The future of online travel will be content, social connectivity and discovering unique experiences, says Hostelworld CTO John O’Donnell.
O’Donnell joined Hostelworld as CTO in June 2010 and currently leads the technology, product, design and e-commerce teams.
Prior to joining the company, O’Donnell held the role of head of technology at Paddy Power for 10 years. He worked in New York as technology operations manager for Lehman Brothers and was also responsible for the implementation of a newly developed trading platform (Optimark) onto the Nasdaq Stock Exchange in 1999.
‘The one thing that makes hostels different to any other accommodation product is the social factor’
– JOHN O’DONNELL
O’Donnell will be speaking at the upcoming Quest for Quality conference that Comtrade Digital Services is organising on 4 and 5 October in Dublin.
He will be speaking about how investing in QA resourcing, skills and technology enables Hostelworld to continually improve on quality without compromising on efficiency or throughput.
How does Hostelworld differentiate itself in the travel and experience economy?
The core aspect of the business is, we provide marketing and technology services to hostel partners. On one level, that is putting customers in beds; but at its simplest, the components we provide are the marketing and technology services and the traffic to our hostel partners and, in turn, their customers.
What scale are we dealing with here?
We would do somewhere between 7m and 8m bookings a year. Our total transaction value would be more than €600m every year. Our turnover would be around €80m a year and we make around €25m in profits a year.
How reliant are you on proprietary systems and how much of your platform is in the cloud?
Well, I wouldn’t call them proprietary systems, but we do like to manage our own infrastructure and our own environment. Now, that said, one of the core fundamentals of the company is that we are open source. We don’t like licensing. We are MySQL, we are Lamp stack, we don’t pay. The money we save, we spend our capex on hardware that is all virtualised. We have two data centres, one in London and one in Dublin. We are pretty proficient at what we do.
What would be the primary tech trends that have characterised Hostelworld’s digital transformation in recent years?
When I joined the company from Paddy Power, I was well focused on mobile and in the mobile space. At the time when I joined, something like 2pc of bookings on Hostelworld were coming in by mobile. We have grown that steadily over the last seven years. On a full-year basis for 2016, mobile was 49pc of our bookings. That trend has continued and now, more than 50pc of our transactions this year – and close to 60pc of transactions during the peak season – were mobile. We see a big surge in mobile bookings from people who are travelling during the peak summer season.
How did you go about orienting the company toward mobile?
It doesn’t happen by accident. We identified in 2010 that mobile was a big opportunity for us – more to the point, not just an opportunity, it was a must-have. We decided we had to play in that space.
We invested in a small, internal mobile development team. We started with Titanium, one framework to handle Android and iOS, and then, in 2013, my head of product realised and convinced me that we had to tear it all up and start again. Even though at that stage we were doing 25pc of bookings in mobile and making great headway, we just ripped it all up and went and hired two new teams to handle Objective-C for iOS and Java for Android, and we’ve built two native products and that is a big driver.
When I say more than 50pc of our transactions this year are mobile, more than 30pc of them are coming in through our native apps.
We love that because we spend a lot of money every year with Google through digital marketing and we like to think that when we get a customer into our [native] app, we get the opportunity to hold onto that customer and not have to pay for them multiple times to bring them back to a website through Google.
As the hostel travel experience evolves, do you see yourselves adding additional services and experiences?
It’s something we have done traditionally well, but we have seen a big opportunity for us over the last two years; not only being a specialist within the booking part of the journey, but also actually becoming part of the experience with the customer.
Mobile is a big opportunity. We have a good product that has won several awards, and we’ve been featured by Google and Apple as a leader in the travel apps sector.
We looked at our customers and asked ourselves what we know about them. We know who they are, when they are travelling and where they are travelling to, and where they are staying. But what are they actually interested in while they are travelling?
The top priorities for them are the weather when they get there, good places to eat and good things to do. You think of that today and think, ‘that’s Google’, but actually it’s not, because our customers are very unique.
We really play in a niche space. They are young. 50pc of them are between the ages of 18 and 25. 90pc of them are under 35 years of age. They like budget travel, and they travel a lot. On average, they will travel four to five times a year, they go on long trips and, while they are very conscious about budget, they actually travel on average more than most people because they have more time. More than 30pc of them are students.
TripAdvisor and Google do not hack it for these guys. We partnered with Trip.com, originally Gogobot, who made a stir as a new player in the space a couple of years ago. They specialise in content and reviews but they are able to segment it specifically to customers. We were able to source things to do in localities through them, like local art galleries and restaurants, rather than the standard fare you get on TripAdvisor. So, that ability to segment the content by customer was really important.
The other initiative we have got in conjunction with the app was this concept called a Hostel Noticeboard. The hostel space has changed in recent years and really is a high-quality product; chains like Saint Christopher’s or Wombats, these are multimillion-dollar properties with up to 1,000 rooms, really well designed and managed. If you go back to your traditional hostel, every hostel used to have a noticeboard, with things happening in the neighbourhood, but 20pc would have been travellers communicating with each other.
We have digitised that to be like a social network. The one thing that makes hostels different to any other accommodation product is the social factor. People stay in hostels because they want to meet other people. They are less about dorm rooms (they have more and more private rooms), but the one thing that makes a hostel unique is the social area.
We enable that social aspect. Within our app, we launched a product called ‘Speak the World’. We partnered with Google Translation API, so people can speak to each other within the app and that allows them to converse, and we’ve had fun with it in terms of photo filters.
Where do you see AI and machine learning featuring in your core product in the years ahead?
AI is a big buzzword in the travel space. Go to any of the travel conferences and everyone is talking about bots. I think there is a role for it.
But, if I go back to when people first started talking about mobile and how it would be the future a decade ago, there is always a hype phase, a disappointment phase and a lull and, eventually, the technology catches up with the hype and starts to deliver on the earlier promise.
I think we are in the research phase of AI and machine learning; there is going to be a lot of hype but, in a couple of years, it will really start to make an impact.
What does the future hold for the online travel industry?
Travel is all about content. It is going to be about content and enabling the customer experience.
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