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ITB Berlin News - Day 2

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16 EXCLUSIVE INTERVIEW

16 EXCLUSIVE INTERVIEW ITB Berlin 2015 Keynote Executive Online travel pioneer shares his Priceline expertise © Messe Berlin Darren Huston, President & CEO, The Priceline Group, interviewed by Philip C. Wolf, Founder, Phocuswright Inc at ITB Future Day 2015 Yesterday at ITB Berlin in his Keynote Executive Interview, Philip C Wolf - founder of Phocuswright, the travel industry research authority – interviewed President & CEO of Priceline Group, Darren Huston onstage. ITB Berlin News spoke with Huston about the company’s progression from internet start-up in 1997 to key player in the global travel business. The Priceline Group’s acquisition of Booking.com in July 2005 sparked what is arguably the biggest travel industry success story of the past decade – the company’s stocks have risen 4,600% in that time. With .3 billion in gross bookings in 2014, The Priceline Group is the world leader in online travel and related services. Yet, like many highly successful business ventures, The Priceline Group came from rocky beginnings. What does Huston consider the key to its success today? People ask me this often, almost expecting me to reveal a secret formula for how to survive a bubble. I wish it were so easy! In some ways our growth is a complex story, because there are so many factors that have contributed to the company’s success. A disciplined approach to growth has always defined our strategy. The internet is often a story of big investments tied to big success or big failure, but The Priceline Group is more a story of many, many small steps that, collectively, have created a completely different company than existed 15 years ago. Helping of course were a few mediumsized steps through a number of successful acquisitions: Active Hotels and Bookings.nl, Agoda, Travel Jigsaw, KAYAK, and now OpenTable. However, the bigger, maybe less sexy story has been taking these platforms and focusing day-to-day on building great products for end users, marketing those products through performance-based channels, and finding ways in which we can win while still offering a very competitive value proposition to our partners. Sometimes people think our business is simple or easy. It isn’t. We are more than servers and algorithms - although we are those things too. We are a hyper-local business that requires building end user demand in countries around the world and matching this to hundreds of thousands of very local partners across more than 200 countries. And, when we think we’re done, being self-critical enough to figure WE ARE MORE THAN SERVERS AND ALGORITHMS (…) WE ARE A HYPER-LOCAL BUSINESS THAT REQUIRES BUILDING END USER DEMAND out how to drive even more value for our customers and partners. I call it being hungry and humble. Being hungry enough to be successful in an ultra-competitive environment of everchanging habits and technologies and being ITB BERLIN NEWS • Thursday 5 th March 2015 www.itb-berlin-news.com

EXCLUSIVE INTERVIEW 17 Guest: Darren Huston humble enough to be allowed the opportunity to succeed. In an increasingly competitive market, and as European economies continue to struggle, the past year has seen continued strong growth for The Priceline Group. How do you gauge the past year’s performance? 2014 was a good year for The Priceline Group. Our business witnessed another year of strong growth. But, beyond financials, 2014 was also a pivotal year for the company. We acquired OpenTable, bringing a new dimension to the types of e-commerce service transactions we facilitate for consumers and partners – now including restaurants – worldwide. We also launched Villas. com, which signals a set of steps we are taking to improve the way vacation rental owners and consumers engage, creating a better experience for both sides. We also launched BookingSuite, which is an investment in a set of software solutions that we believe will dramatically lower the costs and improve the effectiveness of how hotels and accommodations use technology to market their brands and profitably grow their businesses. Finally, we made great strides in mobile technology across our businesses. So there is a lot to be proud of in 2014, but the year certainly didn’t come without its challenges – from macroeconomic conditions to always-present competition. However, for every challenge there are always bright spots and the challenges we face drive us to stay focused and work harder. How do you see the future of bookings via smartphones and tablets evolving in the next three to five years, and why do you expect to stay ahead of the game? Mobile has been an important aspect of our business for many years. But in the last couple of MOBILE HAS ALSO CREATED NEW BEHAVIORS. SPECIFICALLY, LAST-MINUTE OR SPONTANEOUS BOOKING IS A RISING PHENOMENON years in particular, we’ve seen a real mainstreaming of mobile as part of the new multi-screen lifestyle of our users. In some markets, and in some demographics, many users are even mobile-first. As this trend continues, we will need to continue to evolve with it. Mobile has also created new behaviors. Specifically, last-minute or spontaneous booking is a rising phenomenon - from car hires to restaurant reservations to hotel bookings. A new generation of consumers expects all of this to be readily available for simple, fast, instantaneous consumption. We are working hard with our partners to be ready for this. We have also launched popular new products like Booking Now to react to these new trends. Mobile is also not just about transactions. Mobile means that our travellers are always connected. If anything, I also see this trend becoming more pronounced, which means we have to build new features that allow us to move from scaled transactions to end-to-end experiences - from looking to booking, to staying and paying and everything in between. How can we be relevant to consumers who carry a computer in their pocket and are always on? All of this said, if we come back again in 5 years, I am also certain there are new customer behaviors that mobile will enable that we haven’t even begun to imagine. Some hotel operators curse OTAs for taking too much “off the top”. What’s your side of the story? At the end of the day, our relationships with our partners and our customers are the absolute highest priority. Growth in travel is outpacing GDP and that means nothing but opportunity for everyone operating a travel business. And the Internet and online behavior and the various trends surrounding these changes are transforming businesses everywhere, including in travel. In this context, our ultimate goal at the end of the day is to help our partners grow their businesses by bringing more people to their front door. We are an online marketing channel for hotels and other accommodations, and when you look at the cost of other potential marketing channels – including offline advertising – we are one of the cheapest costs of customer acquisition for our partners. Plus, almost everything we do is performance-based (meaning: if we don’t bring you customers, you don’t pay). I can’t think of any better way for hotels and other accommodations to access a global audience and to bring in people from all over the world. By the way, most of our partners tell us this as well and there are many, many of our partners whose success has depended on the services we provide. Even hotels who have full occupancy year round can always use more demand to get a better result for their business. If this wasn’t the case, then large numbers of properties would not choose to work with us. We also invest heavily to find those customers - in marketing, technology and people. And we compete against others who are sometimes given more than we are given. If being an OTA was easy, a lot more companies would be successful in this business. To be able to do what we do, it takes massive scale and a constant focus on cost efficiency and effectiveness. All of this said, I am very conscious of this issue given the big, and sometimes scary, changes going on in our industry. As we grow, I also know that it takes tremendous trust and continuous focus on improving our value proposition to our partners to maintain strong relationships. NEW PRICELINE. COM SURVEY FINDS MILLENNIALS ON THE CUSP OF TRAVEL According to a new survey commissioned by priceline.com, a leader in online and mobile travel, and part of The Priceline Group, last minute getaways are the favoured type of trip for the new year – meanwhile, young Americans aren’t afraid to open their wallets for that “special” vacation. Almost half of all Americans who didn’t take a last minute vacation in 2014 say they regret it. But it’s the millennials (born in the 1980s and ‘90s) who are most eager to do something about it. 73% of them say they are likely to take a last minute vacation in 2015. In total, 58 percent of Americans surveyed say they agree that a last minute 2015 getaway is on the cards. Americans would be most willing to plan a last minute vacation for a romantic getaway (55%), followed by a surprise celebration such as a birthday (42%), a guys or girls getaway (25%), a wedding (19%) or to attend a sporting event (18%). ITB BERLIN NEWS • Thursday 5 th March 2015

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