Competitive Research_Travel and Tourism Industry

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COMPETITIVE RESEARCH
IT Spending and Key Technology Initiatives – TRAVEL and TOURISM INDUSTRY

CONTENTS:
Background Information
Research Methodology
Industry Overview
Findings
Competitor Analysis
Booking.com (Priceline)
Expedia
Thomas Cook
TripAdvisor
Suggestion and Recommendations to TUI AG

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Competitive Research_Travel and Tourism Industry

  1. 1. Sanjay Talukdar COMPETITIVE RESEARCH IT Spending and Key Technology Initiatives – TRAVEL INDUSTRY Prepared by -
  2. 2. TABLE OF CONTENTS • Background Information • Research Methodology • Industry Overview • Findings • Competitor Analysis – Booking.com (Priceline) – Expedia – Thomas Cook – TripAdvisor • Suggestion and Recommendations to TUI AG
  3. 3. BACKGROUND INFORMATION 3 CLIENT: TUI AG Travel and Hospitality Industry Competitors Booking.com; Expedia; Thomas Cook and TripAdvisor Research Focus Analysis of IT spending of competitors Business impact of the technology initiatives on the companies Type of Research Competitive Research Best practices to be adopted by TUI AG Recommendations to TUI AG
  4. 4. RESEARCH METHODOLOGY 4 • Competitive Research • Desk Research Research Type • Co annual reports • Press Release • Previous research reports Secondary Research • IT spending of each company • Case Study - Tech initiatives Competitor Analysis
  5. 5. • Deeper penetration of Internet across the world • Youths form large chunk of population – Tech Savvy • Consumer wants information before purchase Online Travel Industry: • In 2012; 1 bn International arrivals • 70% travelers update status of Facebook while on vacation INDUSTRY OVERVIEW 5 7 7.29 6.85 6.9 6.95 7 7.05 7.1 7.15 7.2 7.25 7.3 7.35 2013 2014 USDTrillion * Expected • In 2013, travel and tourism contributed $ 7 trillion to the global economy • Revenues will grow by 4.2% in this year Global Travel and Tourism Industry Growth Drivers Mobile/Tablet apps: • 85% leisure travelers use Smartphone • 30% use mobile apps to find hotel deals • Industry players investments have paid –off Consumer centric: • 62% user research about upcoming trip • Activities; Read/Give Reviews, watch video Social Media: Big Data way to go • 50% bookings via social media • Volume, Variety, Velocity and Veracity * source
  6. 6. FINDINGS IT SPENDING: Company Total Revenue IT Spending IT/ Revenue Priceline Booking.com 5260 43 0.81% Expedia Inc 4030 485 12.0% Thomas Cook 15755 209 1.30% TripAdvisor 762 87 11.40% Total 25807 824 3.19 % Key Technology Trends: • Automate inventory management • Customized service Priceline acquires Kayak for $1.8bn in 2012 • Social technologies 39% travel agents employ social media; 49% use Facebook; 44% LinkedIn • Seamless experience - all touch points 6 (Figures in $mn) • No industry level benchmark set in terms of % technology spend among companies • Some companies spending about 11-12% of their revenues on technology • Other major players limiting it to close to 1% of their revenue Year 2012* Source: Company Annual reports
  7. 7. COMPETITOR ANALYSIS – BOOKING.COM (PRICELINE) Total Transaction Value 2011 2012 2013 Mobile Booking Transactions 1 3 8 7 Description 2012 2011 Total Revenue 5260 4355 Information Tech Spending 43 33 % of Total Revenue 0.81% 0.75% (Figures in $mn) (Figures in $mn) • Tech Initiatives and Impact: Mobile app • + 20 mn download ; +1mn Recommended on Google Business Impact • Total transaction value (TVA) via app : $8 bn in 2013 Acquisition • $ 3mn deal : Priceline acquires Qlika • Manage & optimize millions of micro-campaigns using BIG Data analysis – Qtree (micro market strategy) Increase of $ 10mn investment in IT spending in 2012 as compared to 2011 TVA via app doubled from over $3 bn in 2012 to $8 bn in 2013 * Source: Company Annual report
  8. 8. COMPETITOR ANALYSIS – EXPEDIA 8 (Figures in $mn) • Tech Initiatives and Impact: Looking into the future • Technology investments; $ 381mn in 2011 and $ 485mn in 2012 • Revenues has consistently been making increased expenses tied to technology investments and international expansion Investment in start-up • Room 77 : American co - search for hotels across multiple travel sites at the same time (meta search feature) • Invests $ 30mn in start up • Promises of $ 72 in savings per stay • Repeat booking rate of more than 50 % Increase of $ 104 mn investment in IT spending in 2012 as compared to 2011 Break-up of IT spending Description 2012 2011 Total Revenue 4030 3449 Technology and content spending 485 381 % of Total Revenue 12.0 % 11.0 % Description 2012 2011 Change Personnel and Overhead 219 183 31% Depreciation/amortiz ation tech assets 116 84 38% Others 106 97 10% Total 485 381 27% (Figures in $mn) * Source: Company Annual report
  9. 9. COMPETITOR ANALYSIS – THOMAS COOK 9 (Figures in $mn) • Tech Initiatives and Impact: Description 2012 2011 Total Revenue 15755 3481 Technology and content spending 209 206 % of Total Revenue 1.3 % 5.9 % Cutting costs by IT enabled improvements • $ 209mn and $ 206mn - In 2012 & 2011 respectively • $ 71mn - cost savings achieved in 2011-12 period Earning Profit and looking for more • Company reported operating profit for the first time in three years – in 2013 • Thomas Cook India Launches interactive and innovative tablet app* Source: Company Annual reports Company Total Revenue IT Spending IT/ Revenue Priceline Booking.com 4355 33 0.76% Expedia Inc 3449 381 11.0% Thomas Cook 3481 206 5.92% TripAdvisor 637 57 8.95% Total 11922 677 5.68% (Figures in $mn) Year 2011 $ 71mn saving achieved during 2011-12 5.68% as compared to 3.19% in 2012
  10. 10. COMPETITOR ANALYSIS – TRIPADVISOR 10 (Figures in $mn) • Tech Initiatives and Impact: Meta display feature & Social Media • 15% of TripAdvisor’s total traffic is using the meta- display • 35% of TripAdvisor’s new reviews are derived from its Facebook connected members Increasing Revenue • 20% increase in its 2012 revenues, technology and content spending was more than $ 30mn as compared to 2011 i.e., $ 57mn Increase of $ 30mn investment in IT spending in 2012 as compared to 2011 Break-up of IT spending Description 2012 2011 Total Revenue 762 637 Technology and content spending 87 57 % of Total Revenue 11.4 % 8.9 % Description 2012 2011 Change Personnel and Overhead 80 51 56 % Others 7 6 7 % Total 87 57 (Figures in $mn) * Source: Company Annual report
  11. 11. SUGGESSTIONS & RECOMMENDATIONS – TUI AG Industry Standard • TUI AG may look to invest separately in IT initiatives as per the benchmark set by other competitors; average technology spending, spend as a percent of revenue of 4 competitors is 3.19% in 2012 • TUI AG should look forward to allocate definite spending for Technology and Mobile spending Consumer Centric • Mobile app, Tablet app and Website integration over different screen size providing customer rich user experience • The company should explore opportunities in metasearch as these days, the customers like to compare from various websites before finally settling on a service provider Big Data Analytics • The company should make investments in analytics for better competitive advantage via analyzing the consumer data at all touch points and via IP based delivery model • Micro segmentation strategy: Company could focus on targeted groups with the help of specific software/platform 11
  12. 12. THANK YOU! 12

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