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Revenue Management Webinar Series

What is the Future of Distribution?November 29, 2011

This webinar series is brought to you by This webinar series is brought to you by HSMAI University, HotelNewsNow, and STR, and HSMAI University, HotelNewsNow, and STR, and

sponsored by IDeaS Revenue Solutionssponsored by IDeaS Revenue Solutions

Overview of Format and TopicOverview of Format and Topic

Kathy Tindell

Program Director

HSMAI University

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We are very grateful to our sponsor for this

Revenue Management Webinar Series:

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Panel Moderator:

Jeff Higley, VP,

Digital Media &

Communications

HotelNewsNow/

STR STR/STR Global

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TodayToday’’s Presenters: s Presenters: Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Jan D. Freitag

Senior Vice President,

Global DevelopmentSmith Travel Research

Scott van Hartesvelt

President, Gcommerce

Solutions

Amy SeversonDirector, Industry

Relations

Expedia, Inc.

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Michelle Wohl

VP, Marketing Revinate

2011 Smith Travel Research, Inc. 7

USLodging Overview

Jan D. Freitag

Senior Vice President


Agenda

• Total US • Major Markets• US Forecast

Smith Travel Research, Inc. and/or STR Global, Ltd. (collectively for these purposes, “STR”) are the e xclusive owners of all rights in these Industry Presentations and t heir content. Reproduction of all or a portion of th ese presentations for any purpose without prior approval of STR is st rictly prohibited.


www.hotelnewsnow.com

Click on “Industry Presentations”

Smith Travel Research, Inc. and/or STR Global, Ltd. (collectively for these purposes, “STR”) are the exclusive owners of all rights in these Industry Pr esentations and their content. Reproduction of all or a portion of these presentations for any purpose wi thout prior approval of STR is strictly prohibited.


Happy Thanksgiving!

*Total US, ADR & OCC % Change, YTD and Weekly through 11/19


Total US - Key StatisticsYTD October 2011

% Change• Hotels 52k• Room Supply 1.4 bn 0.7%• Room Demand 908 mm 5.1%• Occupancy 61.8% 4.4%• A.D.R. $102 3.6%• RevPAR $63 8.2%• Room Revenue $92 bn 8.9%


On An Annualized Basis: Most Rooms Sold - EVER

*Number of Rooms Sold, 12 MMA, 1/89 – 10/11


ADR Grows Slower Than In 07- 09

*Total US, ADR $, 12 MMA, 1/07 – 10/11


Group Rates (Will) Hinder Faster Rate Growth

*Transient vs Group ADR$, YTD October, 2007 - 2011NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels).


Major Markets


Small Supply Growth (Except NYC)

* Top Markets, Supply % Change, YTD through 10/11


Strong Demand Growth Across The Board

* Top Markets, Demand % Change, YTD through 10/11


Absolute Occupancy: Large Markets Win

* Top Markets, OCC %, YTD through 10/11


Healthy ADR % Growth Across The Large Markets

* Top Markets, ADR % Change, YTD through 10/11


Top 25 ADR Premium: $33

* Top Markets, ADR $, YTD through 10/11


US Forecast


Total United StatesKey Performance Indicator Outlook (% change vs. Pri or Year)2011 - 2012

2011Forecast

2012Forecast

Supply 0.7% 0.9%

Demand 4.7% 1.1%

Occupancy 4.0% 0.2%

ADR 3.6% 3.7%

RevPAR 7.7% 3.9%


Hotel Industry Forecasts – STR Revisions

2012

Demand ADR

Jan 11 2.2 6.8

Jun 11 2.5 6.0

Aug 11 2.5 4.9

Nov 11 1.1 3.7


Total United StatesChain Scale Key Performance Indicator Outlook

2012F by Chain Scale

Chain Scale

Occupancy

(% chg)

ADR

(% chg)RevPAR (%chg)

Luxury 1.3% 5.5% 6.9%

Upper Upscale -0.6% 4.0% 3.4%

Upscale 1.4% 4.2% 5.7%

Upper Midscale -0.2% 3.8% 3.6%

Midscale 1.0% 0.8% 1.8%

Economy 0.6% 2.3% 3.0%

Independent -0.6% 3.0% 2.4%

Total United States 0.2% 3.7% 3.9%


2012 Year End RevPAR Forecast(as of 3rd QTR 2011 forecast)

-5% to 0% 0% to 5% 5% to 10% 10% to 15%

Nashville St Louis

Los Angeles-Long Beach Miami-Hialeah

Philadelphia Detroit

Anaheim-Santa Ana Boston

Orlando Minneapolis-St Paul

Washington DC New Orleans

Atlanta San Diego

Norfolk-Virginia Beach Oahu Island

Tampa-St Petersburg

Seattle

Phoenix

Houston

Dallas

San Francisco-San Mateo

Chicago

New York

Denver


Top 10 US Market PerformanceForecasted Occupancy/ADR % Change2012

Occ. % change

AD

R %

change


www.hotelnewsnow.com

Click on “Industry Presentations”

Smith Travel Research, Inc. and/or STR Global, Ltd. (collectively for these purposes, “STR”) are the exclusive owners of all rights in these Industry Pr esentations and their content. Reproduction of all or a portion of these presentations for any purpose wi thout prior approval of STR is strictly prohibited.

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Amy Severson

Director, Industry Relations

Expedia, Inc.

Expedia Partner Services Group | 29

Stay

Online Customer Purchase FunnelOnline Customer Purchase Funnel

Collect/Compare information

and rates

Book

Customer reviews / UGC

Initial Search -

Coordinate family/friends

© Expedia, Inc. All rights reserved. Confidential and proprietary. Expedia Partner Services Group | 30

Potential Transactions

BUSINESSRETAIL

PACKAGEOPAQUE

PRIVATESALE

LUXURY PREMIUM

DEMAND

PR

ICE

DEMAND

PR

ICE

33

Why Mobile?January February March

April May June

July August September

October10

Novembe

r11

December12

2010

1 2 3

4 5 6

7 8 9

Smartphone Sales > PC Sales

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36 EI Travel Apps

downloaded every minute

65% monthly growth in

bookings

40% book on weekend

65% bookings are for same

or next day

35

36

Social Media> 800 million active users globally

> 75% of users outside of US

Average user has 130 friends

25% of all Internet page views in US

38% of all social media traffic in US

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Comments

• Reduced from 13 required fields to 8 required fields

• Enabled UGC photo collection

• Repositioned reviews from “reviews written by” to “reviews written for”

• Content experiments to collect pros and cons and location tips

From this…

… to this

Comments

• Reduced from 13 required fields to 8 required fields

• Enabled UGC photo collection

• Repositioned reviews from “reviews written by” to “reviews written for”

• Content experiments to collect pros and cons and location tips

From this…

… to this

New partner Opportunities

to touch 1 million+

Expedia fans

Investment in

Facebook Sponsored Stories & promoted Tweets on

TwitterConnect with fans/followers

via virtual travel events

Product IntegrationCommunity

ManagementMarketing

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Source: PhoCusWright’s Global Online Travel Overview Second Edition

21%YE 2012

36%YE 2012

39%YE 2012

2010 valued at $256B30% of the total travel market.

2012 expected

valuation: $313B33% of the total travel market.

Global Online Travel

Marketplace

40

As of October 2011

Expedia, Inc.’s Global Reach 100+ localized branded sites

60+ countries

Source MarketsTravellers to the US

© Expedia, Inc. All rights reserved. Confidential and proprietary. Expedia Partner Services Group | 41

US

LatAm

CANAPAC

EMEA

Leng

th o

f Sta

yBooking Window

(Bubble size indicates ADR)*Bookings made 1/2011 – 9/2011, Expedia, Inc. bookings, International is all bookings made outside of the US

TipsTips

Expedia Partner Services Group | 42

Consumers are shopping everywhere, is your hotel everywhere?

Ensure your hotel has a mobile distribution

Customer engagement through Social Media

Implement an International Strategy

43

Michelle Wohl


Introduction

• What does ORM have to do with distribution?

44

Why Social is Key to Distribution

• Goal of engaging people where they naturally

hang out online

• Acquisition costs are low

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The Rise of Social

• Direct Online > Reviews and Engagement

46

The Rise of Social

• OTAs > Reviews, Engagement

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The Rise of Social

• Social Buying/Flash Sales > Social Sharing

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The Rise of Mobile

• Mobile

– Hand-held computer with perk of LBS

– Leading to shorter booking windows

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Goal of Distribution

• Lowest cost of acquisition

• Protect price

• Reach your targeted audience

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51


President,

Gcommerce Solutions

Primary Points of Emphasis

• Distribution today – Structuring for the future

• Fluidity is key

• The customer is still the king in the distribution landscape

• ZMOT and Distribution – The implications

• Mobile will continue to matter more and more

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Distribution Today

• Pricing and Distribution Strategies have Matured and the basics

have been covered

– Price parity practiced

– Hotel/resort websites selling live, consistent inventory

– OTA distribution established

– Interfaces between key systems in place

– Review sites have high number of reviews for most hotels

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Zero Moment of Truth• Jim Lecinski from Google has coined new marketing theory called

ZMOT

• Essentially say that there is a new paradigm in consumer behavior.

– Stimulus

– ZMOT (new)

– Shelf

– Experience

• ZMOT covers hundreds of different actions (searching, comparison

shopping, reading reviews etc)

• 99% of travelers surveyed reported being influenced by ZMOT

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ZMOT Continued

• Average consumer used 10.4 sources of info in 2011, up from 5.3 in

2010

• 84% of shoppers use online channels to help them decide on a

purchase (ZMOT)

• Find your zero moments, strategize and optimize for each of them.

Be deliberate but fast

• Every Source of Info, Every “moment” can influence your target

consumer’s decision. The best of the best will optimize them all.

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Distribution Mindset

• In the future, we will move from “channels” to “ecosystem

• Supplier focus will be on participating in the conversation, or the

ZMOT, instead of “directing” customers to narrow channels

• HTML5 and complex booking engines will change calls to action

• The billboard effect will become more pronounced

• Hotel Booking Engines need to progress their technology and play a

huge role in the future

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Mobile

• 79% of consumers say they use a smart phone to help when

shopping

• 51% of business travelers use mobile devices to get travel

information, more than double the rate of two years ago.

• Social gets all the attention, but mobile is a major trend that must

be embraced by suppliers

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#1 Key to Future Distribution

• Customer Experience – Reviews

• Reviews are not all bad. According to Google the average product

score worldwide is 4.3 out of 5

• Passionate customers leave reviews – 80% of reviews are written

by the top 20% of a business’s customers

• Don’t be afraid of bad reviews unless you are running a bad

business

• 70% of consumers say they look at reviews before making a

purchase

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Attribution• In the future, attribution will become far more sophisticated

• The average customer will look at over 10.2 information sources in

the travel vertical before making a reservation, often with multiple

visits to the same site. What marketing channel gets credit?

• Current attribution models only credit the final site where the sale

is made

• Future tracking models will allow for far more sophisticated

tracking…be ready. Think Group Sales…we know meeting planners

are researching properties online, but sales are made in person by a

sales manager

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Questions? Questions? Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Jan D. Freitag

Senior Vice President,

Global DevelopmentSmith Travel Research


President, Gcommerce

Solutions

Amy SeversonDirector, Industry

Relations

Expedia, Inc.

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Michelle Wohl


Upcoming Webinars:

The HSMAI University 10-part 2011 Revenue Management Series –

Next Session:

•What Will the Revenue Manager of the Future Look Li ke? – December 20, 2011•Watch for our 2012 Revenue Management Series – start ing February!

•December 8 – Taming the Email Beast, with Randy Dean•December 13 – Digital Marketing webinar with expert panel

To register for these and more, please go to

www.hsmaiuniversity.org.

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TodayToday’’s webinar is copyright 2011 by the Hospitality Sales & Marketings webinar is copyright 2011 by the Hospitality Sales & Marketing Association International with All Association International with All Rights Reserved.Rights Reserved.

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