FaceTime Baby

My nephew Samvit, born in 2011, doesn’t talk much on the phone. It’s possibly because he didn’t talk much on the phone as a baby, but I’ve never been able to have a decent phone conversation with him (we get along really well when we meet, though). He talks a couple of lines and hands over the phone to his mother and runs off. If it’s a video call, he appears, says hi and disappears.

Berry (born in 2016), on the other hand, seems to have in a way “leapfrogged” the phone. We moved to London when she was five and a half months old, and since then we’ve kept in touch with my in-laws and other relatives primarily through video chat (FaceTime etc.). And so Berry has gotten used to seeing all these people on video, and has become extremely comfortable with the medium.

For example, when we were returning from our last Bangalore trip in December, we were worried that Berry would miss her grandparents tremendously. As it turned out, we landed in London and video called my in-laws, and Berry was babbling away as if there was no change in scene!

Berry has gotten so used to video calling that she doesn’t seem to get the “normal” voice call. Sure enough, she loves picking up the phone and holding it against her ear and saying “hello” and making pretend conversations (apparently she learnt this at her day care). But give her a phone and ask her to talk, and she goes quiet unless there’s another person appearing on screen.

Like there’s this one aunt of mine who is so tech-phobic that she doesn’t use video calls. And every time I call her she wants to hear Berry speak, except that Berry won’t speak because there is nobody on the screen! I’m now trying to figure out how to get this aunt to get comfortable with video calling just so that Berry can talk to her!


In that sense, Berry is a “video call” native. And I wouldn’t be surprised if it turns out that she’ll find it really hard to get comfortable with audio calls later on in life.

I’ll turn into one uncle now and say “kids nowadays… “

Is TripAdvisor killing Expedia?

The coming of the internet has led to one round of disintermediation in the travel market, and I hypothesize that review websites such as TripAdvisor are going to lead to another. Let me explain.

In the “good old days” if you wanted to travel there was no option but to reach out to the neighbourhood travel agent who would give you options of a few airlines and hotels. The best you could do to figure out if you were being taken for a ride was to check across multiple agents, but even then the only thing you could compare was price. It was impossible to compare hotels in terms of quality and you would take the word of the travel agent.

And then the internet happened.

Now, with sites such as Expedia or Travelocity, you got more transparency in pricing – especially when it came to airline ticketing. The travel agent could no longer take you for a ride when it came to the air fares – you could cross check online and bypass the agent if he wasn’t offering you a good deal (of course some things such as flexible schedules were best booked via agents, and they continue to hold sway in the corporate segment for that reason). Simultaneously airlines started selling tickets direct, via their own websites (this was led in part by “low cost carriers” who saw this as a good way of saving cost by cutting out agent fees).

This was the  first round of disintermediation in the travel industry. Airlines selling tickets direct and customers being able to book directly online meant the overall business of travel agents reduced. Some of them were cut out completely while others were replaced by large-scale technology enabled agents such as Expedia or Travelocity. Those that survived either have corporate clients (who need flexible schedules and have little time to book online) or have resorted to packages Рwhere they arrange for flights, accommodation and cars, and quote you a consolidated fee Рin which there are margins to be made.

The move to large-scale technology-enabled agents meant that some of these agents were now large-scale aggregators. This gave them significant bargaining power vis-a-vis hotels and this allowed them to bargain for deep discounts. While earlier conventional wisdom was that “travel agents” could get you “good deals”, now these large online aggregators were the ones providing the “best deals”. Thus it made eminent sense to book via these aggregators.

Simultaneously most hotels also started direct booking on their own websites. However, the problem was that the hotels themselves did not have the technological capability to implement good revenue management practices on their own websites. They also did not have the technological capability to offer a seamless and smooth booking experience. Thus, large online agents such as booking.com and Agoda prospered.

There are two functions that a travel agent performs – helping customers discover hotels and then actually executing the booking. In the traditional model, agents don’t charge for the discovery process. That service is instead cross-subsidized by the fees they make on the actual booking process. The first level of disintermediation in the travel agency (which we’ve seen above) has chipped away at this model, however. What do I, a travel agent, have to gain if I put in painstaking research and find you a hotel, only for you to find that you can book it for a lower price online? Agents, however, have not figured out a way to charge for the discovery process.

However, it is unlikely that they need to. For you now have websites such as TripAdvisor which have user-generated reviews and ratings for a large number of hotels, and which rank hotels in each city by type and user ratings. TripAdvisor has become so ubiquitous for user-generated ratings for hotels that nowadays travel agents add links to TripAdvisor profiles of hotels that they are recommending. Thus, we can see that the hotel discovery process can exist independently of travel agents.

What of the bookings itself? Don’t we need travel agents for that? Note that irrespective of whether a travel agent is online or offline, the hotel has to pay them a commission for selling their inventory. In the past given their size, hotels (unlike airlines) were unable to effectively sell rooms on their own websites and thus resorted to paying travel agents. However, advances in technology now mean that it is easy for a hotel to adopt a third-party software to effectively manage their inventory and sell tickets on their own website, and at a fraction of the cost they need to pay travel agents.

So, if TripAdvisor helps you discover hotels and then you can book hotels directly through their own websites, who needs travel agents? For now, most large online aggregators have a price matching policy and thus match the prices that hotels quote on their own websites. However, in order to save booking fees (rumoured to be of the order of 17% of the total booking value) hotels are trying to innovate and add freebies to their offering.

For example, a hotel in Cambodia I stayed in last week offered a free massage to guests who had booked through their own website (unfortunately I booked via Agoda and couldn’t avail of this offer). The Bangkok hotel I stayed in last week offered a 10% discount on payments made via American Express on their own website (again we discovered this after we had booked on Agoda, using an AmEx. To their credit, Agoda gave us a refund to the extent of the discount we would have got on the hotel website).

Essentially hotels have figured that with the growing popularity of platforms such as TripAdvisor, they don’t really need travel agents, small or large. As TripAdvisor gets more popular and third party hotel booking softwares gain traction, we are likely to see the decline of large travel aggregators such as Expedia, Travelocity and Agoda.

In essence, the growth of TripAdvisor is going to lead to the partial downfall of its erstwhile parent Expedia.

Missed opportunities in cross-selling

Talk to any analytics or “business intelligence” provider – be it a large commoditized outsourcing firm or a rather niche consultant – and one thing they all claim to advise their clients on is strategies for “cross sell”. However, my personal experience suggests that implementation of cross-sell strategies among retailers I encounter is extremely poor. I will illustrate two such examples in this post here.

Jet Airways and American Express together have come up with this “Jet Airways American Express Platinum Credit Card”. Like any other co-branded credit card, it offers you additional benefits on Jet Airways flights booked with this card (in terms of higher points) as well as some other benefits such as lounge access for economy travel. Given that I’m a consultant and travel frequently, this is something I think is good to have, and have attempted to purchase it a few times. And got discouraged by the purchase process each time and backed out.

Now, I’m a customer of both Jet Airways and American Express. I hold an American Express Gold Card (perhaps one of the few people to have an individual AmEx card), and have a Jet Privilege account. Yet, neither Jet or Amex seems remotely interested in selling to me. I once remember applying for this card through the Amex call centre. The person at the other end of the line wanted me to fill up the entire form once again – despite me being already a cardholder. This I would ascribe to messed up incentive structures where the salesperson at the other end gets higher benefits for acquiring a new customer rather than upgrading an existing one. I’ve mentioned I want this card to the Amex call centre several times, yet no one has called me back.

However, these are not the missed cross-sell opportunities I’m talking about in this post. Three times in the last three months (maybe more, but I cannot recollect) I’ve booked an air ticket to fly on Jet airways from the Jet Airways website having logged into my Jet Privilege account and paying with my American Express card. Each time I’ve waited hopefully that some system at either the Jet or the Amex end will make the connection and offer me this Platinum card, but so far there has been response. It is perhaps the case that for some reason they do not want to upgrade existing customers to this card (in which case the entire discussion is moot) but not offering me a card here is simply a case of a blatant missed opportunity – in cricketing terms you can think of this as an easy dropped catch.

The other case has to do with banking. I’m in the process of purchasing a house, and over the last few months have been transferring large amounts of money to the seller in order to make my down payments (which I’m meeting through my savings). Now, I’ve had my account with Citibank for over seven years and have never withdrew such large amounts – except maybe to make some fixed deposits. One time, I got a call from the bank’s call centre, confirming if it was indeed I who had made the transfer. Why did the bank not think of finding out (in a discreet manner) why all of a sudden so much money had moved out of my account, and if I was up to purchasing something and if the bank could help? Of course, later, during a visit to the Citibank local branch recently I found I wouldn’t have got a loan from them anyway since they don’t finance apartments built by no-name builders that are still under construction (which fits the bill of the property I’m purchasing). Nevertheless – the large money transferred out of my account could have been for buying a property that the bank could have financed. Missed opportunity there?

My understanding of the situation is that in several “analytics” offerings there is a disconnect between the tech and the business sides. Somewhere along the chain of implementation there is one hand-off where one party knows only the business aspects and the other knows only technology, and thus the two are unable to converse, leading to suboptimal decisions. One kind of value I offer (hint! hint!!) is that I understand both tech and business, and I can ensure a much smoother hand-off between the technical and business aspects, thus leading to superior solution design.