Disruption and Shifts in Future Travel Booking

1. Disruption and Shifts in Future Travel Booking Euromonitor International Caroline Bremner

2. Future Travel Booking Digital disruption Future for intermediaries New business models Future trends

3. • North America and Australasia are close to saturation for internet • Emerging markets expected to remain largely underserved by 2030 Technology as an enabler of change 2016-2030 Up to 2015 Percentage of population using the internet Asia Pacific MEA Australasia Eastern Europe Western Europe North America Latin America

4. Moving towards a mobile-first world • Mobile broadband dominates with 80% of global internet subscriptions • Internet.org aiming for ubiquitous connectivity

5. Google TripAdvisor Facebook Twitter iPhone Airbnb, Android Uber Cloud, Internet of Things, VR, AI… Disruptors gain scale quickly • Breath-taking speed of change since the Millennium • From zero social media to 90% penetration expected by 2030 • Internal chip technology a future reality…

6. 0 5 10 15 20 25 30 35 40 0 200 400 600 800 1,000 1,200 1,400 Asia Pacific Australasia Eastern Europe Latin America Middle East and Africa North America Western Europe %shareofpopulation Numberofpeople(mn) Millennial Population by Region 2014 2014 Millennial population (15-35 year old) Millennial % share of total population Millennials lead fast adoption of technology

7. Interaction with brands across multiple devices 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Units,million Global Consumer Electronics Devices in Million Units 2010/2015/2020 2010 2015 2020 1.6 bnWorld smartphones 2020 160mnLatin America smartphones 2020 130%Brazil smartphone penetration per household 2015

9. 0.0 5.0 10.0 15.0 20.0 25.0 30.0 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2005 2010 2015 2020 2025 2030 %period(5-year)growth Trips(million) Global Inbound Arrivals Forecast Performance 2005-2030 Inbound Arrivals % Period Growth Future tourism demand – robust growth but challenges Source: Euromonitor International, UNWTO Source: BBC

10. 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2015 2020 2025 2030 US$billion Global Travel Sales Shift to Mobile 2015/2020/2025/2030 Offline Travel Sales Online Travel Sales ex Mobile Mobile Travel Sales Travel booking landscape Source: Euromonitor International Note: Sales to Residents  Irreversible shift in power from offline to online but there is a ceiling  Mobile the clear winner – creating a mobile strategy critical for future success  Trending towards 80% online vs 20% offline by 2050…

11. Brazil opportunities and threats • Rio 2016 Olympics minimum impact • Low season so less displacement effect • Huge global platform but Zika challenge -30 -20 -10 0 10 20 2014 2015 2016 best case 2016 worst case %y-o-ygrowth Brazil Best Case vs Worst Case Inbound Growth Performance 2016 Arrivals Receipts Source: Euromonitor International from UNWTO Note: 2015 and 2015 actuals , 2016 projections

12. Brazil bucks trend with resistance to online bookings  Big digital inclusion gap with high levels of unfamiliarity with digital sales channels  Lack of trust in security, prefer bank slip payments  Preference for using travel agencies as security net and social status

13. Increased fiction between intermediaries & suppliers OTAs Hotels - Additional revenues - Web marketing/promotion - Source also of direct bookings - Access to new markets - Access to advanced technologies - Significant commissions - Competition on advertising platforms - Competition for brand loyalty - Risk of commoditisation of hotels 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% World US Brazil Intermediaries vs Direct Suppliers % Sales 2015 Offline direct Online direct Offline intermediaries Online intermediaries Source: Euromonitor International

14. • Multi-channel and highly fragmented • Future challenge for who will control the overall customer journey & experience Increasingly busy and complex competitive landscape Search engines & Meta search Consumer Social media Affiliate websites Online travel agents Travel agents Supplier's website Supplier Peer to peer

15. • Expedia and Priceline are world’s leading intermediaries • Metasearch acquisitions with Expedia’s Trivago and Priceline’s Kayak to drive OTA traffic • Expedia’s Decolar acquisition in 2015 to expand in Latin America as new focus area The Big Two dominate and apply pressure Source: Euromonitor International

17. Rise of peer to peer and sharing brands 0 1,000 2,000 3,000 4,000 5,000 6,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Valuesales(US$million) Airbnb and HomeAway Value Sales 2005-2014 • Value for money and authentic experiences big draw for travellers • Rise of online micro entrepreneurs fuels peer-to-peer travel services • Social media ensures trust Source: Euromonitor International

18. Demand Online advertising SEO Supply Vast inventory Best price guarantee Booking Flexible payments and cancellation policies Service Reviews and ratings Seamless service Demand Targeted advertising App push messages Supply Personlised offers In-destination tourist services Booking Multidevice bookings Last minute reservations Service Mobile assistance Seamless travel experience • Shift to mobile changing traveller behaviour and expectations • Big shift to real-time customer service & engagement with opportunities for in-trip bookings • Danger that operators are caught off guard in emerging markets Travel business models transform in the mobile era Online Travel Business Model Mobile Travel Business Model

19. • TripAdvisor, Google and OTAs lead personalisation • But mobile web/apps low barrier to entry – platforms for independents and SMEs • In Brazil, high prices & personal security are barriers to growth for wearables Holy grail of personalisation Consumer preferences Consumer past behaviour LocationTime Online inventory of travel services

20. Leading Global Instant Messaging Platforms 2015 Company Users (million) Whatsapp 800 Facebook Messaging 600 WeChat 550 LINE 205 Snapchat 100 Source: Mary Meeker Internet Trends 2015 • Instant messaging platforms have seen a phenomenal rise in popularity • Use messaging to chat to friends, send photos and videos and increasingly shop New booking platforms emerge quickly

21. • World’s social media base over 2.0 billion users • Huge potential to drive s-commerce in Brazil, away from advertising to sales • Twitter & Facebook making serious moves into s-commerce Brazil highly social nation - opportunity for s-commerce Buy Items via Social Media Platform by Market 2014 Source: Euromonitor International, Hyperconnectivity Survey 2014

22. • TripAdvisor and Google to leverage their huge traffic to generate direct bookings • Both launched hybrid models allowing direct hotel bookings, but not likely to become OTAs • Amazon may try again to crack the travel industry Future travel booking giants?

24. • Blending of the physical and digital worlds • Channels acting in complement not in conflict • Reinvention of old school - Thomas Cook launches “Hi Tech, Hi Touch” store ‘Physital’ fusion

25. •Virtual reality set to take the travel industry by storm •Allowing consumers to try before they buy •Robots a gimmick, but automation a threat to job creation Technology to enhance the in-store experience Source: Marriott HotelsSource: Business Wire

26. • Convenience through multiple channels & devices • Mobile in the mix • Personalisation • Seamless user experience • Sustainability a given Success criteria – experience will trump all

27. Thank you for listening Caroline Bremner Head of Travel caroline.bremner@euromonitor.com @carolinebremner

Disruption and Shifts in Future Travel Booking

Disruption and Shifts in Future Travel Booking

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Disruption and Shifts in Future Travel Booking