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Pegasus Interview: Bob Boles Talks to BTN About

Last time I met with John Davis, CEO, Pegasus, he was very excited about the planned launch of Pegasus’ new consumer website, which would be dedicated to independent hotels.

Just six moths later and has officially launched. The new site enables users to easily search for independent hotels with unique personalities in more than 100 destinations. The next few months will determine whether this portal will catch on. I caught up with Bob Boles, Chief Operating Officer, Pegasus Solutions to talk about
BTN: Who named the site

BB: We had that URL which we had utilised with our Utell by Pegasus product offering. It’s a good URL for search engine optimisation.

BTN: What has been the response and feedback so far?

BB: Yesterday was the official consumer launch but we launched it to the industry trade last week and we did a soft launch for about 30 days leading up to this.

The response from our hoteliers has been very positive - they are very excited about the opportunity of having a portal that really represents them and gives them a much better positioning then they might when all of the brands and chains are part of a distribution channel.

It is a little early at this juncture to get a sense of a consumer response but the early signs are positive and we are going to give it 30 - 60 days to see how things go.


BTN: What are your expectations for the first 6 months?

BB: We are looking at a fairly significant revenue uptake for Pegasus because we are also the travel agency of record through the portal. We are looking at two million dollars of incremental revenue from a Pegasus perspective. The travel agency fee generates at 8 - 10% of booking value.

BTN: Was there a high demand for such a website in the marketplace?

BB: Hotels are continually looking at ways for us to generate more revenue. Because we are in a position to represent more hotels than any other company, globally, we bring scale, and we bring inventory which will ultimately bring more consumers back to our site.

We have 5000 hotels on which will continue to grow. This is one of the main appeals for consumers - when they select a destination they will find hotels. Many other sites with an independent hotel focus may have only 300 to 400 hotels and there are many locations where they don’t have inventory. We think that’s the real critical value proposition that we bring that many other companies could not bring.

And because we are 5000 hotels, their ability to be much more present at the beginning of the search list is obviously there because it is just the independents.

Some of the larger portals have some arrangements with some of the chains, which means the independents don’t get the position they would like. For example Expedia and Orbitz have a portfolio of hotels which is in the 60, 000 property range - so there is a fair degree of difference in terms of how they get positioned on those sites.

BTN: I understand that participating hotels are current customers of Pegasus. Is this a free additional service for those hotel members?

BB: It is an additional channel and the financial element only comes into play with bookings, so they don’t have to pay anything incremental to be on the site. They only pay when they get bookings. It’s a commission-based process.

BTN: How can other independent hotels join

BB: We do not distribute hotels that are not Pegasus customers through some form. If it is an independent hotel that is not related to Pegasus this channel will not be available - that’s part of value of being part of Pegasus.

BTN: Hoteliers are guaranteed complete control of their rates and inventory. What kind of rates will they offer?

BB: There will be both traditional corporate rates as well as promotional rates available. It is initially a retail oriented site. Over time, we will look to allow hoteliers to utilize this as a distribution channel for their distressed inventory, either through merchant or through some other mechanism - but we are very hotelcentric on this.

BTN: What was the main criteria for the design and navigation of

BB: We worked with couple of firms that are expert in this space to work and we did some research to understand the usability of the site and what consumers are looking for when they are shopping.

The final product is very destination oriented and it was one of the big things that came out - a predominant number of consumers like to do destination oriented shopping - so it really provides the ability to be able to shop based on where you want to go or what you want to do there

We look to have navigation very simple in terms of moving between screens and we utilise some of our own products, such as our booking engine, as well.

The bottom line is that it’s focused on searchability - you can search on 32 different search criteria - so you can find the hotel with the right amenities that you are looking for as well as destination orientation.

BTN: Are you planning to add multi-lingual facilities?
BB: Yes. It is on the horizon but we do not have a definitive schedule that we can share at this point.

It will be oriented towards Western European languages: French, German, Spanish, Italian. We will go from there.

BTN: What are your predictions for the future of the merchant model in the US and Europe and Asia?

BB: The merchant model has changed drastically - especially for the large chains who have developed a different approach with the merchants in a hybrid model. It’s a high commissioned model because the chains want to have more control over their rates and the ability to do rate guarantees really drove a hybrid model. That will evolve from some of the largest chains in the US to some other regions of the world where the chains have more leverage with which to drive that arrangement. But they still will look to utilise some of these merchants to move distressed inventory - so the financial settlement might change but it’s still a good channel to move some of that distressed inventory,

Most of the chains continue to talk about the fact that internet bookings are up to 25% of their total bookings, but 70 - 80% of that is coming through their own websites. They continue to drive clients to their own sites and those dynamics will continue to play on.

For the smaller chains and the independents, I believe the merchant model will continue to be an element of their rates strategy and of their distribution. I don’t see it going away, but I do believe there are going to be other elements that are going to help these small chains and independents, such as hotelbook, offering another channel with which to move inventory beyond just the largest merchants - and that dynamic will change the landscape as well.

So it’s evolving in Europe and Asia. I don’t think these regions will go through the same evolutionary process as the US - they will start from where the US has evolved to and go from there rather than going backwards on arrangements that have been on between the chains and merchants.