Trends in the Hotel & Travel

Booking Industry

Hamutal Schieber | April 2014

Introduction

• The purpose of this presentation is to present the major industry and

consumer trends affecting the hotel industry, specifically with regard

to online booking.

• Main subjects that are covered are:

1. Market trends

2. Competitor activity on the digital sphere

3. Hotel strategies used to encourage direct booking.

Technology: Online and Mobile

Travel consumers want:

• mobility,

• flexibility

• easy real-time access to information

Consumers expect seamless connectivity allowing them to access the content they want when they want it across all platforms, and also increasingly expecting seamless transitions between different platforms.

The introduction of smartphones represents one of the most significant technological developments in recent years, and it is having a major impact on the travel industry.

Source: Euromonitor International, PWC, IHRA

The travel consumer is leading the way in driving technological change.

Social & Sharing

Peer-To-Peer Travel

• Vacation Rentals are driven by technology, which breaks the geographic boundaries.

• It is also motivated by consumers’ desire to explore locations, live thriftily without giving up adventures, and travel with family.

• The advent of websites such as Airbnb.com, Homeaway.com and Flipkey.com helped shift predominantly offline sales towards online, which may explain the bulk of their growth rather than stealing share from hotels.

Reviews & Referrals

• Customer reviews on websites

• Friend referrals incentives

Open Innovation & Co-Creation

Booking websites and hotel brands engage consumers and tap them for insights

Social Media and the Collaboration Economy have influenced the traveling

industry with several prominent trends:

Technology: Online and Mobile

• PhoCusWright estimates that by 2015, mobile will account for one- quarter of U.S.

online travel sales, driving $US40 billion in revenue. In Europe mobile will account for

one fifth of bookings by 2015.

• Nearly two-thirds of US internet users researched travel via digital channels in

2013, according to eMarketer.

• mobile sales are forecast to become more and more important in the

upcoming years.

The Online Consumer Journey

• Most consumers consider the

web to be important for travel

research and planning – but the

web is also a fundamental

source of inspiration for new

travel.

• Our research shows that the main

tools used to inspire consumers

by booking competitors and hotel

brands, are Social Media sites

email marketing.

TripWatch – Offers customized e-mail alerts on the

specific hotels, attractions and destinations requested

by the traveler, in the first personalized, time-sensitive

e-mail newsletter for trip planners.

Content Marketing • Websites use social media and content to drive more consumers to the

platform.

– Most social media platforms are used to inspire and encourage

consumers to book a vacation.

– Blogs and contents on the websites are used to guide the consumer,

add value, and position the brand as a lifestyle advocate.

The Airbnb website utilizes

a prominent content

strategy. The site serves as

a “marketing consultant” for

people wishing to attract

more guests.

Other Contents include city

guides, guided tours,

promotional videos, stories,

etc.

Open Innovation & Co-Creation

• Marriott has launched a co-creation

platform, which encourages the

submission of ideas for new hotel

technology, style and design.

http://travel-brilliantly.marriott.com/

Hotel brands, as well as

booking websites, are tapping

consumers in order to come up

with innovative and mostly

effective, products, services

and solutions.

• Orbitz.com has launched Orbitz Labs,

a new site that tests experimental travel

tools and features to improve the online

shopping experience and lets

consumers give ideas and feedback

directly to the engineers and technology

experts developing new products and

services for the website.

Social Media Integration

• More and more websites offer a personalized

experience to users who are logged-in

through their Facebook or other Social media

profile.

• Tripadvisor had spent a fair amount with Facebook

to promote the “Cities I’ve Visited” application and

get Facebook-connected users because that fuels

its personalization effort and the “Wisdom of

Friends” initiative, so that if you’re signed in through

Facebook, you get a lot better experience on

TripAdvisor “and that proved its worth in terms of

better engagement, better monetization, and just a

better, more sticky experience for that Facebook

connected user.”

Traveling Trends

• According to a Google

2013 study, travelers seek

value and comparison shop

with increasing frequency.

Business travelers prioritize

convenience and prior

experience.

• Yet, leisure and business

worlds are blending – 57%

of business travelers

plan to extend a business

trip to include leisure

time, and 43% of

business travelers plan

to research or use peer-

to-peer sharing

alternatives.

• According to PWC Study, Europe remains

the world’s largest tourism region and in

2013 international tourist arrivals globally

grew by 5% to reach a record 1,087 million.

• Europe benefited the most from this growth,

receiving 29 million more arrivals than in

2012, a 5% gain.

• Central and Eastern Europe (+7%) and

Southern and Mediterranean Europe (+6%)

performed particularly well and Spain

welcomed a record 60.6 m international

tourists last year, 5.6% more than in 2012.

• Russia and China were Europe’s largest

source markets in 2013.

• Business travel is expected to be a major

travel driver in Germany, UK and France.

Traveling Trends | Luxury

• Luxury travel recorded a significant recovery after the decline experienced in

2009, with luxury hotels and premium air travel growing by between 5% and

10% per year over 2010-2012.

• Luxury travel is evolving, with authenticity, experiential travel and sustainability

becoming increasingly important, especially in the traditional luxury travel

markets.

• PwC consumer research into the 2014 travel intentions of 10,000 Small Luxury

Hotel Club Members shows most expect to be at least as well off as they were

in 2013 and 44% expected to be better off in 2014.

• Luxury guests have fully embraced technology and SoLoMo (social, local,

mobile), with social media playing an important role for luxury brands in order

to create engagement, receive valuable feedback and gain loyalty.

• According to The Affluence Collaborative research group, 72% of the wealthy

are active Facebook members, and they increasingly use Twitter.

Source: Euromonitor International, PWC

Metasearch / OTAs

• A metasearch display is an interface that

shows hotel or flight availability and pricing

information from multiple sources, without

requiring the user to visit another website.

• Travel metasearch engines and online travel

agencies (OTAs) are becoming more popular,

as travel “lookers” seek out one-stop shops to

compare different brands, products, packages

and prices early in the purchase funnel.

• To compete with the growing success of

booking sites, OTAs created or bought back

many of the currently existing booking sites.

examples are Expedia that owns Hotels.com

and Hotwire; Orbitz that owns HotelClub and

CheapTickets and Priceline that bought back

Pegasus’s Travelweb.com. Priceline acquired

Kayak in November 2012, and soon after,

Expedia, Inc. moved to acquire European

metasearch leader Trivago.Source: eMarketer

Expected growth at Kayak.com, the

metasearch market leader in the US

OTAs Vs. Hotels

• The relationship between the OTAs and hotel operators has been the subject of

wide debate in the industry.

• OTAs have aggressively focused on hotels to provide a higher share of their

revenues as the commission from selling flights has declined, and they have

tried to attract consumers by reducing the cost of booking as much as possible.

• Hotel operators are concerned about losing control over inventory and pricing to

OTAs. Hoteliers feel there is pressure to enter into long term contracts without

exit clauses at rates that they believe are not always commercial.

Source: Deloitte, Google Trends

Independent hotels are much more impacted by

OTAs than are Chain Hotels. While Chain

Hotels have a balanced percentage of

reservations made from OTAs and their

website, the reservations for Independent

Hotels through OTAs are higher than the ones

made through their website.

As a result, hotel companies have invested in

developing and marketing their own websites.

Some hotel companies like Marriott are even

imitating OTAs by offering flights and car hire

online.

Hotel Strategies

• Analysts expect to see the development of a more collaborative

approach: hospitality companies can take advantage of large OTA

investments in technology and marketing to achieve common

benefits for both. • Roomkey.com is a direct booking

hotel search engine – an initiative of

global hotel chains in response to the

increasingly stronger role of electronic

distributers.

• Roomkey.com was founded by large

hotel companies (Choice Hotels

International, Hilton Worldwide, Hyatt

Hotels Corporation, InterContinental

Hotels Group, Marriott International,

Wyndham Hotel and Best Western

International) with the aim of cutting

down distribution costs and as a

counter to Google. On this Website,

travelers can search for, book and

compare hotel room prices of leading

hotel brands.

Metasearch Engines Strategies

Tripadvisor practices diversification both

organically and through M&As, in order to

build presence in platforms which react to

different consumer needs. As such, the

company has also covers Vacation Rentals

with the same review and rating systems as

hotels.

Tripadvisor also blurs the line between

metasearch engines and OTAs, with actual

OTA-derived price comparisons.

The research was conducted by: Hamutal Schieber

Schieber Research | Market Research & Competitive Intelligence

www.researchci.com | hamutal@researchci.com

Thank You