Agoda will be experimenting with social media in a big way. And mobile is now mainstream. These two forces which are feeding each other, believes Robert Rosenstein, CEO of Agoda (left), will transform travel.
What could have been a great year turned out merely good, due to the floods that afflicted Thailand in the last quarter of the year, but all in, Robert Rosenstein, CEO of Agoda, is still smiling.
He has good reason to be. The site he co-founded with Michael Kenny has become Asia’s largest hotel booking site and the space he is in can only grow as online becomes mainstream in a region where customers are becoming increasingly affluent to look on travel as a necessity, no longer a luxury.
And while the floods did cost the company business and cancellations, Rosenstein said it opened his eyes to the dedication and commitment of his team. At the height of the flooding, more than 170 of Agoda’s staff had to stay in hotel rooms for nearly a month.
“Our employees living in Thailand suffered through the floods, it was hard for everybody and it was hard for us to watch them lose their homes and yet they stll had to work to serve our international customers.
“And that’s what I am proudest of – to see the great job they did under dire circmstances. I don’t think you will see this in the investment banking business.”
Does that mean therefore they will be getting bigger bonuses, I asked Rosenstein who was in the midst of preparing bonus payments when I interrupted him for this interview?
“If only effort and sacrifice alone would determine what people got paid,” he laughed.
Overall though Agoda’s staff shouldn’t be complaining too loudly. Their company is on a strong growth path. “We saw growth across the board, online business is growing everywhere and we are one of the lucky recipients of growth. There is a perpetual trend of people booking online over traditional agents and wholesalers. If we just do a reasonable job, we will see growth across all markets.”
One realization he had in 2011 was how dynamic the market is. “Even markets that are going through tough periods – you’ll still see high occupancies and high rates. One big change and which has benefitted us is how dynamic hotels have become in their pricing – taking advantage of weak periods to lower prices and busy periods to increase prices. Our channel is fantastic for that.”
He said that while online travel continues to go mainstream, some markets still had a long way to go, even matured destinations such as Phuket and Bali and hence there was plenty of room for growth.
The thing he will be spending most time on is understanding how social media can be used as a true marketing channel, not only for creating buzz and hype but also actual conversions into customers.
“For everyone now, social media is here. Facebook has made the net a social space and it’s changed the landscape of what people use the internet for. But for the industry, it’s not yet happened. Social media companies are not speaking the real language of marketers, it’s just something cool to have. But it’s going to happen.
“So my priority is to learn about social and the new shifts in gathering data and understanding what this all means.
“Yes, there’s a social aspect to reviews there – TripAdvisor and TripFriends – but does it help us service customers better? What does it do for our core business? Do you really want to know what all your friends are doing? How does this data help us achieve our core objectives? Everyone wants to be at the top of the marketing funnel, does it help me be at the top and convert customers?”
He said Agoda would spend money and time experimenting in this space and partner with Facebook. “This time next year,” he promised, “we hope to have more answers. The thing with Facebook is they have an open platform view and that could give you real scale.”
And as confusing as the social space is, Rosenstein said we should be thankful there’s really only one significant network to deal with.
As for all those trip planning and sharing sites that are popping up, he said, “If they are making life simpler for consumers and expanding their choices, then that’s a good thing.”
Mobile has also become mainstream, believes Rosenstein, as we now live in a fundamentally mobile world and that changes the way we transact. Agoda is seeing fast growing transactions on mobile and as it matures, it will become a similar game to the traditional web. “You have to make sure that mobile and laptop customers are serviced – mobile customers are more liable to book the same day.”
He said that social and mobile were two transformational technologies that were feeding and changing each other and by so doing, changing the entire landscape of travel.
There are also a couple of other areas he intends to keep his eagle eye on. One, the deals space which some may be dismissing because of the proliferation and fatigue factor but investors continue to be in love with them in Asia. For instance, I recently heard an investor say, “You can say what you like about the deal sites but I tell you, they make real money. People actually buy.”
Recounting this to Rosenstein, he responded, “If suppliers are willing to offer great discounts, people will buy. But they also have to be sustainable and make sense for the suppliers. You have to understand it from the consumer value and hotel value – that’s what a real intermediary does.”
Thus, he said, Agoda is interested in looking at any ways that hotels discount and understand why they do that and what that does to consumers.
Collaborative consumption is also a space that intrigues him, specifically models such as Airbnb and 9flats. “This is really interesting. The challenge is going to be structure and rules that they need to solve, the same way that ebay needed to provide insurance, reputation analysis, etc.”
Many questions remain. Who is liable when the apartment gets wrecked? Are flat renters liable for local taxes? How do these sit with local regulations surrounding hospitality? Hotels need licences, serviced apartments as well – do private flats rented out as temporary accommodation?
Rosenstein agrees, “It’s not about supply and customers, it’s about structure and rules and how you bring the authorities into it? That’s where the battle will be won – creating structure.”
Asked if Agoda would consider getting into this space, he said, “We offer service apartments now so yes, we could look into that business. There is an opportunity – lots of customers are searching around and there’s technology to load different room types. But it’s not a business we know about yet.”
Rosenstein expects it to be another dynamic year – lots of ups and downs. “That's okay for us, we just need to make sure our stuff is flexible so that hotels can discount and yield with us.
“This year is also about listening to customers, when you are flat out growing, there are a lot of things you miss so we will keep our ear to the ground and see, what do they want? Do they want these apartments, for instance?”
His message to employees is, it’s been a good year, everybody has delivered through a stressful period but more stress will come. "Be proud of what you've achieved so far, but remain humble with our partners and customers."
As for why he has stayed on after selling the company to Priceline.com in November 2007, Rosenstein, who turns 45 this October 11, said, “I am staying because I don’t think I will get another chance to work with a great team, a parent company that allows me freedom and flexibility and a great industry.”
And would he do it again, build a company from scratch? “They do say once an entrepreneur, always an entrepreneur, and I retain that mindset. But starting small companies again – that’s a young man’s game and there are certain advantages you get with scale.”
* A look at Priceline.com’s performance
