Online travel CEOs: How to serve travelers better

Faced with a rapidly changing online and mobile landscape, the pressure is on for online travel companies to adapt and innovate successfully.

USA TODAY assembled five of the industry's top executives at the PhoCusWright conference in Scottsdale, Ariz., this month to discuss how they're doing just that: Christopher Soder, CEO of Priceline.com North America; Carl Sparks, CEO of Travelocity Global; Dara Khosrowshahi, CEO of Expedia, Inc.; Stephen Hafner, CEO of Kayak; and Barney Harford, CEO of Orbitz Worldwide.

The hour-long event was moderated by USA TODAY's Veronica Gould Stoddart. The text has been edited for clarity and length.

USA TODAY: Chris, will Priceline's recent purchase of Kayak require Kayak to drive more business to Priceline?

Soder: Our purchase of Kayak really is driven by (the fact that) we think Steve (Hafner) and team have built a great interface. So the last thing that we would ever do is change that. Within the Priceline group, we expect Kayak would operate (independently).

USA TODAY: Why should a traveler start their search on each of your sites?

Sparks: For Travelocity, we have a consumer guarantee around price and service. In a recent American consumer satisfaction index survey, consumers rated Travelocity No. 1 in consumer satisfaction. (For) an online travel agency (OTA), the first thing is interline. If you've got a multipoint flight, about 40% of the time we found the cheapest way to do that is a mixture of different carriers. The second is packaging. Just buy your hotel when you buy your air; we can offer a discount that we couldn't otherwise offer. And the final source of value is "opaque," where you don't know where you're staying, but you know (it's) in a certain region or class. We have a product called "Top Secret" and we're very competitive on rates.

Soder: First is breadth of choice. You've got over 201,000 hotels available on Priceline.com both through Priceline.com's inventory, as well as the other companies within the Priceline group, (and) many of them are available on Priceline. Second is value. We've got "Name Your Own Price" and our new "Express Deals," which offer a very compelling way to save more than elsewhere.

Khosrowshahi: One of the differentiators is Expedia is the biggest OTA brand, and Hotels.com is the biggest hotel-only brand in the U.S. But we also give back to our consumers. So Expedia has a rewards program where consumers get points for booking. They can use them for air and hotel. No blackout dates whatsoever. Hotels.com also offers a really simple rewards program where if you book 10 room nights, you get one free. We also just introduced "Expedia Travel Preference." It allows consumers to choose whether they want to pay upfront, give us their credit card information if they don't want to give it to a front desk clerk, or pay at the hotel.

Harford: Orbitz.com has an optimal price choice which guarantees that when a customer purchases a flight or a hotel on Orbitz, if another Orbitz customer purchases the same hotel or flight for less, we automatically credit the customer with 110% of the difference. We credit our own currency, Orbucks, and they can use that currency to buy stuff on the website. But the other thing that's been a real focus for us is the mobile experience. We were recently named by Internet Retailer the fourth largest e-commerce player on mobile after Apple, Wal-Mart and Marriott.

Hafner: So Kayak's a bit different. When these guys talk about comprehensiveness (and choice), we have all their inventory plus. If you visit their website, you have to book on their websites. At Kayak you can book on their websites or you can book on a supplier site or increasingly you can book on Kayak. And then on ease of use, these guys have to think about securing supply, providing customer service, running big operations. We don't. We focus on ease of use and making product great. Kayak is also a leading (travel) mobile app with 20 million downloads — and it still sucks. It will get better and hopefully more and more people it.

USA TODAY: The share of OTA vs. supplier bookings has fallen from 40% in 2009 to 37% this year, and some experts predict consolidation because of too many players. Your response?

Khosrowshahi: From our standpoint, the OTA model is growing. Our room night growth has been accelerating the past five, six quarters. It's 27% this last quarter. We know that consumers like to shop around and that's what we give them very quickly. So I don't think it's either/or. The Internet is getting bigger and bigger.

USA TODAY:How are you dealing with the challenge from airlines and hotels who are fighting to get direct bookings through personalized pricing that only they can provide?

Sparks: That's been already going on in hotel and airline loyalty programs. But the bread and butter of our business are people who aren't as brand loyal. They check over four sites today. If a consumer buys directly from the airline, they've lost the opportunity to interline or to package a hotel for savings.

Khosrowshahi: So as long as we stay true to serving the consumer with amazing technology, we're going to keep running ahead and the airlines and the hotel companies are going to look at what we're doing and to some extent they'll follow suit.

USA TODAY: How will you get more pricing of airline services such as bag fees and seat assignments into your comparisons? The airlines are resisting providing those fees.

Harford: The unbundling of product is actually a key revenue opportunity for airlines. For the majority that I talked to, they see these ancillary service fees as something that we can help them to drive in a transaction. It's critical from a regulatory perspective that transparency and transactability be mandated (of the airlines) by DOT to ensure that level playing field (so) that customers are able to make a fully informed decision.

Khosrowshahi: And between now and making these ancillaries transactable, we're focused on making sure that consumers understand what the fees are. So if you come to Expedia, you can look up baggage fees very easily so that consumers know exactly what they're getting.

USA TODAY: Steve, your app has been called best of class. Why is that and how much of your business is now on mobile?

Hafner: What makes our mobile product different is we staffed it completely independently. The demographic of that team was also very different from our Web engineers. (They are all) 27 and younger, grew up with these devices. It's optimized for the small screen (and) for location (and) is actually about 25% of our query volume now. In terms of revenue, it's far smaller. It's great for searching, not for booking travel yet.

Khosrowshahi: One of the keys is creating teams that only think about mobile. We bought a company called Mobiata that developed a number of leading apps, like flight tracker. And today we introduced the Expedia 2.0 app that includes flights as well. One of the differences (with) app design is that we're trying to create a very organic feel.There are little movements that you make with the page that feel great.

USA TODAY: How quickly do you think mobile is going to overtake the traditional desktop business?

Khosrowshahi: If you define mobile as handset and tablet as well, the tablet is actually growing even faster for us. Those two together should be the majority of our business in five years, easily.

Sparks: We own a brand called Lastminute.com. It will pass the tipping point of more than 50% (mobile) perhaps sooner than five years. We just launched a hotel deals by Lastminute.com app. It immediately finds the best hotel deals around you, including mobile-exclusive deals. One unique feature is you just hold the phone's camera up. It reads your credit card. All you do is enter the security code and you've got your booking, and so far consumers love it.

USA TODAY: Dara, you've incorporated quite a bit of editorial content onto your site in "Find Yours." Why?

Khosrowshahi: (We're) using our data to help travelers. What you'll see on our site increasingly, especially with the new air experience we're going to introduce, is playing back user data to our consumers to help them make better decisions. So when you do a flight search, we'll tell you how many flight searches were made, the most popular times of flying, what percentage of our users flew direct vs. one stop, etc.

USA TODAY: And, Chris, you have user-generated reviews and rankings.

Soder: Yeah, we send everyone who books a stay through Priceline.com a post-stay survey. We've accumulated over 5 million responses to those on our website. We've also gone through a complete rewrite of all of our hotel descriptions to make everything more informative. A very large percentage of customers access the reviews during booking.

Harford: There's a huge inspirational component to travel, as well. So we've partnered with Richard Bangs who runs a PBS series called "Quest." We're now developing PBS shows that showcase really exciting destinations around the world, and then providing a dedicated microsite that helps consumers follow in Richard's footsteps and book that trip. That connection between inspiration and transaction hasn't been achieved yet, so we're breaking new ground.

USA TODAY: How important is personalization?

Harford: Consumers don't understand the richness of what's actually going on behind the scenes. The algorithms are taking account of hotel popularity, but also of what price point that popularity was achieved by. When the customer comes to Orbitz, they're seeing, for example, if a (reasonably popular) hotel has recently cut its rates because it had a big cancellation. We'll jam that to the front because it's such a good deal. We're able to create a kid-friendliness rating in the background. If you're searching with kids, you'll see a different set of hotels.

Khosrowshahi: Looking at consumer intent based on booking patterns is pretty powerful. For example, if a user is doing a midweek search for a two-night stay, you have a good sense that's a business traveler. We show mostly branded hotels in Midtown. (If) it's a weekend stay with a longer booking window, that's probably a leisure search and we'll show them more sensitivity on price and hotels that tend to be leisure specific.

Hafner: One of the benefits we have at Kayak of having relationships with these guys (at the table) is we get access to their content (and) their preferred total order. So we look at what Barney says is his top 25 hotels, Carl's top 25 hotels, Dara's as well. We said, hmm, these three hotels seem to overlap so we can have kind of a meta approach on top of theirs and then we customize a little bit.

Soder: We're all trying to put the most relative content in front of you, but there's only so good we can be at that. So we're focused on making it easy for our customers to filter, sort and find (what) they're looking for. A perfect example that would be very difficult for any of us to know proactively is pet friendly. Somebody's traveling with their pets. So we try to make it very easy for them to find hotels that would accommodate that.

USA TODAY: We've just come through Hurricane Sandy. How are you putting a consumer at ease regarding cancellation and rebooking issues in an emergency like that?

Soder: First, we follow the airline and the hotel policies as a general rule. Second, we have a very large customer service operation, and and allow them to either cancel or re-accommodate at a different hotel or on a different flight — even in the case of non-cancellable bookings.

Khosrowshahi: I think the airlines and the hotels really do their best in this case. One of the new technologies that we were pretty excited about is a virtual queue technology that allows you, if you call us, we can tell you that we'll call you back in 45 minutes so that you don't have to sit on the phone seething. We saved 50,000 hold minutes during (the hurricane).

USA TODAY: What are the hot destinations right now?

Khosrowshahi: We're seeing Mexico volume is very strong. The package savings that you can find going into Cancun and Playa, etc., are pretty extraordinary, hundreds of dollars.

Soder: That applies to the Caribbean as well. Because you're seeing less air lift and therefore less demand, and so the hotels and resorts are getting a little more aggressive.

Harford: As international currencies are weaker, we've seen great values in Europe right now.