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Demystifying the Digital Marketplace
An executive briefing by
Robert A. Gilbert, CHME, CHBA
President & CEO
HSMAI
Fourth report in the “Demystifying” series
Part I—The Macro View of the Digital Market
http://www.ahla.com/ddm/
Code – HSMAI2016
Dec 2016 & Q1 2017
Part II—Hotel Per...
Executive Summary
Three macro trends in the industry landscape:
1. Hotels are exploring new techniques for
implementing re...
Report Highlights
Highlights of Part 1:
1. It’s all about channel mix
2. Commission growth is rising at a faster rate than...
Report Highlights
Highlights of Part 1 (cont):
7. OTA consolidation implications
8. Where are search, meta search and apps...
Demystifying the Digital Marketplace
• Industry Database
• Guest stay and cost of sales information from 25,000 hotels to ...
Thinking differently for optimizing channels and profits:
1. Revenue Capture
2. Channel Mix
3. Direct Booking Ratio
4. Cha...
Revenue Capture for Total U.S. Market : 2015 vs. 2014
As Hotel Revenue Capture declines, Real Estate value erodes
Net Reve...
2015 U.S. Channel Mix
% of Room Nights
preliminary USA mix; final validation Q3 2016
Property
Direct 32%
Brand.com
18.5%Vo...
Direct Booking ratio has declined 33% since 2011
Direct-to-Indirect Channel Share Ratio
2011 thru YTD June 2016 – All Unit...
Channel Share Shifts:
Property Direct, Voice & Group
70%
80%
90%
100%
110%
120%
130%
140%
2011 2012 2013 2014 2015
U.S. Ch...
Channel Share Shift:
GDS Stable, Brand.com and OTA
70%
80%
90%
100%
110%
120%
130%
140%
2011 2012 2013 2014 2015
U.S. Chan...
OTA Share Growing in all Segments
Total U.S. 2011-2015
5.6%
7.6%
8.7% 9.0% 9.2%
15.8%
16.5%
14.1%
11.8% 12.2%
14.5%
18.7%
...
2015 OTA Vendor Mix
% of OTA Room Nights
excludes Midscale, Economy and Independent hotels
1.6%
4.4%
58.7%
2.1%
21.0%
1.2%...
Total OTA Production by Market
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
OTA % of Transient Room Nights – Q1 2016
Upper Midsc...
55.5%
90.7%
60.0%
93.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Brand.com to
Brand.com
Intermedi...
Thinking differently for optimizing channels and profits:
1. Revenue Capture
2. Channel Mix
3. Direct Booking Ratio
4. Cha...
Demystifying the Digital Marketplace
What you Need to Know
1. Imperative for hotels to shift revenue generation approach f...
Part I—The Macro View of the Digital Market
http://www.ahla.com/ddm/
Code – HSMAI2016
Dec 2016 & Q1 2017
Part II—Hotel Per...
bgilbert@hsmai.org
Questions and THANK YOU
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Desmistifying the Digital Marketplace

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Apresentação Bob Gilbert - CEO HSMAI Americas, na 3ª HSMAI Strategy Conference 2016.

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Desmistifying the Digital Marketplace

  1. 1. Demystifying the Digital Marketplace An executive briefing by Robert A. Gilbert, CHME, CHBA President & CEO HSMAI
  2. 2. Fourth report in the “Demystifying” series
  3. 3. Part I—The Macro View of the Digital Market http://www.ahla.com/ddm/ Code – HSMAI2016 Dec 2016 & Q1 2017 Part II—Hotel Performance  Part III—Taking Action Report just released
  4. 4. Executive Summary Three macro trends in the industry landscape: 1. Hotels are exploring new techniques for implementing revenue strategy 2. The legacy OTA model is declining while apps and metasearch are gaining traction 3. New entrants spell disruption for select customer segments
  5. 5. Report Highlights Highlights of Part 1: 1. It’s all about channel mix 2. Commission growth is rising at a faster rate than revenue 3. Trip planning is complex 4. Content is king 5. The billboard effect is dead 6. Last room availability and rate parity are key strategy
  6. 6. Report Highlights Highlights of Part 1 (cont): 7. OTA consolidation implications 8. Where are search, meta search and apps going? 9. Direct booking campaigns 10.Corporate travel: the days of the RFP are numbers 11. AirBnb and the Sharing Economy
  7. 7. Demystifying the Digital Marketplace • Industry Database • Guest stay and cost of sales information from 25,000 hotels to date, primarily in North America, expansion to Europe 2017* • Representing 100+ brands – 3,000,000 rooms • Major Chains and smaller chains and independents • Over 5 billion transactions; 100 million added monthly • External Data Sources & Research • Airbnb • Consumer Reviews • Group & Meetings • Book Direct Analysis *Trends in U.S. expected to extrapolate globally
  8. 8. Thinking differently for optimizing channels and profits: 1. Revenue Capture 2. Channel Mix 3. Direct Booking Ratio 4. Channel Share Shifts 5. OTA Share, Vendor Mix and Share by Market 6. Channel Shift Probabilities New Metrics & Trends
  9. 9. Revenue Capture for Total U.S. Market : 2015 vs. 2014 As Hotel Revenue Capture declines, Real Estate value erodes Net Revenue Revenue Capture 2015 $120,400,000,000 82.8% 2014 $112,800,000,000 83.2% Change 6.7% -0.4% $112,800,000,000  $132,800,000,000  $135,500,000,000  $120,400,000,000  $142,600,000,000  $145,400,000,000  $0 $50,000,000,000 $100,000,000,000 $150,000,000,000 $200,000,000,000 Net Revenue Hotel‐Collected Revenue Guest‐Paid Revenue Revenue Capture Loss (‐0.4) = $572.8 m
  10. 10. 2015 U.S. Channel Mix % of Room Nights preliminary USA mix; final validation Q3 2016 Property Direct 32% Brand.com 18.5%Voice 7% GDS 10.5% OTA 15% Group 17% Transient Ratio Direct : Indirect 2.3 : 1
  11. 11. Direct Booking ratio has declined 33% since 2011 Direct-to-Indirect Channel Share Ratio 2011 thru YTD June 2016 – All United States
  12. 12. Channel Share Shifts: Property Direct, Voice & Group 70% 80% 90% 100% 110% 120% 130% 140% 2011 2012 2013 2014 2015 U.S. Channel by Source of Business  2011 ‐ 2015 Voice Property Direct Group
  13. 13. Channel Share Shift: GDS Stable, Brand.com and OTA 70% 80% 90% 100% 110% 120% 130% 140% 2011 2012 2013 2014 2015 U.S. Channel Share by Source of Business  2011 ‐ 2015 Brand.com OTA / ETA GDS
  14. 14. OTA Share Growing in all Segments Total U.S. 2011-2015 5.6% 7.6% 8.7% 9.0% 9.2% 15.8% 16.5% 14.1% 11.8% 12.2% 14.5% 18.7% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Economy Midscale Upper Midscale Upscale Upper Upscale Luxury OTA % of Transient Room Nights* 2011 2012 2013 2014 2015 +35% +36% +57%+85% *Economy & Luxury Chain Scale analyses in progress
  15. 15. 2015 OTA Vendor Mix % of OTA Room Nights excludes Midscale, Economy and Independent hotels 1.6% 4.4% 58.7% 2.1% 21.0% 1.2% 0.1% 7.3% 3.7% 0% 10% 20% 30% 40% 50% 60% 70% Other Priceline Group Expedia Net (Merchant) Retail Opaque Total Share 63.6% 32.6% 3.8%
  16. 16. Total OTA Production by Market 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% OTA % of Transient Room Nights – Q1 2016 Upper Midscale, Upscale, Upper Upscale and Luxury properties Net (Merchant) Retail Opaque
  17. 17. 55.5% 90.7% 60.0% 93.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Brand.com to Brand.com Intermediary to Intermediary Likelihood of Remaining on  Brand.com or Intermediary 2012 2014 44.5% 9.3% 40.0% 7.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Brand.com to Intermediary Intermediary to Brand.com Likelihood of Switching between  Brand.com and Intermediary 2012 2014 Channel Shift Probabilities: The Billboard Effect is Dead Only 7% of consumers go back to hotel to book
  18. 18. Thinking differently for optimizing channels and profits: 1. Revenue Capture 2. Channel Mix 3. Direct Booking Ratio 4. Channel Share Shifts 5. OTA Share, Vendor Mix and Share by Market 6. Channel Shift Probabilities New Metrics & Trends What are the implications for you and your market(s)?
  19. 19. Demystifying the Digital Marketplace What you Need to Know 1. Imperative for hotels to shift revenue generation approach from an analog to a digital environment • Commissions are still rising at 2x rate of revenue growth • The days of hotels being “on every shelf” are over—costs too much, undermines customer relationship • Manage to an optimal channel mix and differentiate the guest experience 2. Current OTA model not sustainable; apps & metasearch will alter market • Content drives conversion; competition growing around access • The “billboard effect” is dead • LRA and Rate Parity are on the decline; more autonomy coming • Threats to the OTA duopoly are driving diversification; meta and apps will dominate within five years 3. New entrants will be disruptive in a few key customer segments • Corporate travel is about to hit a major inflection point; RFP system will be replaced • Home rentals will impact select business in major markets; won’t be a uniform effect • Groups and meetings are booked with inefficient processes and carry high costs
  20. 20. Part I—The Macro View of the Digital Market http://www.ahla.com/ddm/ Code – HSMAI2016 Dec 2016 & Q1 2017 Part II—Hotel Performance  Part III—Taking Action Download your copy for free
  21. 21. bgilbert@hsmai.org Questions and THANK YOU

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