The document discusses the changing landscape of online distribution in the travel industry. It notes that online travel agencies (OTAs) have gained an increasing share of online bookings over time, now dominating the search and conversion process. It also discusses how customers are increasingly using mobile devices and social media to inform and make travel purchases, requiring companies to adapt their online strategies.

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Peter
O’Connor,
Essec,
2015
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Online Distribution
Is the chaos clearing
or continuing?
Dr. Peter O’Connor
Essec Business School
Distribution is a
battle field!

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Peter
O’Connor,
Essec,
2015
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Ten things
to think
about…..

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O’Connor,
Essec,
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>> 0 >> 1 >> 2 >> 3 >> 4 >>
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Incredible
pace of technological
change

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O’Connor,
Essec,
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How Americans Use Their
“Cell Phones”
• 18 to 29 year olds more
likely to use their phones
as personal computers,
digital music players,
cameras, gaming devices,
social media or internet
access devices rather than
as a telephone!
• No longer a talking
instrument – now a lifestyle
device.

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O’Connor,
Essec,
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Ubiquitous and
instant access to
up-to-the- second
information
>> 0 >> 1 >> 2 >> 3 >> 4 >>
9

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O’Connor,
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Our customer is
changing!
Our customer
has changed!

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O’Connor,
Essec,
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The Post-Dot-Com Customer
Chief characteristic of new consumer
is that they act differently, think
differently, buy differently, and are
early adopters of new technology.
In the past, consumers may
have sought expert advise……

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O’Connor,
Essec,
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Now they turn to the web…..
And the Mobile Web

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O’Connor,
Essec,
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And Social Media
Disruption !

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O’Connor,
Essec,
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Ineffective
presence on
online /
mobile /
social
renders you
invisible
Only two
things matter!

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O’Connor,
Essec,
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Question 1
How will people find your site(s)?
Question 2
Why should customers book
on your site
(rather than elsewhere)?

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Essec,
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>> 0 >> 1 >> 2 >> 3 >> 4 >>
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Search
positioning
remains the
critical issue

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28
28Number of sites considered
before making a travel booking

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Less than one third
of consumers start
looking by
searching for a
brand

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Gaining visibility is
getting increasingly difficult

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What drives search?
Detailed Unique
Organised Topical
Content
See me live……

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O’Connor,
Essec,
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See me live……
OTAs winning search battle
• Dominating SEO results listings
• Booking.com incredible strength in
paid-search (particularly Google)

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Essec,
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OTAs winning search battle
• Dominating SEO results listings
• Booking.com incredible strength in
paid-search (particularly Google)
• High X0,000 of Affiliate and White-label
deals, also heavily engaged in search

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O’Connor,
Essec,
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OTAs winning search battle
• Dominating SEO results listings
• Booking.com incredible strength in
paid-search (particularly Google)
• High X0,000 of Affiliate and White-label
deals, also heavily engaged in search
• TripAdvisor

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O’Connor,
Essec,
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OTAs winning search battle
• Dominating SEO results listings
• Booking.com incredible strength in
paid-search (particularly Google)
• High X0,000 of Affiliate and White-label
deals, also heavily engaged in search
• TripAdvisor
• Both Expedia and Booking forecast to
increase online marketing spend in
European marketplace in short term

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>> 0 >> 1 >> 2 >> 3 >> 4 >>
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Conversion
No point in getting them to your
site unless you can sell to them

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Do you have
sufficiently deep
content, written in a
sales orientated
manner, to convince
the customer to buy?
Will this encourage the guest to buy?

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Lack of
merchandising =
low conversions
rate = high
distribution costs

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Both Macro and Micro level!
Why would I book the more
expensive one?

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Merchandising works….
What can you do
to encourage
your customers
to book?

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Now!
>> 0 >> 1 >> 2 >> 3 >> 4 >>
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OTA dependency a problem
0%
5%
10%
15%
20%
25%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Brand.com
OTAs
OTAs Continue to Gain
Market Power
2006 2010
Online Penetration 11.71% 21.71%
Online Direct Penetration 5.37% 7.76%
Online OTA Penetration 6.34% 13.95%

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OTAs Continue to Gain
Market Power
2006 2010 E2014
Online Penetration 11.71% 21.71% 34.66%
Online Direct Penetration 5.37% 7.76% 9.10%
Online OTA Penetration 6.34% 13.95% 25.56%
Which Companies?
Average Monthly European Visitors for selected European OTAs

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Awful Affiliates
www.SexAndBondageInLondon.com
Which Companies?
European Hotels US$ billion 2006 2010 2014
Total European Hotel Bookings 102.5 101.8 115.4
OTA European Hotel Bookings 6.5 14.2 29.5
Brand.com 5.5 7.9 10.5
Priceline / Bookings 1.3 7.5 19.9
Expedia 1.2 2.0 4.2
Orbitz 0.3 0.3 0.7
Other OTA 3.7 4.4 4.7

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The OTAs are coming to get you!

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Billboard Effect
Cooperation is key!

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>> 0 >> 1 >> 2 >> 3 >> 4 >>
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Magnificent meta-search

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US$ 108 million in 2014

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The Evolution of the
Customer Booking Path

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OTAs dominating!

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Promoted Hotels adding
another distribution cost
>> 0 >> 1 >> 2 >> 3 >> 4 >>
4

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Today’s
consumer

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600%
The Move to Mobile!

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Mobile as a source of
incremental bookings

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OTAs ahead!

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>> 0 >> 1 >> 2 >> 3 >> 4 >>
3

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People are talking!

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O’Connor,
Essec,
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The testimonial is back!
If UK Internet usage was
just 1 hour
September 20, 2011

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0 50 100 150 200 250 300 350
www.skittles.com
www.facebook.com/skittles
Thousands
Visitors, March 2012
Social profiles are outpacing
branded websites

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Socially
Connected

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Have some degree of trust

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O’Connor,
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Effective
if you
get it
right!

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>> 0 >> 1 >> 2 >> 3 >> 4 >>
2
Understand your customer

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Why bother?

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Data
is the new
oil!
>> 0 >> 1 >> 2 >> 3 >> 4 >>
1

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O’Connor,
Essec,
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Focus on the
fundamentals
Need to
manage all
channels
(electronic &
traditional)
much more
closely.

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O’Connor,
Essec,
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Prioritisation
Clear
Strategy

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Dr Des O’Mahony,
CEO and founder at Bookassist
New skill sets needed
(Yield and revenue management, electronic
distribution, search engine placement, online
merchandising and online selling - all
constantly evolving and changing)

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O’Connor,
Essec,
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For a copy of the presentation,
please email me on
oconnor@essec.edu