Guest columnist Joe Haslam finds time for philosophical musings to understand where the travel industry is headed and finds that there is plenty of work to do

Recently I was offered the opportunity to take an executive education course in corporate communication. In the end I couldn’t attend but I heard that the best session was one that analysed slogans from famous political campaigns. The idea was to assess how these campaigns managed to capture the attention of an otherwise apathetic public.

Among these were the words, that almost every political candidate these days is told to heed, from the American author, the late Maya Angelou: ‘I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel’.

Also referenced during the course was the useful but factually incorrect anecdote of the boiled frog. ‘Put a frog in boiling water and the frog will sense danger and jump out but put a frog in cold water and slowly boil the water and the frog will not sense the danger but even like it.’

I’d heard both of those before but one I hadn’t heard is attributed to Leon Trotsky: ‘You may not be interested in war, but war is interested in you’.

The context is disputed but the inference is clear. Sometimes, irrespective of how much a battle appeals, or not as the case may be, to get involved is the only choice open to you if you want to survive.

A tough act to communicate

As chairman of a mobile only hotel-booking company, we’re strong believers that mobile dramatically favours the entrant and represents a huge threat to the incumbent.

When we launched over two years ago, the importance of mobile was difficult to communicate. Two years on, mobile-only companies like Instagram and Whatsapp are worth several billion dollars. Many OTAs now report bookings made on mobile as a separate number in a nod to their growing importance.

Yet, as I wrote last month, many people working in the travel business still see mobile in linear rather than exponential terms. How then can I convince you that mobile is of a bigger consequence than the web ever was? What corporate communications ploy would work? A cup brimming of Maya, some boiled frog or maybe the full Trotsky?

Even though we have the numbers, these are cold and in the form they are generally reported do not pick up just how much mobile is changing everything about the travel business. To become true believers, we need specific examples of a change in user behaviour and an increase in overall market size.

Uber in the spotlight

With the notable exception of Andreessen Horowitz, Silicon Valley venture capitalists are not a very communicative bunch. So when Benchmark Capital partner and Uber investor Bill Gurley writes more than 4,500 words then he has something that he wants to get off his chest.

His issue was a post by NYU finance Professor Aswath Damodaran, a man known as the ‘high priest of valuation’. Damodaran started by blogging that Uber wasn’t worth $17bn. Gurley replied that in his scenario Uber’s market opportunity might be 25X higher leading Damodaran to stick to his guns adding that that not everything that is possible is plausible. All the posts are worth reading and not just for hyperquants.

The debate centres around the size of something called the ‘total addressable market’ aka TAM. Gurley argues that the deeply personal, carried everywhere aspect of mobile allows new transactions to take place that currently do not. He groups these under new ‘use cases’ – think ‘a couple’s night out’, ‘transporting elderly parents’. These new use cases, he continues, create a network effect, the nirvana of every business plan reviewed by a venture capitalist. Network effects lead to economies of scale, which lead to ubiquity of service, cost advantages for consumers and higher demand. In effect, Uber is competing not just with existing taxis, but with the entire concept of car ownership; it’s therefore deserving of the valuation. 

When I read this, I immediately thought of the $45m Series D investment by the hedge fund Coatue Management in HotelTonight. After home runs in companies such as TripAdvisor and Priceline, they are on the lookout for a new category killer. They use a methodology similar to ‘design thinking’ to find their unicorns. As opposed to just loading trading numbers into a spreadsheet and playing with the ‘g’ instead they collect data points based on ‘use cases’.

What they found was that just like Uber, mobile allows a ‘use case’ of hotel booking to take place that previously did not. Even better was the lack of channel conflict. HotelTonight are just selling the rooms that hotels were unable to sell up until the last day. Unlike taxis, companies like HotelTonight (and also Hot Hotels) work with rather than against the existing industry.

And this will increase as travel becomes an even more mobile-centric business with ties to restaurants, events and meet ups.

Still not convinced?

You don’t believe me? Social networking is nearly entirely mobile only (Snapchat 100%, Vine 99%, Instagram 98%, Pinterest 92%, Twitter 86%). 18% of millennials are mobile only, doing all their internet browsing, emailing, social networking and news on a smartphone or a tablet.

Mobile social users are more likely to interact with brands than PC users. There'll soon be two to three times more smartphones than PCs on planet earth. As they are not shared and go everywhere, the real impact could be as much as ten times the impact of the PC. Most frightening of all though is the ‘zero patience, zero wait’ aspect of online travel shopping.

If your experience is not native to mobile, the evidence is that the customer will not wait. That includes incorporating all the pre-loaded information that is possible on a mobile device and a responsive platform that can serve the information you want back to you in less than two seconds. We have recent data on how well the top 100 travel destination and accommodation sites currently rank for mobile experience and on the lack of responsive web design alone, it’s clear there is work to be done.

In Part B, later this month, Joe Haslam reveals what you can do to avoid being left behind in a mobile world. Haslam is the Chairman of Hot Hotels, a same day, mobile only hotel booking App based in Spain. See hot.co.uk or follow on Twitter at @hot_app