Disruption and Shifts in Future Travel Booking

Disruption and Shifts in Future Travel Booking

Euromonitor International

Caroline Bremner

Future Travel Booking

Digital disruption

Future for intermediaries

New business models

Future trends

• North America and Australasia are close to saturation for internet

• Emerging markets expected to remain largely underserved by 2030

Technology as an enabler of change

2016-2030

Up to 2015 Percentage of population using the internet

Asia Pacific

MEA

Australasia

Eastern Europe

Western Europe North America

Latin America

Moving towards a mobile-first world

• Mobile broadband dominates with 80% of global internet subscriptions • Internet.org aiming for ubiquitous connectivity

Google

TripAdvisor

Facebook

Twitter

iPhone

Airbnb, Android

Uber

Cloud, Internet of Things, VR,

AI…

Disruptors gain scale quickly

• Breath-taking speed of change since the Millennium • From zero social media to 90% penetration expected by 2030 • Internal chip technology a future reality…

0

5

10

15

20

25

30

35

40

0

200

400

600

800

1,000

1,200

1,400

Asia Pacific Australasia EasternEurope

LatinAmerica

Middle Eastand Africa

NorthAmerica

WesternEurope

% s

ha

re o

f p

op

ula

tio

n

Num

be

r o

f p

eo

ple

(m

n)

Millennial Population by Region 2014

2014 Millennial population (15-35 year old)

Millennial % share of total population

Millennials lead fast adoption of technology

Interaction with brands across multiple devices

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Un

its,

mil

lio

n

Global Consumer Electronics Devices in Million Units 2010/2015/2020

2010 2015 2020

1.6 bn World smartphones 2020

160mn Latin America smartphones 2020

130% Brazil smartphone penetration per household 2015


Digital disruption


New business models

Future trends

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2005 2010 2015 2020 2025 2030%

peri

od

(5

-ye

ar)

gro

wth

Tri

ps

(m

illi

on

)

Global Inbound Arrivals Forecast Performance 2005-2030

Inbound Arrivals % Period Growth

Future tourism demand – robust growth but challenges

Source: Euromonitor International, UNWTO

Source: BBC

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2015 2020 2025 2030

US

$ b

illi

on

Global Travel Sales Shift to Mobile 2015/2020/2025/2030

Offline Travel Sales Online Travel Sales ex Mobile Mobile Travel Sales

Travel booking landscape

Source: Euromonitor International

Note: Sales to Residents

Irreversible shift in power from offline to online but there is a ceiling Mobile the clear winner – creating a mobile strategy critical for future success Trending towards 80% online vs 20% offline by 2050…

Brazil opportunities and threats

• Rio 2016 Olympics minimum impact

• Low season so less displacement effect

• Huge global platform but Zika challenge

-30

-20

-10

0

10

20

2014 2015 2016 best case 2016 worst case

% y

-o-y

gro

wth

Brazil Best Case vs Worst Case Inbound Growth Performance 2016

Arrivals

Receipts

Source: Euromonitor International from UNWTO

Note: 2015 and 2015 actuals , 2016 projections

Brazil bucks trend with resistance to online bookings

Big digital inclusion gap with high levels of unfamiliarity with digital sales channels Lack of trust in security, prefer bank slip payments Preference for using travel agencies as security net and social status

Increased fiction between intermediaries & suppliers

OTAs

Hotels

- Additional revenues - Web marketing/promotion - Source also of direct bookings - Access to new markets - Access to advanced technologies

- Significant commissions - Competition on advertising platforms - Competition for brand loyalty - Risk of commoditisation of hotels

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

World

US

Brazil

Intermediaries vs Direct Suppliers % Sales 2015

Offline direct Online direct Offline intermediaries Online intermediaries


• Multi-channel and highly fragmented

• Future challenge for who will control the overall customer journey & experience

Increasingly busy and complex competitive landscape

Search engines & Meta search

Consumer

Social media

Affiliate websites

Online travel agents

Travel agents

Supplier's website

Supplier

Peer to peer

• Expedia and Priceline are world’s leading intermediaries

• Metasearch acquisitions with Expedia’s Trivago and Priceline’s Kayak to drive OTA traffic

• Expedia’s Decolar acquisition in 2015 to expand in Latin America as new focus area

The Big Two dominate and apply pressure



Digital disruption


New business models

Future trends

Rise of peer to peer and sharing brands

0

1,000

2,000

3,000

4,000

5,000

6,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Va

lue

sa

les

(U

S$

mil

lio

n)

Airbnb and HomeAway Value Sales 2005-2014

• Value for money and authentic experiences big draw for travellers

• Rise of online micro entrepreneurs fuels peer-to-peer travel services

• Social media ensures trust


Demand

Online advertising

SEO

Supply

Vast inventory

Best price guarantee

Booking

Flexible payments and cancellation policies

Service

Reviews and ratings

Seamless service

Demand

Targeted advertising

App push messages

Supply

Personlised offers

In-destination tourist services

Booking

Multidevice bookings

Last minute reservations

Service

Mobile assistance

Seamless travel experience

• Shift to mobile changing traveller behaviour and expectations

• Big shift to real-time customer service & engagement with opportunities for in-trip bookings

• Danger that operators are caught off guard in emerging markets

Travel business models transform in the mobile era

Online Travel Business Model Mobile Travel Business Model

• TripAdvisor, Google and OTAs lead personalisation

• But mobile web/apps low barrier to entry – platforms for independents and SMEs

• In Brazil, high prices & personal security are barriers to growth for wearables

Holy grail of personalisation

Consumer preferences

Consumer past

behaviour

Location Time

Online inventory of

travel services

Leading Global Instant Messaging Platforms 2015

Company Users (million)

Whatsapp 800

Facebook Messaging 600

WeChat 550

LINE 205

Snapchat 100

Source: Mary Meeker Internet Trends 2015

• Instant messaging platforms have seen a phenomenal rise in popularity

• Use messaging to chat to friends, send photos and videos and increasingly shop

New booking platforms emerge quickly

• World’s social media base over 2.0 billion users

• Huge potential to drive s-commerce in Brazil, away from advertising to sales

• Twitter & Facebook making serious moves into s-commerce

Brazil highly social nation - opportunity for s-commerce

Buy Items via Social Media Platform by Market 2014

Source: Euromonitor International, Hyperconnectivity Survey 2014

• TripAdvisor and Google to leverage their huge traffic to generate direct bookings

• Both launched hybrid models allowing direct hotel bookings, but not likely to become OTAs

• Amazon may try again to crack the travel industry

Future travel booking giants?


Digital disruption


New business models

Future trends

• Blending of the physical and digital worlds

• Channels acting in complement not in conflict

• Reinvention of old school - Thomas Cook launches “Hi Tech, Hi Touch” store

‘Physital’ fusion

•Virtual reality set to take the travel industry by storm

•Allowing consumers to try before they buy

•Robots a gimmick, but automation a threat to job creation

Technology to enhance the in-store experience

Source: Marriott Hotels Source: Business Wire

• Convenience through multiple channels & devices

• Mobile in the mix

• Personalisation

• Seamless user experience

• Sustainability a given

Success criteria – experience will trump all

Thank you for listening

Caroline Bremner

Head of Travel

[email protected]

@carolinebremner

mailto:[email protected]