the role of ota in your distribution...

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Tuesday, December 14, 2010Tuesday, December 14, 2010

2:00 2:00 –– 3:30 PM EST3:30 PM EST

The Role of OTA In Your Distribution Strategy

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Overview of Format and TopicOverview of Format and Topic

Webinar ModeratorFran Brasseux

Executive Vice President, HSMAI

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POLL QUESTION #1POLL QUESTION #1How many people are participating in

this webinar at your location today?

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� 8 or more

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TodayToday’’s Presenters: s Presenters:

Panelists:

Bobby Bowers

Senior VP

Smith Travel Research

Jay HubbsDirector, Hotel ManagementHotwire

Jason Sciarillo

Director of Sales

Travel Ticker

Jake Stein

Director, Global Strategic Accounts

Expedia Partner Services Group

Louis Bouchayer

Senior Director e-Distribution

Wyndham Hotel Group

HSMAIU.S. Lodging Industry Overview

14 December 2010 Bobby Bowers

Smith Travel Research /

STR Global

Today’s Agenda

• Global / U.S. Overview

• Key U.S. Markets

• Construction Pipeline

• Forecast

• Takeaways

Europe €2008 2009 10/10

-4.9% -16.7% 9.6%

ME & A $2008 2009 10/10

17.1% -13.3% 3.3%

Asia Pacific $2008 2009 10/10

1.6% -19.4% 23.0%

USA $2008 2009 10/10

-1.9% -16.7% 4.9%

Caribbean $2008 2009 10/10

-14.4% -17.1% 4.5%

2010 STR Global Limited

Global RevPAR Recovers – Primarily Occupancy Driven

RevPAR % Change – Full Year 2008, 2009, October YTD 2010

Canada C$2008 2009 10/10

0.9% -12.3% 5.4%

Mexico P$2008 2009 10/10

2.9% -16.1% 1.0%

Total US - Key StatisticsYTD October 2010

% Change• Hotels 52k• Room Supply 1.5 bn 2.1%• Room Demand 867 m 7.6%• Occupancy 59.2% 5.3%• A.D.R. $98 -0.5%• RevPAR $58 4.9%• Room Revenue $85 bn 7.1%

Strong Demand Rebound – Supply Slowing 6.4%

2.2 %

-4.7%

-6.9%

Total United States: Twelve Month Moving Average

1989 thru October 2010

Total U.S.Occupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to October 2010

4.2%

-1.4 %

-8.8%

-9.7%

43 Months

25 Months

* Total US, ADR, 12 MMA, Jan ’00 – Oct ’10

Absolute ADR Will Not Recover for At Least 2 Years

-$4.20

-$9.96

Total United StatesQuarterly RevPAR Percent Change: 2008 – October 2010

Chain Scales

STR Chain Scales

Selected chains from each segment

• Luxury – W Hotel, Four Seasons, Ritz Carlton, Fairmont

• Upper Upscale – Sheraton, Hyatt, Hilton, Marriott

• Upscale – Courtyard, Hilton Garden Inn, Hyatt Place

• Mid with F&B – Best Western, Holiday Inn, Ramada, Quality Inn

• Mid no F&B – Hampton Inn, HI Express, Country Inn & Suites

• Economy – Econolodge, Red Roof, Days Inn, Motel 6

U.S. Chain ScalesSupply/Demand Percent ChangeOctober 2010 YTD

U.S. Chain ScalesOccupancy/ADR Percent ChangeOctober 2010 YTD

Key U.S. Markets

Top 25 Markets versus rest of U.S.Key Performance Indicators Percent ChangeOctober 2010 YTD

Key 15 U.S. MarketsRevPar Percent ChangeOctober 2010 YTD

Excludes Las Vegas

Key 15 U.S. MarketsOccupancy Percent ChangeOctober 2010 YTD

Excludes Las Vegas

Key 15 U.S. MarketsADR Percent ChangeOctober 2010 YTD

Excludes Las Vegas

Pipeline

Total United StatesActive Development Pipeline - RoomsChange From Prior Year

Oct 2010 Oct 2009 Change % Chg

In Construction 56,132 111,927 -55,795 -49.8%

“Planned” Pipeline 284,909 323,338 -38,429 -11.9%

Planned Pipeline includes projects in Final Plannin g and Planning phases

Source: STR / TWR / Dodge Construction Pipeline

Total United StatesRooms Under Construction by Scale – ThousandsOctober 2010

Source: STR / Dodge Construction Pipeline

60% = Upscale & Mid w/o F&B

Top 10 MSAs – Rooms Under ConstructionOctober 2010 – in Thousands

Top 10 Under Construction MSAsRoom Construction as of % Existing Supply – October 2010

Projections

U.S. Economic OutlookBlue Chip Economic Indicators – November 2010

2009 2010F 2011F

Real GDP -2.6% +2.7% +2.5 %

CPI -0.4% +1.6 % +1.5%

Corporate Profits -0.4% +30.3% +6.3 %

Disp Personal Income +0.6% +1.2% +1.9%

Unemployment Rate 9.3% 9.6% 9.4%

Real GDP Growth ForecastQuarterly Percent Change vs. Same Quarter Prior Year

Source: Blue Chip Economic Indicators – 10 November 2010

Total United StatesKey Performance Indicator Outlook Scenario (% chang e vs. Prior Year)2010F

Hotel Industry Performance Scenarios

2010Low

GrowthForecast

HighGrowth

Supply 2.1 2.0 1.8

Demand 7.0 7.4 7.9

Occupancy 4.9 5.3 6.0

ADR -0.5 -0.1 0.4

RevPAR 4.4 5.2 6.3

Total United StatesKey Performance Indicator Outlook Scenario (% chang e vs. Prior Year)2011F

Hotel Industry Performance Scenarios

2011Low

GrowthForecast

HighGrowth

Supply 1.2 0.9 0.7

Demand 2.1 2.5 3.0

Occupancy 0.9 1.6 2.2

ADR 3.4 3.9 4.4

RevPAR 4.3 5.5 6.6

Total United StatesOccupancy Percent2004 – 2011P

Total United StatesAverage Daily Rate (In Dollars)2004 – 2011P

Total United StatesChain Scale Key Performance Indicator Outlook

2010F by Chain Scale

2010 Year End Outlook

Chain Scale

Occupancy

(% chg)

ADR

(% chg)RevPAR (%chg)

Luxury 8.1 1.3 9.4

Upper Upscale 6.7 0.2 7.3

Upscale 6.3 0.5 6.8

Midscale w/ F&B 3.0 -0.3 2.7

Midscale w/o F&B 4.4 0.0 4.4

Economy 3.4 -3.2 0.2

Independent 4.0 0.8 4.9

Forecast as of September 2010

Total United StatesChain Scale Key Performance Indicator Outlook

2011F by Chain Scale

2011 Year End Outlook

Chain Scale

Occupancy

(% chg)

ADR

(% chg)RevPAR (%chg)

Luxury 0.4 6.7 7.1

Upper Upscale 1.6 5.4 7.0

Upscale 2.1 4.4 6.5

Midscale w/ F&B -1.0 2.5 1.5

Midscale w/o F&B 1.8 4.0 5.8

Economy 1.3 2.3 3.6

Independent 2.4 3.7 6.1

Forecast as of September 2010

2010 Year End RevPAR Forecast-10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20%

Houston Dallas Anaheim-Santa Ana Boston

Nashville Atlanta Denver

Norfolk-Virginia Beach Detroit New Orleans

Oahu Island Los Angeles New York

Orlando Miami Chicago

Philadelphia Minneapolis-St Paul

Phoenix San Francisco

San Diego Seattle

St Louis

Tampa-St Petersburg

Washington, DC

2011 Year End RevPAR Forecast-10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to

20%

Miami-Hialeah Boston Anaheim-Santa Ana Orlando

Denver Atlanta Phoenix

Los Angeles-Long Beach Chicago

Nashville Dallas

Oahu Island Detroit

San Diego Houston

San Francisco-San Mateo Minneapolis-St Paul

Washington DC New Orleans

New York

Norfolk-Virginia Beach

Philadelphia

Seattle

St Louis

Tampa-St Petersburg

Takeaways

• Value is King – Always!

• Tepid, Uneven Recovery

• Supply growth slowing

• Demand / Pricing conditions improving

• Performance reset – dig out of the hole

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Jake Stein



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Comparing The Models...

...Which One Is Right For My Hotel?

Merchant

Enhanced Commision

Retail

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Comparing The Models

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Did you know that….

30% of our hotels produce 70% of our business and these hotels log the most amount of calls/meetings with our market management team?

• Build long term plans based on your needs• Get chosen for merchandising an promotional placement• Stay top of mind for new opportunities

• Get consultative guidance based on market knowledge and expertise

GET TO KNOW YOUR MARKET MANAGER!

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Opaque Selling: Incremental Demand or Brand Dilution?

Jay Hubbs

Hotwire.com

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Opaque Overview

� Opaque customer segmentation

� Opaque site differentiation

Opaque Value to Travelers

� Unique messages and marketplaces across the OTA landscape

� Additional points of contact and channels for customers

Opaque Value to Suppliers

� Booking window dynamics

� Boosting RevPAR / GOPAR

� Pricing effectively

� Revenue maximization through channel agnosticism

Takeaways

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Who is the Opaque Customer

Roughly 1 in 5 online shoppers identify themselves as Deal Enthusiasts

• Research studies support this sub-segment of shoppers

• Substantiated by Forrester and others

With comparable demographics to other online travel customers

• 50/50 male/female split, average age of 46

• 64% married, only 41% have kids at home

• Average household income is $70-80,000+

• Majority have attended college, 1/3 have Master’s

Attitudes and behaviors separate these customers

• Driven by price, saving money is their #1 priority

• Use their flexibility to make trade-offs

• Not loyal to specific hotel or airline brands

• Not very loyal to one OTA either

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Opaque Hotel Product Differentiation

Opaque Model Posted price Bidding Posted price

Full Retail Display Not on Hotel path Yes - Travelweb Yes -Travelocity

Opaque Display –Results

Limited to one hotel

per compset

None – bid model All hotels in market

Hotel selection criteria

Price, random Random function None (all hotels

shown)

Sort criteria Purchase likelihood Unknown ‘Travelocity picks’

Display – Hotels Some amenity

information (icons)

Some amenity

information

Some amenity

information (text)

Star Ratings 1* through 4.5*

(5* in some markets)

1* through 4*


2* through 4*


Opacity or brand protection

Yes Yes Yes

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These Customers are Similar…These Deal Enthusiasts like to shop around…

• …on OTA brands and metasites,

• … through newsletter deal sources,

• …and on supplier brand sites or offers

These customers are smart – they will use a multitude of referent price

points to make their purchase decision (bid or buy) often searching

dozens of sites

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These Deal Enthusiasts like to shop around… which tells us that each site provides incremental value

…and yet different

Source: comScore

50%

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Marketing is targeted to drive incremental trips

� In TV advertising

� Alluring message and price points

� Encouraging last-minute travel

� In email marketing vehicles

� Tailored to searches

� Highlighting top deals

� Optimized for customer segment

� In partner marketing

� Call to action

� Placement with key partners

� Driving RNs to suppliers

Without calling out brand pricing or names

Marketing to Travelers

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Recently launched Mobile apps

� Product details

� Hotel, Car

� Easy to read display, more utilitarian

� Early data points positive

� Search volumes increasing

� Purchase rate stabilizing

� Opaque / Retail split in line for hotel

� DTA and LOS skew even shorter

� Device distribution� iPhone 61%

� Droid 27%

� Targeting last minute, brand agnostic travelers

Going Mobile

– Blackberry 10%

– All others 2%

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Understand how the models work

� Driven by price and value

� Dynamic selection / sort criteria

Understand market dynamics through reporting

� Transparency

� Compset and market factors

� Supply and demand

Understand how to use the segment

� Availability of rates

� Pricing

� Linking rateplans

Hotels should maximizing their opportunities

across all of these sites

Effectiveness in these Models

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Opportunity to build Revenue and gain Market Share

� Last minute

� Weekend / leisure guests

� Need price incentive

� Replace group wash while preserving retail

� Median DTA is 4-5 days

� Further out

� Over need dates (holidays, off season)

� Create base business (replacing crew, wholesale)

Opportunity to sustain or raise Retail rates

� Occupancies up, ADRs slow to recover

� Create in-house compression to reinforce published rate structure

Opportunity to drive RevPAR or GOPAR

� Building market share

� Top and bottom line growth

Value to Suppliers

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Opaque OTA sites offer unique marketplaces

� Different than what a brand loyal customer is looking for

� These customers are similar… yet different

� Opaque sites are unique – from retail and from each other

All companies are looking to expand their reach

� Mobile, social media

� Partnership marketing

� Drive value customers, owners and shareholders

Understanding how the models work is paramount

� Selection and sort criteria

� Compset and market factors in pricing

Understanding that the models are different marketplaces with different opportunities and you should maximize every opportunity

Takeaways

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Using Online Media In Your Distribution Strategy

Jason Sciarillo

Director of Sales

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• Deal driven Web sites/email newsletters

• travel-ticker.com

• travelzoo.com

• Large subscriber databases.

• Wide variety of deals.

• Hotel, Air, Package.

• Objective = direct response/room bookings.

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• Corporate advertising campaigns.

• Banners on Web sites targeting travelers.

• Sponsorships of travel related content

• Objectives = branding and direct response

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Online Media Benefits

• Opportunity to build consumer brand loyalty

• Direct to supplier bookings

• Build internal marketing database

• Build solid base of business 30 -90 days out

• Parity offers can be promoted

• Provide incremental lift to overall campaign

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Online Media Strategies

• Lead with aggressive “from” rate

• Advertise when flexibility is greatest

• 30% + discounts

• Focus on near-term needs

• Direct consumer to specific (deepest need) dates

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Online Media Strategies

• Open sufficient availability at advertised rates

• Use to drive ADR

• Offer upgraded room types for slightly higher rate

• Offer additional stay dates where need isn’t as strong

• Blended stay dates = higher ADR

• Use value-adds when available

• Parking, breakfast, attraction tickets.

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Additional Tips

• Promotions must be newsworthy.

• WOW! deals work best.

• Use media to introduce offer in market.

• Offers are the content so make sure you put your best foot forward.

• Validity of offer builds consumer confidence in your property!

• Be creative when structuring offer

• Package value-adds to drive higher ADRs

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Louis Bouchayer


Wyndham Hotel Group

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Hotel Reservations are Shifting to Electronic Channels

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Hotel Reservations are Shifting to Electronic Channels

Electronic Channels 3%

Offline Reservations 3%

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Every Channel Brings New & Different Consumers

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BRAND.COM

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� Brand.com (Branded Websites)

� Loyal Customers & increase participation in Loyalty programs

� Benefits:

• Stronger Conversion at lower distribution costs

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PhoCusWright Consumer Trends Survey

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� Lead Generators

� Meta Search

• With consistent content & rate parity,

meta search partners refer consumers first to brand.com

• Used by DMO’s & CVB’s

� Affiliate Network

• Commission Junction brings referrals from

over 700 smaller regional websites to brand.com

� Search Engines

Websites lead bookings to BRAND.COMWebsites lead bookings to BRAND.COM

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GDS

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� GDS

� Corporate Consumers

� Traditional Travel Agents

� Benefit:

� Corporate consumers bring higher rated weekday business

� Consumers using Offline travel agents usually need flexibility, book in peak times, and pay higher rate

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OTA’s

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� OTA’s (Online Travel Agencies)� Leisure consumers � Corporate consumers via Corporate Booking Tools

� Exposure� Optimize the unique value and extensive reach of the OTAs� The OTA’s spend millions of dollars in marketing the experience of travel to

consumers• Online is where most consumers shop for goods and services

� Capture the guest who might not know your hotel - consumer acquisition tool

� Occupancy� Opportunity to build occupancy during need periods

� Convenience� By participating in OTA program, you can manage all rates and inventory

through your property management system

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The OTAs

have diverse product offerings in both domestic and international markets

KEY:

0%

100%

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Every Channel can bring different booking behaviors

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Stay Date

Booking Channel

Brand Web Site

OTA GDS VoiceProperty

Direct

Sunday 12.7% 14.5% 11.4% 12.8% 12.0%

Monday 11.5% 10.1% 15.3% 11.4% 13.0%

Tuesday 11.5% 10.3% 19.0% 11.5% 13.6%

Wednesday 12.1% 11.9% 17.5% 12.0% 13.9%

Thursday 13.4% 15.3% 14.3% 13.3% 14.1%

Friday 18.6% 16.3% 11.5% 18.7% 16.3%

Saturday 20.2% 19.0% 11.1% 20.4% 17.0%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

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Lead Time

Booking Channel

Brand Web Site


Direct

0 days 7.5% 11.1% 8.8% 6.8% 31.9%

1-2 days 15.1% 17.4% 9.9% 11.8% 10.5%

3-6 days 17.4% 17.0% 11.7% 25.9% 13.4%

7-13 days 16.2% 14.9% 11.0% 22.9% 10.7%

14-29 days 17.6% 14.5% 14.2% 21.5% 13.8%

30-59 days 12.5% 13.9% 15.5% 7.4% 10.9%

60-89 days 5.1% 7.1% 12.8% 2.0% 3.8%

90-179 days 6.1% 3.4% 9.5% 1.4% 3.7%

180+ days 2.7% 0.7% 6.6% 0.3% 1.4%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

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Length of Stay

Booking Channel

Brand Web Site


Direct

1 night 19.4% 21.9% 13.8% 22.2% 31.9%

2 nights 20.9% 22.0% 15.0% 21.5% 18.4%

3 nights 17.4% 22.3% 10.1% 16.3% 12.0%

4 nights 12.6% 14.4% 10.0% 13.9% 8.7%

5 nights 5.7% 5.6% 3.4% 8.3% 4.8%

6 nights 6.0% 4.8% 6.8% 2.8% 2.7%

7-13 nights 10.9% 7.8% 14.6% 9.6% 9.8%

14+ nights 7.1% 1.1% 26.2% 5.5% 11.7%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

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TodayToday’’s Presenters: s Presenters:

Panelists:

Bobby Bowers

Senior VP

Smith Travel Research

Jay HubbsDirector, Hotel ManagementHotwire

Jason Sciarillo

Director of Sales

Travel Ticker

Jake Stein



Louis Bouchayer


Wyndham Hotel Group

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Plan to attend the travel-marketing event of the year, the

2010 HSMAI Adrian Awards Gala!Monday, January 31, 2011

New York Marriott Marquis, New York City

This black-tie, networking celebration highlights outstanding work

and achievements in travel marketing.

Early Reservation Deadline: Friday, January 14, 2011

www.hsmai.org

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Save the Date – February 1, 2011 -- for the HSMAI Digital Marketing Strategy Conference, following the HSMAI Adrian Awards Gala in New York City.

This unique one-day interactive program will feature thought leaders and subject-matter experts in various components of digital marketing. Hot topics will include measurement and ROI, selecting and working with an agency, mobile and location based marketing, social, digital strategic planning, web analytics, and case studies from HSMAI’s Adrian Awards Digital Marketing award winners.

The event is designed for digital marketing, ecommerce, or distribution management professionals from hotel brands, hotel management companies, hotel ownership groups, destinations, and independent hotels and resorts.

Register Now: www.hsmai.org

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TodayToday ’’s webinar is copyright 2009 by the Hospitality Sale s & Marketings webinar is copyright 2009 by the Hospitality Sale s & Marketing Association International Association International with All Rights Reserved.with All Rights Reserved.

the role of ota in your distribution...

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