USA TODAY US Edition
Flexibility brings plenty of Upside
Priceline.com founder Jay Walker says new website is all about the business traveler,
“If you’re willing to do small things, it turns out they have giant benefits in price.” Priceline founder Jay Walker
Q What are you hoping to achieve with Upside? A: Travelers have little bits of flexibility on the flights and hotels they buy on their trip. We have built an entire system that lets business travelers turn that flexibility into something great for them and for their company. Typically when a business traveler gets to trade their flexibility, they get an average of $100 to $200 in free gift cards to their favorite stores on every trip they buy. Companies reduce their travel costs by 5% to 15%.
Q How are they saving so much money? A: Most people have never thought that flexibility was very valuable. But if you’re willing to stay two or three minutes from the convention center, then the amount of money you can save in hotels is dramatic. If you’re willing to do small things, it turns out they have giant benefits in price. But nobody’s ever run the analysis because nobody has ever had a big data system to look at every possible airfare, every possible hotel and then price it exactly the way you would want to look at it, as opposed to look at long lists. In addition, we can negotiate because we only sell package deals of flights and hotels together.
Q So, you’re using their flexibility and turning it into money and an opportunity to get better deals? A: Exactly. In the past, people never saw what their flexibility was worth. And because nobody has ever been able to build a big data system for it, nobody could ever count. But literally, we search terabytes of information. And at the same time, in a matter of seconds on your mobile phone, we can say, “Willing to leave 15 minutes earlier? That’s worth $50 in gift cards to you. Willing to leave an hour earlier? That’s worth $100 in gift cards to you. Willing to take a seven-minute Uber ride from the convention center? That’s worth $120. Willing to take a nine-minute Uber ride? That’s worth $160.” So you’re essentially re-pricing the entire system by flexibility.
Q Why does this work for business travel vs. personal travel? A: Two reasons. With leisure travel you’re already super flexible. You’re already trading off everything and you’re spending your own money. But when you’re traveling on business, you’re spending the company’s money. The difference is on business travel there is much more savings because business travelers spend so much more for their airline tickets because they buy them much closer in. And for their hotel rooms because they buy them in the downtown business sector. That’s why business travel has more savings. And that’s why the average customer is going to get $100 to $200 of free gift cards to whatever store they want, literally on every business trip. And double that for international trips.
Q What are the kinds of partnerships that you have formed in doing this, for example, to offer gift cards? A: We are going directly to the business travelers, specifically in the small- and medium-sized market. The big companies have volume deals with the hotels, and the big companies have volume deals with the airlines. But more than half of all business travelers have no discounts of any kind.
The USA TODAY reader is the small- and medium-sized market, a lot of it. So that’s No. 1. No. 2, the business traveler can book on us, buy a package on us just like they would on any online travel agent. So we’re just an alternative to an online travel agent. We don’t need to have deals with hot big chains because what we do is have partnerships with Expedia and Priceline on the hotel side, and we work directly with several of the major airlines because we only sell packages. Because we sell packages, we can discount in plain sight. ... We work with a company that works with hundreds of different gift card providers. By the way, if you want gift cards, we’ll have them for all the major stores by the time we launch. But if you don’t want gift cards, you can take the gift card value as a small businessperson and apply it to your business trip. So you can have an even lower price if you’re the owner.
Q When does this start? A: Early September will be the official launch. But in the meantime, you know, we’ll have thousands of people who will be seeing the product in advance.
Q What does the market look like for this at this point? What kind of reception might you expect in an economy that has been moving at a slow pace? A: Every business is looking for ways to control business travel costs. Up to now, nobody has really brought the traveler into the equation. We align the interests of the business traveler and their company. There’s never a bad time for a business to save money for companies. In addition, the traveler is highly motivated because they get something, too. I expect that, good or bad, there’s never a bad time to launch a business that gives more value to the customer and saves their employer money. But it’s a $300 billion total industry, business travel, of which the small and mediumsized guys are about half of that entire market.
Q Can this approach be used for other industries? A: Yes. The notion of building a flexibility engine, which is essentially the software that runs this thing, is applicable in a broad range of industries.
Q Where else do you see the opportunity for great innovation right now? A: Health and wellness is, by far and away, the biggest business in the world. I also think there’s a giant opportunity in financial technologies.
Things will look as different 15 years from now as 15 years ago when there were no mobile phones. The mobile phone is not an end state.