Charles Ehredt (Chuck)

Group Director, New Ventures & Innovation

charles.ehredt @ odigeo.com

@ChuckEhredt

March 19, 2013

ACC1Ó Esmorzars de Finançament

Corporate Venturing y Intrapreneurship

1

ODIGEO Operates 4 Leading Online Travel Agency Brands

NEW TECHNOLOGIES

NEW BUSINESSMODELS

New Ventures Team

2

ODIGEO is the largest ecommerce business in Europe with only about 7% of the Online Travel market

SOURCES: Nielsen, June 2012 (Italy, France, Spain); Omniture, June 2012 (UK, Germany); Google Adplanner, June 2012 (Nordics, Portugal)

Competitive environment is constantly changing

Consumer preferences are constantly changing

Technologies are constantly changing

Start-ups bring constant innovation through business models and/or technology

Barriers to entry are very low, but barriers to success are very high

3

ODIGEO offers early-stage companies marketing support and capital investment, but the bigger opportunities are through internal innovation

The New Ventures & Innovation Team is dedicated to:

Study and anticipate shifts in the competitive landscape

Study and anticipate shifts in consumer preferences

Study new business models and technologies

Work across internal departments to drive innovation/coordination

Work with 3rd parties to access skills, products, and services not available internally

Key Observations: Cost of Customer Acquisition has gone up dramatically in Europe in recent years The Smartphone is driving structural changes in many industries The Travel Market is maturing – leading to greater price transparency Massive industry fragmentation implies a need to work with the eco-system Deep expertise is required in a few operational areas for sustainable differentiation

Market demands have led to several shifts in the focus of the New Ventures team

4

Global travel is large, growing, and customer habits are changing

Flights$425B

Lodging$581B

Auto$351B

In-destination Spend$2,106B

Food$803B

Local Transit$598B

Local Activities

$351BTravel Retail

$346B

< 1% of destination travel spending is booked by OTAs (because it is not “planned“)

Even when bookable, less than 5% of local activity is booked online in advance

Local service providers are extremely fragmented, little publication of offers online, little use of international standards for ease of distribution, and few global players

Source: USTravel.org, WTTC 2010, IATA 2010

Global Travel-related spend is $3,463B

5

Technical and Cultural changes will likely affect the 6 traditional phases of travel

Excell in online flight sales Leverage into new fields

$ $ $ $$$$$ $$$$$$$ $

Travel Spending Today – by Phase of Travel

20 years ago, these phases of travel were integrated – as a human travel agent in a brick & mortar Travel Agency provided ideas and services.

During the past 15 years, the phases have not changed, but simply migrated online with technical advances.

Unfortunately, the degree of fragmentation enabled by technology does not serve the traveler´s primary objectives of simplifying the process and having access to someone for help when there is a problem.

6

Excell in online flight sales Leverage into new fields

$ $ $ $$$$$ $$$$$$$ $

Excell in online flight sales

$$$$$$$$

Travel Spending Today – by Phase of Travel

Planning/Shopping/Bookingwill blur together in Social

Travel (standalone Meta and Booking sites will still exist)

Travel Spending in 2-5 years based on new Aggregators & Smartphones

Leverage into new fields

$$$ $$$$$$$$$$$$ $

Google, Apple, Facebook, and others willfiercely compete for the attention of customers

Mobile booking on the smartphone willbe the transaction vehicle of choice

$

Changes in Consumer Behavior create opportunities for suppliers who can present compelling offers during Inspiration/Planning and engage travelers during their trip

7

ODIGEO is only involved in a few of the major areas of expenditure in the Travel Eco-system

Rental Cars

Flights

ODIGEO

Local Activities

Restaurants/Bars

Accommodation

Local Transit

ODIGEO OTAs are not involved in some of the biggest areas of travel spending

Darker blue circles indicate services that would be Mobile-friendly. Offering such services makes Mobile solutions

much more sticky/useful, i.e., the smartphone will be the in-destination device of choice for discovery and booking.

8

We are clearly in an age where the customer is highly empowered. Brands must engage the customer with great services if we want their business

The consumer was Time Magazine´s“Person of the Year” in 2006.

The Customer

is inControl !!

By 2012,the Smartphone has exponentially added to the Consumer´s influence over whom they choose to do business with, and how they want to be served.

9

Who is this customer and what do they want / need ?

Customers only care about reduced hassle and richer experiences

Customers vary, but generally align with 8 primary profiles

The ¨Sharing¨ economy has taught customers that a lot of information is free, but quality still has a cost

To ¨win¨ in the marketplace, ODIGEO must allow the customer to do business with us the way they choose

In response to market shifts, ODIGEO is increasingly focused on:

Enhancing Customer Relationship Management (CRM)

Engaging customers during their trips

Aggregating Long Tail products and services

Building a collaborative eco-system to rapidly adapt to changing customer requirements

10

Customer Engagement with a brand evolves through fairly predictable stages that ODIGEO - through valuable products or services - can strongly influence

Selection

Awareness

Knowledge

Consideration

Satisfaction

Loyalty

Advocacy

Pre-purchaseAssessment

of Alternatives

Eventuallythere is a

First Purchase

Loyalty andAdvocacy Drive Down the CostOf CustomerAcquisition

Striving for a “relationship”with the customerincreases Lifetimevalue

The only way to proactively manage this process is with an integrated, enterprise-wide CRM System

11

Engaging and useful services are required to remain engaged with customers

FlightsHotelsRental CarToursGuidesInsurance

Mobile Travel CompanionAccess to useful information

(Before & During Trips)

Nearly all employees are involved in innovation, raising problems and opportunities that get evaluated

ODIGEO is interested in collaborating with 3rd parties who can help deliver customer value in-destination (ByHours, ReallyLateBooking, TEPWireless, etc.)

Internal projects include: Passenger Rights for cancelled or

delayed flights Delivering passenger itineraries on

mobile devices Proactively alerting customers of

delays or cancellations CRM enhancements Improving information quality

(booking confirmation emails, etc.)

12

Gaining consensus across ODIGEO requires a lot of communication and

“data” to substantiate hypotheses

What we know

What we don´t know that we don´t know

What we know that we don´t

know

Adjusting business models is very difficult when you have been so successful for many years

ODIGEO is remarkably innovative around its core ¨flights¨ product, but can be so focused on optimizing the core business, that other opportunities are missed

Measuring everything enables improves agreement concerning priorities

But sometimes, you must rely on instinct

13

Typical weekly activities for the ODIGEO New Ventures and Innovation Team

Respond to inquiries from Start-ups & Early Stage companies

Conduct interviews with interesting candidates

Follow-up with companies on ODIGEO´s “Watch List”

Manage portfolio companies & commercial relations

Conduct Due Diligence on Investment Prospects

Participate in Industry Conferences

Internal Meetings

Design New Solutions

Manage Internal Projects

Prepare Company Presentations

Industry Research & Analysis

4-6 hours

4-6 hours

6-8 hours

12-16 hours

0-20 hours

0-20 hours

8-16 hours

8-20 hours

8-12 hours

4-12 hours

6-10 hours

Almost Zero Time in

Operations

60-80 New Companies/

Ideas Reviewed

per Quarter

14 Companies in Portfolio

or on Watch List

3 Major Internal Projects

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Innovation is often a matter of perspective Be sure that “perspective” is objective

Companies compete based on: Price Innovation Customer Relationships

Innovation is not only customer-facing, but can include internal processes and supply-side improvements

For leaders in Operational roles, there is never time left over at the end of the day for innovation

Innovation initiatives have a profound, positive impact on employee morale (hope)

Innovation should be led by people with credibility across the entire organization (not a young MBA)

Innovation efforts can fail, but risk management can reduce the negative impact

Innovation is part of the long-term survival of a company; it cannot be started and stopped frequently

VS

15

Thank You !

“In most organizations, change only comes

in two flavors: trivial and traumatic.”- Gary Hamel, Wall Street Journal, Sept. 29, 2009

* Gary Hamel is considered the world s leading strategist by the Wall Street Journal and Financial Times

Charles Ehredt (Chuck)Group Director, New Ventures & Innovation

charles.ehredt @ odigeo.com

@ChuckEhredt