I could not pass up on the opportunity to meet again with John Davis, CEO, Pegasus Solutions, on a flying visit to London. Since our last meeting in 2002, Pegasus has continued to grow its portfolio, and now provides reservations-related services to 80,000 agencies 50,000 hotels worldwide.Corporate travel is on everyone’s lips at the moment and John did not hesitate to share his views on the subject. According to John, hotel based web bookings have returned to 2001 levels, but with a far higher level coming from corporate travel. Furthermore, John revealed that these online bookings did not come at the expense of the travel agent.
“In 2001, we all used to say the Internet is going to replace the travel agent. It did not. In 2004, travel agent bookings equalled levels of 2001. This is amazing because the Internet bookings have gone off the chart, but it did not come at the expense of the travel agents. It came at the expense of the telephone”. He added: “People have given up the telephone and are going on the Internet.”
I asked John whether he had faith in the corporate product offerings from the likes of Expedia, Travelocity and Orbitz. Citing a recent quote by Expedia’s Eric Blachford, he said: “It’s harder than it looks”. He added: “The customer service requirement is much more substantial than in leisure travel. The challenge they are going to have is providing the hands holding requirements for corporate travel”.
Although John is optimistic that the sites will gain some of the market share, he believes that they will have to work hard to develop partnerships with larger corporations. He commented: “I think the obvious target is the small, unmanaged travel. It’s going to be very difficult to get the large corporations, but it’s a good opportunity for them and it’s a challenge”.
According to John, corporate travel has acted as a catalyst for the decline of the merchant model in the US. However he predicts that the recent Cendant acquisitions, including e-Bookers and Orbitz, are going to drive the sale of European hotels over the Internet.
Given the recent spate of acquisitions by Cendant you might expect John to be wary of his competition, but he remains good-humoured about his relationship with Cendant: “It’s great. They are customers of ours, we are customers of theirs and we compete, so it is an interesting relationship”.
Whilst John is pleased at the prospect of hotels being pushed over the Internet through Cendant’s acquisitions, he does see a challenge ahead of him: “From a positive standpoint, they are going to be actively pushing hotel sales over the internet - that is good for us and for our Utell customers”. He added: “On the other side, we do compete with most of their businesses and having them as visible as they are is going to provide some challenges”.
So what else can we expect to see from Pegasus in 2005? John is determined to lock horns with the hotel chains. He is proposing to launch a new consumer website, Hotel Book, dedicated to independent hotels. John seems to have a knack for identifying gaps in the market and that is exactly what he has done. He commented: “The site will compete with the websites of the major hotel chains, such as Marriott.com, and Hyatt.com. Those sites are grabbing 80% of the Internet bookings in the US. The independent hotels don’t have that opportunity so we are going to create it for them”. He added:“Expedia.com is primarily pushing the chains and the relationships they have with them. The independents might be on page 52 - you can’t ever find them! Hotel Book will give the independent hotels a chance to market themselves to the consumer directly”.
Pegasus plans to deliver its weekly agency commission processing this month. I asked whether Pegasus were on schedule for the release of the upgraded product. John laughed and said: “Trust me. If it’s not, there are going to be some people who are looking for jobs”.
Pegasus will also be unveiling its PegsTour service that will automate bookings by wholesale travel companies and tour operators with multiple central reservations. “It’s the same technology that we created 16 years ago when we connected the GDS’s to the Hoteliers. Now we are connecting the tour operators to the hotels”. Commented John.
And finally, Pegasus are planning to launch a new central reservation system which will combine the Unirez service for hotels and the Utell reservation system, enabling hoteliers to control their own data. John commented: “With the new system we are going to allow the hotelier to take control of their own information and the way they want to promote themselves rather than having us do it”.
With so many plans in the pipeline, I asked John what he perceived his greatest challenge for 2005 to be. He concluded: “In 2005, we have got to create products that work first time, every time, on time. That’s it”.
Breaking News: John Davis will be a keynote speaker at the World Travel Internet Conference on 15th November 2005, at the Crowne Plaza Hotel, London Docklands.