Hotels.com & COVID Travel Disruption | In Practise

Hotels.com & COVID Travel Disruption

Former President at Hotels.com

Learning outcomes

  • The potential impact to leisure and business demand in travel
  • Why OTAs may came out of the pandemic strongest
  • Why Expedia have a larger operating cost base than Booking.com
  • How Booking.com converts traffic so well
  • Lessons from building Hotels.com product and marketing strategy
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Executive Bio

Scott Booker

Former President at Hotels.com

Scott joined Hotels.com in 2003 when the company was a Dallas-based startup. He spent 5 years in product and customer marketing before moving to SVP where he was responsible for the global website and product development. In 2012, Scott was then promoted to President of Hotels.com with full P&L responsibility. Scott previously spent 3 years at Blockbuster as Senior Director of Strategic Marketing for Blockbuster Online, the incumbent competitor to Netflix, where he was competing directly with the now video streaming giant. Read more

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Scott, can you set the context of you joining Blockbuster, in 2003, 2004?

The company, at the time, had about 9,000 retail stores around the world and probably, top line, around $6 billion in sales. When I joined, my primary role there was a senior director of strategic marketing. I had responsibility for developing products, both in store and online, using technology. One of the things we weren’t good at, when I first started and what I brought to the table, was helping to develop a CRM solution, to help re-engage and reactivate customers.

One of the things we noticed, pretty early on, is that 15% to 20% of our actual revenue was coming from late fees. We all knew it was an issue and my group was responsible for trying to figure out how to solve that. It was the albatross around our neck. How do we solve this problem? Netflix was just a little bitty company, coming up. But during this time period, my group had about 20 people and we were all using Netflix. We kind of had to, because it was competitive and we were trying to keep up with what was going on in the marketplace, but it was a better service, straight up. We were all using it and trying to figure out how to replicate it, in our world. I had some colleagues, from my team, that went to the executives at the time and said, we either need to buy these guys or partner with them or something, because they are going to eat our lunch, at some point.

The executives were old school, brick and mortar, 7-Eleven, Circle K kind of convenience store guys and just weren’t very strong on the technology side of things. It was one of those, yes, that’s kind of a niche play; we’ve got other issues to deal with; let’s not worry about that, right now. Honestly, within a year, we ended up saying, we’ve got to do something now.

I was put in charge of building up the user experience and the branding for Blockbuster online, from that standpoint.

How were you marketing to consumers Blockbuster online versus Netflix?

I actually thought we had a winning formula. Remember back then, you mailed the DVD to the consumer, so it took two days for the DVD to get to the consumer. Then if you wanted to immediately turn it round and send it back, it was a two-day turnaround. So four days, total. We’ve got 9,000 stores, one on every corner of every major city so why not offer the consumer, yes, if you want to mail it back, that’s fine. But if it’s Friday night and your kids need a DVD, why don’t you just come down to the store and you can swap it out. In fact, we would have had 9,000 distribution centers, across the world. That’s how we tried to go to the market with it. You can do it through the mail or come to the store and swap it out. I thought we had a good proposition, from that standpoint.

What didn’t work about that?

Unfortunately, during this time period, the brick and mortar stores were bleeding money. The problem was getting enough investment and resource, to focus on developing that online platform. It was very, very difficult. Hindsight is 20/20. It’s easy to make calls now. In the heart of it, I think, if the executives had known what was going to happen, they would have tried to do everything they could to put more investment and resource into building that out. It was a little bit too late, to be able to fund that initiative.

But Blockbuster tried to buy Netflix, I think, in 2003, maybe, or 2002? What happened there?

There were some discussions about that. I don’t really know if it got very far, because of valuations and so on and so forth. A couple of years ago, I ran across somebody that was head of marketing, at Netflix, at the time that this was going on. They were just about to enter into the UK and start getting into Europe. When they found out that we were going to launch Blockbuster online, they actually pulled all their resources out of developing in Europe, to try to focus on beating us, in the US. It was a real threat for them. But I don’t think it ever went very far, for us to buy them, or any combination, from that standpoint.

From a strategic standpoint or from a leadership standpoint, what did you learn from that period in time, where Blockbuster Online was fighting Netflix and how it evolved from there?

I was a mid-level director, at the time, so I didn’t have a lot of responsibility at the leadership level. But it’s so easy, especially for somebody who comes from a technology background, to now see how old school industries have been totally disrupted by technology. I think my biggest takeaway from that is, if you don’t reinvent yourself, if you don’t try to break down your own direction and approach and how you go to market, then somebody else will. You’ve got to constantly be thinking about, how is this going to get better? How do we evolve it? We weren’t fast enough. We were losing so much money on the brick and mortar side, we didn’t have enough time to catch up on the online side and we started too late. There was just a reticence from the top levels, to move in that direction. For me, I always take from that experience, what can I do, to keep thinking about what’s going to happen. How could somebody disrupt me, in our business that we’re in?

How do you keep reinventing yourself in that way, to prevent that happening?

There’s a few things to do, from that standpoint. I’m a big believer in user research and understanding where your holes are. At Blockbuster, we knew we had a major hole, with late fees. Nobody liked late fees and it was a massive issue with consumer sentiment, to Blockbuster. I’m a big believer in listening to consumers, on a regular basis, and understanding where your holes are and then trying to solve for those holes. If you’re a start-up, that’s exactly where you start. You try to find where the gaps are, in the marketplace, where things aren’t working well and then you go attack it.

I think, sometimes, established companies forget that that’s what they need to be doing. For me, I also like to do regular strategy sessions, to understand what’s going on in the marketplace, what’s happening with the competition? What are some of the things that they’re focused on, that we’re not? I think that’s super important, to keep on top of what’s happening in the marketplace.

It’s almost like you have to build people around you, as well? You need to build a team around you, to keep you in check or keep challenging you, different ways of thinking?

Yes, for sure. I learned a big lesson when I moved to the UK with Expedia and Hotels.com. That lesson was, surround yourself with diverse skillsets, at the leadership and executive level. Everybody is going to bring their own kind of backgrounds, their understanding, their cultural differences, all that, to the table. It’s so important, especially when you are running a global business. Yes, you’re going to disagree, from time to time, but I think, as the main leader of a business like that, it’s listening to what’s important in those conversations and then helping the group to come to a decision about how to move forward. Sometimes, there will be some that don’t always agree with everything, but at that point, your team needs to disagree and commit. The important part there, is the debate and bringing up the learning and the diversity that comes with having that type of team, at the executive level.

Moving onto travel now, Scott. What are the main questions you are asking yourself, about this impact of Covid-19, on the travel industry?

Travel has gotten crushed right now. I’m feeling for them. I think the biggest thing that worries me, is how long is this impact going to last? Even if we get past the flattening of the curve and it starts to diminish over the summer time, the ramifications of people being laid off and losing their jobs and not having disposable income, I think, is going to last for months, if not for a year or so. For me, thinking about travel, it’s how long is that going to last? A lot of them have furloughed employees and even laid some people off. How long is that down scoop from Coronavirus going to last and how do I ramp back up, over time?

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Hotels.com & COVID Travel Disruption

April 9, 2020

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