Discover more from Travel Tech Essentialist
Travel Tech Essentialist #118: Surprise
It turns out that too little or too much surprise is bad for sales - Read #1 for more on this. Having said that, I hope you have a summer full of good surprises.
This newsletter is sponsored by Duetto
Download today to learn how to measure total profitability by looking at guest spend, channel management, and guest behavior, and explore how an RMS optimizes your hotel for profit.
Learn how hotels already running on Duetto are optimizing their revenue strategy to boost profitability.
Thanks for giving some ❤️ to the Travel Tech Essentialist sponsors (such as this week’s sponsor Duetto) by clicking on their links and learning more about what they offer.
0. The most clicked link in the previous newsletter
The most clicked link in Travel Tech Essentialist #117 was Charles Hudson’s due diligence checklist for pre-seed companies.
1. Unveiling the language magic: the impact of syntax surprise on effective marketing messages
Achieving a desired outcome requires arranging words to formulate a message (i.e., syntax). I discovered an academic paper (thanks to Thomas McKinlay from Ariyh) that analyzes the role of syntax in marketing communications by focusing on “syntactic surprise” (i.e., how unexpected the syntax of a message is). The authors introduce a measure that captures syntactic surprise and tests its effectiveness for marketing messages. Their findings reveal an inverted U-shape correlation between a message's syntactic surprise and its effectiveness, indicating that messages with moderate syntactic surprise are the most effective, resulting in higher click-through rates compared to text with low or high levels of surprise.
They also analyze hotel descriptions on Booking.com, examining how the syntactic surprise in a hotel's description impacts consumers' willingness to pay. The results confirmed that syntactic surprise of the hotel descriptions follows the same inverted U-shaped effect on conversion. Read + Journal of Marketing
To further assist marketers, the authors developed a Syntactic Surprise Calculator, a tool that analyzes text, measures its syntactic surprise, and provides feedback on whether the surprise level falls within the "effective" range.
The authors themselves did not apply their advice in choosing their research title 😉. Their paper’s title, "Creating Effective Marketing Messages Through Moderately Surprising Syntax," falls outside of their own calculator’s effective range of surprise (see image below). Hence, I opted for a different title for this section, wich gets a surprise value of 2.01, falling inside the effective range of surprise according to the calculator.
2. The consumers’ allure of hidden fees
Everyone says they hate “drip pricing” (a technique whereby a seller advertises only part of a product’s price up front and then reveals additional fees/surcharges as the consumer proceeds through the buying process), but four experiments illustrate why this strategy is so effective at getting us to pay more.
Consumers punish transparency. Sales volume dropped about 8% for products with price tags that included the tax than a control group without the tax.
People prefer ‘costly complexity’. For example, the complex disclosure for prepaid cards breaks down the final price into things such as “initial fees,” “card acquisition fees,” “card activation fees,” “service fees” and “administration fees.” The simplified disclosure combines all these fees as a single “initial fee.” Some 70% of people preferred the complex disclosure.
Lower prices prompt shoppers to upgrade. StubHub, which resells event tickets, did an experiment where half of the shoppers saw all-in pricing, and half saw the lower base price with taxes and fees only added at the end. The latter strategy increased revenue by 20%. Shoppers didn’t just buy more tickets. When they saw lower prices initially, they opted for better seats.
People think fees don’t alter relative prices. In a study on booking airlines and hotels, people went for the low base prices. After all the additional fees were added, they had the option to start over and look for a cheaper alternative. Most opted not to, erroneously believing drip prices worked sort of like taxes, affecting the base price uniformly. This isn’t correct, as drip prices can vary substantially between sellers, and the lowest base price won’t necessarily be the lowest final price.
I’m no neuroscientist, but IMHO, this phenomenon can be attributed to our brain's tendency to make a firm purchase decision and justify a purchase upon encountering the initial lower price. As the booking process progresses, it becomes more difficult for our brain to reverse its decision.
3. Revved up marketing engines
These six OTAs and one metasearch increased their marketing expenditures by over $1 billion in Q1 2023 versus Q1 2022.
Despite its continued focus (and success) on adding up users to its Prime subscription program, eDreams Odigeo still has the highest marketing spend relative to its revenues ($75 in marketing for every $100 in revenues in Q1 2023), while Trip.com has the lowest ($19 in marketing for every $100 in revenues in Q1 2023).
4. United Airlines’ biggest mistake
Tom Stuker, a 69-year-old New Jersey car dealership consultant, has flown more miles than any human being in history — 23 million so far. And he’s the biggest mistake United Airlines ever made. In 1990, United briefly offered a lifetime pass for $290,000. Stuker jumped on it and has pretty much lived in a United plane ever since. In 2019 he took 373 flights that covered 1.46 million miles. If he had bought all these flights in cash, it would have cost him $2.44 million. He calls it the best investment of his life. Frequent-flier miles aren’t just valuable for booking more flights. You can sell them, trade them, and do lots of things with them. He says he even traded the miles into enough gift cards to redo his brother’s house and once cashed $50,000 worth of Walmart gift cards in a single day. In this article, Tom shares some of his travel secrets with us mere mortals.
5. Top 10 travel iPhone apps for select countries
Booking.com is the only app that ranks in the top 10 travel apps for all 6 of these countries. Airbnb (5 countries), BlaBlaCar (4 countries), Hopper and Trainline (3 countries) also show a strong global performance. More rankings.
6. Paul Graham’s Animal Test
In 2005, Paul Graham wrote a post, How to Start a Startup, in which he highlights the three things that are needed to create a successful startup: start with good people, make something customers actually want, and spend as little money as possible.
On getting “good people,” Graham shares a simple rule for deciding who to hire:
Could you describe the person as an animal? It might be hard to translate that into another language, but I think everyone in the US knows what it means. It means someone who does what they do so well that they pass right through professional and cross over into obsessive. What it means specifically depends on the job: a salesperson who just won't take no for an answer; a hacker who will stay up till 4:00 AM rather than go to bed leaving code with a bug in it; a PR person who will cold-call New York Times reporters on their cell phones; a graphic designer who feels physical pain when something is two millimeters out of place.
Paul Graham points out that the “animal quality” is not needed or perhaps not even wanted in big companies, but you need it in a startup.
7. Save and then travel
CheapOair partnered with Accrue Savings, a Save Now Buy Later platform, to enable Accrue customers to save up for their next trip over time in a dedicated savings account while earning rewards toward the cost of their trip. CheapOair contributes 6% toward the trip in the form of rewards up to a maximum reward amount of $150 per trip. While Buy Now Pay Later (BNPL) has caught on in the past several years, Save Now Buy Later (SNBL) is in its infancy. A number of online travel players have recently established partnerships in the space, including Booking.com and Expedia with Monkee and MakeMyTrip with Multipl, while EaseMyTrip has developed its own initiative. Read +.
8. Landing in Greenland
Breathtaking views from the cockpit of a Bombardier Dash-8 landing in Maniitsoq, Greenland (video).
9. Baggage claim 😂
10. Investments in travel startups from 2022 to date
The Travel Tech Essentialist Startup & Investor Dataset contains 1012 travel startups from 76 countries and 352 cities that have received a total funding of $49 billion from 2360 VCs and angels in the last 6 years.
Filtering the data from January 2022 to June 2023, 163 travel startups have raised a round. The countries most represented are the US, England, Germany, Spain and Israel, accounting for 65% of the total funded startups in this time period.
A total of 811 investors have participated in rounds from 2022 to date. There are 28 VCs that have participated in 3 or more rounds in this time period, including Andreessen Horowitz, Plug and Play, Certares, F-Prime Capital, Thayer Ventures, Heartcore Capital, JetBlue Ventures, and Goldman Sachs.
Access to the Startup & Investor Dataset costs $100 / year
Travel Investor Network
Travel Investor Network is a private platform launched by Travel Tech Essentialist for investors and innovators to discover innovative travel startups. In the first nine cohorts (October-June), I’ve recommended 89 startups from 27 countries.
→ If you are a startup looking to raise a round (from pre-seed to Series D), maybe I can help (for free). Please start by completing this form.
→ If you are an investor interested in joining the Travel Investor Network, please complete this form.
The Travel Tech Essentialist talent network has companies across the travel tech landscape that are currently hiring. If you’re a candidate looking for new opportunities, apply here to join at no cost to you and get introduced to hiring companies.
If you like Travel Tech Essentialist, please consider sharing it with your friends or colleagues and hitting the heart button up top (it helps more readers discover it):
If you’re not yet subscribed, you can do so here:
Thanks for trusting me with your inbox,