Apresentação Dan Kowalewski - Oliver Wyman, na 3ª HSMAI Strategy Conference - 2016.

1. © Oliver Wyman | NYC-MXD18401-002
Dan Kowalewski
Email: dan.kowalewski@oliverwyman.com
Mobile: +1 703 626 8064
NOVEMBER 10 2016
THE DIGITAL TRAVEL REVOLUTION
A HOTEL INDUSTRY CALL TO ACTION

2. CONFIDENTIALITY Our clients’ industries are extremely competitive, and the maintenance of confidentiality with respect to our clients’ plans and data
is critical. Oliver Wyman rigorously applies internal confidentiality practices to protect the confidentiality of all client information.
Similarly, our industry is very competitive. We view our approaches and insights as proprietary and therefore look to our clients to
protect our interests in our proposals, presentations, methodologies and analytical techniques. Under no circumstances should
this material be shared with any third party without the prior written consent of Oliver Wyman.
© Oliver Wyman

3. THE RISE OF DIGITAL DISRUPTION

4. 3© Oliver Wyman | NYC-MXD18401-002
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Other transports
Other OTA
C2C Players
2014200920041999199419891985
Online--35,6%
Intermediary–39,2%Transport–28,9%
CruiseandLodging
–31,8%
Hotels and resorts
Cruises
Tours Operators OTA
Classic airlines
Low-cost
airlines
Rental cars
The big picture
Today almost 35% of the travel market stock value is captured
by online players
Note: 1. Stock value: average included the two previous years and two following years
Sources: Datastream, Main companies of each market, Analyze OW
Evolution of the travel market stock value 1 of the main players in Europe and in the US – 1985–2014

5. 4© Oliver Wyman | NYC-MXD18401-002
Traditional Competitors Future Disruptors
The current distribution landscape has been playing
out for several years with each segment seeking to
extract value from the travel and leisure industry
Companies controlling the access (hardware) and entry (search) into
the booking funnel have the potential to radically transform
the landscape and upset the value chain
TMCs/TAs GDS OTAs Meta-mediaries
Search
companies
Social
Device
makers
Complete Pricing Plus
Overall travel distribution landscape: competitors
While traditional distribution competitors remain important, the new breed
of digital competitors is poised to further disrupt the distribution landscape

6. 5© Oliver Wyman | NYC-MXD18401-002
Overall travel distribution landscape: online penetration and market value
The industry could reach the level of complete disruption in the next 10 years
as new digital competitors enter the landscape
Traditional competitors have been very successful
at creating value and disruption over the last 15 years…
… but many of the new competitors are poised to create further
disruption and steal value from hotel industry
0%
10%
20%
30%
40%
50%
60%
70%
20%+ of value was absorbed by
online players in the travel
industry in just 8 years!
'01 '03 '05 '07 '09 '11 '13 '15 '17
% of travel
market
value owned
by digital
players
Online
agencies
Metaplayers
Social?
Search
Companies?
Device
Platforms?80%
Today
The question is not whether Google and
Apple will be a threat, rather it is which part
of the guest journey will they attack first
US travel
industry
online
penetration
Traditional Competition Future Disruptors
e
‘25

7. 6© Oliver Wyman | NYC-MXD18401-002
Overall travel distribution landscape: online penetration by market
US and Western Europe have high penetration but are relatively mature;
however, growth has been strong in more emerging markets
55%
48%
31%
29%
25%
23%
1%
6%
18%
7%
12%
8%
0%
4%
8%
12%
16%
20%
0%
10%
20%
30%
40%
50%
60%
US Western
Europe
Eastern
Europe
Asia
Pacific
Middle
East
Latin
America
Online Penetration (2015) Online Penetration CAGR (2011–2015)
Globalonlinetravelpenetration
OnlinePenetrationCAGR(2011–2015)
Global online travel penetration by region
2015 penetration; 2011–2015 growth rates
Source: Phocuswright report - “Online Travel Agencies: More Than a Distribution Channel”; Oliver Wyman Analysis

8. 7© Oliver Wyman | NYC-MXD18401-002
Hotel distribution channel mix projections
OTA and other online intermediaries are likely to represent over 1/3 of all
hotel business in the next 10 years
31%
26%
14%
4%
12%
3%
19%
18%
1%
8%
15%
34%
8% 7%
2014 2025
26%
Groups
Property-direct
(walk-ins)
CRS
Brand.com
(w/o referrals)
Brand.com
(referrals/meta)
OTAs & others
GDSs
Competing with OTAs and other
intermediaries:
• The strongest growth will come
from online travel intermediaries
as share shifts from traditional
offline direct channels (CRS and
property direct)
Competing with referrals on
Brand.com:
• Additional share shift within the
online direct channel (brand.com)
will come from referrals from
intermediaries such as Google
and Apple
For each 1% shift from direct channels to commissionable intermediaries
(e.g. OTAs), commissions costs to the industry increase by ~$400 MM (based on
2024 market size) and equates to a $10 BN increase in the next 10 years
US total room night demand by channel (transient & group)
% share based on number of room nights
Trend supporting channel shift
Source: Distribution Channel Analysis: A Guide for Hotels, TravelClick NADR (2011–2013), and Oliver Wyman analysis

9. FUTURE WINNERS
IN THE DIGITAL LANDSCAPE

10. 9© Oliver Wyman | NYC-MXD18401-002
Pattern description Hotel implications
Pattern 1 Dominant accelerated growth models:
The scalability of Internet distribution now
plays in favor of the leaders
Large scale digital competitors will:
• Enter quickly and without warning
• Target the “low hanging fruit” by
focusing on specific customer and hotel
segments
• Take a loss leader position while they
build capability and scale
Pattern 2 Solving customer hassles:
The big winners will no longer be the
technological pioneers, but those who
understand and solve the customer’s hassles
• Understanding and addressing customer
hassles along the entire guest journey
is critical to success
• Focusing on “the little things” will
create a favorable consumer perception
and the differentiation necessary to
compete with “killer capabilities” of the
disruptors
Pattern 3 Winning the customer relationship:
The relationship is being won by companies
that transcend beyond purely transactional
models to become interactional or
collaborative
• Purely transactional relationships with
consumers will no longer win, even if
targeted and personalized
• Relationships must become
interactional and collaborative, they
must become more human and evoke a
dialog based on trust
How the new digital competitors will win
Looking across industries, we can see emerging patterns in the digital
economy that the winners will take advantage of

11. 10© Oliver Wyman | NYC-MXD18401-002
Amazon
(US)
Grainger
(US)
MSC
(US)
ANIXTER
(Europe)
Office
direct
(UK)
Abrasives 15 K 10 K 7 K <1 K
Fasteners 60 K 56 K ≈4 K 110 K
Hand tools 55 K 39 K 7 K 1 K
Paper 9 K 3 K
500.000
600.000
750.000
June
2012
January
2013
July
2013
December
2013
1,250,000
Pattern 1: Dominant accelerated growth models
Large scale digital players such as Amazon have demonstrated an
ability to enter (and exit) markets rapidly in targeted segments
Amazon Destinations was launched, tested, and shut down in less than 1 year
Speed of Amazon’s market
penetration – Supply in the US
(Number of Amazon supply products online)
Selection of products in a few representative categories
Note: Compared selection of products, December 15, 2013

12. 11© Oliver Wyman | NYC-MXD18401-002
Hassles solved Perceived added value
Easily find risk-free
carpooling solutions
A movie suggested in a few clicks
without paying per view, no matter
what device I use for the service
A vacation home without the hassle
50% cheaper than the train
90% cheaper than owning a vehicle
Unlimited offer
(25,000 films in the US), $9 a month
versus 1 film = $4
30–40% cheaper than
residences or hotels
A car when I need it without the
hassle of ownership (purchase
cost, parking, maintenance)
Pattern 2: Solving customer hassles (1/2)
Digital players are stimulating latent demand by focusing on
customer hassles…

13. 12© Oliver Wyman | NYC-MXD18401-002
Customers feel
compelled to use
multiple sites to shop
and compare rates
Pattern 2: Solving customer hassles (2/2)
…and the travel industry is no exception, with tech-enabled
competitors seeking to solve hassles along all points of the guest journey
Guest journey
Customerhappiness
Explore
and discover
Research
and plan
Book
and buy
Travel
and stay
Share
and rate
Refine and
add‐on
Customers want
content that inspires
and appeals to their
travel intentions
Customers plan
airfare, hotel, and
destination activities
in separate places
Coordinating multiple
traveler itineraries
(e.g. one car for two
people) is difficult
Information about
entertainment options
on property or in the
local vicinity is limited
Many aspects of the
reserved experience
are not guaranteed
(e.g. adjoining rooms)
Consumers don’t feel
rewarded for sharing
Tech-enabled
competitors
(examples) Owned by Priceline Owned by Priceline

14. 13© Oliver Wyman | NYC-MXD18401-002
2000 2004 2008 2011 2014
Phase 3
Interactional
Phase 4
Collaborative
Mobile economy
Phase 1
Search
Phase 2
Transactional
Phase 5
Connected objects
Massive spread of digital
INTERACTIONAL
MODELS
3.8 h 5.8 h
12% 21% 49%
2.6 h
Average time
connected
in US
Total time
online (h)
Time mobile
device
(% of time online)
2017F
6.5 h
55%
Pattern 3: Winning the customer relationship (1/2)
Consumers will gravitate to more interactional models of engagement
as they increasingly spend more time on their mobile devices…
Source: Oliver Wyman analysis, E-marketer, Adage advertising, The Digital future project

15. 14© Oliver Wyman | NYC-MXD18401-002
Market value 2009–2013
Billion USD – Top 30 digital firms (excluding Apple)
1,000
600
200 Search
Transactional
Interactional
Collaborative
(Google, Yahoo, etc.)
(Amazon, Priceline,
Rakuten, Expedia, etc.)
(Facebook, LinkedIn,
Netflix, YouTube)
(AirBnB, Uber,
HomeAway,Blablacar)
2009 2010 2011 2012 2013 2014
Pattern 3: Winning the customer relationship (2/2)
…and these collaborative and interactional models represent 31%
of the value of the Top 30 digital firms
• Seek interaction that transcends beyond purely transactional in
an effort to build trust and make them select your brand as their
brand of choice (e.g. Convey a sense of always helping)
• Develop favorable consumer perception as a defensive posture
against strengths like aggregation
• Look to partner early
• Work to find areas for mutual value exchange (e.g. content
for leads)
• Find ways to guide customers to your direct or
preferred channels
Sample strategy
Recent value growth has been strongest for
collaborative and interactional models…
…and hotel companies must develop strategies that
address both traditional and “new” competitors
Source: Thomson, Bloomberg, Forbes, E-marketer, Adage advertising, Analysis Mason, The Digital future project

16. 15© Oliver Wyman | NYC-MXD18401-002
Given the rapid
evolution of digital
and the next wave of
disruptive competitors,
what do hotel
companies need to do?

17. 16© Oliver Wyman | NYC-MXD18401-002
Hotel industry call to action
Hotel companies must think differently about the role of distribution
and the revenue agenda they develop and manage
1
2
3
4
5
Understand the role
of distribution in the
revenue pipeline
Build a holistic operating
model for distribution
Define the desired segment
and channel mix
Develop and manage
the revenue agenda
Measure performance
through RevPARD

18. 17© Oliver Wyman | NYC-MXD18401-002
Strategy
Revenue
Management Merchandising
Advertising
and
Marketing
Sales and
Distribution
Product
Delivery
Loyalty
and CRM
Product
Design
Property
Portfolio
Planning
How can our loyalty
program help us reach
customers earlier in the
funnel? Are our
partnerships and reward
mechanisms aligned?
What
changes are
planned on
property that
can further
differentiate
our strategy
How well does
our existing
partnership
strategy
support our
new strategic
intensions?
Where do the “killer apps”
we wish to developed fit
into our ecommerce and
digital roadmap?
How does our price positioning by market vary?
Where do we need the greatest assistance with
generating and capturing demand?
What variations must be considered by brand and geography? Do we
have critical mass in supply to achieve winning distribution in the
market?
Understand the role of distribution
Developing a compelling and thoughtful strategy requires an
understanding of the role of distribution along hospitality revenue pipeline
Hospitality Revenue Pipeline
1

19. 18© Oliver Wyman | NYC-MXD18401-002
Properties
Voice Web OTA MetaGDSProp
ConsumersChannels
Partner and Channel Management
Partner and Channel Monitoring
Trouble-
shooting
and Support
Hotel/Product/
Partner Setup
Content
Management
Standards and
Communication
Partner and Channel Connectivity
Distribution
Marketing
Partner and Channel Performance
Partner and Channel Strategy
Commercial Agreements
Technology
Process
Organization
Distribution strategy activity Distribution operations activity
Build a holistic distribution operating model
The responsibilities of a distribution function must cover strategy,
operations, technology, and commercial agreements
2
Illustrative

20. 19© Oliver Wyman | NYC-MXD18401-002
1) What are the current and planned initiatives that are part
of the today’s distribution strategy?
2) What are the key beliefs and assumptions underpinning
these strategies and initiatives?
3) Value mapping analysis: What is the current and desired
demand mix?
20%0%
0%
100%80%60%40%
20%
100%
80%
60%
40%
Group
Corp.
Call
Center
Property
Direct
Whlsle
Web
Leisure
Retail
40% 60% 80%20% 100%0%
Corp.
Property
Direct
Leisure
Retail
Whlsle
Group
Web
Call
Center
Current Desired
1) What are the current customer preferences for
accessing content and transacting across each step
in the guest journey?
2) How are these preferences changing? What new offers
are the most appealing?
3) What are the biggest perceived hassles in the
guest journey?
How do the most valuable customers want to book?
High
Medium
Low
Opaque
OTA
TMC
Property
direct
Call
center
Web
Group
Whlsle
Corpo-
rate
Retail
Leisure
Segment and channel mix Customer channel preferences
Illustrative value mapping analysis output Illustrative customer research output
3
Illustrative
Define desired segment and channel mix
Isolating and targeting the channel preferences of your most valuable
customers is integral to your strategy
Where are customers booking today and in the future?

21. 20© Oliver Wyman | NYC-MXD18401-002
Develop and manage the revenue agenda
A comprehensive revenue agenda include initiatives that drive
compliance, optimization, and innovation
REVENUE AGENDA
Compliance
with best practices and agreements
Optimization
of existing products with
improved strategies
Innovation
of rate products and
distribution capabilities
Distribution and Revenue Management Initiatives
“Walk-up” discounting
Dynamic Pricing by Segment
Online group intermediation
Wholesale online platform
Loyalty Member Rates
Digital CRMOTA margins
Ancillary sales
Rate parity
Illustrative
Standard rate programs Opaque channel availability Book direct campaigns
Distribution and revenue management strategies can collectively drive 2–5%
increase in revenue while controlling or decreasing distribution costs
4

22. 21© Oliver Wyman | NYC-MXD18401-002
Net RevPAR (RevPARD)
Inventory Mgmt.
Scorecard
Pricing
Scorecard
Distribution
Scorecard
Do we have the right
rates in the market?
RevPAR and
RevPAR Index
Distribution Cost
(as % of revenue)
Do we make the right rates
available at the right time?
Do we distribute our rates
as efficiently as possible?
RevPAR × (1 – DistCost%)
Measure RevPARD
Tracking your cost of distribution will enable you to measure the true
net-revenue of your distribution and revenue management strategies
Illustrative
5

23. 22© Oliver Wyman | NYC-MXD18401-002
Hoteliers, disrupt before someone else does
9 September 2015
Reserving the travel experience
06 February 2014
Creating a digital ecosystem
13 August 2014
For more information and insight
Oliver Wyman has a wide range of publications available on its website,
www.oliverwyman.com
Hotels, OTAs battle for guest experience
11 March 2015
Cutting edge whitepapers Industry surveys and points of view
Industry journal articles

25. QUALIFICATIONS,
ASSUMPTIONS AND LIMITING
CONDITIONS
This report is for the exclusive use of the Oliver Wyman client named herein. This report is not intended for general circulation or
publication, nor is it to be reproduced, quoted or distributed for any purpose without the prior written permission of Oliver Wyman.
There are no third party beneficiaries with respect to this report, and Oliver Wyman does not accept any liability to any third party.
Information furnished by others, upon which all or portions of this report are based, is believed to be reliable but has not been
independently verified, unless otherwise expressly indicated. Public information and industry and statistical data are from sources
we deem to be reliable; however, we make no representation as to the accuracy or completeness of such information. The
findings contained in this report may contain predictions based on current data and historical trends. Any such predictions are
subject to inherent risks and uncertainties. Oliver Wyman accepts no responsibility for actual results or future events.
The opinions expressed in this report are valid only for the purpose stated herein and as of the date of this report. No obligation is
assumed to revise this report to reflect changes, events or conditions, which occur subsequent to the date hereof.
All decisions in connection with the implementation or use of advice or recommendations contained in this report are the sole
responsibility of the client. This report does not represent investment advice nor does it provide an opinion regarding the fairness
of any transaction to any and all parties.