surcharges and the Virgin CEO admitted he was mixed up -- good choice of words -- in the scheme.

Wall Street Journal: Virgin Atlantic CEO Concedes Price Fixing: LONDON -- Virgin Atlantic Airways Ltd.'s chief executive, Steve Ridgway, acknowledged Monday being involved in an alleged price-fixing cartel with British Airways PLC after his name was identified in court.

BA has already been fined a total of £269 million ($436 million) by U.K. and U.S. authorities over allegations that it colluded with Virgin Atlantic over fuel surcharges on long-haul flights between July 2004 and April 2006. BA pleaded guilty to price-fixing in a U.S. court in 2007. Read more

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The fuel-surcharge issue aside, British Airways is keeping its eyes on the prize. The carrier remains adamant that going after business travelers with premium services, despite the economic downturn, will be essential for its viability.

Bloomberg: British Airways Says Won’t Budge From Business Focus: -- British Airways Plc won’t budge from its strategy of focusing on premium travel even as the recession saps demand for its most lucrative services across the North Atlantic, the carrier’s U.S. chief said.

Business-class only flights between London’s City Airport and New York start in September and a promotion begins today offering U.S. executives free travel to Europe to publicize their companies, Simon Talling-Smith, executive vice president for the Americas, said in an interview. Read more

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I think a lot of hoteliers would take issue with the following story on how the lodging industry is grappling to come to terms with social media. But, certainly the story indeed reflects confusion at least among sectors of the hotel industry.

UpTake Travel Industry Blog: Social Media Baffles Travel Industry: Speakers at the Hospitality Industry Technology Exposition and Conference (HITEC) and HSMAI’s Revenue Management & Internet Marketing Strategy Conference earlier this month admitted the unthinkable: As hotel VIPs, they still don’t know how to make social media work. They don’t know how to approach it (one person or every employee’s job?), and they don’t have a big-picture goal (boost sales, seal loyalty). Read more

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Few would take issue with the view that United Airlines mishandled not only Dave Carroll's guitar, but its social media response to the issue. Socialmediatoday "pics" that response apart.

Socialmediatoday: United Airlines Online Public Response to Dave Carroll YouTube Video: By now, many of you have seen or heard about the Dave Carroll YouTube video and how United Airlines’ baggage handlers mangled his guitar. It once again demonstrates the power of authenticity, creativity and compelling content to grab attention and send PR executives reeling. Read more

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As much as the travel industry would like the swine flu to go away, health officials believe it will be with us for awhile, and the industry will have to deal with it.

Reuters: New flu resembles feared 1918 virus: study: WASHINGTON - - The new H1N1 influenza virus bears a disturbing resemblance to the virus strain that caused the 1918 flu pandemic, with a greater ability to infect the lungs than common seasonal flu viruses, researchers reported on Monday. Read more


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Travel InsideOut is a Dennis Schaal Blog daily feature. Get a thorough-going look at the day's travel industry top and tangentially interesting stories. Feel free to comment on them below.

Travel InsideOut is Copyright (c) 2009 by Dennis Schaal. All rights reserved.

Mr. Sandman: Orbitz and Expedia Play Gotcha on Fees

In March, Expedia eliminated air-booking fees, causing a lot of pain for Orbitz. And, last week, Orbitz made some travel news of its own when it reduced booking fees for hotels and began displaying the total cost of the booking in initial search results, presumably generating considerable angst at Expedia.

Here's how one travel industry insider views the booking-fee skirmish:

"Orbitz led with hotels to kick sand in Expedia's face. Same reason they dropped hotel fees. Since Expedia sells a lot more hotels than Orbitz, the reduction in fees will hurt them more than Orbitz (the inverse of the drop in air fees). Since most suppliers only show base fees, Orbitz (and other online travel agencies if they match) will look more expensive than hotel websites, at first blush. So some volume will be lost. That will hurt Expedia more than Orbitz."

As I reported in Travel Weekly and the Hudson Crossing Travel Industry Insight blog confirmed, Expedia apparently has matched Orbitz's hotel-booking fee reductions.

Among other OTAs, Travelocity still is in assessment mode, and Priceline reduced its hotel-booking fees a year ago.

As I noted in the Dennis Schaal Blog a few days, ago, Orbitz's initiative is designed to build its nonair business, a strategic imperative that Orbitz Worldwide CEO Barney Harford was brought in to execute.

Yes, Orbitz's in-your-face move seemingly would hurt Expedia more than Orbitz because Orbitz's hotel business is way smaller than Expedia's.

And, by one estimate, Expedia garnered about 19 percent of its EBITDA last year from hotel-booking fees. The hotel business, in addition to advertising and media, is Expedia's growth-generator.

But, Expedia's hotel business already had been under substantial pressure before Orbitz's reduction in hotel-booking fees.

In Expedia's 2008 10-K, the company stated: "Industry sources forecast lower occupancies and year-on-year declines in ADRs [average daily rates] in 2009. These trends, combined with softer demand in a weakening economy and lower air capacity into our core leisure travel destinations, create a challenging backdrop for our hotel business, which has been a key source of revenue and profitability growth for Expedia."

So, the OTA play-for-keeps games continue. You can expect that Orbitz will mount an intense marketing campaign to tout its "total cost" hotel displays.

Harford gave us a taste of the likely talking points on the Orbitz Travel Blog. "We’re daring you to compare the Orbitz Total Price before booking your hotel anywhere else," Harford wrote.

Incidentally, the Orbitz Total Price initiative had to be in the works for several weeks. That would be the time needed to do the development work required to move total price displays for hotels from the details page to the initial search-results page.

And, the development work required may be one reason that Expedia and Travelocity haven't immediately parroted Orbitz on the hotel-display issue. It would take 30-45 days of code-writing, one industry strategy-decoder told me.

There is pressure on Expedia, Travelocity and Priceline to match Orbitz on total price in hotel displays. And, it's about time the OTAs got more consumer-friendly.

For example, Travelocity markets itself as a "customer champion" and it would be hard to see how it can remain couching the total price of hotels on its details page when the pressure is on and the Travelocity Customer Bill of Rights states that customers "have the right to unbiased information up front."

The OTAs, because of Dept. of Transportation (DOT) requirements, already display total price on flights. And, Travelocity led the way on total price for car rentals several years ago, with the other OTAs following in lock-step.

In addition to hotels, the OTAs' service fees on cruises, too, remain couched in "taxes and fees."

And, although Orbitz's decision to display total price on hotels up-front is a huge step in the right direction for consumers, all of the OTAs fall short on the transparency front because they still lump together "taxes and fees" in hotel bookings, leaving consumers in the dark regarding how much of a service fee they are paying.

With hotel-tax lawsuits against the OTAs raging across the country and the OTAs' disguising of their net rates on hotels still their unanimous mantra, don't expect any movement on the "taxes and fees" issue in the near future.

You might have to wait for a court order or a settlement for that issue to get resolved.

Meanwhile, it will be interesting to see next week, when Expedia releases its first quarter earnings results, what the business impact was of its eliminating flight-booking fees in the last couple of weeks of the quarter.

Did it pick up some share in the air business? Was there a steep revenue hit or did increased volumes fill the gap?

So, what is the next step in this OTA gotcha game?

An acquisition? A merger? Another frenzy of discounting?

Or, as Forrester analyst Henry Harteveldt cautioned to me: Will all of these fee cuts lead to a "revenue death spiral?"

Royal Champions, Royal Rooters ... Who Knew

I like the Red Sox, but didn't know a thing about the team's historic Royal Rooters, a scattershot collection of brewski and baseball buffs that traced their origins to 1897, until Ted Kennedy threw out the first pitch on opening day at Fenway Park the other day.

It turns out that Kennedy's grandfather, John "Honey Fitz" Fitzgerald, the mayor of Boston, threw out the very first pitch at Fenway Park in 1912. The Kennedy grandad was a member of the Royal Rooters.

Today, the Royal Rooters of Red Sox Nation even have a blog.

So, it seems that Royal Caribbean's Royal Champions, which made for unflattering headlines about user-generated content a few weeks ago, weren't the first "Royal" rooting section.

No word, though, on whether the Boston Red Sox in the early 1900s encouraged the Royal Rooters to post puffy reviews on CruiseCritic.com:)

Airlines Bringing Behavioral Ads to In-Flight Entertainment Systems

I just found out, through the Shearwater Blog, that the latest bit of travel news in airlines' drive for ancillary revenue and behavioral advertising is that carriers will be delivering targetted ads to passengers through the airlines' in-flight entertainment systems.

If I hadn't just read up on it, I would have thought this was a "Saturday Night Live" parody.

But, Jetera Precision Media, a Danbury, Conn., company owned by Venture Capital and Consulting Group and with former Southwest Airlines CEO Jim Parker on the board, just put into production an ad delivery and targetting system that combines reservations data about travelers' intent with publicly available information about individual passengers to serve up ads tailored to that passenger on seat-back TV systems.

It is unclear at this point which specific companies are selling Jetera their reservations data.

But, here's how it works. In a FAQ on its website, Jetera explains: "The reservation information comes from any one of the multiple travel e-commerce sites, hotel and airline reservation systems. Then by partnering with some of the largest publicly available consumer data companies in the world we enrich that reservation data. The result is that we can then ultimately offer, for the first time, marketers and brands an unmatched level of relevancy, timeliness and action-ability."

It looks like the reservations data would be coming from "Airlines, Global distribution systems (GDS), Large Travel Companies, Hotels and Vacation Ownership Companies, Rental Car Firms, [and] Cruise Ships" because Jetera aims to partner with these travel suppliers and distributors in addition to marketers and advertising partners.

As I wrote yesterday and March 24 in the Dennis Schaal Blog, and recently in Travel Weekly, Expedia, Google, BlueKai, and others with travel industry ties are working hard to further commoditize travelers' reservation data to deliver targetted ads to you when you surf the Web and now, it turns out, some marketers will be going after you in your aisle or window seat, too.

It's all to the advantage of the traveler, goes the refrain. Marketers are telling travelers that advertisers are almost providing passengers with a public service when those ads for cellphones or credit cards bombard you during your travels.

And, oh, "Yes," Jetera explains, "passengers will be in complete control and have multiple opportunities to opt out should they choose to do so."

It sounds to me as if such behavioral advertising may become so omnipresent that efforts to opt out could become a full-time job.

Corporate Responsibility Advice to Royal Caribbean and Cruise Critic

From a corporate responsibility perspective, here's my advice to Royal Caribbean and Cruise Critic regarding the Royal Champions episode: Come clean.
I have read the statements from the cruise line and Cruise Critic, and read the interview with Royal Caribbean's Bill Hayden.
In short, Royal Caribbean is accused of contacting active, online-cruise reviewers, getting their contact information from Cruise Critic, and then wooing them and seeking to manipulate their writing in ways subtle and not-so-subtle.
What is blatantly missing in all of this in the aftermath of the disclosures is any admission of wrongdoing on anyone's part, other than Cruise Critic saying that "at this time, we have decided that it is not in Cruise Critic’s best interest going forward to contact members on behalf of Royal Caribbean or any other cruise line."
From my days in dealing in crisis communications as an editor-in-chief of a corporate responsibility magazine, I can tell you that the best approach in these types of situations is to let it all hang out, admit where you screwed up and let us know how you plan to reform your ways in the future.
Has Cruise Critic done such favors for advertisers and major travel companies in the past? Was it pressured to do so by anyone? Was there any internal debate about it? Were any privacy policies violated?
And, will Royal Caribbean end any involvement with the Royal Champions? Does it admit that it was wrong to try to manipulate the social-media airwaves in such a manner?
I say to both companies: We'd respect you a lot more if you if you conduct some internal reviews of your behaviors, publish the results openly, and let us know what steps you are taking to ensure that this kind of thing won't happen again.

Reviewing Review Policies on TravelPost and TripAdvisor

Lost in the Royal Champions' controversy, in which Royal Caribbean organized and wooed this group of frequent cruise-reviewers, is the fact that a lot of review websites these days incentivize reviewers to pen their opinions.
As I wrote here a few days ago, I oppose the practice of review compensation.
Now, as it turns out, Kayak-owned TravelPost, in its quest to give TripAdvisor a run for its media dollars, is aggregating and posting user reviews from some sites that compensate their reviewers.
To its credit, Travelpost itself doesn't compensate people who write reviews for TravelPost. And, neither does TripAdvisor pay reviewers.
But, TravelPost is partnering with sites, including IgoUgo, Epinions.com, and BedandBreakfast.com , that compensate reviewers to varying degrees.
IgoUgo offers reviewers Go Points from American Airlines and Amazon; Epinions provides a revenue share; and BedandBreakfast.com makes reviewers eligibile for a $1,000 gift card.
TravelPost provides a way for consumers to filter in or out the source of TravelPost reviews.
But TravelPost, which says it values transparency, should provide explicit information for consumers about the review policies of its partners.
In that way, consumers would be able to make up their own minds about whether they should read or disregard reviews from incentivized critics.
It would only enhance TravelPost's reputation if it does so.