demystifying the digital marketplace · 2016-10-25 · demystifying the digital marketplace what...

Kalibri Labs © 2016, Confidential

Demystifying the Digital Marketplace

Cindy Estis [email protected]



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


Booking Brands Now Dominate Consumer Point of Entry

Consumer Stay Brands

Booking Brands3


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


“Organic search”…a quaint term from the mid-2000s

5


Google’s Travel Ecosystem Google Travel & Apps

Source:BCGandHiltonWorldwide


Future: Peer to peer services


Tech Consolidation – who is buying who and why?

8


Business Travel: The RFP Gets a One-Two Punch

9


Surprise, surprise…from Amazon

10

21st April,2015

16th October2015


“Book Direct” Gains Traction

11

GIANT Booking.com attacks tiny Triptease


Groups and Meetings Ripe for Disruption


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


Demystifying the Digital MarketplaceHighlights of U.S. Hotel Performance


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


Direct Booking ratio has declined 33% since 2011 Direct-to-Indirect Channel Share Ratio2011 thru YTD June 2016 – All United States


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


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



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



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


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


+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.


Contribution by Channel with COPE %Contribution to Operating Profit and Expenses


Next-Gen Benchmarking:Tracking Revenue Capture on a monthly basis


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


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


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


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


Case Study—Kalibri Suites


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%


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


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


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?



Thankyou!

Cindy Estis [email protected]

demystifying the digital marketplace · 2016-10-25 · demystifying the digital marketplace what...

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