Ctrip and Skyscanner: A Look at How the Deal Went Down

Skyscanner CEO Gareth Williams

Skift Take: Ctrip’s purchase of Skyscanner continued the trend of metasearch consolidation and should provide Ctrip with support for its outbound and inbound businesses.

— Dave Montali

Last week we launched the latest report in our Skift Research service, A Deep Dive Into Ctrip and the China Online Travel Market 2017.

Below is an excerpt from our Skift Research Report. Get the full report here to stay ahead of this trend.

Ctrip acquired global metasearch player Skyscanner in December 2016 for £1.4 billion ($1.74 billion). At the time of the acquisition, we wrote that competitiveness for meta boils down to scale, brand strength, and technology. Skyscanner checked each box for Ctrip.

The company has strong traffic in Europe, Asia-Pacific, and North America, but lacks the scale Ctrip has in fulfillment and inventory. Ctrip should be able to improve monetization of Skyscanner’s robust traffic over time and push up its revenue and margin trajectory.

We spoke with Colin McLellan, the CFO of Skyscanner, about how the deal came about. What follows is his account:

Back in August 2016, there was an opportunity for some of the senior Skyscanner management team to go and visit Ctrip in Shanghai.

Myself and our Chief Legal Officer went. The plan was that Gareth, our CEO, would actually go out to Ctrip as well, but a week before we were due to go, Gareth moved houses and lost his passport.

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We went out to visit the Ctrip team and it was Jane, and James, and Cindy their CFO, and a collection of a few others, and Gareth connected via phone from Edinburgh. At that point, it was more about where do we see the future of Skyscanner and where do we see our ability to add value to the travel industry.

So, that was how it kicked off originally.

Things progressed quickly. Within a matter of weeks after that, it became clear that Ctrip was interested in potentially acquiring us. The vision was aligned and obviously you have to walk through the detail and that’s always the part that takes the time and the diligence. But the fundamentals were agreed very quickly because we recognized we were actually on the same page about what’s important to travelers and how to provide that to them through the strength of technology and the strength of product. Because we had that strong foundation and understanding between each other, everything else was just the details, really.

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After that first meeting, it took only a couple of weeks for Ctrip to show their intentions to acquire us. It was then another few weeks after that we had come to terms and then we moved onto a period of diligence, which again, happened very, very quickly.

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Ryan Wolkov

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Business of Loyalty: Using Big Data to Measure Sentiment Across Loyalty Programs

Cathay Pacific

A new study on loyalty looked at members of Cathay Pacific’s frequent flier program. Cathay Pacific

Skift Take: Until the time comes when airlines need to compete for customers again, passenger sentiment many not matter.

— Grant Martin

Loyalty programs in the airline industry have evolved dramatically over the last few years to favor high-spend customers and trim budget travelers from the ranks — after all, with the sector booming, who needs to incentivize new customers?

The course has slimmed down loyalty programs and aggravated some budget travelers, but until recently, most of the negative sentiment has been only recorded on the fringes of social media, where it’s tough to draw quantitative trends.

Now, a new study from Travel Data Daily has been able to look at aggregate data across social channels to predict how unhappy loyalty program members can be and when they’re at risk of taking business to other carriers.

The study used Cathay Pacific’s Marco Polo program, which made major changes in 2015, as a case study. By analyzing the social feeds of over 13,000 elite program members, the study determined the points at which customers became unhappy with the program and the subsequent moment when they switched carriers.

“..When loyalty members who consistently talk about their home airline suddenly begin talking about another airline in a positive manner or asking questions related to another airline, our research suggests the propensity for this individual to book a flight or switch loyalty programs significantly increases,” the study concluded.

In total, the study hypothesized that about 1,200 elite members in the test group — just under 10% — likely defected from Cathay Pacific after the loyalty program changes were made.

Though the study stops at analyzing Cathay Pacific, it’s easy to see how similar movement may be afoot across legacy U.S. carriers. American Airlines, in particular, has taken a heavy dose of criticism from its customers this year thanks to not only new spend-based elite status requirements but also a lack of award space available for those that do end up earning any miles. On top of that, many regular travelers on the airline bemoan the service now delivered by the recently merged carrier, which is still bringing two service and flight teams together to the same standard.

Basic Economy, which is now in place at all three legacy carriers, has also exacerbated passenger unease and no doubt by extension, loyalty churn. As more passengers learn about lack of benefits and elite status that comes along with basic economy fares, more are losing their faith in loyalty programs.

Were Travel Data Daily to run a similar study on the American legacy carriers, it might find record levels of passenger dissatisfaction with loyalty programs. By design, spend-based loyalty programs are made to award high-spend customers and shrink the pool of participants. The question isn’t how unhappy passengers are, however, it’s whether the loyalty programs care.

Skift Stories and More Expert Insight

American Airlines Succeeding in Upselling from Basic Economy to Main Cabin

Shown a basic economy seat, about half of American Airlines passengers are opting for a main cabin seat instead. The airline’s premium economy seats are likewise doing well.

Air France-KLM Buying Stake in Virgin Atlantic in Major Airline Shake-up

Air France-KLM is buying a 31 percent stake in Virgin Atlantic as part of a series of deals that look set to shake up the airline world.

Hilton CEO Talks HNA, Cancellations, OTAs, and Airbnb

Hilton reported its earnings for the second quarter of 2017, and during a call with investment analysts, CEO Christopher Nassetta addressed a number of recent developments related to the company, including news regarding its relationship to its newest big investor, HNA Group.

Wyndham Hotels Debuts Online Auctions for Loyalty Program Redemption

U.S.-based members of the Wyndham Rewards program will be able for the first time to redeem the points they’ve earned by bidding in online auctions on activities, vacations, and other experiences.

InterContinental Hotels Group Institutes a 24-Hour Cancellation Policy

The latest hotel company to announce change to its cancellation policy is InterContinental Hotels Group (IHG).

The Wall Street Journal: Sapphire Reserve Cards Aren’t Very Rewarding for J.P. Morgan

J.P. Morgan Chase & Co.’s Sapphire Reserve credit card has been popular with consumers—maybe too popular.

Without Bullshit: Air France Aims Its New Airline, Joon, at Credulous Millennials

Air France announced a new subsidiary targeting millennials, Joon. It apparently believes that millennials will select an airline based on branding and style, unlike everyone else who buys on price, convenience, and a reduced chance of being assaulted. The resulting announcement is as airy as a fresh-baked Parisian croissant.

One Mile at a Time: Lufthansa Is Now Selling Access To Their First Class Lounges

Lufthansa has just announced that they’re selling access to their first class lounges in Frankfurt and Munich. However, there are a few important terms associated with it.

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Chefs+Tech: The Trouble with Signature Ingredients

Buffalo Wild Wings Facebook

The cost of Buffalo Wild Wings’ signature ingredient (that’s literally in its name) has a huge effect on the business’s bottom line. Buffalo Wild Wings Facebook

Skift Take: Streamlining menu offerings is a smart way to reduce the cost of food overall, but it also leaves a business vulnerable to major shifts in ingredient pricing.

— Kristen Hawley

chefslogo_use-for-socialEditor’s Note: In September we announced that Skift was expanding into food and drink with the addition of the Chefs+Tech newsletter. 

We see this as a natural expansion of the Skift umbrella, bringing the big-picture view on the future of dining out, being fanatically focused on the guest experience, and at the intersection of marketing and tech.

Bonus: We now publish C+T twice weekly.

The Problem with Signature Ingredients

Streamlining the number of ingredients used to create restaurant dishes helps to reduce both supply costs and food waste. But when an ingredient’s cost or availability changes dramatically, a business and its bottom line can quickly feel the effects. Chipotle, for example, uses just 51 ingredients in all of its product offerings, including the popular and critical-to-Chipotle avocado. As Bloomberg reports, “a confluence of factors drove the wholesale cost of Hass avocados from Mexico, the biggest supplier to the U.S., to more than double this year.” We’re not only eating more avocados than we have in the past (thanks, avocado toast!), but recent weather conditions caused less-than-ideal growing conditions. Similarly, remember the lime shortage of 2014? Chipotle was hit with that one, too — but so were other restaurants. Some even used it as a hook to educate about climate change and the involvement of drug cartels in the food supply chain. (Good news for avocado fans: The 2018 crop is already on the trees and looking good.)

Last week, Buffalo Wild Wings slashed its earnings forecast citing the high price of chicken for its woes. Chicken wing costs caused the cancellation of one of the chain’s most popular specials, half-price wing Tuesdays, as locations experienced a drop in same-store visits. Buffalo Wild Wings is currently working to turn the numbers around, even experimenting with beer delivery, which one has to believe is nearly always in demand.

For large, publicly traded operations like the above, a small change in supply cost can suddenly equal a huge change in revenue or even restaurant operations. While smaller restaurants can operate more nimbly, adjusting menu items and offerings, large chains are beholden to standardization, ingredients lists, and nutritional information, making a quick change challenging. While dangerous in the short-term, (and maybe the long-term) for these chains, connecting the costs of beloved ingredients like avocado and chicken wings to the social and environmental changes affecting their costs isn’t necessarily a bad thing. Even when it’s purchased through a major chain, food comes from real people in real places.

Toast Secures $101 Million in Series C Investment

Big news in point-of-sale systems (POS): Toast raised a $101 million series C round last week. The Toast POS integrates front-of-house, back-of-house, customer relationship management, inventory, and more, allowing restaurants to leverage data to make better business decisions. Toast Inc.’s plan for the cash is a telling glimpse into the future of digital restaurant systems. In a company blog post, Toast shared that they’re focusing on self-ordering kiosks, handheld pay-at the-table options, customer relationship management (CRM) and marketing tools, advanced reporting, inventory, and loyalty, as well as leveraging data to create a more personalized guest experience.

This growth strategy isn’t surprising; it’s a reflection of where we see restaurant industry technology heading. Companies like Toast (which at four years old is already considered a major established player in the space) are creating digital systems to manage every aspect of the restaurant. Other formerly disparate systems are becoming more open, offering APIs and working with other systems and companies to create comprehensive tech solutions for restaurants. There’s a lot of movement in this space as companies work to emerge as leaders and compete for customers. Worth remembering, though, that adopting a new system for something as critical to a restaurant as its POS takes a significant time investment and effort. This means the competition for existing restaurants is strong, but the competition to become the first, default operating system for a new restaurant is even stronger.

Do Restaurants Need Dedicated Sommeliers?

When’s the last time you called on a sommelier to help you with a wine order? Notable wine writer Jon Bonné edited a collection of five essays written by restaurateurs, each with a different strategy. There’s a space argument: tiny restaurants and wine bars don’t have space on the floor for a person strictly dedicated to helping you pick wine. There’s the all-hands-on-deck approach: a full-time sommelier on staff makes sense, says San Francisco restaurateur Jeff Hanak, but they must pitch in to help in other ways, too. There’s the strong “yes, restaurants do need a sommelier” (according to a master sommelier but also as a signal of a commitment to service and hospitality.)

Every essay makes strong points, and there’s no one-size-fits-all solution. But this is an interesting topic to think through, especially amid trends like chefs who step out of the kitchen to bring plates to the table, or wait staff that doubles as bar staff or host staff. It feels like we see this more often than not at full-service restaurants. Conversely, consider the highly publicized opening of The Grill in New York City, a high-profile example of the traditional style of service coming back into the mainstream. When does a specialized staff versus a generalist staff make more sense? And how does that speak to the vibe of a restaurant? In the examples above, the choice of wine-specific staff members has a direct effect on the way a restaurant operates and the way it feels. Obviously, fine dining and traditional restaurants have existed through changing times and trends, but curious if the growing popularity of the traditional restaurant will signal the return of a specialized staff.


  • New York’s delivery-only Ando will soon offer a pick-up option — Eater
  • Deliveroo says an algorithm named Frank has reduced its average delivery time by nearly a half-hour — Business Insider
  • Phish food: The band taps a Philadelphia donut store for its 13-night Madison Square Garden residency — AP

Ryan Wolkov

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Author: Ryan Wolkov

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