Startup Spotlight: ebookers.com
Published: 24 Nov 1999 17:03 GMT
Appearing on Wednesdays, Spotlight will show you the faces behind the news.
ebookers.com made headlines a few weeks back when it shunned UK markets in favour of raising capital on the high-tech markets of Germany and the US, a decision the company says was simply practical. The float raised £35m. (See ebookers.com, Baltimore in Nasdaq floats )
The company started life in 1996 as the online presence of Flightbookers, founded by Dinesh Dhamija, who previously worked for IBM and ran the European operations of Royal Nepal Airlines. The company faces a growing demand for online travel bookings, but the airline industry is changing radically, which could eventually mean lowered commissions for online travel agencies. In the meantime, ebookers faces plenty of competition, with lastminute.com , Buzz.com, Microsoft's Expedia, Deckchair.com and others fighting for the attention and favour of UK consumers.
techTrader spoke with Glenn Trouse, ebookers' chief marketing officer, about the new interest in European high-tech companies and the companies plans for European domination.
What's the focus of ebookers.com?
Our aim over the short term is to become the No. 1 European online travel provider. The way we'll achieve that is to expand our brand footprint across the Continent; we'll be fully pan-European by 1 October, 2000. We're currently operational in the UK, France and Germany, with a call centre in Ireland.
Our core area is selling high-value discounted airfares. We have a standard business to consumer model, and there's also new consumer to business services, which lets customers come to the site, name their price, make a bid, and if we're able to match the bid the consumer bets to fly. We call it Bid and Go or Surprise and Fly. That was rolled out in September.
Isn't that service similar to Priceline.com's name-your-price model?
We think we have a better service than Priceline, because we already offer high-value tickets. Customers can research their destination, find out what the current lowest fare is, and they're making a much more educated bid. If you bid for £200 and we have a ticket for £180, you'll pay the lower price.
What about lastminute.com, which also has a name-your-price service for travel bookings?
lastminute.com has done a terrific PR job on themselves, but we think customers are smart, we offer high value for money fares, and you can book up to a year in advance, not just a last minute impulse, and it's not distressed inventory.
Why did you recently choose to float on the Nasdaq and Germany's Neuer Markt instead of the LSE or the techMARK?
The Nasdaq is the predominant market for this space, and it was [J P Morgan's] strong recommendation that we go there. And because our focus is purely European, we wanted to have a European presence, and the Neuer Markt is probably Europe's leading technology market. That drove the decision.
Doesn't floating on the Nasdaq mean you have to compete with the biggest US Internet companies for investors' attention?
Our offer was an institutional offering and institutional analysts realise the growth of the European Internet space over the next four years is going to be tremendous. It's growing at five times the rate of the US, and online shopping will have online presence [equivalent to the US] in two years. It's the next real fertile ground for investors.
There's a perception that European and UK investors are more conservative than in the US, that they're not interested in risky technology shares. Was that your experience?
No, not at all. The numbers speak for themselves: we were 20 times oversubscribed, and 50 percent of that demand came from Europe. It was evenly split between the US and Europe.
Airlines' relationships with travel agents are changing, with commission prices going down, and some airlines are even moving towards getting into business for themselves as online travel bookers. How will this affect ebookers and other online travel agencies?
Airlines rely heavily on agents, whether online or off, to move inventory for them. This provides a new distribution channel to move their inventory. There will always be a need for this. As for the trend of pushing down commissions, if you dig below the surface it's not necessarily true. British Airways lowered commissions two years ago, and then raised them above what they had been originally. There's a symbiotic relationship and online bookers play an integral part in it.
How do you see the European e-commerce market developing in the next few months? Is it just a delayed version of the US' online boom or are there fundamental differences?
We see a serious explosion in Europe, and it's going to happen over a much shorter period of time than in the US. That affects the way you do business in that you have to be staffed and prepared and have your vision in place so that you'll be able to capitalise on the boom when it comes.
The other fundamental difference is that convergence will happen much more quickly here, Given that the penetration of mobile technology is greater in Europe. We're already looking into this, and that's why we've delivered mobile services on the site now. Flightwatch, for example, allows customers to track the status of their flights via mobile phone.
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