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Kalibri Labs © 2016, Confidential
Demystifying the Digital Marketplace
Cindy Estis [email protected]
Kalibri Labs © 2016, Confidential
Demystifying the Digital Marketplace
Kalibri Labs Industry Database• Guest stay and cost of sales information from 25,000 hotels to
date, primarily in North America, expansion to Europe 2016 & Asia 2017
• Representing 100+ brands – 3,000,000 rooms• Major Chains and smaller chains and independents• Over 5 billion transactions; 100 million added monthly
External Data Sources & Research• Airbnb• Consumer Reviews • Group & Meetings • Loyalty Programs
Kalibri Labs © 2016, Confidential
Booking Brands Now Dominate Consumer Point of Entry
Consumer Stay Brands
Booking Brands3
Kalibri Labs © 2016, Confidential
ü Google That
ü Uber will do what?
ü Who bought who?
ü The Demise of the RFP
ü Amazon is here today, gone tomorrow
ü Booking.com boss is “clicking” mad; Expedia boss issues warning
4
Kalibri Labs © 2016, Confidential
“Organic search”…a quaint term from the mid-2000s
5
Kalibri Labs © 2016, Confidential
Google’s Travel Ecosystem Google Travel & Apps
Source:BCGandHiltonWorldwide
Kalibri Labs © 2016, Confidential
Future: Peer to peer services
Kalibri Labs © 2016, Confidential
Tech Consolidation – who is buying who and why?
8
Kalibri Labs © 2016, Confidential
Business Travel: The RFP Gets a One-Two Punch
9
Kalibri Labs © 2016, Confidential
Surprise, surprise…from Amazon
10
21st April,2015
16th October2015
Kalibri Labs © 2016, Confidential
“Book Direct” Gains Traction
11
GIANT Booking.com attacks tiny Triptease
Kalibri Labs © 2016, Confidential
Groups and Meetings Ripe for Disruption
Kalibri Labs © 2016, Confidential
Demystifying the Digital Marketplace What you Need to Know
New entrants will be disruptive in a few key customer segments
• Corporate travel is about to hit a major inflection point; RFP system will be replaced
• Home rentals will impact select business in major markets; won’t be a uniform effect
• Groups and meetings are booked with inefficient processes and carry high costs
Kalibri Labs © 2016, Confidential
Demystifying the Digital MarketplaceHighlights of U.S. Hotel Performance
Kalibri Labs © 2016, Confidential
Revenue Capture for Total U.S. Market : 2015 vs. 2014 As Revenue Capture declines, Real Estate value erodes
Net Revenue Revenue Capture
2015 $120,400,000,000 82.8%
2014 $112,800,000,000 83.2%
Change 6.7% -0.4%
$112,800,000,000
$123,200,000,000
$132,800,000,000
$135,500,000,000
$120,400,000,000
$132,000,000,000
$142,600,000,000
$145,400,000,000
$0 $20,000,000,000 $40,000,000,000 $60,000,000,000 $80,000,000,000 $100,000,000,000 $120,000,000,000 $140,000,000,000 $160,000,000,000
NetRevenue
COPERevenue
Hotel-CollectedRevenue
Guest-PaidRevenue
RevenueCaptureLoss(-0.4)=$572.8m
Kalibri Labs © 2016, Confidential
Direct Booking ratio has declined 33% since 2011 Direct-to-Indirect Channel Share Ratio2011 thru YTD June 2016 – All United States
Kalibri Labs © 2016, Confidential
2015 U.S. Channel Mix% of Room Nightspreliminary USA mix; final validation Q3 2016
Property Direct32%
Brand.com18.5%Voice 7%
GDS 10.5%
OTA 15%
Group 17%
TransientRatioDirect : Indirect
2.9 : 1
17
Kalibri Labs © 2016, Confidential
55.5%
90.7%
60.0%
93.0%
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
100.0%
Brand.comtoBrand.com IntermediarytoIntermediary
LikelihoodofRemainingonBrand.comorIntermediary
2012 2014
44.5%
9.3%
40.0%
7.0%
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
100.0%
Brand.comtoIntermediary IntermediarytoBrand.com
LikelihoodofSwitchingbetweenBrand.comandIntermediary
2012 2014
The Billboard Effect is Dead Only 7% of consumers go back to hotel to book
Kalibri Labs © 2016, Confidential
Demystifying the Digital Marketplace What you Need to Know
Current OTA model not sustainable; apps & metasearch will alter market
• Content drives conversion; competition growing around access
• The “billboard effect” is dead• LRA and Rate Parity are on the decline; more autonomy
coming• Threats to the OTA duopoly are driving diversification;
meta and apps will dominate within five years
Kalibri Labs © 2016, Confidential
Demystifying the Digital Marketplace What you Need to Know
We operate in a digital market. Imperative for hotels to shift revenue approach from analog to digital
• Commissions are still rising at 2x rate of revenue growth• The days of hotels being “on every shelf” are over—costs
too much, undermines customer relationship• Hotels have to manage with 15%-25% cost of acquisition• Manage to an optimal channel mix and differentiate the
guest experience
Kalibri Labs © 2016, Confidential
The New Imperative: Net Revenue Metrics
Net Revenue
Revenue earned net of customer acquisition costs
Contribution %(COPE)
Revenue generated from each channel net of
commissions and transaction fees
S&M Efficiency
Net revenue generated for every $1 spent on
Sales & Marketing
Kalibri Labs © 2016, Confidential
+2%
-1%
Revenue Capture - Refining a Classic Metric: Net RevPAR
How much revenue are you earning net of acquisition costs?
$100
$110
$120
$130
$140
$150
$160
$170
$180
$190
$200
P&L RevPAR Guest Paid RevPAR Net RevPAR
Booking Costs
Marketing Costs
Guest PaidRevPAR
Hotel-collected RevPAR Net
RevPAR
(Guest Paid Revenue – Acquisition Costs)Available Rooms
Net RevPAR =
Hotel-collected RevPAR
Hotel-collected RevPAR
Guest-paid RevPAR
Hotel-Collected (or Traditional) RevPAR can look good while Net RevPAR declines.
Kalibri Labs © 2016, Confidential
Contribution by Channel with COPE %Contribution to Operating Profit and Expenses
Kalibri Labs © 2016, Confidential
Next-Gen Benchmarking:Tracking Revenue Capture on a monthly basis
Kalibri Labs © 2016, Confidential
OverallCOPE%:86.7% 90.55%
Optimal Channel Mix vs. Benchmark
MyOptimalChannelMix
Brand.com12%
GDS12%
OTA26%
PropertyDirect7%
Voice34%
FIT2%
Group7%
MyHotelBrand.com
15%
GDS16%
OTA22%Property
Direct5%
Voice30%
FIT3%
Group9%
Benchmark
ManageandSpendto
AchievetheHotel’sOptimalChannelMix
Kalibri Labs © 2016, Confidential
Case Study: Measure Top Line vs. Profit Contribution
Kalibri SuitesPropertyInformation
• Suburbanlocationoutsidemajormetropolitancity
• 230rooms
• 2,000squarefeetofmeetingspace
• DataisJanuarythruJune
January - June 2015 2016 Change % Market Change %
Hotel-Collected Revenue $5,440,656 $5,544,241 2% 1%
Hotel-Collected ADR $166 $163 -2% -1%
Hotel-CollectedRevPAR $129 $132 2% 1%
Occupancy % 78% 81% 4% 2%
2%yearoveryeartoplinerevenuegrowth
Kalibri Labs © 2016, Confidential
Case Study: Kalibri Suites
Brand.com Voice Property Direct High Discount GDS OTA/ETA FIT Wholesale Group
2015 20% 12% 17% 3% 18% 18% 2% 10%
2016 17% 10% 14% 3% 19% 25% 3% 9%
Point Change -3% -2% -3% 0% 1% 7% 1% -1%
0%
5%
10%
15%
20%
25%
30%
Brand.com Voice PropertyDirect HighDiscount GDS OTA/ETA FITWholesale Group
Kalibri SuitesRoomNightSharebySourceofBusiness
2015 2016
OTAroomnightgrowthdrivingoccupancygain
Kalibri Labs © 2016, Confidential
Case Study: Kalibri Suites
Brand.com17%
Voice10%
PropertyDirect14%
HighDiscount3%
GDS19%
OTA/ETA25%
FITWholesale3% Group
9%
Kalibri Suites2016RoomNightSharebySourceofBusiness
Brand.com23%
Voice15%
PropertyDirect14%
HighDiscount3%
GDS18%
OTA/ETA15%
FITWholesale2% Group
10%
Market2016RoomNightSharebySourceofBusiness
PropertyisnowsignificantlymorereliantonOTAcomparedtomarket
Kalibri Labs © 2016, Confidential
Case Study—Kalibri Suites
January - June 2015 2016 Change % Market Change %
Hotel-Collected Revenue $5,440,656 $5,544,241 2% 1%
Hotel-Collected ADR $166 $163 -2% -1%
Hotel-CollectedRevPAR $129 $132 2% 1%
Occupancy % 78% 81% 4% 2%
January - June 2015 2016 Change % Market Change %
COPE Revenue $5,152,629 $5,084,146 -1% 3%
COPE ADR $157 $149 -5% 1%
COPE RevPAR $122 $121 -1% 3%
Kalibri SuitesCOPERevenuePerformance
• Hotel-CollectedRevenuegrewyearoveryearduetotheoccupancyincrease
• COPERevenuedeclinedduetoroomnightshiftintolessprofitablesourcesofbusiness
Kalibri Labs © 2016, Confidential
OverallCOPE%:86.7% 90.55%
Optimal Channel Mix vs. Benchmark
MyOptimalChannelMix
Brand.com12%
GDS12%
OTA26%
PropertyDirect7%
Voice34%
FIT2%
Group7%
MyHotelBrand.com
15%
GDS16%
OTA22%Property
Direct5%
Voice30%
FIT3%
Group9%
Benchmark
ManageandSpendto
AchievetheHotel’sOptimalChannelMix
Kalibri Labs © 2016, Confidential
Three Key Concepts: Evaluating Revenue Performance
#1 Revenue CaptureHow much do you keep of the revenue paid by guests?
#2 Optimal Channel MixWhat is realistic and how much will it cost to achieve?
#3 Incentives - You Get What You Pay ForHow can you set bonuses and incentives around revenue capture?
Kalibri Labs © 2016, Confidential
Demystifying the Digital Marketplace
Thankyou!
Cindy Estis [email protected]