0
Eyefortravel
Shift in distribution channels:
How internet is changing the way people buy
and sell travel

May 11, 2009 – D...
AGENDA

         1. How the Internet is evolving as a distribution and marketing
            channel for travel products
 ...
Growth in Online Adoption
   More and more customers are buying travel online




      Source: www.internetworldstats.com...
Growth in Online Adoption
   More and more customers are buying travel online




© 2007 Expedia. Confidential and proprie...
Effects of the internet on consumers




© 2007 Expedia. Confidential and proprietary. All rights reserved.   Expedia Part...
Effects of the internet on hotels and travel suppliers

       • World wide distribution and marketing

       • Access to...
Effects of the internet on intermediaries

              • Traditional travel agents: value added / mix model / less
     ...
AGENDA

         1. How the Internet is evolving as a distribution and marketing
            channel for travel products
 ...
How to profit from online distribution



              1. Expedia?
              2. Basics
                 • Content man...
Expedia Travel – From MSN to the World
   Expedia holds a leadership position in nearly every market where we are present
...
And they visit The World’s Largest Travel Channel




© 2007 Expedia. Confidential and proprietary. All rights reserved.  ...
Expedia – The Power of the Global Distribution




           One Extranet, one contract and your hotel is seen and sold w...
Expedia – The Power of the Global Distribution




© 2007 Expedia. Confidential and proprietary. All rights reserved.   Ex...
Expedia General Figures
 • $21bn sold in travel in the last 12 month #1 online travel company
 • Around 75 million people ...
How to profit from online distribution



              1. Expedia?
              2. Basics
                 • Content man...
Content management
     95% of US leisure Bookers and 92% of Lookers
     say descriptive content is important to them.
  ...
Provide excellent service
    The Web Site Content That Matters To
    Travelers
    Forester Research




© 2007 Expedia....
Inventory and Rates Management
Tour Ops case study – From Volume to Rev Mgmt
              Tour Ops   Expedia/Hotels.com

...
1 day release
                    ONLINE
                                                       10 rooms allotment
       ...
Shortening the learning curve – Usual ‘mistakes’ while @
• No thinking on selling price. Same Net rate to everybody
  with...
How to profit from online distribution


                             1. Basics
                                • Content ...
Marketing
                                             Media value of participating with Expedia
                      PLA...
Merchandizing – from 1 to all                                     Expedia.es
Expedia.com




                             ...
Case study – South African Tourism
    Budget:                                       $ 400.000 spend
    Campaign:      ...
Summary
 1. This shift online is impacting consumers, intermediaries, and travel suppliers.
    Internet is changing the w...
Thank you!

   diegol@expedia.com



www.joinexpedia.com
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Eye for travel - Expedia presentation INDABA 2009

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How the internet is changing the way people buy and sell travel

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Transcript of "Eye for travel - Expedia presentation INDABA 2009"

  1. 1. Eyefortravel Shift in distribution channels: How internet is changing the way people buy and sell travel May 11, 2009 – Durban, South Africa Diego J. Lofeudo Director of Market Management Expedia Travel diegol@expedia.com
  2. 2. AGENDA 1. How the Internet is evolving as a distribution and marketing channel 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 © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 1
  3. 3. Growth in Online Adoption More and more customers are buying travel online Source: www.internetworldstats.com © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 2
  4. 4. Growth in Online Adoption More and more customers are buying travel online © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 3
  5. 5. Effects of the internet on consumers © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 4
  6. 6. 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’ © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 5
  7. 7. Effects of the internet on intermediaries • Traditional travel agents: value added / mix model / less transactional more experiential • Wholesalers and traditional tour operators: direct to consumers / large investments in technology and marketing • Online travel agencies: Battle to win hearts and minds of consumers and suppliers • Better functionality for consumers • Improved tools for suppliers • Alternative compensation models (transaccional & media) © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 6
  8. 8. AGENDA 1. How the Internet is evolving as a distribution and marketing channel 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 © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 7
  9. 9. 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 © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 8
  10. 10. Expedia Travel – From MSN to the World Expedia holds a leadership position in nearly every market where we are present No.1 OLTA, in 19 countries No.1 hotel specialist, in 50 countries Leading discount travel site reaching price-conscious travelers Corporate travel agency operating in 9 countries No.1 community player with more than 15M reviews and opinions Leading online travel service provider in China Operating more than 100 in-market concierge and activity desks We build leading brands that are highly relevant to our partners © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 9
  11. 11. And they visit The World’s Largest Travel Channel © 2007 Expedia. Confidential and proprietary. All rights reserved. Source: Nielsen NetRatings February. 2008 Expedia Partner Services Group | 10
  12. 12. Expedia – The Power of the Global Distribution 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! © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 11
  13. 13. Expedia – The Power of the Global Distribution © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 12
  14. 14. Expedia General Figures • $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 sites at 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 are sold per day at Expedia (circa 2000 rooms sold when I finish my 20min presentation)  If we put in line all the beds we sell every month, we We fill 150 Boeing 747’s every day! could build a bridge between New York and London. We land more than 130 paxs a day just in JNB Some 14 rooms per hour (24/7) sold just in ZA! © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 13
  15. 15. How to profit from online distribution 1. Expedia? 2. Basics • Content management • Provide excellent service • Inventory and rates management 3. Advanced • Merchandizing and Marketing • Retail Management © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 14
  16. 16. Content management 95% of US leisure Bookers and 92% of Lookers say descriptive content is important to them. The Web Site Content That Matters To Travelers, Forester research © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 15
  17. 17. Provide excellent service The Web Site Content That Matters To Travelers Forester Research © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 16
  18. 18. Inventory and Rates Management Tour Ops case study – From Volume to Rev Mgmt Tour Ops Expedia/Hotels.com • Fixed net rates • Flexible net rates • Fixed allocation • Increase & decrease • Shrinking market Inventory • Mass market • Growing market • Rev Mgmt Market 14 May 2009 17
  19. 19. 1 day release ONLINE 10 rooms allotment $60 room 1 to room 4 $80 room 5 to room 10 1 day release BSC = $720 + 10 rooms allotment High Season $50 room 1 to room 4 1 day release $65 room 5 to room 10 21 days release 10 rooms allotment BSC = $590 + 10 rooms allotment $40 room 1 to room 4 Mid Season $60 room 1 to room 10 $50 room 5 to room 10 BCS = $600 - BSC = $460 + 14 days release Low Season 10 rooms allotment $50 room 1 to room 10 7 days release BCS = $500 - 10 rooms allotment $40 room 1 to room 10 BSC = $400 - Do you need us all (TO offline and Online)? YES Should you talk to us all the same way? NO 14 May 2009 OFFLINE 18
  20. 20. Shortening the learning curve – Usual ‘mistakes’ while @ • No thinking on selling price. Same Net rate to everybody without understanding the financials of the partner www.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) 14 May 2009 19
  21. 21. How to profit from online distribution 1. Basics • Content management • Provide excellent service • Inventory and rates management 2. Advanced • Merchandizing and Marketing • Retail Management © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 20
  22. 22. Marketing Media value of participating with Expedia PLACEMENT IMPRESSIONS CLICKS • Top Hotel • 7,743,507 – £154,870 •130,874 - £150,505 • Average •4,222,803 – £84,456 •62,713 – £72,120 • Low • 2,337,650 – £46,753 •42,786 - £49,203 Cost of Top 5 position head term on a major Cost of a banner with Expedia is aprox £20 per 1,000 impressions search engine such as ‘london hotels’ estimated at £1.15 per click If your hotel doesn’t have the right content and the right rate you are underutilizing this great deal of exposure. © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 21
  23. 23. Merchandizing – from 1 to all Expedia.es Expedia.com Expedia.co.uk © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 22
  24. 24. 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)  $68.5 Million Turnover in Period $12.5+ Million Additional $56 Million Turnover in Campaign Period $56 Million Turnover brought to South Africa in same Period Last Year Same Period Campaign Period Last Year © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 23
  25. 25. Summary 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 as a long weekend city break!!!) 2. Revenue Management is key to maximize profits. Moreover in times of economy slowdown. Every single penny counts. 3. More of the same will take us nowhere. Moving mind set from signing contracts to managing contracts. 4. Wear online hat when doing business with online Tour Operators. Wear offline hat 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 and benefit from this new way of doing business. Hotels / Lodges / Guest Houses pls visit www.joinexpedia.com for more info. © 2007 Expedia. Confidential and proprietary. All rights reserved. Expedia Partner Services Group | 24
  26. 26. Thank you! diegol@expedia.com www.joinexpedia.com
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