Murder by Numbers Past predictions and present surprises

Presented at BTO 2015

3 December 2015

Lorraine Sileo

Senior Vice President, Research lsileo@phocuswright.com

2 © 2015 Phocuswright Inc. All Rights Reserved.

About Phocuswright Phocuswright is the travel industry research authority on how travelers, suppliers and intermediaries connect.

Independent, rigorous and unbiased, Phocuswright delivers qualitative and quantitative research on the evolving dynamics that influence travel, tourism and hospitality distribution. Our marketplace intelligence is the industry standard for segmentation, sizing, forecasting, trends, analysis and consumer travel planning behavior. Every day around the world, senior executives, marketers, strategists and research professionals from all segments of the industry value chain use Phocuswright research for competitive advantage.

The company is headquartered in the United States with Asia Pacific operations based in India and local analysts on five continents.

Phocuswright is a wholly owned subsidiary of Northstar Travel Media, LLC.

3 © 2015 Phocuswright Inc. All Rights Reserved.

Copyright

All  Phocuswright  Inc.  publica5ons  are  protected  by  copyright.  It  is  illegal  under  U.S.  federal  law  (17USC101  et  seq.)  to  copy,  fax  or  electronically  distribute  copyrighted  material  without  explicit  permission.  You  may  not  copy,  reproduce,  modify,  republish,  upload,  post,  transmit,  or  distribute,  electronically  or  otherwise,  any  Phocuswright  research  report  in  any  form  or  by  any  means  without  prior  wriGen  permission  from  Phocuswright  Inc.  Any  unauthorized  use  of  the  materials  may  violate  copyright,  trademark,  and  other  applicable  laws  and  could  result  in  criminal  or  civil  penal5es.  ©  Phocuswright  

4 © 2015 Phocuswright Inc. All Rights Reserved.

Online Travel

© 2015 Phocuswright Inc. All Rights Reserved. 5

6 © 2014 Phocuswright Inc. All Rights Reserved.

7 © 2015 Phocuswright Inc. All Rights Reserved.

Destination Selection

Travel Shopping

Booking

25%

22%

14%

27% 22%

14%

80% 80%

79%

Desktop

Smartphone

Tablet

*UK, Germany, France Question: Please indicate which of the following travel-related activities you have done online using your desktop/laptop, smartphone or tablet in the past 12 months. Select all that apply for each row. Base: European travelers (UK, Germany, France) (N=4,120) Source: Phocuswright’s European Traveler Technology Survey 2015

Devices Used During Trip Planning Life Cycle European Markets* Combined

8 © 2015 Phocuswright Inc. All Rights Reserved.

Travel agents are dead

Everything will be booked

online Tour operators will fold

OTAs will rule the earth

9 © 2015 Phocuswright Inc. All Rights Reserved.

Dinner or Diner?

10 © 2015 Phocuswright Inc. All Rights Reserved.

2015

11 © 2015 Phocuswright Inc. All Rights Reserved.

2015 - Global

½ Trillion (US$) global online travel gross

bookings

US$90B Expedia, Priceline, TripAdvisor

market cap

+11% annual growth

37% of all travel is booked online

12 © 2015 Phocuswright Inc. All Rights Reserved.

2015 - Italy

€8 Billion online travel gross bookings

1+M Number of bookable beds

+10% annual online growth

€1.5 Billion mobile travel bookings

13 © 2015 Phocuswright Inc. All Rights Reserved.

Global Share of Priceline Group and Expedia

Note: *Excludes gross bookings for Egencia, Expedia’s corporate travel business. Includes Travelocity, Wotif and Orbitz in 2015. Source: Phocuswright Inc.

-

50

100

150

200

2011 2013 2015

Gro

ss B

ooki

ngs

(US$

B)

All other OTAs

PCLN

EXPE*

38% 47%

65%

14 © 2015 Phocuswright Inc. All Rights Reserved.

15 © 2015 Phocuswright Inc. All Rights Reserved.

Percentage of U.S. Travelers Who Have Rented Private Accommodation, 2010-2014

Source: Phocuswright’s Rentals Rising: The State of Private Accommodation in U.S. Travel, 2015

8% 10%

13% 17%

25%

2010 2011 2012 2013 2014

But Airbnb travelers wouldn’t travel unless they could find an Airbnb, right?

17 © 2015 Phocuswright Inc. All Rights Reserved.

Only considered an Airbnb

Budget/economy hotel

Hostel

Staying with friends and family

Home or condo rental on another website

Inn/bed & breakfast

Upscale or luxury hotel

Midscale hotel

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Airbnb Travelers Shop Just Like Other Travelers

Source: Phocuswright’s The Airbnb Traveler, forthcoming 2015

The size of our vacation rental

business is as big as the whole of Airbnb

Darren Huston President & CEO, The Priceline Group, and CEO, Booking.com

Source: http://www.theguardian.com/business/2015/jul/03/priceline-online-travel-agent-booking-com-opentable

19 © 2015 Phocuswright Inc. All Rights Reserved.

+  

20 © 2015 Phocuswright Inc. All Rights Reserved.

“8181 Vacation Rentals in Rome”

21 © 2015 Phocuswright Inc. All Rights Reserved.

© 2015 Phocuswright Inc. All Rights Reserved. 22

Book on

23 © 2015 Phocuswright Inc. All Rights Reserved.

How is Italy faring in all this?

24 © 2015 Phocuswright Inc. All Rights Reserved.

Source: Phocuswright Inc.

Why the Lag? Online Penetration, Italy and Europe Travel Markets, 2013-2017

32% 35%

38% 40% 41%

41% 44%

47% 50% 52%

2013 2014 2015 2016 2017

Italy Europe

25 © 2015 Phocuswright Inc. All Rights Reserved.

Source: Phocuswright Inc.

More Reliance on OTAs Italian and European Online Travel Market, OTA vs. Supplier Direct Share, 2015

OTA 59%

Supplier Direct 41%

Italy

OTA 43%

Supplier Direct 57%

Europe

26 © 2015 Phocuswright Inc. All Rights Reserved.

24%

4%

31%

15%

5% 5% 3% 0.2% 0.3%

13%

No. of Properties

Hotels Aparthotels Apartments Bed & breakfasts Farm stays Guesthouses Country houses Resorts Holiday parks Other

Source: Key OTAs, April 2015. Base: 68,312 properties, representing 884,307 rooms. Other includes holiday homes, villas, inns, hostels and campsites (mobile homes and similar). *VHC members are assigned to the Independent Lodging market if not affiliated with a hotel chain (hard brand).

Hotel is Fragmented Italy – Total Lodging, 2014

Hotel chain share: 2%

27 © 2015 Phocuswright Inc. All Rights Reserved.

Key Metrics – Independent Lodging

43%

41% 37%

33%

11%

40%

55% 58%

70%

86%

0%

20%

40%

60%

80%

100%

U.K. Spain France Germany Italy

Hotel Chain Penetration (% of Total Rooms Supply)

Independents' Online Intermediary Share (% of Total OTA Gross Bookings)

Avg. No. of Rooms per Property Total Lodging 13

Hotel/Motel 37

Other Lodging 3.3

28 © 2015 Phocuswright Inc. All Rights Reserved.

Independent Lodging, Italy

98% of total properties

(95% of hotel properties)

81% of total online direct

gross bookings

89% of total rooms capacity

84% of total gross bookings

© 2015 Phocuswright Inc. All Rights Reserved. 29

What’s next? Murder by Numbers

Murder by Numbers Past predictions and present surprises

Presented at BTO 2015

3 December 2015

Lorraine Sileo Philip Wolf Senior Vice President, Research Founder, Phocuswright

U.S.  Online  Travel  Gross  Bookings,    1998-­‐2001  (US$  millions)  

 

$2,556

$6,974

$12,887

$20,230

1998 1999 2000 2001

The  first  four  years…  

Source:  The  Phocuswright  Yearbook  1999  

32 © 2015 Phocuswright Inc. All Rights Reserved.

Market Valuation (as of 27 Nov)

$62B Priceline

$24B** Airbnb

$16B Expedia

$50B* Uber

*WSJ,  31  July  2015  **WSJ,  26  June  2015