Issues & Trends – October 2011
‘Co-opetition’ the key to Webjet’s new hotel market assault
WEBJET will become a “meta-aggregator” of five other hotel aggregator sites as it bids to carve out the same market dominance in online accommodation sales that it has already achieved in air ticket sales.
Managing director John Guscic said the aggregators feeding their inventory into the new Webjet Hotels offering include Expedia, currently battling hard to topple Webjet from its leadership position in the Australian online travel agency market.
The others are Orbitz, GTA (now owned by Kuoni but formerly part of Travelport when Guscic spent five years at its helm), Hotel Beds (owned by TUI and Guscic’s arch rival during his time at GTA) and Tourico.
Why would these aggregators, particularly Expedia, share their inventory with a rival?
Guscic explains it as “co-opetition”.
“While we are fiercely competing every day for the business of consumers, we co-operate in the provision of inventory,” he said.
According to Guscic, this makes sense for Webjet’s partners who gain increased volume and still make money from room sales.
They recognise that not all prospective customers come to their websites and they are very aware of the potential for a major seller of air tickets, like Webjet, to develop air-bed sales, Guscic said.
He said the “co-opetition” model enables Webjet to tap into “an unparalleled supply chain without hotel contract-ing and operational costs”.
“In addition, the model accesses both commissionable product and deep discount wholesale product, so the resulting margin will exceed 12 per cent.”
For Webjet, the deals mean that it will have more rooms to offer in more markets and a broader range of special offers – “one million global hotel rooms on sale every night”, according to Guscic.
Each of its five partners will have exclusive deals with suppliers and Webjet will be able to pick the most competitive, said Guscic.
He noted also that individual aggregators sometimes had different deals with the same hotel – one might have the best single room deal; another the best double room deal; and a third the best suite deal. Webjet will be able to offer all three, he said.
Guscic sees opportunities for Webjet to tailor offers for people who typically come to its site to buy air but delay the purchase of accom-modation until a later date and he is “most excited” by the potential to attract visitors who will come just to buy hotel rooms.
This is a market which Webjet has so far not been able to crack (just as Australia’s leading hotel aggregator, Wotif, has been unable to make a big impression on the air market). But with its “meta aggregator” product in place, Webjet will next month launch an aggressive marketing campaign.
Guscic is not releasing details yet but he does not deny that one of the challenges is to associate the Webjet name and its obvious air connotations with hotels.
He is confident it can be done. “There is the analogy of a company called Flight Centre selling an awful lot more than just flights – we want to replicate that success,” he said.