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The Future of Intermediaries and the Consequential Ripple Effect
Presented by: Max Starkov President and CEO HeBS Digital Offices in: New York City, Las Vegas, Europe
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First, Hospitality & OTAs in Numbers…
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Hospitality and OTAs in Numbers���
25% Of hotel
roomnights booked via
intermediaries (1995)
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Hospitality and OTAs in Numbers���
43% Of hotel
roomnights booked online
in Q2 2014
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Hospitality and OTAs in Numbers���
35% Of major brand hotels’ online roomnights
booked by OTAs in Q2 2014
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Hospitality and OTAs in Numbers���
70% Of independent hotels’ online roomnights
booked by OTAs in Q2 2014
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Over-dependency is an industry issue ���Independent hotels are overly dependent on OTAs
65.2%
34.8%
Major Hotel Brands Room Nights
Brand.com OTAs
30%
70%
Independent Hotels Room Nights
Hotel Website OTAs
True Cost of OTA distribution: $2.5 billion in merchant commissions (STR)
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Case Study: The Cost of OTA Distribution 150-‐room Independent Hotel in NYC $250 ADR Occupancy 80% 13,184 roomnights booked via the OTAs (70% of online) $3.296 million OTA room revenue $824,000 in OTA commissions/year (25%)
-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐
150-‐room Branded Hotel in NYC
$1.648 million OTA room revenue (35% of online)
$247,200 in OTA Commissions/year (15%)
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The Rules of Engagement Are Changing
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Rules of Engagement Are Changing
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• Travel demand is UP • Corporate Groups are TRAVELING • Hoteliers are becoming SMARTER • Direct online channel is a PRIORITY • OTA Commissions are going DOWN
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What does the future hold for the OTAs?
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OTAs will be around in the long term ONLY IF they: • Can provide unique value proposition to both
consumers and hoteliers. • Can provide value ad to hoteliers, not just
distribution. • Can work with hotels to resolve/help with their
business needs. • Seasonality, Occupancy Needs, etc.
• Are extremely efficient and innovative. • Are truly global.
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Hotelier’s Action Plan
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21.6 Touch points The average traveler researches 21.6 websites before making a booking.
Search & Display Together increase purchase intent 43%
24 Days
Average length in days before purchase
Important Stats
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Hotelier’s Action Plan
Minimum 4%-6% of room revenue should be invested
In digital technology+marketing
Requires:
Invest in the Direct Online Channel
• Website – Responsive/AdapVve Design, CMS • SEO+SEM • Online Media & RetargeVng • Dynamic Rate MarkeVng • Email MarkeVng • Social Media • MulV-‐Channel MarkeVng
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Shift from Desktop to Mobile & Tablet
38%
42%
16%
Of website visitors 17% in Q2 2012
Of page views 15% in Q2 2012
Of trackable bookings 6.2% in Q2 2012
In the first half of 2014, mobile + tablet generated:
Competitor Name: XX Pages What does this mean?
• Hoteliers need to boost presence on three screens (desktop, mobile, tablet) • Year-over-year web analytics are meaningless • Must install call analytics: majority of mobile bookings come via the voice channel
• Case Study: 44% of digital marketing revenue comes via the voice channel
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Fact: Tablets generate 224% more room nights and
283% more revenue than “pure” mobile devices
HeBS Digital’s Hotels Portfolio
Mobile 5%
Tablet 11%
Desktop 84%
Bookings
Mobile 27%
Tablet 15%
Desktop 58%
Visits
Devices: Traffic And Bookings Q2 2014
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#3: Search Engines are Still King���
50% Of direct online revenue results
from the search engines.
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Hotel Advertising Hasn’t Changed Much in 100 Years! Dynamic Rate Marketing (DRM)
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Dynamic Rate Marketing (DRM)
Direct Response adverVsing format, featuring real-‐Vme hotel inventory availability and pricing, inserted dynamically in various adverVsing campaigns: From banners to meta search to email and Google AdWords.
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DRM Value Proposition
Boost Conversion Rates
Increase Direct Online Bookings at reasonable ROIs
Satisfies Travelers’ demand for instant and precise Information
To Travel Consumers:
To Hoteliers:
“Closes the Loop” in Hotel Stay Research and Planning
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Meta Search: TripAdvisor & Google HPA Shifting Share from the OTAs
TripAdvisor Metasearch Portfolio Return: 716% ROAS or 7 to 1
Google HPA Portfolio Return: 644% ROAS or 6 to 1
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DRM: Travel Ad Network
A traveler researches a hotel in a specific destination or books an airline
ticket.
The Ad Network uses first party data from airlines and travel planning
resources (OTA, Loyalty Programs, Delta, United, etc.) to target the traveler.
The DRM ad is served for a hotel in that destination, featuring the rates and
availability for the dates the user has selected to travel.
How does it work?
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DRM: Banner Advertising
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DRM: Banner Advertising
Will this move display further up in planning journey? 23
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DRM: GDN Retargeting
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DRM: Google AdWords
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DRM: Complex Technology Needed ���
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Q
uestions?
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Case Study for Florida Keys Property: 44% of online marketing revenue through voice channel.
Full Year 2013 Total Revenue Online Revenue Offline Revenue Online % Offline %
$115,998.48
$31,720.36 $84,278.12 27% 73%
Social Media
$27,629.20
$2,490.00 $25,139.20 9% 91%
SEM / Paid Search
$1,969,061.66
$1,196,848.97 $772,212.69 61% 39%
Direct to Website (SEO)
$1,747,691.35
$1,016,196.23 $731,495.12 58% 42%
Trip Advisor Business Listing
$429,017.37
$281,203.54 $147,813.83 66% 34%
Online Media / Display
$161,859.70 $64,670.35 $97,189.35 40% 60%
Local Listings
$6,421.25 $6,421.25 $0.00 100% 0%
Limited Time Offer
$38,260.31 $27,379 $10,881.31 72% 28%
All Marketing
$4,690,074.30
$2,626,929.70 $2,063,144.63 56% 44%
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The Digital Marketing Budget
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Breaking Down the 2015 Budget Here is a quick snapshot on how hoteliers allocate the digital marketing budgets
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