Trends in the Hotel & Travel Booking Industry April 2014

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The purpose of this presentation is to present the major industry and consumer trends affecting the hotel industry, specifically with regard to online booking.
Main subjects that are covered are:
1-Market trends
2-Competitor activity on the digital sphere
3-Hotel strategies used to encourage direct booking.

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Trends in the Hotel & Travel Booking Industry April 2014

  1. 1. Trends in the Hotel & Travel Booking Industry Hamutal Schieber | April 2014
  2. 2. Introduction • The purpose of this presentation is to present the major industry and consumer trends affecting the hotel industry, specifically with regard to online booking. • Main subjects that are covered are: 1. Market trends 2. Competitor activity on the digital sphere 3. Hotel strategies used to encourage direct booking.
  3. 3. Technology: Online and Mobile Travel consumers want: • mobility, • flexibility • easy real-time access to information Consumers expect seamless connectivity allowing them to access the content they want when they want it across all platforms, and also increasingly expecting seamless transitions between different platforms. The introduction of smartphones represents one of the most significant technological developments in recent years, and it is having a major impact on the travel industry. Source: Euromonitor International, PWC, IHRA The travel consumer is leading the way in driving technological change.
  4. 4. Social & Sharing Peer-To-Peer Travel • Vacation Rentals are driven by technology, which breaks the geographic boundaries. • It is also motivated by consumers’ desire to explore locations, live thriftily without giving up adventures, and travel with family. • The advent of websites such as Airbnb.com, Homeaway.com and Flipkey.com helped shift predominantly offline sales towards online, which may explain the bulk of their growth rather than stealing share from hotels. Reviews & Referrals • Customer reviews on websites • Friend referrals incentives Open Innovation & Co-Creation Booking websites and hotel brands engage consumers and tap them for insights Social Media and the Collaboration Economy have influenced the traveling industry with several prominent trends:
  5. 5. Technology: Online and Mobile • PhoCusWright estimates that by 2015, mobile will account for one- quarter of U.S. online travel sales, driving $US40 billion in revenue. In Europe mobile will account for one fifth of bookings by 2015. • Nearly two-thirds of US internet users researched travel via digital channels in 2013, according to eMarketer. • mobile sales are forecast to become more and more important in the upcoming years.
  6. 6. The Online Consumer Journey • Most consumers consider the web to be important for travel research and planning – but the web is also a fundamental source of inspiration for new travel. • Our research shows that the main tools used to inspire consumers by booking competitors and hotel brands, are Social Media sites email marketing. TripWatch – Offers customized e-mail alerts on the specific hotels, attractions and destinations requested by the traveler, in the first personalized, time-sensitive e-mail newsletter for trip planners.
  7. 7. Content Marketing • Websites use social media and content to drive more consumers to the platform. – Most social media platforms are used to inspire and encourage consumers to book a vacation. – Blogs and contents on the websites are used to guide the consumer, add value, and position the brand as a lifestyle advocate. The Airbnb website utilizes a prominent content strategy. The site serves as a “marketing consultant” for people wishing to attract more guests. Other Contents include city guides, guided tours, promotional videos, stories, etc.
  8. 8. Open Innovation & Co-Creation • Marriott has launched a co-creation platform, which encourages the submission of ideas for new hotel technology, style and design. http://travel-brilliantly.marriott.com/ Hotel brands, as well as booking websites, are tapping consumers in order to come up with innovative and mostly effective, products, services and solutions. • Orbitz.com has launched Orbitz Labs, a new site that tests experimental travel tools and features to improve the online shopping experience and lets consumers give ideas and feedback directly to the engineers and technology experts developing new products and services for the website.
  9. 9. Social Media Integration • More and more websites offer a personalized experience to users who are logged-in through their Facebook or other Social media profile. • Tripadvisor had spent a fair amount with Facebook to promote the “Cities I’ve Visited” application and get Facebook-connected users because that fuels its personalization effort and the “Wisdom of Friends” initiative, so that if you’re signed in through Facebook, you get a lot better experience on TripAdvisor “and that proved its worth in terms of better engagement, better monetization, and just a better, more sticky experience for that Facebook connected user.”
  10. 10. Traveling Trends • According to a Google 2013 study, travelers seek value and comparison shop with increasing frequency. Business travelers prioritize convenience and prior experience. • Yet, leisure and business worlds are blending – 57% of business travelers plan to extend a business trip to include leisure time, and 43% of business travelers plan to research or use peer- to-peer sharing alternatives. • According to PWC Study, Europe remains the world’s largest tourism region and in 2013 international tourist arrivals globally grew by 5% to reach a record 1,087 million. • Europe benefited the most from this growth, receiving 29 million more arrivals than in 2012, a 5% gain. • Central and Eastern Europe (+7%) and Southern and Mediterranean Europe (+6%) performed particularly well and Spain welcomed a record 60.6 m international tourists last year, 5.6% more than in 2012. • Russia and China were Europe’s largest source markets in 2013. • Business travel is expected to be a major travel driver in Germany, UK and France.
  11. 11. Traveling Trends | Luxury • Luxury travel recorded a significant recovery after the decline experienced in 2009, with luxury hotels and premium air travel growing by between 5% and 10% per year over 2010-2012. • Luxury travel is evolving, with authenticity, experiential travel and sustainability becoming increasingly important, especially in the traditional luxury travel markets. • PwC consumer research into the 2014 travel intentions of 10,000 Small Luxury Hotel Club Members shows most expect to be at least as well off as they were in 2013 and 44% expected to be better off in 2014. • Luxury guests have fully embraced technology and SoLoMo (social, local, mobile), with social media playing an important role for luxury brands in order to create engagement, receive valuable feedback and gain loyalty. • According to The Affluence Collaborative research group, 72% of the wealthy are active Facebook members, and they increasingly use Twitter. Source: Euromonitor International, PWC
  12. 12. Metasearch / OTAs • A metasearch display is an interface that shows hotel or flight availability and pricing information from multiple sources, without requiring the user to visit another website. • Travel metasearch engines and online travel agencies (OTAs) are becoming more popular, as travel “lookers” seek out one-stop shops to compare different brands, products, packages and prices early in the purchase funnel. • To compete with the growing success of booking sites, OTAs created or bought back many of the currently existing booking sites. examples are Expedia that owns Hotels.com and Hotwire; Orbitz that owns HotelClub and CheapTickets and Priceline that bought back Pegasus’s Travelweb.com. Priceline acquired Kayak in November 2012, and soon after, Expedia, Inc. moved to acquire European metasearch leader Trivago. Source: eMarketer Expected growth at Kayak.com, the metasearch market leader in the US
  13. 13. OTAs Vs. Hotels • The relationship between the OTAs and hotel operators has been the subject of wide debate in the industry. • OTAs have aggressively focused on hotels to provide a higher share of their revenues as the commission from selling flights has declined, and they have tried to attract consumers by reducing the cost of booking as much as possible. • Hotel operators are concerned about losing control over inventory and pricing to OTAs. Hoteliers feel there is pressure to enter into long term contracts without exit clauses at rates that they believe are not always commercial. Source: Deloitte, Google Trends Independent hotels are much more impacted by OTAs than are Chain Hotels. While Chain Hotels have a balanced percentage of reservations made from OTAs and their website, the reservations for Independent Hotels through OTAs are higher than the ones made through their website. As a result, hotel companies have invested in developing and marketing their own websites. Some hotel companies like Marriott are even imitating OTAs by offering flights and car hire online.
  14. 14. Hotel Strategies • Analysts expect to see the development of a more collaborative approach: hospitality companies can take advantage of large OTA investments in technology and marketing to achieve common benefits for both. • Roomkey.com is a direct booking hotel search engine – an initiative of global hotel chains in response to the increasingly stronger role of electronic distributers. • Roomkey.com was founded by large hotel companies (Choice Hotels International, Hilton Worldwide, Hyatt Hotels Corporation, InterContinental Hotels Group, Marriott International, Wyndham Hotel and Best Western International) with the aim of cutting down distribution costs and as a counter to Google. On this Website, travelers can search for, book and compare hotel room prices of leading hotel brands.
  15. 15. Metasearch Engines Strategies Tripadvisor practices diversification both organically and through M&As, in order to build presence in platforms which react to different consumer needs. As such, the company has also covers Vacation Rentals with the same review and rating systems as hotels. Tripadvisor also blurs the line between metasearch engines and OTAs, with actual OTA-derived price comparisons.
  16. 16. The research was conducted by: Hamutal Schieber Schieber Research | Market Research & Competitive Intelligence www.researchci.com | hamutal@researchci.com Thank You

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