Month: May 2012

Hotel(Not)Tonight: Disrupting The Hospitality Industry Takes More Than a Slick App

I‘ve long been a fan of HotelTonight. In fact, Sarah and I were there at its launch, test driving the service in a fun dash through San Francisco. Since then, I’ve booked more than a dozen stays through the company — and the front end experience has always been a delight.

At noon each day, in any one of nearly 40 US cities (Canada, Europe coming soon), HotelTonight displays a list of available accommodation, at rates usually far below rack. Two clicks later and you’re booked.

Unfortunately, that’s where the trouble all too often seems to start.

Given how publicly bullish I’ve been on the company (and I remain a huge fan), it seems only right and proper that I’m equally public when things don’t go so well. And last week, when I travelled to NY for PandoMonthly, things went pretty damn far from well.

I was already a little nervous about using HotelTonight for a last minute booking. The previous week I tried to check in to Hotel Abri in San Francisco, only to be told that my HT booking had been moved to a different hotel down the street. The excuse given — “we had a water leak” — is classic hotel code for “we gave your room to a more valuable guest.”

But one swallow does not make a sucky service so, on landing at JFK, I clicked twice and was booked into Hotel Indigo. What happened next played out on my Twitter stream…

Fuck sake @hoteltonight. I just got walked to a shitty Marriott. Same excuse as when this happens in SF. “pipe leak”. Bullshit.

— Paul Carr (@paulcarr) May 23, 2012 Ah yes, the old “pipe leak” excuse, this time at 1am. Next up: a walk across the street to a crappy Marriott that had absolutely no record of my transferred booking. Instead, they tried to sell me a one-night stay for $300 (I’d already paid $600 to HT for my three night stay at Hotel Indigo).

Awesome. The shitty Marriott doesn’t have a record of my booking but if offering to sell me another room at rack. // cc @hoteltonight

— Paul Carr (@paulcarr) May 23, 2012 Meantime, Starwood jumped in with a textbook piece of social media marketing…

@paulcarr We would be glad to help you book a reservation. Please DM us the best number to reach you if you’d like our help.

— Starwood Hotels (@StarwoodBuzz) May 23, 2012 Finally, the next morning…

Moved to the Ace, where all is dandy. Thanks to @samshank and @hoteltonight for fixing the rest of my NY stay.

— Paul Carr (@paulcarr) May 23, 2012 Actually, that last Tweet deserves a footnote. Yes, HotelTonight had booked me into the Ace, agreeing to pay the difference in rates, but in a last amusing twist, the company’s credit card was declined at check in. It took an extra twenty minutes before reception would actually let me into my room.

There are a few morals to the story. The first, of course, is that it doesn’t matter how slick your app is, disrupting an industry as complicated as the hospitality business involves building a huge number of real-world relationships. If your app takes customers’ money up front, then it’s your problem if any one of those relationships breaks down.

The second moral is that, while hotel owners will gladly agree to anything that might sell their last minute inventory, they’ll also throw your fancy app company under the bus if a full-paying customer walks through the door. That’s almost certainly what happened with my bookings in San Francisco and New York. In fact, it definitely happened in New York: hilariously, I discovered the next morning that the full-paying bookings that walked in were members of the PandoDaily team. Ho ho ho.

To deal with the above, HotelTonight has to do two things. For one thing, it has to keep growing. Once the service becomes a force to be reckoned with — like Orbitz or Expedia — hotels will think twice before bumping guests, knowing that doing so will surely lead to fewer bookings in future.

In the meantime, the second thing they need to do is act like they’re already a giant. Most customers will forgive a single dropped booking, but two “walks” and the third time they’re simply not going to take the risk. HotelTonight needs to have a zero tolerance policy with the hotels it works with. One strike and they’re out.

In the short term, that will reduce the number of hotels the company has to offer its customers, but better that than the alternative: a reduction in the number of customers it has to offer its hotels.

How NSFW Corp Dodged the Newsstand Bullet and Lucked Into HTML5

As I read Jason Pontin’s piece about how Technology Review decided to turn its back on magazines-as-apps in favor of HTML5 publishing, I felt a sense of horror. Horror at how close I came to making exactly the same costly mistake.

Seven months ago, when I announced my bold (and at that point entirely un-thought-out) plans for a new tablet-focused satirical news magazine (“the Economist as written by ‘The Daily Show’”), I was extremely bullish on Apple’s Newsstand and its clunkier cousin, the Kindle magazine store. Our magazine would be optimized for those stores, I wrote. As a paid-for publication, there was no other sensible choice.

And yet…when Not Safe For Work Corporation finally launched a few hours ago, there was no Newsstand edition, and no Kindle store edition. Instead, it’s HTML5all the way.

And as I read Pontin’s explanation of how TR blew $124,000 on outsourced software development I felt horror at how much of our investors’ money we could have wasted, and how much stress we could have suffered had we stuck to our original plan. But I also felt relief: We dodged a very expensive, very annoying bullet.

The logic behind publishers initialembrace of the Newsstand makes total sense. Free content has canibalised traditional magazine sales, making it near impossible for high quality magazines to be profitable online.

The Newsstand gave them a second chance, allowing them to deliver a distinct, print-quality package to consumers in exchange for a virtually frictionless payment. Book publishers are kicking ass with that business model, why should magazine publishers?

Here’s why: Books are, by and large, an immersive experience. They don’t need links, music, video or any of that kind of nonsense.

They don’t need to be constantly updated, week in week out. They don’t have — ugh — comments. As such, books — like music or movies — are perfectly suited for paid downloads. Magazines, on the other hand, have evolved into something far more interactive.

The idea of a once-monthly (or weekly) collection of topical pictures and words, delivered as a 500mb file, without links or other interactive elements is anathema to the connected consumer. If they want those things, they’ll buy a paper magazine (which increasingly, of course, they won’t). For most people, periodicals are accessed in the browser, usually for free.

But it’s important not to conflate the apps vs HTML5 debate with the paid vs free debate. As the Financial Times (which just announced the closure of all its native apps) has proved, it’s perfectly possible to sell paid subscriptions to an HTML5 publication, just as it’s possible to sell subscriptions to a website. You just have to make the path to purchase easy enough and the value proposition compelling enough.

Moreover, HTML5 allows publishers to replicate almost all of the native app experience, without the gigantic downloads and many of the bells and whistles that consumers have shown themselves entirely uninterested in. Content can be updated instantly, links behave way more familiarly and — joy! — you can read them anywhere, on any device. Sure, you lose the in-app purchase convenience of the newsstand, but that would have to drive away more than 29% of potential customers before paying Apple’s commission on app purchases becomes a better deal. Oh, and apps cost a fortune to build and an even bigger fortune to fix, when they inevitably don’t work properly.

It was a combination of all of these reasons, plus a general nervousness about publishing a satirical magazine on a platform controlled by the notoriously prissyfolks at Cupertino, that made me abandon the development of our newsstand edition before it even began. I have no doubt, though, that I was also very lucky. Not Safe For Work Corp is an entirely new publication, and, as such, we spent the first few months of our existence hiring writers, figuring out our editorial voice, arguing over style guides and all that fun preparation stuff. If we were a pre-existing print publication, we’d have been able to jump straight to the app building stage — doling out development money almost immediately, and continuing throughout the 3-4 months it took me to realize what a clusterfuck the Newsstand is.


We’re also lucky in that our new-ness means we don’t have an existing Web presence. A publication like the New Yorker or Wired will have a much tougher job convincing people to pay for an HTML5 in-browser magazine. Why pay for content that’s already free through the browser in a slightly different format? The FT dodged this bullet because they already charged for much of their online content. We dodged it by being a paid publication from day one.

Still, shiny new HTML5 “app” notwithstanding, convincing subscribers to pay for NSFW Corp won’t be easy. We tick a lot of will-pay boxes: offering satirical comment and analysis as opposed to highly commodotised news, keeping our price point low ($26 for a whole year of weekly issues), offering a completely ad-free experience…but still, without offering boobs or stock tips, paid content ishard. At the same time, though, we’re absolutely not going to give away free subscriptions. I’ve been clear from the start: We pay our writers and illustrators a decent wage for their work, and great, funny content — without the stench of SEO — is worth paying for. (Call us the anti-HuffPo, please.)

And so, we’ve come up with what I hope will be an effective way to build our initial subscriber base and kick off that all-important word of mouth — without compromising our business model. We’ve convinced a raft of sponsors to pay $5 per subscriber to let in a few thousand people from our beta waiting list for free. The arrangement means we get an initial spike of paid subscribers, without expecting individual readers to buy before they try.

In return for their generosity, sponsors get branding on the login/registration page(the magazine itself is ad-free), an ad on our daily audio show, and a text shout-out in every email we send to “their” sponsored subscribers.

There’s only one slight catch to the waiting list model: We already have way more people on the list than we have sponsored subscriptions to give away. It turns out, though, that scarcity breeds anticipation, and all day NSFW’s Tweet stream has been blowing up with people begging to jump the line. Who knew?

The ability to throttle access to the pilot issue, to offer discounted bulk subscriptions to sponsors and potentially later to A/B test different price points are just three more reasons why HTML5 kicks the Newstand’s ass six ways from Sunday.

Really the only thing surprising about our (and Technology Review’s) decision to ignore apps is that we ever held a different view. More surprising, and alarming, still is that some publishers still do.

PandoDaily readers, of course, are a special breed and one deserving of special treatment. As such, the first 50 Pando readers to email beta@nsfwcorp.commentioning PandoDaily will be fast-tracked to the front of the line. You’re welcome. Update: we ended up letting over 100 Pando-ers in, as they came in too fast to know precisely who was in the first 50. Fast-track is all gone now, but normal wait-list sign-up is still open.

If you’re not quick enough to grab a fast-track subscription, feel free to join the wait list anyway. And while you’re waiting, you can listen to our daily audio show, NSFW Live, available through iTunes store. You’re also welcome.

(Main image credit: PJ Perez, for NSFW Corp)

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