Welcome to the Magpie Newsletter #2
If you have anything that you think we should share, please do not hesitate to send it over. Also, any / all feedback on the content is welcome.
1. Hopper acquires Placepass (undisclosed $)
Hopper has raised $345 million this year.
Not far behind Tripactions at $430M.
Hopin has raised $850M ($1B in last 12 months).
Nobody (in the west, at least) talks about Yanolja at $1.7B.
4 great stories there, but the Hopper story could be very impactful for the Experiences sector. Placepass was an aggregator of various OTA products. The interesting part here is not really the acquisition, but the fact that Hopper is moving into the sector.
A big part of Hopper is the ‘price freeze’ which locks in the price of a flight (for a fee). That lock-in creates a financial (balance sheet) event, which makes Hopper more of a Fintech than an OTA. That creates an interesting perspective for somebody currently grabbing a lot of market share in the travel industry.
Its also App-only (for flights) which is a little crazy. They don’t spend anything on performance marketing (Google).
This transaction, in my (Christian Watts) opinion is all about the potential frequency of the Experiences transaction. When you are building the next super-app (they are), you need transaction frequency. Tours, activities, attractions, and experiences, especially if you include the local market, give you that frequency, which might be the missing piece for this financial-travel-super-app.
It’s nice to have a play that doesn’t rely on Google for traffic though. Airbnb (30x larger market cap) is in the same bucket. Expedia and Booking would love to have this kind of ownership of their acquisition channels.
Hopper has 70 million app downloads, and is growing rapidly, but transactions are still a fraction of Expedia or Booking.
2. Viator – commissions for exposure
There is still a lot of confusion on this.
Most rankings are, and always have taken commission levels into account. It’s not really a big secret either. Many trade show meetings are very explicit conversations including questions like “Ok, if we give you an extra 5% commission on [this product] and give you a promo, can you move us up to a top 3 placement”
This Viator program is the most explicit version of this from a large player in the Experiences sector (its more common in Hotels)
“After opting into the Viator Accelerate program, your product(s) will appear in advertising placements across Viator within 48 hours. You’ll also see your sort order rankings improve over time”
There’s an escape clause for Viator in there. Products with ads should drive more conversions (from a listings page), which might give that product a boost in the organic listings. Nobody has stated that though.
Regardless of the mechanism, if it affects ‘sort order’ then products with low marginal costs (like attractions, think wax museums) will float to the top under this program. Products with high marginal costs (food tours, wine tours) will suffer.
Google would be crucified if they allowed Ads to influence organic placement. Amazon would probably disapprove too. Those are probably unfair comparisons. Time will tell if this is a slippery slope.
3. Klana acquires Inspirock
Trip planning companies are given a hard time in the travel industry. It’s widely accepted to be a graveyard for start-ups. Pitches start with “Travel is broken, the average consumer goes to 34 websites to book a trip… but don’t worry, here’s an app to plan and book everything in one place”. Some really great websites and apps have failed in this space. Even Google couldn’t make it work with their excellent Trips app, which was shut down pre-covid.
No details on the transaction here, but Klana is another Fintech company making moves into the travel industry. The latest of many. People spend a lot of money on travel. Fintech companies want a piece of that.
Trip planning apps fail because they can’t acquire customers. It’s possible that it needs somebody from outside the industry to make a tool like this work. Klarna has raised $1.6B this year, so they could put some significant weight behind it if they choose to. Enough to make a trip-planning tool successful? We’ll see.
4. The Connected Trip
Pre-covid, this was the exit plan for the OTAs to wean themselves off Google Ads.
– Glenn Fogel (Booking CEO) still talks about it like its the next big thing (flight gets delayed, airport transport gets re-booked, hotel room gets notified bla bla).
– Peter Kern (Expedia CEO) forgot about the last Expedia conference, which was all about the connected trip. He now says its just called a ‘trip’.
That’s Semantics. But both major OTAs have taken a step further back from Experiences. Booking have contracted out completely to TUI-Musement and Viator. Expedia still have direct contracts, but are taking feeds from Viator and GetYourGuide.
If you’re going to truly build this connected trip, you need to be involved in Experiences. Flight delay notifications and late hotel check-outs are fine, but if you want to increase loyalty, a great way to do that would be to get involved in the activities people do when they travel – the REASON they travel. That’s where people create memories. Memories = loyalty.
5. City Experiences Acquires Devour Tours
Devour, a Food Tour company operating in 8 cities in Europe has been acquired by City Experiences (Hornblower) More information from Arival
We should probably expect more deals like this. There’s a great matching opportunity here.
– Those in the industry with cash to think long term, who want to expand and bring in great people.
– Those operators without cash, who want to continue but lack resources to get back to pre-covid levels quickly enough.
Its potentially a win-win on a spreadsheet, and also a win-win for the people involved. (In general. No suggestion that the Devour deal matched these incentives)
6. Loyalty, Discounts, Subscriptions, Horizontal, Vertical
Its interesting to look at the different directions and strategies from some of the bigger players as they plan their path ahead, and work out how to not get crushed by G. These are some of the more recent focus areas announced. Good material here for future discussion.
- Expedia: Branding and loyalty points (kind of the same thing as discounts)
- Booking: Branding and discounts (kind of the same thing as loyalty points)
- Tripadvisor: Subscription / Membership (kind of the same thing as loyalty points and discounts)
- Google Travel: Make the customer happy, resulting in Google Ad spend
- Klook: Horizontal integration. Hotels, other stuff. Build a super-app.
- GetYourGuide: Originals. Vertical integration.
- Hopper: Get a great valuation by saying you’re a Fintech. Raise tons of $. Build a super-app. Hope super-apps are the future.
- [Your startup story here]
7. WTM Historic London Pub Crawl
Its that time again.
This guided historic pub crawl includes no historic commentary or information at all, but the itinerary does include 3 pubs, each with claims to be one of the oldest pubs in London (its quite a complicated definition)
Monday Nov 1st.
6:30pm – 8pm – Ye Olde Miter – 1 Ely Court, Holborn
8:00pm – 9pm – Cittie of Yorke – 22 High Holborn St
9:00pm – Seven Stars – 53 Carey St
All are welcome (please email [email protected] if you will attend)
8. Arival’s operator survey
Arival are gathering the latest insights to help benchmark your own performance and plan for what’s ahead. It’s short, confidential, and interesting
(Those are Douglas Quinby’s words. Take the survey, and let us know if it actually is ‘interesting’)
WTM – London
November 1 – 3, 2021
Going ahead largely as normal (with reduced attendance expected) Registration
Tourism Innovation Summit (TIS) – Seville
November 11 – 13, 2021
Use code 3D63J to save 50% discount on Silver and Gold Passes Registration
Please email us with feedback, suggestions, ideas, or anything else. We’d love to hear from you.