Net Travel 2000 presentation


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Presentation given at NET TRAVEL 2000 conference, sponsored y IQPC, in Alexandria, Virginia.

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Net Travel 2000 presentation

  1. 1. A Diverse Customer Focused Web Strategy to Shift Buyer Behavior & Increase Stakeholder Value Assistant Vice President of E-Commerce Interval International Adjunct Professor Graduate Business School University of Miami William J. Brown
  2. 2. This Presentation Will Be Available Online <ul><li>Send a blank e-mail to: </li></ul><ul><ul><li>[email_address] </li></ul></ul><ul><li>Get immediate access to this presentation and others from many Internet executives </li></ul><ul><li>Share your expertise with 400 students </li></ul><ul><li>Recruit your E-Commerce team from graduating students </li></ul>
  3. 3. What We’ll Discuss Today: <ul><li>We will examine Interval’s historical approach to consumer-focused technologies </li></ul><ul><li>We will look at what Interval has and is doing to shift buyer behavior </li></ul><ul><li>We will examine some of Interval’s challenges and our next steps </li></ul><ul><li>We will take a look at the use of the Internet in the timeshare industry </li></ul>
  4. 4. Timeshare: A Growing Industry <ul><li>Global Sales of Timeshare = $6.7 Billion </li></ul><ul><ul><li>up 5.6% compounded annually since 1994 </li></ul></ul><ul><ul><li>4.99 million families own timeshare </li></ul></ul><ul><ul><li>collectively own 7.4 million intervals or respective points-based equivalents </li></ul></ul>Source: American Resort Development Association
  5. 5. Leisure Travelers Interested in Using the Internet Source: The YPB Yankelovich Partners 2000 National Leisure Travel Monitor * Denotes statistically significant difference from prior year 48* 43 Make car rental reservations 52* 46 Make airline reservations 52* 48 Make hotel reservations 64* 57 Get information and prices 2000 % 1999 % Leisure travelers who are interested in using the Internet or services such as Expedia or Travelocity to:
  6. 6. Online Distribution Growth <ul><li>Vacation/Tour/Cruise category is the fastest growing sector of online travel </li></ul><ul><li>By comparison, Hotel Web site distribution will grow by just 218%; Airline Web sites by just 156% </li></ul>Source: 2000 PhocusWright eCommerce Survey 971% 750 70 Vacation/Tour/Cruise Change 2001 $m 1999 $m Distribution Channel
  7. 7. Interval International <ul><li>One of the world’s largest vacation exchange companies </li></ul><ul><ul><li>With 1,700 team members in more than 50 countries </li></ul></ul><ul><li>1.2 million member families, comprising more than 4 million individuals </li></ul><ul><li>A network of more than 1,850 affiliated vacation resorts </li></ul><ul><li>Privately held </li></ul><ul><ul><li>Willis Stein (Venture Firm) </li></ul></ul><ul><ul><li>Marriott, Hyatt, Carlson, Starwood hold equity positions </li></ul></ul>
  8. 8. Web Initiatives Built on Solid Foundation <ul><li>Interval is a recognized leader in vacation travel services & exchange </li></ul><ul><li>Interval has a scaleable organizational structure, which today manages: </li></ul><ul><ul><li>1,250,000 members, living in over 60 countries </li></ul></ul><ul><li>Interval members own approximately 1,900,000 units of timeshare, much of which is not utilized for exchange </li></ul>
  9. 9. Interval’s Affluent, Web-Savvy Membership <ul><li>Average household income has risen 11 percent over the past two years, to almost $103,000 </li></ul><ul><li>More than 33% have a household income above $100,000, compared with just 9.3% of U.S. population </li></ul><ul><li>80% have Internet access at home or work </li></ul><ul><li>70% use e-mail </li></ul><ul><li>On average, spends 4.2 hours each week online </li></ul>Source: 1999 Simmons Proprietary Research Study
  10. 10. High Propensity to Purchase Online <ul><li>33% use the Internet to shop for and purchase travel services </li></ul><ul><li>32% purchased airline tickets, hotel reservations, car rentals, or last-minute or preplanned vacation packages via the Internet </li></ul><ul><li>50% said they planned to purchase merchandise online in 2000 </li></ul><ul><li>More than 20% would make their travel purchases online again </li></ul>Source: 1999 Simmons Proprietary Research Study
  11. 11. Interval’s Goals for the Web <ul><li>Provide a better user experience for our customers </li></ul><ul><li>Transition business to self-service model </li></ul><ul><ul><li>Reduce costs </li></ul></ul><ul><ul><li>Provide worldwide service, 24/7/365 </li></ul></ul><ul><li>Create new revenue streams by building on core competencies </li></ul>
  12. 12. Credit card order processing Website for product/service information Customer support via the Web Website for corporate information ( Web access to order information Inference Engine Full Online Exchange Measuring Interval’s Web Progress Credit: Geoffrey Moore E-Commerce Escalator, adapted from “Living on the Internet” Core Context
  13. 13. Internet Enabled Core Business Functionality <ul><li>Getaways </li></ul><ul><ul><li>“ II-Savers” </li></ul></ul><ul><li>Membership Renewals </li></ul><ul><li>Membership Upgrades </li></ul><ul><ul><li>Interval Preferred </li></ul></ul><ul><li>Exchange Queries </li></ul><ul><li>Online Travel </li></ul><ul><li>Exchange (more on that later …) </li></ul>
  14. 14. State of Convergence: Offline Competencies – Online Components Under development <ul><li>Packages (travel and/or amenities) </li></ul><ul><li>Air/car/ground/hotels </li></ul><ul><li>Amenity packages (e.g., Disney park tickets) </li></ul>Promotional program launched June 2000 MBNA Consumer Credit Card & Rewards Program Promotional program launched March 2000 Membership Upgrade Package Partnership with (CFN) Insurance Fully Enabled, plus Web-only products such as II-Savers Getaways Enabled; Amadeus/ProLogic/Vendors Air/Car/Cruise/Hotels Under “highest-priority” development; implementation to begin 4 th Quarter 2000 Full Self-Service Vacation Exchange Status of Internet Offering Existing Member Products, available through traditional call center
  15. 15. <ul><li>Member Use Accelerating </li></ul><ul><li>Nearly 100,000 unique Interval members visited </li></ul><ul><li>Between content and transaction pages, members are viewing more than 2.2 million pages each month </li></ul><ul><li>Traffic growth of about 7% per month </li></ul><ul><li>NOTE: is a closed membership site exclusively for Interval members </li></ul>Site Traffic Internet Initiatives to Date
  16. 16. Online Getaway Sales: Approaching 35% of Total Getaways Sold 1999 2000 To Date August 12
  17. 17. Online Renewals Surging Membership renewals conducted through
  18. 18. Online Member Inquiries (Self-Help, in-place of Call Center) Total, self-service exchange status inquiries since inception of functionality = 457,991 Savings in opportunity costs, based on average customer service cost of $6.75 per call = $3,091,439
  19. 19. How Are We Shifting Buyer Behavior?
  20. 20. <ul><li> is a Members-only Web site </li></ul><ul><li>Member content available in 11 languages, with international versions launching this Fall </li></ul>Clear Statement of Exclusive Value
  21. 21. Internet-Only Discounts <ul><li>Interval members can save up to $50 on each Getaway (additional, last-minute resort vacation) </li></ul><ul><li>II-Savers: Very limited, least expensive specials on imminent burn space </li></ul><ul><li>Preferred seating for Broadway Shows </li></ul><ul><li>Coming soon : Discounts for online membership renewals & upgrades </li></ul>
  22. 22. Expanded Resort Directory & Tools <ul><li>Each resort listing will have up to 10 photographs of sample units (by size, amenities, etc.) </li></ul><ul><li>Streaming video is being produced for 80 top destinations in partnership with Visual Data Corp. (we call this “ResortView”) </li></ul><ul><li>Blueprints and floor plans for each property </li></ul><ul><li>Local maps and event schedules </li></ul>
  23. 23. Cohesive, Unified Marketing Messages <ul><li>Cohesive marketing message: is faster , easier to use , and offers exclusive savings </li></ul><ul><li>Positioning to members that this can be a primary channel for conducting business with Interval </li></ul><ul><li>Example of branding: Re-launch of member magazine as IntervalWorld Magazine , to reinforce value of Web site </li></ul><ul><li>Every piece of Interval collateral and document delivered to our customers reinforces Internet brand </li></ul>
  24. 24. E-Mail Marketing Initiatives <ul><li>Early efforts have succeeded in creating opt-in lists of more than 100,000 Interval members </li></ul><ul><li>Strategy is to significantly expand effort throughout remainder of Year 2000 and deliver diverse newsletters and communiqués </li></ul><ul><li>Anticipate that these initiatives will assist in shifting buyer behavior to Web functionality and drive higher Internet revenues </li></ul>
  25. 25. Online Travel Interval members may search for fares or purchase airline tickets , hotel or car rental reservations, at Interval negotiated rates
  26. 26. Select Alliances Build on Demographics <ul><li>Example: </li></ul><ul><li>Launching a private-label tee times booking service for members of Interval International </li></ul><ul><li>Nearly 31% of Interval members golf while on vacation </li></ul><ul><li>Alliance will also create a joint membership program to market to Interval members </li></ul><ul><li>Other examples include real-time worldwide weather, street directions, maps, etc. </li></ul>
  27. 27. IntervalWorld Delivers Even More Value <ul><li>Through select affiliate programs, Interval creates compelling online-only services for our members </li></ul><ul><li>Provides the platform for our members to purchase value-added products that reinforce our brands, many at negotiated discounts </li></ul><ul><li>, Spa Finder, Schubert Theatre Group,, Samsonite, and more </li></ul>
  28. 28. Internet Lead Generation Initiatives
  29. 29. Mass Market: Compelling Internet Opportunities <ul><li>27 million people shopped for travel online in 1999 </li></ul><ul><ul><li>Double 1998’s total of 13.4 million </li></ul></ul><ul><li>Online travel shoppers now comprise more than 33% of the total online population </li></ul><ul><li>These consumers spend $500 more per year than the general online user (typically spend $705 per transaction) </li></ul><ul><li>More than 75% of online travel shoppers agree that brands are more important online than offline </li></ul><ul><li>Online adults make an average of 3.3 online travel arrangements each year </li></ul>Source: Cyber Dialogue
  30. 30. Mass-Market Initiatives <ul><li>Interval Goals: </li></ul><ul><li>Consumer lead generation for our partners </li></ul><ul><li>New distribution channels for inventory </li></ul><ul><li>New affinity membership programs </li></ul>
  31. 31. Interval’s Access to Resort Vacation Inventory <ul><li>Developers </li></ul><ul><ul><li>Estimated by AEG at 2.1 million units in 2000 </li></ul></ul><ul><li>Home Owners Associations (HOA) </li></ul><ul><li>Existing Inventory </li></ul><ul><li>Unsold weekly intervals </li></ul><ul><ul><li>Interval has potential access to 217,620 unsold units, just from its existing membership base </li></ul></ul><ul><li>Non-timeshare inventory </li></ul><ul><li>Interval is a true inventory aggregator </li></ul>
  32. 32. Where are Timeshare Web sites today? Let’s take a look at the top companies by total annual sales revenue …
  33. 33. 40% 87% 33% 40% 27% Source: Vacation Industry Review January/February 2000
  34. 34. A Few Conclusions <ul><li>Analysis suggests that there is a gap between endorsing the Web as an important channel and actual execution </li></ul><ul><ul><li>we’re acknowledging it’s an important channel, but not fulfilling it </li></ul></ul><ul><li>I believe timeshare companies are still trying to figure out why the Web matters to them </li></ul><ul><ul><li>Can’t actually sell a timeshare online – yet </li></ul></ul><ul><li>Web-site operators should do more to demonstrate value to existing owners and to the leads that they want to convert into new owners. </li></ul><ul><ul><li>For example, the Web is a perfect medium for mini-vacations and other promotions, but only a third of the resort vacation companies provided any such special offers. </li></ul></ul>
  35. 35. Summary <ul><li>The vacation ownership niche is a vibrant, popular and growing segment of the global travel industry </li></ul><ul><li>Interval has a clear strategy to: </li></ul><ul><ul><li>Deliver value to our customers & partners </li></ul></ul><ul><ul><li>Shift consumer behavior from offline to online </li></ul></ul><ul><ul><li>Create new revenue streams </li></ul></ul><ul><ul><li>Leverage the Web to enter the mass-market </li></ul></ul><ul><ul><li>Launch new vertical businesses using the Internet & Interval’s core competencies </li></ul></ul>
  36. 36. Still, the Opportunities are Just Being Scratched <ul><li>As Robert Shaw once said </li></ul><ul><ul><li>“ So far we’re only putting lipstick on the pig.” </li></ul></ul>