Keynote Speaker - Brian Thomson – CEO_ TRIP

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Keynote Speaker - Brian Thomson – CEO_ TRIP Powered By Docstoc
					Keynote Speaker - Brian Thomson – CEO,

Some audiovisual difficulties! There we are. Okay good morning. I hope that music got
everybody excited, I know it gets me excited when I hear that. I think of going to Hawaii
which I think all of us in the travel industry like to fantasize about but reality is most
likely we are going to cities like Denver and Sioux City, so anyway, well good morning.
My name is Brian Thomson. I am President CEO of I am one of the
founders of

I would like to talk to you this morning about what I have dubbed the travel scenami and
that is that I think that what is happening in this industry is nothing short of seismic. It is
that major forces have changed or are impacting what travel services are and how they
are provisioned. And so what I what I would like to talk to a little bit today is what I see
as some of those forces and what the implications are on the travel industry.

First just let me give just a little bit of background of We were founded in
June of l995, spun off of USWest Media Group. We are focused on the mobile
professional market or the road warrior market, a very demanding market segment. We
are privately held. We just announced a merger with Galileo International two weeks ago.
That deal is expected to close in the next few weeks and so ourselves and then
Travelocity are the two majors linked up with GDS. Travelocity, of course was Sabre
and now with Galileo.

We are the third largest full service travel site on the Web as measured by Media Metrix
in terms of visits to the site each month and some of the product innovations that we have
released include flight tracker, real-time access to any aircraft in US or Canadian airspace
tracking - we get that feed from the FAA and so it is real time data that we are displaying
in terms of both text in a text format, graphical as well as e-mail notifications. Intellar
TRIP – Intellar TRIP is the first application to support the direct to supplier model of
travel distribution and I will talk a little bit more in detail about that but it is a major
innovation for the industry, we believe, and think that is really where the industry needs
to go. And finally Company TRIP, which we released in September. This is an effort to
extend the rich services that we currently offer to the mobile professional market but at
the enterprise level – so to the small and medium size enterprise in providing travel
management tools for that enterprise to better control their travel expenses.

Alright, predictions. I am putting it on the screen. It is going to be on the Web so next
year when we come back here you can see if I’ve hit any of these, but I think, hopefully
my batting average is going to be greater than 500. The first is the collapse of the
traditional distribution channel. I think it is evident that there is a huge incentive for
travel suppliers to go to direct to the customer, both in terms of economics as well as
marketing and with the advent of the Internet in which there is ubiquity in terms of the
actual network, this model becomes possible and so what has done was to
create Intellar TRIP to facilitate that. But that is really just a baby step to where we think
this will go.
Rapid Expansion of Travel Services - I think that what you have heard over the past day
and a half is a lot of folks talking about the different and new travel services and I think
that this provides the greatest opportunity to effect the ratio of not only lookers to
bookers, but more importantly to effect the percentage of penetration in terms of travel
bookings to the overall population. We are currently at 2% - there is 98% of the market
out there, but, what it takes to do that is a change in the model that provides true value
added services around the core air, car or hotel transaction, and I will talk a little bit more
about what I see coming for that area.

The third is the emergence of service driven customer ownership. I think what is really
fascinating for me as I have been going to these conferences for three years, is early on
the focus was very much on product and there wasn’t a lot of discussion about service. I
think the industry is evolving to focus more on total customer service and customer
service driven ownership of the customer so that once…we all spend significant dollars
acquiring our customers and then particularly in an interactive environment it is so easy
to lose that customer and you competition is just a click away. And so, in order to really
ensure the value of your marketing dollars you need to focus on total customer

And the fourth is the emergence of new pricing models. Certainly Price Line is a major
innovator in the travel industry with the advent of the auction model for travel but there
are many other pricing models that I think are ripe to hit this industry in the next 12 to 18

Let me talk a little bit about Forces of Change. What are the forces that are contributing
to these visions of where the industry is going and really when I think about them there
are really two key areas – one is technology and one is marketing. In the technology
area, I talked about earlier network ubiquity. Back ten years ago when Internet didn’t
have the penetration that it does today, the GDS Networks were the major distribution
networks for travel. That is all changing with the ubiquitous network, not only do you
have access to a wide range of customers but travel suppliers have access to those
customers and that has implications on how the industry distributes its products and

Processing Power – You know, Moore’s Law, the processing power just continues to
increase. What that means for the travel industry is that we can become more
sophisticated in terms of the service we are providing via the technology that is available
to us.

The third is Technology Integration – the ability to integrate multiple technologies into
one seamless service offering to the customer and the implications here is that no longer
are we limited just by providing air, car and hotel reservations. Now we can package
various content around that core transaction, other services that would be relevant to the
customer. For example, weather notification - if I was coming into San Francisco this
morning, I would be really happy to understand that it is raining here and I should bring
my raincoat. So that kind of service offering is now possible via the increasing ease with
regard to integrating these disparate technologies.

And the fourth is Storage Capacity. We have the ability now to capture massive amounts
of data as a separate issue of what we do with that data and how we manage it, but the
fact that we can be recording not only transaction information but also customer profile
information and Web behavior information and I know that, yes, I thought the panel
yesterday addressed this very well because there is a big privacy issue out there and I
would agree that I think it is something that Congress here in the US wants to
demonstrate some movement on. I don’t think the legislation is going to be too
cumbersome on the industry, and I think it is really an issue that is blown out of
proportion, because the way, at least, and I think most of our major
competitors treat it is, that is our most valuable asset, is what our customers are doing and
what we use that for is not to spam them but to be able to offer new services and learn
from their behaviors what kind of services they may want but might not be telling us in
any kind of survey.

Over on the marketing side, one is Brand Leveling and I don’t mean this to indicate that
brand is no longer relevant in this environment, it is certainly relevant. It is that new
opportunities to build brand have emerged and when you think about all the brands
extending beyond the interactive travel space, just into the interactive space itself, brands
like Yahoo, Amazon and Ebay are very powerful brands now, but they were not existent
just a few years ago. So there is still, if you combine what I predict as a massive change
in terms of the travel service industry as a result of the interactive industry coalescing
with the travel industry, is that there is still much opportunity to build brand out there.
Brand is very important and I think it goes in line with what I said earlier of that you
competitor is only a click away and brand is a critical component in terms of retaining
customers and having customers confident in booking with you, but there is still lots of
brand opportunity that exists.

Operational Efficiency – would be the second major marketing force that’s driving. Now
you have the capability of automating a lot of tasks to one and sure better quality control,
but more importantly to free up your human personnel to interact at a higher level with
your customer base. So that creates lots of opportunity value added services that you
couldn’t before in a non-interactive environment.

The third is Data Base Marketing – and again there has been a lot of discussion there.
That offers huge potentials to the industry of understanding your customer in a very
intuitive way and reacting to a need before they even are aware of it. I found Martin’s
example was perfect of a flight delay and the cascading effect that that has. Those with
the systems integration capabilities that exist now and the notification capabilities via
wireless, there is no reason why you can’t before your customer even is aware of what
has transpired is to give them an alert and say “hey we’ve got you covered, we have
already booked your flight and we have covered your hotel.”
The final is the Service Content Integration I spoke to this earlier is the melding of
various content and services outside of the core transaction to make it a richer
environment and to compete greater and with the traditional provisioning of services via
the brick and mortar channel.

Let me talk a little bit about the collapse of the traditional distribution channel.
Yesterday, the logo, by the way, represents the customer, hence that is why we
have got the guy striding, he’s a customer – but in this example the distribution channel
represents the customer. Yesterday the customer would interact with the travel agent
typically by phone, call them up and ask for what the flight availability is for a given
itinerary. The agent would interface with he GDS and the GDS would interface with the
travel supplier working against their yield management systems. Today what you have
seen is the collapse of that agency and GDS so that now consumers have direct access
through a relatively intuitive interface to the GDS – I know there is lots of room for this
industry to improve that interface and to make it more sophisticated, it doesn’t seem like
a month doesn’t go by without, you know, someone pointing it out in the press of how
they found a much better deal and five minutes talking to their travel agent than they did
spending two hours on line. I think that is an example of how we still have a long way to
go………………………………………………..…end of tape

………….….. and how fares on behalf of the consumer because before that, as I think
most of us are aware that the travel suppliers have been using discounted inventory to
drive customer acquisition and offering net only fares, fares that are only available via
their Website. Well that is a compelling proposition to an end customer but it is quite
laborious to go and actually compare and find those fares because when you think about
having to go log on to four or five different Websites, pull up the fares and then compare
them, it is a very time consuming activity and so what we did at was develop a
search technology that would do all of that work automatically and very intelligently on
behalf of the end customer. But as I mentioned this is just a first step to tomorrow.
Tomorrow we see a very dynamic link between the end customer and the travel suppliers
in which intelligent agents are working on behalf of the customer in interfacing with the
travel supplier in order to locate what is the best itinerary and fare for that given search,
but more importantly is that dynamic market intelligence can be fed back into the travel
suppliers, back to their yield management systems so that for the first time what we are
offering is to make the channel truly interactive and very dynamic and this has great
implications, not only in terms of the yield management systems on the travel suppliers
side, but also in terms of the pricing of the inventory because this is an environment in
which you could offer unique pricing based upon the individuals preferences, background
and experience on the Web. So, we think that this is where the industry needs to go, that
there are compelling arguments for it, there is certainly huge challenges to moving to this
model but it is a vision for the future and I think that when you think about all the forces
that are driving change it is conceivable that we will be moving in this direction in the
next few years, if not sooner.

In terms of expansion of travel services, as I mentioned the core air, car and hotel
reservations is what anyone who is a veteran of the travel service industry tends to think
of when you first talk about travel service. What you have seen happen is a slow
expansion of what these services are so that you are moving constantly outward in terms
of the type of services and content that you are providing to the end customer. So,
information with regard to the destination that they are traveling to, in transit services,
notifications of delay, seat upgrades, weather complications, even notification where if a
particular trigger event occurs you can notify the customer. Basically it is again, data
base marketing activity.

Merchandising, now this has been slow to come into it. I think all of us have
experimented with merchandising. Very anxious to demonstrate yet another revenue
stream to our overall nets, that there are great challenges to introducing merchandising
effectively, at least at a full service travel perspective, and the greatest challenge there is
what I would argue is point of purchase promotion. It is that we have the opportunity to
understand what the customer is doing, where they are going, what their background is
and then to be able to promote selected merchandise at that point. Just popping up a mall
on your site and hoping that customers are going to purchase a laptop, I think, is not a
viable model, but being able to understand that this is the first time you have seen this
customer go international and to be able to offer various international services and
merchandise is an attractive model.

And then finally, post travel services. Not much talk goes on about what you can do for
the traveler close travel, but there are lots of services that could be provisioned in that
area in terms of not only feedback from the customer but also recording of the events of
the journey so that that can be used in subsequent, did they like the hotel or not so that
you know not to refer that particular hotel or if they did like it to ensure that they got it,
the same room, the same floor, that kind of thing.

In terms of customer ownership – As I mentioned is, is that I already see this taking the
forefront in terms of removing from just a sheer customer acquisition to more share
customer of perspective and that certainly some core services are driven around this
customer care excellence orientation. General fulfillment services, targeted content,
advisory services, these I would argue are all core services to any general travel
fulfillment offering. But then you also have integrated services where there is some
specialty fulfillment, for example is adventure travel. At we have our
customer base, they tend to be skewed towards that kind of vacation orientation and our
expertise is not in that area and so we looked to partner with companies that are focused
on that but the key is, is going to be the seamless integration of that and are we there
today? Certainly not. But it is something that we need to strive to so that we have total
ownership of the customer experience and ultimate accountability for that experience.
Passing the buck, saying “well we are passing off to specialty provider” and then not
taking responsibility for that customer experience, I think is shortsighted.

In terms of the pricing models, I predict that an added value model will hit the industry.
We have been reticent as an industry to introduce fees for service and subscription, but I
think it has got to happen and as we move more into the provisioning of value added
services that I alluded to earlier, I think there is the opportunity to offer and introduce
both a fee for service and subscription model. And certainly in an environment with
declining commissions, and I know that within our model we have predicted that
commissions go to zero, we just think that is prudent financial planning on our part and
will drive the kind of behavior to ensure that our revenue streams remain strong and
growing into the future.

Aggregated – there has been, this has been the year that group buying has hit the
interactive industry in general with sites like Ecompany and Vercadia. It has not in a big
way come to travel and I think it has just got to. There is too much opportunity there,
whether you are talking about it at the enterprise level or consolidating a group of
individuals to offer them unique fares based upon an aggregated model. It is certainly an
attractive model in terms of customer acquisition.

Finally, Dynamic - Now as I mentioned earlier, Price Line has been the innovator there
and various other sites are starting to come into this are. Then there is also the
opportunity for more sophisticated bartering of services and travel and so I think that
what we may be seeing that being introduced.

So the impact on travel – As I talked about, I really see that there are two major forces
driving change here, technology and the marketing innovation and that is driving what I
am predicting are four main areas of change for the industry, distribution channel shift
where there is a more direct linkage between the end customer and the travel supplier and
a great expansion in terms of what we define as travel service; customer ownership and a
real focus on that by the part of web service companies and then the introduction of new
pricing models beyond auction. And what that does is that creates huge growth and
potential for this industry and so I think this is a very, very exciting time for us and we
are just at the beginning of the wave, if you will, or just starting to get our speed and get
surfing into the vortex there. So hang on for a wild ride.

Thank you very much


Gerry McGovern: Thanks very much Brian. I think we have time for a couple of
questions and microphone please. If you can give your name please and company please.

Q.     My name is Jim Steinhard. I’m President of Planetware. I think you are right.
       The impact of the Internet can very well cause the traditional channels of selling
       travel products to collapse. My question though is: For the half of the North
       American market who don’t own computers and three quarters of the American
       market that is either not in a position to surf the Web or, unwilling to surf the Web
       for various and sundry reasons, how is that three-quarters of the market going to
       purchase travel services if the Net does have this impact.

Brian: It is an excellent question and I think that what you are going to see is it is the
       melding, it is not going to be a night and day kind of transition, it is going to be a
       melding of it and where the direct to supplier model is melded into the general
       GDS model and then that is provided out via the existing distribution channels so
       that the agency, and we have already gone and paid an Intellar TRIP pro offering
       in which that is being distributed via Galileo to all of the Galileo agencies once it
       comes out on Beta which is a great draw for agencies to be able to understand
       what kind of pricing is going on the Web and then to be able to book direct with
       the supplier they so choose. I think that it will be an evolution because there is so
       much to offer both sides of the equation in this more dynamic environment taking
       advantage of the ubiquity of the Network, but it is going to take time and it is
       going to be a transitionary period not a just flip the switch and suddenly we are in
       direct supplier mode. So I think your observation is exactly on.

Q.     My name is Bal Anjan from New Delhi. Do we take the fact that Galileo buys
       out your company and they also become a service provider and a retailer? Do we
       take the GDS as a competitor or a service provider?

Brian: Good question. I think that they’re primarily a service provider, that a lot of the
       technology is developing is being provisioned also through the agency
       channel. However, I think you need to recognize, I think all of us do is, is that
       there are significant cost implications of competing effectively in this new
       interactive channel and that there are players who are well positioned to succeed
       in that model and that is in the consolidated form and so I think that what you
       seeing is that the GDS’s trying to establish a presence in this environment because
       they are well positioned to compete in this. You know, they have got the
       technology, they are innovating and keys areas that would be very valuable, for
       example, you know, Galileo has developed a wireless product where you can
       actually book, change and re-book airfares on, you know, a wire phone, which is
       very compelling to our customer base and offering that now. So, I think that you
       are seeing that they want to guard their existing channel but they also want to
       participate in this new dynamic channel.

Q:     Too far from microphone …………………
Brian:          To what other people?
Q:     To all the users of the Galileo GDS system. What stops Galileo giving it to the
       other people and making ten TRIP.coms?
Brian: Well it is a good question, I guess what I would say is that, yes, it is kind of scary,
       you know, but it is also, it is more than technology, you know, it is the total
       package that you offer, it is how your market yourself that makes you successful
       in this environment.
Q:     I mean Galileo purpose is to provide technology but not to be a fulfillment agent
       and be a competitor to the other agents, I’m sorry.

Gerry: Okay, before we start any fights, Okay. Unless there is one last quick question, I
       think we will wrap up with some housekeeping. Okay.

Questioner: You and Mr. Charlwood both had some excellent questions notifying
      customers of the devices that are – how do you deal with all of the different
       wireless types of devices, all if the different potential locations, that fact that
       people may or may not have these devices and they may be in other countries
       where there are different standards, for example we have one here, there are very
       different standards in Europe and most of the rest of the world, so how do you
       deal with all these complexities and get us notice that we are going to be sitting on
       the tarmac for three hours and we are better off to re-book another flight.

Brian: Yes, the challenge is that the ubiquity in the standard. was one of the
       first to develop based upon the pocket net phone which was one of ATT’s first
       adventure into offering Internet services via a cellphone and while we found that
       to be a successful experiment, we never really considered full deployment
       because of the limitations of its penetration and if we had to develop based upon
       every different hardware piece it wasn’t just cost effect to do that. Now what is
       exciting is the introduction of WAP – Wireless Application Protocol – which is a
       first general protocol for wireless technology. I don’t know if any of you have
       experimented with it, it is fascinating in its access, it is slow in its delivery, and I
       know there is a third generation wireless protocol that will be coming up that
       should compete in terms of speed. So I think now the door is opening to the
       provisioning of wireless services. There, you have to be, and it is an excellent
       point this, we got experience with this with our flight notification is that you can
       come on to our Website and give us an e-mail or pager number and we will notify
       you when a flight is delayed. Well, there issues with that because we go ahead
       and send out the notification but for some reason in the Network, there is a delay
       in the delivery of that and people go “Hey, you know, you are 45 minutes late,
       this is no longer relevant. You know, what is going on here?” and it really wasn’t
       us, it was the pager system that had the delay in the routing and so but, we have to
       take ownership for that on a customer basis so it is risky, it is definitely risky and
       I guess I would say the way to approach that is to make sure as clear as possible to
       the customer what the limitations of this technology are so that they understand it
       and you can control as much as you can the introduction of it, but we believe that
       wireless is a huge step for the industry and we want to participate aggressively in

Gerry: Maybe you can notify them by phone that the e-mail delay notification is delayed.
So a couple of housekeeping issues. Some changes to the program – Timothy O’Neil
Dunne will be on the Business to Business Connecting Panel. Mary Norbert cancelled
for 3.30, just got that notification there a little while ago and I suppose most importantly
the cocktail reception will be at 4.30.

The next session will start at a quarter past ten and if I could ask everybody please to
leave this room because there is some serious enough construction work needs to go on to
split it up so we don’t want anybody with cracked heads. So here, I think is it Go will be the only Web architecture workshop tomorrow afternoon. The
exhibition will end today and hope you enjoyed this morning. Thank you very much.

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