Farecast and Kayak - BKM (Best Known Methods) of booking travel online

It's been a while since I blogged about my travel. I've been swamped with some life transitions... for the better I hope.

Recently, I've been helping with several friends and relatives with their travel hunt. I thought I share the rules of thumb and steps to follow here:

1. Don't keep querying the same dates and flights. Familiar with Priceline.com? Yes, all your activities are tracked and these airlines form alliances (i.e. Star Alliance) to not only give you benefit program but they share data.
   
2. Use Farecast.com to get an idea on whether you should book your travel now or you can wait it out.
   
3. Use a meta travel search engine like Kayak.com, to get multiple price quotes at one instant. Remember, don't do it one by one, your activities are being watched and shared. There are many meta travel sites but I just love the usability in Kayak.com

Another thing I've been asked is to do parallel search. Meaning this is your way out if you have already searched for the same route, and similar dates too many times and travel industry is determined to get you (or your IP).

What this means is get your friend to do the searches for you, and 8/10 times your friend will get a lower rate. You can then just ask him to help you book the itinerary.

Hope this helps!

Why is Travel an Interesting Industry ?

Why is travel an interesting industry to learn about? Well, first to state the obvious - it is about Fun and Generating Memories. Ask anyone a hypothetical question around you "If you have all the money and time in this world, what would you do?". The answer you are most likely to get it "Travel" without much hesitation. My personal favorite quote for years is:

"Life is not measured by the number of breath you take, but by the moments that take your breath away"

Everyone mentally inks the most pleasant memories in their own personal history book. I would dare to generalize that the most indelible experiences and memories are happen when we travel. Why? well, the way our brain functions just remembers those novel experiences better than routine mundane circumstances. Do you agree? If you also believe in that we are a cumulation of our experiences then you also are most likely to believe that life is about brief joys, those saturated moments when you stand shaky, but upright, and find that you have everything in balance... is when memories will be stores in permanently in our cerebral.

Let's take a look at some facts about the travel industry before I get too carried away in philosophical talk :)

The travel industry pulls in approximately $1.3 trillion annually in the United States alone. That figure leaps to $7 trillion when measured worldwide. That's some serious money and there are many out there looking to get a slice. It's even bigger than energy and health care industry!

Four significant trends that contribute this:

Trend One: There are almost 1 billion baby boomers worldwide. One person every eight seconds reaches retirement age. This trend will continue for the next 20 years. So what? What will these newly retired baby boomers do when they retire? Travel, of course!

Trend Two: The travel industry is growing 23% faster than the global economy. That means that travel is expected to double to $14 trillion worldwide in the next 10 years.

Trend Three: The growth of E-Commerce. Consumers last year spent billions of dollars on the Internet. Travel is the fastest growing segment of that trend.

Trend Four: Statistics show that there are a growing number of small home-based businesses focusedon online travel as a result of travel engine commoditization. With large companies outsourcing and downsizing, people are turning to home based businesses to provide them with job security.

You might ask what the heck is commoditization? According to MSN Encarta dictionary, it is the process by which a product reaches a point in its development where one brand has no features that differentiate it from other brands, and consumers buy on price alone.

Having worked for corporate America for years and being a technology industry insider, it is hard to avoid this concept. You might ask, “Is online travel such technology to be commoditized?” You bet, web technology gets commoditized even faster since they have much shorter development and rework cycle, that’s why there are so many options to do everything online (i.e. local searches via Citysearch,Yelp, Menuism, Judysbook, MetroseeQ (my favorite)). It exists in all general life cycle of a product not limited to technology products like microprocessors, cell phones, game consoles, iPods (you gotta check out iPod Touch!!!) but also household... that’s why it’s called commodity.

So is travel the next wave? the next disrupter that you'll hear in the news? Probably not, because the overall user/customer experience is the same. Booking online is already a skill that most of us have, the only difference is that there will just be more of it, and most destinations to venture to and more money to be made on these travel commissions!

Life is a journey, Travel it. :)

ABCs of flucatuating fare

Alright, this is my first blog, so "hello world!" :-)

What I'm discussing today has no verification by online travel giants, only bases of reasoning from my humble interview experience with Expedia when I graduated from college. It's something that virtually all of us do when we travel - booking travel online...

Perhaps the most confusing or even frustrating thing in booking travel online is understanding why fares are so unpredictable! It's easy to fall into the indecisive trap when finally the credit card screen appears and you find yourself suspicious of price drop in the next week, next day, or even next hour! This unpredictability mushroomed up many online forums discussing and sharing the best deals one can possibly find but still no one can really provide a definitive strategy. In fact, the code to find the best fare is so complex, if you can decode it, you should probably call Expedia or go on CNBC like the kid who decoded the iPhone.

So why do prices differ from engine to engine where no one single online booking site can claim leadership? Why is it is sometimes cheaper to book it way way far in advance and why are last minute deals dirt cheap? Well, to answer these questions, one really has to consider the objective function in which algorithms were constructed around these online reservation engines. The three high level objective functions I can think of are:

1) Flexibility, 2) Availability, and 3) Internet Traffic.

Last minutes deals
Flexibility is really time and dates of your travel and is generally intertwined with availability. Take Las Vegas, #1 attraction in the U.S. and the most visited place on earth for example.

Monday night – Thursday nights are cheaper than cheap relative to what they sell for weekends. The reason being inventory and room availability. If the rooms don’t sell out, what happens? Hotels lose money on that room and other potential spendings in that hotel. It’s logical to occupy the space at a discounted rate than take a loss on unoccupied space. Now, apply that for Cruises, once Cruises ship off to sea, they lose that whole period of time its at sea. If branding or image isn’t an issue, they rather give away these unoccupied rooms and hope they spend more on booze. However, they need to protect their corporate reputation and like all occupancy business (Cruises, hotels and flights) so they don't just give away room for free. Besides, they have fat built-in margins so the trade-off becomes reputation and money. Nevertheless, they are more willing to give it away in a form of FAM trips (a.k.a Familiarization trips) to travel agents to promote awareness of their services/property. So hopefully that explained the concept of last minute deals.

How about those that you book the next day? Well, the algorithm knows if you are booking something so close to current time/date, you must be willing to pay a bigger price to compensate for your urgency. They have no problems taking advantage of your desperation. I think there's an exception for death travel but I learned that from Seinfeld so don't quote me on it.

If you book way too far in advance, they will know this trip is very important to you (i.e. family reunion) so you must be willing to pay. OR you are booking for high demand destinations like an Alaska Cruise (the draw is mainly seeing glaciers before they disappear ). The whole mindset behind it is calculating and predicting customer's "willingness to pay".

Internet Traffic/Peak times

Ever find yourself losing the deal that you saw just 5 minutes ago? Frustrating isn’t it? Well, you’re not alone. The absolute worst time to book travel is during business hours (if you’re using your own money). Okay, so to back up a little bit they are two types of travel, business travel and leisure travel. Business travels are usually booked during what time? You guessed it, business hour time. By whom? well, at major corp, they are booked by admins or overworked individual contributors who don’t care about finding deals since

1) it’s a business expense NOT out of their pocket, 2) they don’t get rewarded for finding deals, 3) their time is simply more valuable than finding cheap fare.

It’s like your cell phone minutes, your carrier counts your minutes during “peak” time hours, but nights and weekends are generally free. Well, how do I explain losing a good deal at midnight?? Well, it’s probably because they are many concurrent connections raising site traffic. The logic is, the higher the site traffic, the more people who visit, the higher the demand, the higher the price.

Well, I hope that shed some light to some people. Until next time!

thanks for reading!