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The%20online%20leisure%20market%20which%20business%20model%20will%20dominate
 

The%20online%20leisure%20market%20which%20business%20model%20will%20dominate

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    The%20online%20leisure%20market%20which%20business%20model%20will%20dominate The%20online%20leisure%20market%20which%20business%20model%20will%20dominate Presentation Transcript

    • The online leisure market – which business model will dominate? Daniela Wagner Global Managing Director, OctopusTravel
    • The online leisure market – which business model will dominate? or Is there a future for the travel intermediary?
    • Agenda 1. Online travel – the opportunity 2. Advantages of the intermediary 3. Flexible distribution 4. Knowing your customer
    • The Opportunity • In 2006, World Travel and Tourism is expected to post US$6,477.2bn of economic activity • World Travel and Tourism activity is expected to grow by 4.2% a year between 2007-2016 • In 2016 it will virtually double to US$12,118.6bn (Source: World Travel and Tourism Council)
    • Growth in International Online Travel International Online Travel volume will continue to expand rapidly with gross bookings exceeding US levels by 2006. Leisure & Unmanaged ($ Mn) 2002 2003 2004 2005 2006 2007 Europe - Gross Bookings 9,471 15,621 23,616 35,178 51,168 69,077 Growth Rate - 65% 51% 49% 45% 35% Asia Pacific - Gross Bookings 4,780 8,089 12,100 15,900 20,400 25,600 Growth Rate - 69% 50% 31% 28% 28% Total Europe and Asia 14,251 23,710 35,716 51,078 71,568 94,677 Growth Rate - 66% 51% 43% 40% 32% US - Gross Bookings 28,710 39,358 52,771 65,957 78,472 90,243 Growth Rate - 37% 34% 25% 19% 15% Source: Phocuswright. Notes: United States/Canada, Europe and Asia Pacific represents 93% of the worldwide internet population. Phocuswright forecast for Europe in Euros: 2002 €7,700; 2003 €12,700; 2004 €19,200; 2005 €28,600; 2006 €41,600; ; 2007 €56,100 Assumes $ / € = 1.23 as of November 26, 2004.
    • B2C Online Travel Industry Significant Growth Across Geographies $ billions U.S. $110 45% $129 Highest online penetration, yet still 56% $137 growing $95 2005A 2007E Online Offline Europe Largest overall travel market; $188 73% $217 online under-penetrated 27% $70 $35 2005A 2007E Online Offline APAC Lowest online penetration, but 90% $220 $196 most rapid growth 10% $26 $16 2005A 2007E Online Offline
    • UK example Internet use in UK rose by over 9% to 29.3 million in 2005 Almost 40% of UK shoppers have shopped online in past 6 months 75% rank low price as very important 90% are prepared to spend time finding best value for money
    • There are some radical changes underway • Uncertainty • Changes in Demand Inbound • Changes in Supply • Changes in Technology and Infrastructure • Changes is Business Domestic models …The complexity remains (search, assemble, package, price, sell, add, change, fulfil) … The pressure, options Outbound and risks are greater than ever.
    • Biggest change of all: the lines are blurring….
    • Changes in behaviour Lowcost airlines have driven change Traditional players have entered online space Tour operators and hoteliers are marshalling marketing resources around branded websites New loyalty schemes (co-branded alliances with credit card companies) Travel belongs to everyone – supermarkets, sports clubs, insurance companies, financial institutions, media
    • Changes in Booking Patterns By 2007 PhoCusWright predicts that tour operators will have an 18% share of the UK’s online market compared with 12% in 2005. Online travel agencies will see drop from 36% to 31%. Hotel direct sales will increase to 12% of all online hotel sales (6% in 2004).
    • So how does the intermediary fit in?
    • Advantages of the Intermediary • Travel companies need intermediaries to be an extension of their business to help them position and sell products. • Controls inventory but doesn’t own it – manageable risk (minimal pre-buys). • Can manage the business up and down according to demand. • Chamelon ability – flexible distribution • Multiple suppliers so can expand and diversify product portfolio • Not constricted by bundling (air, hotel)
    • Content – The Cendant Opportunity
    • Content
    • Information
    • Flexible Distribution – key to our success What’s worked for OctopusTravel? 1. B2b2c strategy (GTA) 2. Consumer direct website 3. Travel agents (RBS) 4. Affiliates 5. Franchises
    • www.OctopusTravel.com
    • HotelClub Member Dollars
    • Orbitz TLC
    • RBS • No set up fees • Generous commissions • Easy to track sales (online management reports) • Marketing support – promotional material, • incentives, roadshows, educationals • Customisation included co-branded websites • and XML • Flexible payment methods such a direct debit • ABTA bonding 8 account managers supporting over 4,800 UK travel agents
    • AGENT PROMOTIONS
    • Affiliates 60% of our business is B2B2C Partnerships with around 80 airlines and other partners Benefits for OctopusTravel - global penetration to large volumes of customers - minimal advertising and marketing spend • Benefits for Partners - strategic account management - tailor made solutions/one stop shop - access to competitively priced hotels - seamless customer journey
    • Affiliate Partners
    • easyHotel •Partial XML solution to improve SEO •Promotions via EasyGroup companies (EasyWatch) •Solus email campaigns created exclusively for client …135% YOY revenue increase
    • Strategic Partnerships – Nectar Improved account management process Increased business reviews Homepage coverage, Cashback promotions, exclusive offers Working with other Cendant brands (ebookers) …53% YOY revenue increase
    • Some new business in 2006
    • Franchise Strategy Why Franchises? • Speed to market • Shared risk and resource • Local knowledge and contacts • Plan in 2006 to roll out to 12 new markets …YOY growth of 190%!
    • Franchise Marketing Poland Greece Poland Austria Romania Poland Romania
    • Challenges – it’s not plain sailing! Industry wide challenge: risk of commoditisation Increasing competition in market place from many different angles Pressure on commission levels reducing supplier margins – impact on price Big partners seeking own direct inventory solutions (complete or partial) Availability – technology – innovation!
    • Is there a future for the intermediary? • The market opportunity • Content and technology • Flexible Distribution • Maximising customer relationships – differentiation and personalisation
    • Key Considerations Market positioning Own the Own the content customer Customers? Products? Own the capability Geographies? Channels? Capabilities Business Architecture Customer Innovation insight Innovative / Industrialised flexible Ensure core Drive process business Distinctive structures Capabilities are in place Customer Flexibility service Insightful Resources Channel management
    • The online leisure market – which business model will dominate? Daniela Wagner Global Managing Director, OctopusTravel