Apresentação Bob Gilbert - CEO HSMAI Americas, na 3ª HSMAI Strategy Conference 2016.

1. Demystifying the Digital Marketplace
An executive briefing by
Robert A. Gilbert, CHME, CHBA
President & CEO
HSMAI

2. Fourth report in the “Demystifying” series

3. Part I—The Macro View of the Digital Market
http://www.ahla.com/ddm/
Code – HSMAI2016
Dec 2016 & Q1 2017
Part II—Hotel Performance
Part III—Taking Action
Report just released

4. Executive Summary
Three macro trends in the industry landscape:
1. Hotels are exploring new techniques for
implementing revenue strategy
2. The legacy OTA model is declining while
apps and metasearch are gaining traction
3. New entrants spell disruption for select
customer segments

5. Report Highlights
Highlights of Part 1:
1. It’s all about channel mix
2. Commission growth is rising at a faster rate than
revenue
3. Trip planning is complex
4. Content is king
5. The billboard effect is dead
6. Last room availability and rate parity are key strategy

6. Report Highlights
Highlights of Part 1 (cont):
7. OTA consolidation implications
8. Where are search, meta search and apps going?
9. Direct booking campaigns
10.Corporate travel: the days of the RFP are numbers
11. AirBnb and the Sharing Economy

7. Demystifying the Digital Marketplace
• Industry Database
• Guest stay and cost of sales information from 25,000 hotels to date, primarily
in North America, expansion to Europe 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
• Book Direct Analysis
*Trends in U.S. expected to extrapolate globally

8. Thinking differently for optimizing channels and profits:
1. Revenue Capture
2. Channel Mix
3. Direct Booking Ratio
4. Channel Share Shifts
5. OTA Share, Vendor Mix and Share by Market
6. Channel Shift Probabilities
New Metrics & Trends

9. Revenue Capture for Total U.S. Market : 2015 vs. 2014
As Hotel 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
$132,800,000,000
$135,500,000,000
$120,400,000,000
$142,600,000,000
$145,400,000,000
$0 $50,000,000,000 $100,000,000,000 $150,000,000,000 $200,000,000,000
Net Revenue
Hotel‐Collected Revenue
Guest‐Paid Revenue
Revenue Capture Loss (‐0.4) = $572.8 m

10. 2015 U.S. Channel Mix
% of Room Nights
preliminary USA mix; final validation Q3 2016
Property
Direct 32%
Brand.com
18.5%Voice 7%
GDS
10.5%
OTA 15%
Group 17%
Transient Ratio
Direct : Indirect
2.3 : 1

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

12. Channel Share Shifts:
Property Direct, Voice & Group
70%
80%
90%
100%
110%
120%
130%
140%
2011 2012 2013 2014 2015
U.S. Channel by Source of Business
2011 ‐ 2015
Voice Property Direct Group

13. Channel Share Shift:
GDS Stable, Brand.com and OTA
70%
80%
90%
100%
110%
120%
130%
140%
2011 2012 2013 2014 2015
U.S. Channel Share by Source of Business
2011 ‐ 2015
Brand.com OTA / ETA GDS

14. OTA Share Growing in all Segments
Total U.S. 2011-2015
5.6%
7.6%
8.7% 9.0% 9.2%
15.8%
16.5%
14.1%
11.8% 12.2%
14.5%
18.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Economy Midscale Upper
Midscale
Upscale Upper Upscale Luxury
OTA % of Transient Room Nights*
2011 2012 2013 2014 2015
+35% +36% +57%+85%
*Economy & Luxury Chain Scale analyses in progress

15. 2015 OTA Vendor Mix
% of OTA Room Nights
excludes Midscale, Economy and Independent hotels
1.6%
4.4%
58.7%
2.1%
21.0%
1.2%
0.1%
7.3%
3.7%
0% 10% 20% 30% 40% 50% 60% 70%
Other
Priceline Group
Expedia
Net (Merchant) Retail Opaque
Total Share
63.6%
32.6%
3.8%

16. Total OTA Production by Market
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
OTA % of Transient Room Nights – Q1 2016
Upper Midscale, Upscale, Upper Upscale and Luxury properties
Net (Merchant) Retail Opaque

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.com to
Brand.com
Intermediary to
Intermediary
Likelihood of Remaining on
Brand.com or Intermediary
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.com to
Intermediary
Intermediary to
Brand.com
Likelihood of Switching between
Brand.com and Intermediary
2012 2014
Channel Shift Probabilities:
The Billboard Effect is Dead
Only 7% of consumers go back to hotel to book

18. Thinking differently for optimizing channels and profits:
1. Revenue Capture
2. Channel Mix
3. Direct Booking Ratio
4. Channel Share Shifts
5. OTA Share, Vendor Mix and Share by Market
6. Channel Shift Probabilities
New Metrics & Trends
What are the implications for you and your market(s)?

19. Demystifying the Digital Marketplace
What you Need to Know
1. Imperative for hotels to shift revenue generation approach from an analog to a
digital environment
• 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
• Manage to an optimal channel mix and differentiate the guest experience
2. 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
3. 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

20. Part I—The Macro View of the Digital Market
http://www.ahla.com/ddm/
Code – HSMAI2016
Dec 2016 & Q1 2017
Part II—Hotel Performance
Part III—Taking Action
Download your copy for free

21. bgilbert@hsmai.org
Questions and THANK YOU