Eye for travel - Expedia presentation INDABA 2009

EyefortravelShift in distribution channels:How internet is changing the way people buyand sell travel

May 11, 2009 – Durban, South Africa

Diego J. LofeudoDirector of Market ManagementExpedia [email protected]

© 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 1

AGENDA

1. How the Internet is evolving as a distribution and marketingchannel for travel products

• Growth in online adoption

• Effects of the internet on consumers

• Effects of the internet on hotels and travel suppliers

• Effects of the internet on intermediaries

2. How to profit from online distribution (focus on OLTAs)

• Effects of the online shift to hotels and travel suppliers


Growth in Online AdoptionMore and more customers are buying travel online

Source: www.internetworldstats.com


Growth in Online AdoptionMore and more customers are buying travel online


Effects of the internet on consumers


Effects of the internet on hotels and travel suppliers

• World wide distribution and marketing

• Access to mountains of information

• Flexibility

• Control and real time decision making

• Revenue Management

• Consumer is now ‘Pro - sumer’


Effects of the internet on intermediaries

• Traditional travel agents: value added / mix model / lesstransactional more experiential

• Wholesalers and traditional tour operators: direct toconsumers / large investments in technology andmarketing

• Online travel agencies: Battle to win hearts and minds ofconsumers and suppliers

• Better functionality for consumers• Improved tools for suppliers• Alternative compensation models (transaccional & media)


AGENDA

1. How the Internet is evolving as a distribution and marketingchannel for travel products

• Growth in online adoption

• Effects of the internet on consumers

• Effects of the internet on hotels and travel suppliers

• Effects of the internet on intermediaries

2. How to profit from Online distribution (focus on OLTAs)

• Effects of the online shift to hotels and travel suppliers

• New Marketing channel for public and private sector


How to profit from online distribution

1. Expedia?

2. Basics

• Content management

• Inventory and rates management

• Provide excellent service

3. Advanced

• Merchandizing and Marketing

• Retail Management


Expedia Travel – From MSN to the World

Expedia holds a leadership position in nearly every market where we are present

We build leading brands that are highly relevant to our partners

No.1 hotel specialist, in 50 countries

Leading discount travel site reaching price-conscious travelers

Leading online travel service provider in China

Corporate travel agency operating in 9 countries

No.1 community player with more than 15M reviews and opinions

No.1 OLTA, in 19 countries

Operating more than 100 in-market concierge and activity desks


And they visit The World’s Largest Travel Channel

Source: Nielsen NetRatings February. 2008


One Extranet, one contract and your hotel is seen and sold worldwide

No partner can offer you such valuable exposure at ZERO fix cost

does!

Expedia – The Power of the Global Distribution


Expedia – The Power of the Global Distribution


• $21bn sold in travel in the last 12 month #1 online travel company

• Around 75 million people visit our sites every month.

• 75% of the people buying their holidays online visit one of our sitesat least once before buying. Value and billboard effect.

• 14 million hotel searches are made every day in Expedia sites.

• 1.6 rooms are sold every second, an average of 140.000 rooms aresold per day at Expedia (circa 2000 rooms sold when I finish my20min presentation)

We fill 150 Boeing 747’s every day!

We land more than 130 paxs a day just in JNB

If we put in line all the beds we sell every month, wecould build a bridge between New York and London.

Some 14 rooms per hour (24/7) sold just in ZA!

Expedia General Figures



1. Expedia?

2. Basics




3. Advanced




Content management95% of US leisure Bookers and 92% of Lookerssay descriptive content is important to them.The Web Site Content That Matters To Travelers, Forester research


The Web Site Content That Matters ToTravelersForester Research

Provide excellent service

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Tour Ops

Inventory and Rates ManagementTour Ops case study – From Volume to Rev Mgmt

• Fixed net rates

• Fixed allocation

• Shrinking market

• Mass market

• Flexible net rates

• Increase & decreaseInventory

• Growing market

• Rev Mgmt Market

Expedia/Hotels.com

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Low Season

Mid Season

High Season

7 days release10 rooms allotment$40 room 1 to room 10BSC = $400 -

14 days release10 rooms allotment$50 room 1 to room 10BCS = $500 -

21 days release10 rooms allotment$60 room 1 to room 10BCS = $600 -

1 day release10 rooms allotment$40 room 1 to room 4$50 room 5 to room 10BSC = $460 +



ONLINE

OFFLINE

Do you need us all (TO offline and Online)? YES

Should you talk to us all the same way? NO

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Shortening the learning curve – Usual ‘mistakes’ while @

• No thinking on selling price. Same Net rate to everybodywithout understanding the financials of the partnerwww.hotelscomparison.com

• Internet is one market – no rates for GCC vs Scanda

• Partnering online without the benefits of the @

• No clue about your hotel content @

• No clue about how your hotel product is sold @

• No revenue management – sign and bye

• No promotional plan – all last minute ‘help help pls!’

• No participation on UGC sites www.tripadvisor.com

• Result??!!

• Hotel losses LOTS of money by underselling rooms

• Customers book a destination more @ friendly(Thailand)


1. Basics




2. Advanced





IMPRESSIONSIMPRESSIONS

•• 7,743,5077,743,507 –– ££154,870154,870

••4,222,8034,222,803 –– ££84,45684,456

•• 2,337,6502,337,650 –– ££46,75346,753

Media value of participating with Expedia

Cost of a banner with Expedia is aprox £20 per 1,000 impressionsCost of Top 5 position head term on a majorsearch engine such as ‘london hotels’ estimatedat £1.15 per click

PLACEMENTPLACEMENT

•• Top HotelTop Hotel

•• AverageAverage

•• LowLow

CLICKSCLICKS

••130,874130,874 -- ££150,505150,505

••62,71362,713 –– ££72,12072,120

••42,78642,786 -- ££49,20349,203

Marketing

If your hotel doesn’t have the right content andthe right rate you are underutilizing this greatdeal of exposure.


Merchandizing – from 1 to allExpedia.com

Expedia.co.uk

Expedia.es


Case study – South African Tourism

Budget: $ 400.000 spend

Campaign: October 2007 – May 2008

Platforms: Expedia in the UK, US, Italy, France, Germany and the Netherlands

Result: Additional $ 12.5 million USD turnover to the South African Tourism Industry

- $2.9m Additional Lodging Turnover

- $6.1m Additional Flight Turnover (4800+ Additional Pax / Arrivals)

- $3.5m Additional Local Spend ($130 Daily Spend, Length of Stay: 5 Days)

Same PeriodLast Year

Campaign Period

Tu

rno

ver

inP

eriod $12.5+ Million Additional

Turnover in CampaignPeriod

$56 Million Turnoverbrought to South Africa insame Period Last Year

$56 Million

$68.5 Million


1. This shift online is impacting consumers, intermediaries, and travel suppliers.Internet is changing the way people buy and sell travel (i.e. Cape Towm is sold asa long weekend city break!!!)

2. Revenue Management is key to maximize profits. Moreover in times of economyslowdown. Every single penny counts.

3. More of the same will take us nowhere. Moving mind set from signing contractsto managing contracts.

4. Wear online hat when doing business with online Tour Operators. Wear offlinehat while doing business with offline tour operators.

5. Expedia is your best option to maximize revenue, reach worldwide audience,learn about e-commerce and benefit from our vast online experience.

6. There is money involved for those doing the right thing. Lots!.

7. We are moving into all areas of Africa. Be the first not the last to join us andbenefit from this new way of doing business. Hotels / Lodges / Guest Houses plsvisit www.joinexpedia.com for more info.

Summary

Thank you!

[email protected]

www.joinexpedia.com

Eye for travel - Expedia presentation INDABA 2009

Travel

Transcript of Eye for travel - Expedia presentation INDABA 2009