City Insider - FT journalist David Stevenson on the travel industry

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It’s been a funny old month. Thomas Cook still seems to be very much in business and at one point it even sported a buy note from a major investment firm (Investec).

Sadly that buy note was very short-lived and rapidly turned into a sell recommendation as the shares doubled on the back of frankly laughable speculation that a bid from Tui Travel might be imminent.

And pigs will fly and buy a German airline from Thomas Cook. Cook may well have survived the dark winter months, but sadly it’s now consigned to the grim fate of all penny stocks – the butt of endless ridiculous stories designed to drive the share price up for speculators. 

The big story is whether Cook can sell a heap of assets quick enough to keep the banks happy.

And therein lies the dilemma for any of the potential private equity buyers circling the troubled giant – it’s not immediately obvious that enough hard cash can be realised in just a few months to help fund a big takeout offer.

For Thomas Cook’s senior management (doing a remarkably good job in awful circumstances) it would appear that it’s time to focus on the job in hand, which is to right the business and boost that operating cashflow – and ignore all the pointless playground chatter about takeovers and such like.

Thomas Cook isn’t the only one having a tough time at the moment. Poor old Carnival also seems to be facing its own version of holiday hell caused by yet another cruise ship mishap and rising oil prices.

But most US based  investor’s will be more motivated by the evidence of a slow recovery in US consumer sentiment and Carnival’s dominant position in a fast growing market – its shares are also reasonably priced after the recent sell offs.

Airlines giant IAG, by contrast, would appear to be having a better time of late, and its recent full year results were well received by the City, with revenues increasing 10%, profits before exceptional items more than doubling and passenger revenues per unit increasing 3.6%.

The good news seems to be that business class travellers are steadily returning, although I found myself more than a little troubled by the chunky increase in net debt and the drop in cashflow.

Increasing revenues in the back of the plane, from economy leisure travellers, especially those coming out of the depressed UK market, should also help mitigate these ever-so-slightly concerning cash flow numbers, with patchy evidence beginning to emerge that the disastrous drop in consumer confidence has (possibly) started to bottom out.

The latest MarkIt consumer behaviour survey, for instance, suggested that consumers have stopped growing more despondent and may be resigned to their fate. 

For this jaded observer the most interesting story of the last few weeks has been the increasingly hysterical media coverage of TripAdvisor. In particular many media types have been working themselves up about the revelation that many of the comments on the site have helped ruin honest businesses. 

Everyone from Woman’s Hour on Radio 4 through to the Daily Mail seems to be surprised that the internet giant can’t possibly police every single comment on its website.

Personally I’ve always been far more interested in the flip side of this very modern ‘faux’ debate – the ability of travel brands to manipulate their comments to produce a positive outcome.

The Cove Hotel in Cornwall may have been recently caught  innocently trying to encourage its users to leave good reviews, but media coverage of this attempt to ‘self-police’ its online image has reminded us of the huge number of ‘dark forces’ constantly bent on channelling the power of the crowd.

Luckily technology may be about to come to the rescue – a team of academics at Cornell have developed a clever algorithm that boasts a 90% success rate in spotting what’s called ‘deceptive opinion’.

Academic researchers Ott, Choi, Cardio and Hancock commissioned a group of freelance writers through a site called Mechanical Turk to produce specious reviews of hotels in the Chicago area.

Ordinary human users of these online reviews were largely unable to spot the lies but the computer based programme got nearly all of them. Social media ‘spinners’ should read this paper (entitled “Finding Deceptive Opinion Spam by any stretch of the Imagination”) and tremble.   

But all this media hysteria about TripAdvisor, I think, points to a much bigger story – that social media has finally arrived and is now shaping up to be the most powerful media channel for the travel sector. 

All that talk of the ‘potential’ of social media should move away from the conditional and embrace a frightening new reality – poor social ‘conversation’ about a brand could help destroy it.

At the moment it’s nasty brutish Arab dictators who are feeling the wrath of internet-based people-power, but if I were in the travel industry I’d be watching very carefully how a groundswell of online comment will attack a once trusted brand.

Travel industry leaders should also be watching very carefully the wall of money that’s starting to chase the newest form of travel based social media – using social networks such as Facebook and Twitter to power ‘friend-based’ travel advice.

This fascinating sub-trend involves users looking to acquaintances and buddies in their closed circle of friends to solicit ideas about where to go on holiday.

In the last 18 months a slew of new outfits have raised fairly large amounts of money to develop apps and software that can read the Facebook social graph and crunch the viral coefficients, to produce ‘personalised’ travel ideas using your friends as inspiration.

Gogobot for instance has just powered through its second round of funding with $19 million in hard cash to develop its range of algorithmically based plug-ins that can sync your travel ideas with Foursquare and Facebook networks.

GTrot – a Harvard spin out – has also just raised a smaller chunk of money (courtesy of Groupon funder Lightbank)  to develop its apps and its ‘curated travel guides’ offering ‘trusted travel advice’.

We should also be watching carefully J.R.Johnson’s new start up which ploughs a similar furrow to Gtrot and Gogobot – it’s key difference is that it isn’t algorithmically based but seeks out your friends’ ideas and then builds a plotted, mapped itinerary.

Johnson set up Virtual Tourist a few years back, before selling it to Expedia – both Trippy and Gogobot are helmed by extremely experienced online travel  pioneers who would appear to know a few tricks about how online sites can transform traffic (based on friends recommendations) into hard bookings.

In fact I’d go so far as to say that this form of friendly travel advice has the potential to be a huge force in the travel sector.

The sheer scale of TripAdvisors’ database of comments is awe inspiring but it doesn’t feel remotely personal or tailored to my own idiosyncrasies’ (although maybe its recent purchase of facebook app Where I’ve Been may help redress that balance). 

Not everyone who’s connected to me by Facebook will be a real friend, nor are my friends always the best sources of information, but I’d suggest that they are nevertheless trusted sources of information.

Marry that intimacy with personalised holiday offers (built around data mining techniques that ‘know’ what you like), mix it up with online user generated video (showing you exactly what the resort or hotel looks like) and we have the holy grail of travel technology – the next best thing to a really knowledgeable travel agent, but built around an algorithm. 

Obviously, these friendship driven trends may amount to nothing, with TripAdvisor still very much king of the castle, but I’d bet the bank on social media and travel – especially for younger and wealthier travellers. Watch this space.