OnVantage Inc. was formed in September 2004 through a merger of former meetings technology rivals PlanSoft Inc. and SeeUthere Technologies (Meetings Today, Sept. 20, 2004). OnVantage CEO John Chang and Ed Tromczynski, president of the supplier division, spoke with Meetings Today about their plans to redefine meeting transactions and distribution.Meetings Today: In what direction is the growth and development of OnVantage headed?
John Chang: When we brought PlanSoft and SeeUthere together, we created this virtual marketplace for meetings, but today the role that we play is really more of a matchmaker, so it's kind of like classified ads. Buyers can come to the OnVantage site, or the hotels themselves, but ultimately all they're going to see is just content. The next step is moving it from a classified-ads model to more of a transactional, EBay-type of model. The hotels have got to be ready for it, our customers have to be ready for it, we have to build a lot of technology to tie it all together, but the great thing is that coming from where we are, which is handling some of the most difficult, complicated meetings, bringing business into the online transaction world is where things actually get easier. It's pretty straightforward.
MT: How long until you're ready to launch the online marketplace?
Chang: A year. If you look at the development of online travel for the transient side, I think it's a pretty realistic timeframe because it didn't take that long for Expedia, Orbitz and Travelocity to deliver similar functionality on the transient side.
Ed Tromczynski: In how to find a hotel, compare them, book something online, and communicate to attendees, we have significant experience in each of those buckets. We're better suited than anybody else to package meeting space into that difficult transaction, and we have a lot of road time there. We don't have the perfect answer but I think we're down the road.
Chang: It's actually the most opportune time, as occupancy rates go up and as the hotels feel like they have more bargaining power. That's the best opportunity to go in and deliver value because that's when the meeting planners don't know what's really going on, so they're confused and need information.
MT: Do you have the sense that hotels are willing to wrap meeting space into that equation?
Chang: The dynamic that you're going to see is that they're going to want to play, but they're going to want to control the game this time instead of allowing each and every individual property to do business with whoever their service provider is. That is where we have a huge advantage over anybody else that tries to commit themselves to this space because we're already powering Hilton, Wyndham, Radisson and so forth. They're very comfortable with us. The trick is to allow the hotels to still maintain control over their inventory and their pricing, but at the same time for us to add value.
MT: How does Expedia fit in this structure
(Meetings Today, Dec. 8, 2003)?Chang: Let me talk about the three big online players in general, because they all have the same big issues right now. Their original core business was leisure travel plus unmanaged corporate. Then they created Orbitz for Business, Expedia Corporate Travel and Travelocity Business. The three went after the managed market, then started going international and the fourth was going to be group. What you're seeing now is as the hotels come in and wipe out the margin, all these online travel players now have to learn to survive on 10 percent gross margins instead of the old 30 percent. As a result, their margins are squeezed and they have to come back and focus on their original, possibly not even three, but the core two, which is leisure and corporate travel. Maybe they focus a little bit on international, but probably more through partnerships. As a result, what you see is all three of these players really are not doing significant investments in group right now. My prediction is it's going to take about a year for the economics to shake out.
MT: How are you going to price the new market model?
Chang: We don't know yet, but there is sort of an industry standard right now that is 10 percent. If you are an intermediary like ConferenceDirect and you help bring business to hotels, then you basically earn 10 percent. I would say in sort of the nominal case it would be 10 percent, but exactly how it plays out, time will tell.
MT: Would this model be more useful for meetings planned far in advance? Or would it be better for meetings with short lead times?
Chang: Hotels are willing to deal with you if the event is very far out or if it's very close, it's the stuff in between that they're less willing to deal with you. As you move to the short-timing stuff, that's when there's a tremendous opportunity. When you look at electronic trading markets, one of the questions that always gets asked is: 'Why do these companies fail?' The fundamental problem with those trading networks is that there is usually a very strong supplier or a very strong buyer. Eventually, these trading networks have to form and coalesce around these big players and all the little guys lose power and eventually get kicked off the network by the big guy. If you look at the travel and meetings industry, it's the other way around. It's highly fragmented. The dynamics of the market are such that it allows you to create this EBay sort of marketplace.