Big Data + big disruption Andrew Sangster

Editorial Director and owner, Hotel Analyst Group

Agenda

• Defining big data

• Demand management

• Where rooms are sold

• OTAs (and other channels) are the

retailers, hotels the product

• Viability of booking direct

• Conclusion

To define…..

Big Data:

• The processing of unstructured data

• It moves beyond relational databases

But in reality it means:

• Lots of data

• Can’t cope / process

• Not doing anything with it

Big Data is an accelerant on the flames of

the demand management fire

It matters in demand management

• Revenue management has seen the cheapest prices go

to the earliest and latest bookers – but why?

• Last minute bookers should pay more and

understanding behaviour better will help deliver it

• Cancellation policies give late bookers a free insurance

policy

• Total revenue (eg f&b, spa etc) is what matters

• Profit (GOPPAR) rather than RevPAR

Big Data will facilitate change in all the

above and then some

Big Data is having a big impact on all the

five stages of travel

• Dream

• Plan

• Book

• Experience

• Share

Who owns the guest at each stage

The big hotel chains are waking up and investing

The online journey has only just begun

Where do guests book

It’s still largely offline In the US:

Hotel website 19%

OTA 17%

Travel agent / GDS 9%

Direct to property 55% Source: Phocuswright

The online share in the US is 36% and in Europe it is only just behind

at 33%.

The OTA share in Europe is estimated at 20%

The focus to date has been on the

transient guest

• Corporate negotiated

• Group / conference

• Tour group

• Etc

Have yet to come online

in a meaningful way

OTAs are dominating in the online

transient guest segment

• The two biggest OTAs,

Priceline and Expedia,

spent US$4.2bn last year,

mostly online

• CSFB says OTAs make

US$6.00 per room booked,

hoteliers make US$2.80

OTAs are creating

demand far better than

hotels

Hotels are the product brands

OTAs (and other channels) are the retailer

The intermediaries have

the marketing reach and

the financial power.

In the long-run, how can

hotels win?

In the meantime, there

is substantial value to

be gleaned by keeping

as much direct booking

as possible

Book direct

Marriott has launched a

high profile campaign

But it drew fire including

from ASTA

Marriott has to balance

its book direct desire

with its need to keep

selling through other

channels

Change is coming in other channels

Examples

• Concur’s Triplink means

corporate guests can track

open booking

• BCD Travel’s deal with

GetGoing has created

RoomSource to offer 400k

plus rooms with corporate

and published rates

More and more is

coming online

It is ever harder to segment the market

And the big

unknown is what

will happen to the

direct to property

component

Peer to peer / sharing economy

• And Housetrip, Wimdu, 9Flats, Homeaway, Onefinestay,

Interhome….

• Barclays investment bank analysts reckon Airbnb is on course to be

as big as IHG in room nights sold within a couple of years

• Spain saw tourist arrivals grow 7.4% in summer 2014 but receipts at

traditional transient accommodation rising just 0.4%

• Airbnb charges 3% (guests pay 6% to 12% depending on length of

stay)

• Regulatory issues unlikely to halt the onslaught

Conclusion

The biggest challenge is

the future of hotel

brands – what are they

for?

Owners and operators

must pick the most

profitable route and

consider radical options

Thank you

www.hotelanalyst.co.uk

www.ha-dt.com

Look out for:

Prof Macy Marvel’s

“Hotel Distribution

Report”