On a recent Monday afternoon, executives at online travel agency Expedia (EXPE) invited 16 bloggers for lunch at a Mexican restaurant in Seattle’s trendy Capitol Hill neighborhood. The steak burritos and green chile enchiladas were richly aromatic, but the bloggers had caught a whiff of something even more tantalizing: money. The lunch, along with meetings with top executives at the company’s suburban headquarters and a corporate suite at that night’s Seattle Seahawks football game, was part of a charm offensive aimed at developing a relationship with bloggers. Expedia, the biggest online travel agent, hopes bloggers can serve as an important plank in its effort to re-engineer the way people shop for hotel and airplane tickets by incorporating those transactions into a marketplace driven by social networks.
“If our goal is to get closer to travelers … bloggers are a very interesting place to us,” says Joe Megibow, vice-president of Expedia U.S. And while Expedia isn’t looking to add a roster of bloggers to its payroll, the company is likely to fund trips for bloggers it deems influential—those with sufficient audience and voice. Expedia would likely use the bloggers’ videos, photos, and writing on its site, without influencing content. The company considers bloggers an untapped resource in an industry whose media strategies are often dictated by newspaper travel sections, magazines, and public relations firms, said Sarah Keeling, the Expedia public relations executive overseeing the effort.
The idea that your friends might alert you to cool stuff while flagging the dreck is not a new one. Industries as diverse as retail, radio, and restaurants have leapt into social networking with gusto in recent years. People tend to trust their friends’ opinions. The $109 billion annual online travel market has been notable for not deploying the mountains of data found on social networks to suggest potential trips, or to connect your friends’ experiences with a hotel or resort you may be researching at a site such as Orbitz (OWW) or Expedia. “Think about what Amazon (AMZN) has done around personalization and recommendations. And we see nothing like that around online travel,” says Douglas Quinby, a senior director for travel research firm PhoCusWright.
A slew of tech startups such as Trippy, Gogobot, Gtrot, and FlyMuch are hoping to change that by using Facebook, Twitter, Foursquare, and other social-networking data as a way to gather information, share reviews, and plan trips. The idea is that as you plan travel, you’ll be more comfortable about booking a particular hotel or resort—or choosing a particular Caribbean island or rain forest hike—if one of your friends has been there.
“Harder to Backpedal Into Social”
Some travel experts question whether such sites, which struggle for traffic, can build viable stand-alone businesses. Most suffer from no recognition and meager traffic. To help build traffic, Gtrot plans to introduce “white label” co-branded sites that larger travel clients will use to offer a socially curated experience, says Brittany Laughlin, a co-founder of the Chicago-based company. For example, airlines, hotels, or online travel agents would offer a link to Gtrot from their sales-transaction pages so customers can share plans with friends. The first such partnerships are to be announced in February. “I think the biggest challenge for OTAs is that they are transaction sites and they always have been,” Laughlin said. “It’s just a lot harder to backpedal into social.” Johnson, of Trippy, agrees, citing the retailing success Apple (AAPL) has enjoyed with iTunes, vs. the dismal public reaction to its Ping social network. The meager traffic for social-travel sites hasn’t kept investors away. Trippy received $1.75 million in funding from Sequoia Capital and True Ventures in November and Gtrot has raised $1 million from Lightbank, the venture capital firm started by co-founders of Groupon (GRPN). Trippy founder J.R. Johnson in 2008 sold another travel startup, Virtual Tourist, to Expedia. Johnson and Megibow declined to comment on whether Los Angeles-based Trippy would fit into Expedia’s plans for social travel.
Expedia’s goal is to make planning the entire trip—from flights to hotel to transportation, with even restaurant selections and amusement park tickets—an integrated shopping experience. Say your family is planning a spring break trip to Orlando. After booking flights, your hotel search would incorporate friends’ views on particular properties. If your cousin’s family has been to a particular restaurant, you’d get her recommendation or caution. And all those Facebook photos that people post after a trip? Expedia wants to mine those for your own travels, just as TripAdvisor (TRIP) does with hotel shots its users submit.
In several important ways, Expedia’s push to personalize travel—“delivering a pleasant, positive surprise,” in the words of President Scott Durchslag—marks a return to the bricks-and-mortar travel agent of old who could steer you clear of a dodgy hotel or restaurant. The twist is that your modern “agent” would be a collection of friends and acquaintances conversing about travel. That would be very different from the way most online shopping for leisure travel takes place today: Visit an airline or hotel site, mix in an online travel agent (or four), check an aggregator site such as Kayak or Fly.com, search Google (GOOG), find a hotel discount site, worry about whether the posted prices are reasonable, become frustrated. Repeat the process. And then your trip is booked.
An Amazon.com-Like “Place Market?”
Expedia’s three-year strategy, still in its infancy, envisions an online “place market” akin to the bazaar overseen by Amazon.com, on which competing retailers post their wares and prices with buyers’ comments. Expedia also wants to know where you’re considering going for your next few trips, to align your personal interests and dislikes with your network and customize it all into an integrated networking-cum-travel shopping experience. “Consumers are eager to engage, if you can do it in interesting, meaningful ways,” Megibow says. Gone would be the guesswork of ascertaining what is a reasonable rate, how small or clean the room really is, or the best time to visit a particular beach. You might also become a loyal Expedia shopper, curbing your travel site promiscuity.
There’s already some evidence that social networks spur sales in the travel industry. Delta Air Lines (DAL) has been selling tickets directly through a Facebook page for more than a year; most airlines still link you back to their own sites to purchase anything. Facebook, with its 800 million users, referred 15.2 million visitors to hotel websites in 2010, a 35 percent jump from the prior year, according to a July 2011 PhoCusWright study on social media’s role in travel. Of that number, about 568,000 resulted in a booking—a “conversion rate,” in industry parlance, of 4 percent. That’s far higher than expected, and higher than the conversion rate from travel-review sites, said Quinby, one of the report’s authors.
“When we saw the results from the data, we kind of did a double take internally and went back to our partners and had them double check,” he said. “I think it’s some very provocative circumstantial evidence that there’s something going on.” One possible explanation: Knowing someone who stayed at a particular hotel or resort makes you want to have the same experience. You’re keeping up with the Joneses, in essence, and will have something additional in common.
Moving in on TripAdvisor
The report also found that the number of hotel reviews posted online is increasing, to 1.1 million in 2010, the latest data available. That trend, coupled with further networking tools, could pose a threat to the largest source of online hotel reviews, TripAdvisor. The Newton (Mass.)-based company, which spun off from Expedia in a Dec. 20 public offering, pioneered the role of hotel reviews and turned it into a business valued at nearly $4 billion. TripAdvisor licenses its 50 million reviews to some 300 clients and says it adds 25 fresh reviews per minute. The bulk of its income comes from referring traffic to hotel booking sites. TripAdvisor founder and Chief Executive Officer Stephen Kaufer said he’s not concerned if Expedia and others jump into social travel with more editorial content, encroaching on an area TripAdvisor has owned nearly exclusively. “I think they have a couple of years before they’re able to catch up with where we were five years ago,” Kaufer says.
That’s where Expedia thinks bloggers can help. Expanded posts on travel adventures, supplemented with user reviews and comments, might draw in more travelers. The online travel agents have been pushing to expand the number of reviews travelers post. Orbitz saw its review count jump 300 percent in 2010, while Expedia says it has collected more than 5 million user reviews to date.
Both company and bloggers say they aren’t concerned that readers may be turned off by commercial relationships between the travel agent and writers. Kim Mance, a Brooklyn, N.Y., video blogger and co-founder of Galavanting, a site aimed at female adventure travelers, says disclosure is important for readers but bloggers need to retain the mission and voice that garnered an audience in the first place. “Bloggers will miserably fail and lose their audience if they piss them off,” Mance says.
Bloggers say they’re ready to deliver travel tales and potential new Expedia customers—so long as they are compensated with exposure and cash. “I’ve spent five years traveling and building up an expertise and a following,” says Sherry Ott, a blogger from South Dakota who was among the Expedia visitors in Seattle. “I want to be able to be paid for my knowledge and for access into my audience.”