It was blindingly obvious from that weekend, that life had changed, and that meant that there was no time to waste querying it. We had the data we needed; we just had to take action.
- Battling uncertainty on two fronts: operating in the industry most heavily impacted by the current crisis – – travel and hospitality – and trying to raise a Series C in a recession.
- Enabling hotels to continue marketing themselves in this downturn, without beefing up their third party competitors, for whom they compete with each individual booking online.
- Pick yourself up, dust yourself down, and start all over again
In the fifth episode of our “Reimagining” podcast series, Charlie Osmond, Co-Founder and Chief Tease at Triptease, shares his COVID experiences, rescuing, recovering and ultimately reimagining his business and industry.
Charlie Osmond is a serial entrepreneur who founded Triptease to help hotels take back control of their distribution and increase their direct revenue. Triptease’s goal is to identify hotels’ most valuable guests then work across the entire customer journey – from acquisition to conversion – to make sure they book directly at the hotel. Triptease operates at the intersection of travel and hospitality, arguably the industries impacted the most by the current crisis; its customers have been under immense pressure putting Triptease at the forefront.
Let’s jump straight in. When and how did you realise the significance of this pandemic crisis?
There were different realisations at different moments in time. We have offices in New York, London, Barcelona and Singapore and a growing business in Asia. In February, we were due to run our annual hotel direct booking conference in Bangkok – we pick a different city in Asia every year. In January we were preparing for the conference, and we were starting to hear that the hoteliers weren’t comfortable travelling to Thailand.
We could feel the impact on our customers in Asia quite early on, and we had a big decision to make around this significant event. Even some of my European colleagues said, “well, I don’t want to travel to Asia. I don’t know if we should do it. I don’t want to go and get this virus.” So I got very obsessed quite early on with tracking coronavirus cases every day. My day would start with looking at every country’s tests and coronavirus cases, what was happening if it was increasing daily or not. Very quickly I noticed this pattern across Asia, which was that a country would start to get cases and the number would rise rapidly. For instance, countries may end up with up to 10% growth on the previous day’s cases, and then when they hit a certain level, it would be a few more days until the numbers would start dropping. Numbers would hit a 10% growth rate by day, and then they’d go down to 5% and then the countries would come out of it. I saw this pattern repeatedly, through Asian countries.
So in fact, in February, I felt confident it was all being handled very well by the governments it was hitting. I felt that the coronavirus was perhaps being blown out of proportion, in terms of the number of people it was actually affecting at that stage and the impact it was having on their lives. I realised the significance on Asian travel, but I certainly didn’t get the global importance at that stage and being an entrepreneur and particularly being a company and a brand that’s very well known for standing up for hoteliers and standing up for the little guy I felt was important to go to Thailand. So I went, and I did the event. We didn’t do the full-scale event, instead, we made it a smaller one. I felt that, by showing my face, I was promoting tourism in Thailand and that people could still travel to the country. When I looked at the statistics, I was more likely to die on my way to Heathrow Airport than I was to catch coronavirus, let alone get harmed by it in Thailand. So that was our first brush with it in January/February, and it felt like it was going to be fine. But then everything changed. And then fast-forward to the first week of March, we really felt the hit in Europe. It moved from being small scale in terms of the geographical regions it had hit, to suddenly taking over the Western world as we know it and having a much larger impact.
How did it feel when you started to realise that this was going to have an impact on your family and your business?
I was still looking quite carefully at the statistics of the proportions of people that had contracted the virus, as I’ve always been a statistician at heart. So even in March and April, statistically, it was a very low-risk impact for people in my family for instance. So I’ve got to admit that it wasn’t top of my agenda.
From a business point of view, the thing that hit us was that a lot of our customers and hoteliers were starting to see cancellations. So that was a very stressful situation for them and for our team. Our customers had bookings, and expected customers to come in, and then suddenly, over the space of two or three days, they saw half of their customers cancel their bookings. That was very scary for them. The other thing was, in 2018, we went through a bit of a revolution – bringing out new products, making a lot of significant changes to the organisation, to get us back onto a faster growth track. In 2019, the goal we stated at the beginning of the year was to grow the business by 50%. Honestly, at the beginning of 2019, we didn’t think we had much of a shot at doing that, but we managed to have an extraordinary run in 2019. The entire company pulled together, and we had a great outcome. It was a massive year.
One of the next steps was to raise a Series C which was planned for April 2020. We’d done everything we needed to do in 2019, getting the right metrics as a growth stage SaaS business. We’d been speaking to investors in Q1 and had some really positive feedback. By March we were going down the shortlist, with the intention to close our round of financing. Everything was going to plan. As we know, startups go through funding cycles, so let’s say the average funding cycle will give you money that will last 18 months. At any moment in time, some startups are running towards the end of their 18 months, and some startups are just beginning their next 18 months of funding. We were running towards the end of ours. So if everything went as planned, we would have raised the next set of cash with another three months left in the bank. What happened to us in March was that we were speaking to a couple of investment banks and we had these two banks that were pitching for our business, on a Friday, saying why we should work with them. Then on Monday morning, they both separately rang up, having changed their tune over the weekend, and they said, “it’s not going to happen.There’s no way anyone’s going to give anyone money.” And they continued, “Forget everything we said on Friday, it’s Monday, everything changed over the weekend. If you want to raise funding in this climate for a travel business, you’re going to take a hefty hit on the valuation and the terms.” It was a Friday evening where everything seemed to change in Western Europe, and we felt it because our plans, which were so well laid out ahead of us, suddenly had to change. Going from, “we’re going to get the money we need, no problem,” to “We might not be able to get any money at all let alone money at reasonable terms.” This really was a problem because we only had three months of runway left. It was a really stark change over that single weekend.
How did you come to terms with the changes that you needed to make?
As I look back on it, it was incredibly empowering. We have a team made up of a variety of different people who we’ve selected to be part of a team because of the different ways they look at the world. Case in point, my brother and I run the business between us mostly, with him being the cautious first child, and I am a bit more entrepreneurially-minded, the classic middle child. So between us, we have a great balance. From my perspective, it was devastating because we’d had such a great year, and everything was going to go beautifully. But at the same time, it was empowering, because the shift was so sudden, it meant there was no time for thinking about “is this really going to be bad?” Or “how much action do we need to take?”. It was blindingly obvious from that changing weekend, that life had changed, and that meant that there was no time to waste on querying it and needing more data. We had the data we needed; we just had to take action. It was quite empowering from that sense because the clarity was there. We didn’t really have time for commiserating. There were some very clear, very immediate actions we could take, particularly around people and headcount, some of which were things we’d discussed in the past. For example, maybe this department doesn’t need to be this size, maybe we haven’t quite got the right fit in another area. All of those decisions were able to be taken within a minute. We realised that we needed to change now. Of all the companies that are going to get affected by people not travelling, we were at the sharp end. We knew we had to take action, so we immediately started making those plans.
So tell us about the plan you put in place to ensure your company’s survival?
The playing to survive mindset just isn’t me. My brain wasn’t really there at any time in this because I am an optimist. I know we’re going to survive, I know we have a great future ahead of us. I don’t question that for one instant. James and Aislinn, our finance director, were thinking about playing to survive and creating the financial plans and the headcount plans that would do that. Whilst they were busy, thinking that way, I was thinking about the opportunities that lay in front of us. For about three years, we’ve been talking to investors and advisors, about the fact that we knew there had to be, at some point, a downturn and we had seen the impacts of previous downturns on the hotel industry. Hotels are a peculiar beast. We knew that during the last downturn in 2008, the online travel agents, Expedia, Booking.com etc. had really grown in strength and power because the downturn had made the hotels turn to them in desperation.
So we’d been thinking for a few years about how we were going to evolve our product, set our pricing and our packaging, to be ready to accelerate in a downturn. When it happened, there were immediate changes we had to make. Also, my headspace was very much thinking, “how can we now maximise this opportunity?” We’d been preparing for this and we are really well placed to grow market share significantly in a downturn. Now, we’ve got to make it happen. Amongst the senior team, we allocated different tasks. For instance, James, and Aislinn very much owned the financial plan, as well as the disaster and risk planning. I was focused on how we could make sure that we come out of this stronger.
So what’s changed now in the business? What are you doing differently?
Hoteliers have to distribute their rooms and their inventory every night. So, if any rooms go unsold, that’s it, they’ve lost that revenue potential. Hoteliers aim to fill up their hotels as best they can and hold a price point at the same time. In essence, hotels have two budgets. One budget is their marketing budget – they use that to run adverts online, metasearch on Google and have a website. The marketing budget, as with most companies is finite because they set it every year. The second budget is the distribution budget and by contrast, it’s infinite. When a hotel gets a booking from Expedia, for example, it will pay 15-20% of the stay to that third party. When a hotel has empty rooms, and they’re desperate to fill them, then they essentially say to the market, if you can fill the rooms, I will continue paying you 15-20% till the cows come home. As long as I’ve got rooms that need occupying, I will keep on paying. Hence why I say that budget is in a sense infinite. But what happens in a downturn is that everybody gets nervous, and looks for ways to cut costs. Ergo the first budget that gets cut is the marketing budget. It was 100K, but now it’s 20K and the impact is that hoteliers reduce the extent to which they’re bringing people to book on their own direct website. At the same time, the rooms are emptier than ever before because we’re in a downturn and so they’re turning to third parties clamouring for business and say, “Hey, forget paying 20%; I’ll pay 25 or 30%.” So, just at the moment where the hotels could get the best ROI from their marketing spend, and just at the moment when they could be the ones grabbing market share, they hand market share to a third party. So in this downturn, we need to enable hotels to carry on marketing themselves, without beefing up their third party competitors, for whom they compete with each individual booking online. So what it means is providing the hotels with the ability to spend marketing dollars on a “pay-on-success” basis. That’s what the driver between these two budgets is. One is if you’re a hotelier, you’re spending money on adverts, and the other one is you’re only paying when a guest arrives and when someone’s booked. We have been shifting and playing with our fees and the way we charge hotels in order to be able to deliver into the second bucket, that infinite budget, while at the same time driving customers directly to the hotel, not via a third party. I have not tried explaining that before in a podcast, so I hope that makes sense!
As we’ve been working towards performance spend capability, as that’s what our market needs, our balance of pure-play SaaS, revenue to performance has been evolving. Most companies in this world are desperate to get away from performance into flat SaaS fees. But what we believe for our market and for our customers is that having a different balance is perfect. We’ve been trying to navigate our way through this balance, but we also felt that it gave us a very strong hand in a downturn.
It had a big impact on the immediate go to market plans. The customers we target, the way we target them, the packaging and the pricing. So we’re still testing different things in different markets, and we’re seeing great reception and great uptick. We’re already seeing that growth in market share that we were hoping for, but It’s still early. We don’t know what’s going to happen with COVID, or what the world economy is going to look like. It’s certainly helped us in this time, and more importantly, it’s helped a lot of our customers. They can see it happening right in front of their eyes in slow motion, but they needed to have a way to purchase that would allow them to achieve their business goals.
It was Satya Nadella who said that Microsoft had seen in just two months, two years worth of an innovation shift and adoption. It certainly feels like it’s doing that. I heard your interview with Richard from Mews, and I think it’s definitely true that there will be a segment of the market that will stop everything – they don’t want new supplies, they don’t want to test new things, and they’re scared, and their plan is to wait. A perfectly understandable strategy. Then there’s another segment of the market that is saying, if ever there was a time to make a change, this is it. So we’re seeing, you know, a market that’s kind of bifurcating into those that say there’s a new normal now’s the time to take action and others who are a bit more head in the sand. It’s been fascinating and no doubt it will keep evolving.
How do you reimagine the future for your industry?
In the hospitality industry, there’s been a lot of consolidation. The big brands – Marriott, Hilton, IHG, they’ve been buying up smaller brands. I suspect that will continue as there’ll be a lot of mid-market brands, who perhaps have been turning down those interesting offers in the past, who were found having a harder time. So I’m sure there’ll be some more consolidation in the next couple of years, because the big brands still have relatively healthy balance sheets, and they’ll be able to go out and make acquisitions. When it comes to digital marketing, there are a few really interesting trends. So we’ve been major advocates for direct booking, getting guests to book on the hotel website for years. What we’ve seen through the crisis, completely unexpected, was the importance of hygiene and also just understanding what’s open in a hotel. Are the restaurants open? Are the buffets open? Etc. What is the single best source of truth for what’s happening in a hotel? And do I feel I can trust it? Do I want to stay there? The single source of truth is ultimately a hotel website. Thus more and more guests are going to a hotel website before they make a booking decision. They won’t just go and make a decision by visiting an OTA website like Booking.com. In a sense, the hygiene concerns and the shutdown concerns are increasing reasons for consumers to book directly and to be on the hotel website. We see this as a watershed moment and opportunity for hotels. Ultimately, I do think it is going to bifurcate. There are hotels where it’s really clear that they’ve got their stuff together. Those hotels are going to make the most of the opportunity, and they’re going to use this as a moment to lean the table back towards themselves compared to the OTAs. Equally, the OTAs will continue providing value and doing a great digital marketing job. So they’re not going to disappear. But we’ve seen that there are hotels that take control and there are hotels that don’t take control. Generally, the ones that aren’t taking control or leaving their distribution, sales and marketing to a third party, have set themselves up to be commoditised and in a dangerous place in the future.
I saw some research this week: It looked at 3000 American guests who’d booked either by an OTA, hotel or Airbnb before the crisis, all of whom had very different experiences with cancellations. It was focused with their likelihood or propensity to book via a different channel in the future. The experience was quite different, and it was different between the OTAs. Guests who had booked on Booking.com had had a better cancellation experience than those on Expedia. Airbnb, of the third parties, have done particularly well also. But overall, hotels did come out proportionally better, because if you had a direct connection and a direct relationship with the hotel, then you can have a proper conversation about it. But equally, there are people who will say I liked and trusted the OTAs I booked with more than an individual hotel I’ve never met before. It does vary, but there’s no question that in dark times or times of panic having a relationship directly can be beneficial.
Tell us a little bit about the organisational restructure you had to go through.
There were some tough times, as well as some lessons learnt in the process. So as I said earlier, the impact on us as a business became very clear very soon. This is not just because we operate in the travel industry, but also the fundraising implications. Ultimately it meant that we needed to become masters of our own destiny financially and very quickly. We had to go from financial plans that were about the investment to a financial plan where we were going to be profitable – and we needed to do that within a matter of months. There were no two ways about it, our single largest expense by a long way was our people. It was clear that there was no way that we were going to get to profitability without making cuts. Whilst the decision – from a business point of view – was very clear, it was devastating. We knew we needed to reduce headcount by 25%, so the next steps were: Where are we going to do that? What roles across the business are going to go? What are the implications for team members? We’d seen this group come together and work tremendously hard and successfully for over 18 months to 2 years, to achieve what we did in 2019. We’d achieved so much more than we expected, and everyone had pulled their finger out for it, and then suddenly, to be having to let people go, because of this extraordinary circumstance was completely devastating. I think that the immediacy and clarity of what we needed to do meant that we moved very fast. As soon as it was clear this was going to transform our fundraising, we could see instantly 20% of roles that we needed to cut, and we ran a process and a system internally. We defined what roles, then we looked at the different people in those roles and then went through the standard HR best practice. This included speaking to managers, scoring individuals, and then taking decisions. That first cut rationally was a very clear cut decision. We knew that a recession would come and that we’re going to be hit hardest because we’re in the travel industry. The rest of the world and the rest of the economy probably won’t be affected for six months. I used to run a recruitment business, and in recruitment, you could always feel recessions coming early. We felt quite strongly that actually, the best and fairest thing we can do is make cuts as fast as possible. It’s far better to let people go while the rest of the market is still relatively buoyant, and other people are hiring.
So we made selections and decisions very quickly, and we let them know. I personally called every person who we sadly had to let go (had to be a call due to lockdown), and then I called every single other person in the company who was staying and explained why we were taking those actions. It was incredibly emotional and very upsetting, and not a day I’ll ever forget. We were able to let those people go fast and they’d all found new jobs very quickly. We hire great people and we always felt confident that they’d very quickly find new roles. A bunch of them ended up with higher salaries, perhaps in roles that were better suited to them and in a better place. Despite our need to get to profitability, we were able to be quite generous with that loss, in terms of letting them go and providing support. That was phase one.
With hindsight, we acted too fast, because it was so clear what we had to do that we acted before the government started furlough schemes or even talked about the fact that they were going to provide support. So, in fact, we very sadly had to do it twice, which was even more devastating and destabilising because the second round was a larger group of people, which, under European law, meant that we had to run through a one month process of notifying people and looking at alternatives. It was a very long and drawn-out process, to ensure that people weren’t being let go for the wrong reasons without due consideration. However, it was incredibly frustrating and I would argue it’s very inappropriate legislation for times like this and for companies like ours. As a business we needed to cut, not 25%, but 50% in total and there was no alternative, it was extremely difficult. That’s like black and white blindingly clear, and then doing what we had to do, which to notify everybody whose role might be affected, tell them they’re going to go through the redundancy process with the world kind of blowing up in the meantime, we couldn’t tell them for sure if their role was going to be redundant or if they were going to be kept. That feeling of not knowing for a month was the worst thing. We had to follow the legislation, but it was completely inappropriate for our circumstance. What we then had was a workforce who’d seen one cut and knew we were going to have another one. But then they had this Limbo of not knowing who was in and who was out, and we couldn’t really address it because we had to go through the process. That was a really horrible time and very hard for motivation – not to mention the fact that our engineers, who every day of the year are being phoned up by Google, Facebook, Apple, Peloton trying to recruit them, are suddenly thinking to themselves why am I working in the travel industry? So there’s been a whole bunch of unfortunate circumstances.
If I could do it again – we would have done it once and we would have been slower to make the first decision. It was a horrific experience and it also brought about this feeling of lack of closure. We couldn’t have a leaving party, which seems like a small thing, but was massive and really painful. We couldn’t celebrate people’s experiences, time and effort in the firm, face to face and thank them. That just added more pain. Altogether from a people’s point of view, it’s been a horrible experience because everything has been made more painful by the fact that you’re working from home, in a circumstance that might not be perfect. It’s hard for the people who are having to find new jobs and who were in the not knowing period.
So how do you and your employees feel now?
We were quick to act in a number of different ways, with one of the core actions being taking financial action and rolling out new products, offers and hitting certain targets. We’re in a really good place now. We’ve gotten through that pain of not knowing and lack of clarity about roles, so we’re back on the mission, and we have been now for three months. So we’re through that pain. Everybody, just as you do, has picked themselves up, dusted off, and carried on, and now we are in a really exciting place again, where we can see lots of opportunities ahead of us. We still need to have closure, organizationally and individually, on all our friends that we long to work with again. There have even been some people who we’ve been able to bring back, which has been wonderful. The actions we did, and the government support from different countries, it’s been helpful. We’ve all been rocked by this unexpected externality and we just have to get on with it.
I’m feeling good right now because I care a lot about these people. They’ve given so much to the business and to their colleagues. Broadly, the truth is, is there’s still a lot unknown. There are still a lot of our customers and hotels that are closed. So we can’t speak to them and don’t know how they are or their plans. There are a lot of question marks, and a lot of challenges to work through in terms of how we help support them. I’m a glass half full person, and we see some great opportunities in the future. COVID forced some decisions that had been lingering at the back of my mind and forced us to act on them. For instance, we’ve reduced some of our product scopes, we’ve reduced the focus of what people are trying to build for the next quarter. We’re leaner, and that’s empowering. I feel really good about the things we are focused on. There’s still a way to go, and I’d happily speak to you again in six months to see where we’ve reached. I feel like the team is back on fire as much as they ever have been.
I think the danger with entrepreneurial stories is too often, we only read them at the end when everyone’s had their success and don’t quite get the grip of the pain, but there’s been a lot of that this year. 2020 has been a challenging one.