The Commander and the Hawk: Sometimes it’s good to let go

KAYAK
and Open Table chief on entry into hospitality and changes to work habits

THIS week, KAYAK announced two more hotels in New Mexico, in addition to its existing one in Miami. Steve Hafner talks about what this expansion into hospitality means plus how he’s been managing through the pandemic, how it’s making him think differently and how it’s changed him.

In many
ways, Steve Hafner is pleased he contracted Covid at the start of the pandemic.
“Got that out of the way,” he said. “I’ve been travelling through the
pandemic.”

I caught up with the CEO of KAYAK and Open Table in his Miami penthouse, just a few weeks before he’s due to move out. This report states that he listed his penthouse for close to $40 million, reportedly three times the price he bought it six years ago, and he’s moving to Fisher Island, described as “a private, 216-acre tropical paradise” in real estate listings.

He gives me a quick tour – let me
just say this, it’s HUGE. I think my whole apartment would fit into one of the
bedrooms. The “wow” factor is the infinity pool deck that aligns perfectly with
the big, blue ocean out there. A hawk circles and Hafner says it occasionally
drops dead things on his deck and “it’s big enough to pick up my dog”.

Hafner wears his wealth as easily
as he wears his CEO responsibilities, even through the worst of times. “It’s
been an interesting couple of years, professionally,” he said. “We were in two
of the hardest hit industries – dining and travel – and were contending with
inconsistent protocols by governments around vaccinations and testing.

“Personally, I have young kids
and having to wear masks in school, this period will impact on their
development. The upside is, I got to spend more time with them.”

For those who don’t know him,
Hafner is known for his optimism and for him, there’s always a positive in
every negative event. “It’s your attitude that determines it.” And the silver
lining has been the opportunity to “rethink work habits” and the possibility to
“work from anywhere”

Rethinking offices, and talent can come from anywhere

“It’s made us ask questions like,
do we need the office space? We have 22 offices, I wished I didn’t have to pay
rent. Could we relook at how we could share offices with our sister brands?

“It also means we can recruit
from anywhere. In the past, we thought of hot spots where talent congregated as
the big cities of New York, Sydney, London, Singapore but now they can work
anywhere. This is a great leveller.

“In the past, to make it in the
US, you either have to be on the West or East Coast. Now you don’t even have to
be in the US,” said Hafner, who was born in Peru and who also counts Sweden as
home.

Between KAYAK and Open Table, his
staff count is around 2,000, 60% of whom are in the US while the rest are in
Europe and Australia and South Korea, the latter the result of the
HotelsCombined acquisition).

Asked if the ratio will change, given
the opportunity to tap talent from anywhere, he said, “I’d like it to change.
Employees should be as diverse as our customers. Sixty five percent of our
customers are Americans.”

At the Phocuswright conference,
he made an open call for talent. “We are hiring, and we will be flexible. You
want to work from home or an office, we will make it work for you.”

The best
investments made during the pandemic

The pandemic has forced all
travel companies to localise and I asked if the retreat to local has set back
KAYAK’s expansion plans. “Well, we can only do what governments let us do, Asia
Pacific is still in lockdown. But we have two years of pent-up demand building
up and as more restrictions ease up, more cross-border travel will return. The
US is a big place but the world is even bigger.

“Our search trends show that
everytime restrictions ease, leisure travel bounces back. Business travel will
be slower to return, and we will see people mixing business and leisure and
taking longer trips.”

For him, the best investments
he’s made during this time has been in people and the workplace tech tools. “We
didn’t all have laptops, VPN or Slack, even though we are quite a tech-forward
company but now we have all the tools necessary for our people to perform
effectively, with flexibility.”

For Open
Table, it waived fees for a year to help restaurants survive. “That was a huge
investment and that’s earned the goodwill of the industry. Now fees are back,
and restaurants are back. KAYAK also invested in product, flexible cancellation
policies, Covid safety policies, launched Things To Do, KAYAK loyalty and KAYAK
for Business. Who launches a new travel tool at a time when there was no
business travel?”

Two new KAYAK hotels in New Mexico – “more like Yanolja than OYO”

It’s also
been a time when KAYAK got into hospitality with its first hotel
KAYAK Miami in April
2021. Is that because you live in Miami, I asked? “Yes, probably,” he laughed.

This
entry into the independent hotel business is through a partnership with
accommodation startup Life House which
provides the technology and manages the hotels.

Said
Hafner, “We found that during the pandemic, people were not staying at Marriott
or Hilton, and they wanted smaller boutique, off the beaten track hotels. The
feedback was, they liked the experience but they thought it was antiquated – no
instant bookings, they weren’t too confident about hygiene standards – and we
thought, we can help with that, we can bring the tech and some brand
standards.”

While the
partnership with Life House is not exclusive, it is clearly working because he
announced at the Phocuswright conference two additional branded hotels in Playa del
Carmen, Mexico, “where KAYAK can build and test new accommodation software” while
Life House will manage day-to-day operations.

KAYAK Luna – Playa del Carmen and KAYAK Sol – Playa del Carmen are available for reservations from December 13 and both properties offer rooftop pools, self check-in, and communication capabilities directly with hotel staff through the KAYAK app.  Each has its own distinct design, look and feel.

“Our
shared ambition is to improve the guest experience and increase profitability
of the hotel,” said Hafner of the partnership.

Asked if
the model was similar to what OYO is doing, he said, “I think we aspire to be
higher up the food chain, four star hotels. We believe our platform technology
can be democratised to individual hotels. Software shouldn’t be fragmented, it
should be on one platform, we have it with Google, Microsoft and Apple – this
needs to happen in the accommodation space.”

In fact, he sees more similarity with Yanolja, the South Korean hospitality tech company that has a consumer superapp offering a range of travel services and Yanolja Cloud, offering B2B hospitality tech solutions. “What they are doing is super interesting,” he said at the conference. With Life House Miami, 90% of the demand is coming direct from the KAYAK channel.

He’s
keeping a “jaundiced” eye on the fintech space. “Every few years, someone talks
about a new innovation in air fares or insurance. Those companies don’t seem to
last. Things can go wrong very quickly.”

Having
said that, he’s “testing stuff” with Hopper’s Fare Lock product. “We will see,
but I don’t see a day when 70% of our revenues is coming from fintech.”

Asked the
differences and similarities between Open Table and KAYAK as businesses, Hafner
said being consumer facing brands, they have one common competitor – Google. The
difference between the two companies is that “Open Table has software installed
in 55,000 restaurants but KAYAK software isn’t installed in an airline or hotel
yet. Both are fundamentally great businesses.”

How about
thin margins, don’t both companies share that similarity? “I don’t know about
that,” said Hafner. “Open Table makes good profits. Door Dash has a US$70
billion market cap but it’s never made a dime.”

On the
subject of superapps and whether one will emerge in the US, Hafner said the US
already has two superapps – Apple and Android. “They could  create a vertical superapp, but they are gun
shy right now. It is easier to build a product than get traction.”

As for
how the pandemic has changed him as a leader, he said, “It’s made me less of a
control freak. Trusting my colleagues was always a challenge, I am now more
comfortable with a coordinating role vs a commanding one. I also appreciate
being with family a lot more.

“I think
at the start of the pandemic, I was afraid the impact was going to be a lot
worse on our business partners – not everyone has the balance sheet of Booking
Holdings. It would have been a lot worse if the government had not written the
big cheques. It also showed us how much of economic activity is voluntary.
Walks on the beach don’t cost money.”