Market Watch Nick Harfield Madrid OTA Workshop - Oct 2016 - Travelport
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Market Watch Nick Harfield Madrid OTA Workshop - Oct 2016
20 –2
1995: That whole internet
thing is not going to work out
“I’d say it’s not that important.
20
I think it’s grossly oversold and
within two or three years people will shrug and say, ‘”Uh yep,
it was a fad of the early 90′s and now, it still exists but hey,
I’ve got a life to lead and work to do. I don’t have time to
waste online.”
….why should I bother prowling around the Worldwide Web”
simply because there’s so little of value there.”
Clifford Stoll, astronomer, author, scientist
Today, globally, more than 1 in 3
consumer travel dollars
…are spent
Source: PhocusWright
online
And online continues
Gross Bookings to outperform…
Global Travel and Online Sales
US$ B
Total Online Travel Total Offline Travel
25% 28% 32% 34% 36% 39%
2.439
2.229
1.980 2.030
1.943
1.709
1.232 1.472
773 918 1.030
580
2009 2011 2013 2015 2017f 2019f
With an exponential internet audience
providing much of the impetus
Global Internet Users (millions) 3.366 And we’re
expected to hit
4 billion users
2,749 by 2020
1.971
1.574 That’s
1.093
817
587
361 new users every
36 147 second
1996 1998 2000 2002 2004 2006 2008 2010 2012 2015
Source: internet world stats / Microsoft
And Asia providing much of the growth
% by Region Internet Penetration
North America 9% 88%
Europe 18% 74%
75%
1%
Oceania 10% 73%
3.3 4%
billion
internet Latin America 56%
users
Middle East 48% 52%
Asia 40%
Africa 10% 29%
Global average: 42%
Source: internet world stats
Europe overtakes US with world's
highest travel online penetration rate
Online Travel Penetration of the Total Travel Market 2013-2017f
52%
50% Europe
47%
43% 44% U.S
45% 45% 45%
44% APAC
41% 37%
34% 36%
31% MEA
31%
25% 27% LATAM
27%
25% 27%
22% 25%
23%
20% 21%
2013 2014 2015 2016f 2017f
Source: PhoCusWright
Big keep getting bigger
Making growth for the
rest that much more of a
challenge
Global OTAs share continues to grow fuelled by consolidation
Global public OTAs total gross bookings share (%)
2013 US$129 2015 US$175
Others
Others Odigeo 10%
19% Expedia 7% Expedia
31% 34%
Odigeo
Ctrip
10%
17%
Ctrip
10% Priceline Priceline
30% Booking value
Globally 32%
up 36%
Source: PhoCusWright
Note: Others – Orbitz, Rakuten, Lastminute, MakeMyTrip, etcExpedia and Priceline continue International growth….
Global Gross Booking in US$bn, 2014-2015
24.3%
10.4%
$60bn $56bn
$50bn
$48bn
22
18
49
44
63%
30 62%
37
7 13% 7 12%
Looking
2014 West 2015 International 2014 2015
Market Intelligence Team Travelport
– 12
Proprietary & Confidential
US
Source: Annual reports of Priceline and Expedia….Ctrip an upcoming contender
UK Travel content
Largest Indian OTA aggregator
acquisition acquisition
Expertise particularly in the mobile arena
Home rentals Rapidly becoming a global player
(Chinese version of Airbnb) Chinese hotel chain
China Eastern Airlines Largest Chinese Chinese OTA Chinese Hotel IT
(second largest)
partnership Metasearch
(launching its own LCC airline)
Market Intelligence Team Travelport
acquisition Looking East
acquisition
– 13 Merger
Proprietary & ConfidentialOpportunities
Business travellers expect to search
based upon factors important to them
+
Concur acquire
Hipmunk to deliver
consumer grade
products to CorporatesBusiness travel increasingly a target for OTAs
Egencia is today the 5th largest global TMC
14% 2015 Transaction growth Corporate revenue growing faster than
Expedia total revenue
2%
-1% CTRIP grew Corporate travel revenue by
>30% per year for last 4 years
Booking.com for Business launched in 2015Thinking and acting “mobile
first” is a must
In 2015 mobile usage across
business and leisure travelers
worldwide increased by 50%OTAs have seen strong mobile growth
OTA Mobile Gross Bookings (US$bn) 2013-2017f
$35
$30 $30,3 US
$27,2 China
$25
$20
$17,8 Europe > 50% of China’s OTA
$15 bookings via mobile
channels, in 2014
$10 $7,1 Japan
$5 By 2017, it is
$2,4 India expected to hit 73%
$-
2013 2014 2015 2016f 2017f
Source: PCWAlthough actual booking share does not
tell the whole story
Share of mobile bookings for select countries
Q1 2016
Source: Criteo 2016
Mobile accounted for 27% of travel bookings worldwideOTAs eyeing the untapped in-destinations market
~US$67bn 30%
offline via OTAs in ChinaAsia has already embraced the concept of a travel companion
Disruption
OTAs face threat from the “sharing”
economy 34% of
business
Airbnb’s Share of US online leisure penetration Vs OTAs
travelers
50%
45%
considering
Priceline
40% Airbnb for
35% next trip
Expedia
30%
25%
20% Airbnb
15%
10%
Brand.com/
5% other OTAs
0%
2014 2015 2016f 2017f 2018f 2019f 2020f
Source: Travel and Transport 2016Growth
Uber of On Demand
– The shift to real time
23% decline in Taxi in 2 years
Car Rental Taxi Ride Hailing
Q1 2014 Q1 2015 Q1 2016
8
25
46 40
37 50
55
25
14Airlines are striving to become the
“amazon” of the travel industry
Using data from loyalty programs,
social media to offer relevant,
targeted services and discountsGoogle Travel ecosystem expanding
• Google is slowly blending
many of its travel-oriented
features.
• Potential to pull customers
into the ecosystem
• In turn may help shift
customers to Google as the
starting point for travel
planning, searching and
Google Trips: New Travel Assistant App bookingArtificial intelligence attracting investments
Machine Translation
Visualization Rendering
Question & Answer
Message Resonance
User Modeling
Concept Expansion
Relationship Extraction
Language IdentificationConsumers starting to trust Mobile
Voice Assistants Smartphone
owners using
Voice Assistants
have doubled to
>60% in just 2
years in the U.S
In 5 years time at least 50% of all
searches are going to be either
through images or speech
- Andrew Ng Chief Scientist, BaiduMessaging. From communication to
booking and servicing tool
Virtual assistants and Messaging
Time spent on Chat has overtaken time Platforms bots, offer personalization and
spent on Social Networking reduce strain on call centres
Source: Business IntelligenceThe 3rd Industrial Revolution
Acceleration is on the horizon
- The fourth industrial revolution
Power of
connectivity
Mobility
Personalisation
PowerDigital can be confusing Trust Content
to the business… models
(Air Bnb)
sensitive
Always on
Tailored
offers Anywhere
Customer
Shared Ancillary
centric
knowledge selling
Micro Unbundling
Merchandising services
(Run Fare
anywhere) Upselling families
Insight
Mobile Distributed
Next data & Bundling
best development Geo aware processing
actionDevelopments have the potential to completely change the touchpoints on the consumer journey • Integrated Social Media • Contextual information • Smart cities • Predictive algorithms • Predictive Planning • Virtual Reality • Automated Rebooking • Intelligent assistants • Automated expenses • Semantic search • Smart, digital wallets • Personalised results • Embedded Biotech • Omni-channel booking
Digitally mature consumer
Anticipate
our needs
Tailor
interactions
around us to
personalise
Changes will be driven Seamless
preferences
by the evolving needs travel
experience
and expectations of Recommend Recognise
the next us as
future travellers best action individuals
Predict
issuesThe role of the mobile in travel will evolve Inspiration, Search & Bookings will continue to grow But it will become much more than a booking channel It will be the delivery mechanism The digital traveller for a more personalised, enriched wants an experience, traveller experience not a product
The question will be who is best placed to provide the seamless experience
Online environment evolving faster now
than at any point in last 20 years
Personalisation Speed is crucial Managing & Tailoring Content
Personalised offers driven by Digital content continues Suppliers websites are
big data and analytics. to explode. Increased evolving how they sell &
penetration Cloud to package their products
handle speed and scale online
Seamless experience Automation
Mobile fuels consumers use of Artificial intelligence and
multiple channels for search robotics help drive
and shopping. automation and return
Omni Channel key on tripJP Ephithite Madrid OTA Workshop Oct 2016
How we can help
Search Price Book Fullfill
To help OTAs drive conversion and incremental
revenue throughout the customer experience
targeted itineraries and relevant results
for the meta and mobile channel
Travelport e-Pricing Meta
Sell bags and seats to drive
customer loyalty an d
Boost customer conversion and incremental air revenue
loyalty by giving access to the Travelport Universal API Ensure an improved
same content found on the Ancillaries Return on Trip through
supplier site plus customer process automation and
tailored content yield optimization.
Travelport Universal API Queue Control Console
Boost customer conversion Upsell incremental Best Buy Plus
Branded Fares by search results that are hotels by integrating Automated Exchanges
more relevant now with the more unique content Travelport Business
appropriate persona, channel than the competition. Insights
Drive conversion with improved
or device. Travelport Universal API
search speed through
Search Control Console - Core, Your, More Hotel
- Travelport Universal API
- Car content
- Lightweight API for Search
Drive conversion with
- Integrated content (LCC, Rail)
- Split ticketing search
Customer acquisition Conversion Upselling Automation and Yield OptimizationSpeed Mobile First
Cloud Based Services
Return on Trip
Machine Learning
DIY Personalization
Omni Channel CacheHow we can help
Search Price Book Fullfill
To help OTAs drive conversion and incremental
revenue throughout the customer experience
targeted itineraries and relevant results
for the meta and mobile channel
Travelport e-Pricing Meta
Customer acquisition Conversion Upselling Automation and Yield OptimizationCustomer acquisition is expensive…
“For every $100 spent on driving
traffic to websites, companies
spend only $1 converting that
traffic into business.”
(Forrester)
Acquiring visitors Converting visitorsIHG / Priceline comparative marketing spend
($million)
Source: Credit Suisse
…And will keep getting more expensivee-Pricing Meta
A new agile, targeted shopping query
Available to API customers
only – a new indicator added
Reduced airline L2B ratios to existing search XML A targeted search
Up to 30% less polling than a specifically designed for
regular search driving conversion on
Metasearch
Quicker response times
More targeted processing A relevant selection of 50
shave up to 30% off response itineraries are returned for
times each query
No
provisioning More cost effective
Focus on low fare solutions, No changes to
required – API customer acquisition contracts or
functionality is
and itineraries that are most
enabling OTAs to broaden billing model
available to all attractive to leisure travelers
their reachDemo e-Pricing Meta with demo.travelportuniversalapi.com • Have a search result without ePricing Meta • Click XML and the response size • Do the same search with ePrcing Meta and show the equivalent response size
but don’t just take our word for it….
Skytours, Germany
"Using e-Pricing META, we've drastically reduced our
transaction response times while speeding up on finding the
lowest valid fares for each of your request.
With e-Pricing META one can be fully comfortable using meta-
search engines and there is no worry to be blocked by most
airlines.“
Rudi Seiberlich
CEO, SkytoursHow we can help
Search Price Book Fullfill
To help OTAs drive conversion and incremental
revenue throughout the customer experience
Drive conversion with improved
search speed through
- Travelport Universal API
- Lightweight API for Search
Drive conversion with
- Integrated content (LCC, Rail)
- Split ticketing search
Customer acquisition Conversion Upselling Automation and Yield OptimizationNeed for Speed
Mobile Abandonment by Industry
Financial services 23%
Online gaming 27%
56% of US Smartphone owners abandoned a
Electronics 35%
mobile transaction
Entertainment purchases 39%
Estimated $25B revenue lost alone in the US, Event tickets 39%
by mobile business Household items 39%
Travel 41%
36% of this was down to slow loading speed
Food 41%
(key reason)
Retail/Apparel 60%Growing traveller confidence to
self connect and book One Ways
92% willing to
How much would you need to save in order to book multiple,
self- connect? individual legs
At least $100 40% if it saves
At least $200
them money
34%
At least $300 15%
At least $400 4%
> $500 8%
Source: OAGSplit Ticketing (in Alpha)
The ability to execute only one search
request
• to get one-way and roundtrip fares
• aggregated in the response in order
to uncover lower fares
• save processing time/cost incurred
by multiple shop requests.
52How we can help
Search Price Book Fullfill
To help OTAs drive conversion and incremental
revenue throughout the customer experience
Boost customer conversion and
loyalty by giving access to the
same content found on the
supplier site plus customer
tailored content
Travelport Universal API
Branded Fares
Customer acquisition Conversion Upselling Automation and Yield OptimizationWhat are the airlines doing?
$60bn
Ancillary Revenues
expected for 2015
$16
Average ancillary
revenue per
passengerThis is impacting the OTA channel growth …
In the US, the gap between the airline “The evolution of airline products
websites and OTAs is widening and merchandising is also
contributing to a major shift in online
US online air spend (US$B) air sales…
Airline website 63
56 58 61 ancillary distribution strategies are
53
46 49 pushing OTAs’ air bookings – and
their share of online air – down at
18 19 19 20 21 an unprecedented rate.”
18 18
Airline via OTA Source: PhoCusWright
2011 2012 2013 2014 2015 2016f 2017fLeaving OTAs feeling they have a clear disadvantage
How agencies perceive the ability to compete with airline websites to sell branded fares
Disadvantaged Equally competitive Advantaged
10% 13% 0% 3%
20%
26% 29%
12%
29%
61% 0% 19% 62%
71% 72%
75%
100
%
TMCs Consolidators OTAs Retail leisure Wholesalers Other
Source: IATA study - October 2015
OTAs more than any other travel intermediary believe that the growth of branded fares have put
them at a substantial disadvantage to airlines websites
The Challenge for OTAs:
A Key concern is the requirement to build out branded fares capabilities with multiple GDSs
They would prefer a GDS agnostic solution
Source: Travelport Researchbut this doesn’t have to be the case…….
How airlines present their offering… How OTAs present the offering…
>65% of leisure & business passengers prefer an online agency that presents flight options using richer retailing*
*source: IATA NDC PAX Report – Oct 2015Branded Fares Demo
Branded Fares & Tailored
Content
170 airlines live with merchandising, including
fares families, branded fares, ancillaries and
tailored offers
(Regional) European OTA customer has seen 47%
upsell including 8% business class. Large European
OTA seeing 20% upsell
Three new items to discuss
• Brand indicator on shop
• Tailored content
• CodesharesHelping to create
More informed customers. More air bookings
Conversion Air
= uplift + revenue uplift
Improved service and experience Improved revenue opportunities
Create a more compelling visitor experience Create the environment which facilitates higher
reducing the need for visitors to go elsewhere propensity to upsell / cross-sell
which translates into better conversion translating into better airline negotiations
Site stickiness - Less abandonment Increased upsell opportunity
Loyalty - More repeat visitors Higher average ticket value
Choice - “Complete” offering Better negotiating position with
airlinesbut don’t just take our word for it…. Viva Travel, Greece
“We introduced Branded Fares in June 2016.
The upsell results have definitely exceeded
our expectations. We have significantly
improved our customer offering and at the
same time strengthening our airline
relationships. This has been a real win, win
for Viva Travel.”
Says Yannis Giovanis, VivaWallet
Average Branded Fare Upsell in %
>30%
0 5 10 15 20 25 30 35Branded Fares & Tailored
Content
Ski Special
Ski Special
Ski SpecialGDS agnostic branded fares
How does it work? GDS Agnostic Branded Fares
Travelport
Traveller Traveller Travelport can provide this data now
PRICE call to Branding
visits OTA reviews (one API call) for 157 airlines in
Travelport and Upsell
and SHOPS options and English language – no restrictions
for chosen is displayed
using any chooses based on current Travelport points of
itinerary for priced sale – fully GDS agnostic
GDS itinerary
itinerary
Then follows one of two paths
1 2
Traveller amends PRICED fare by Upsell or adding
Traveller retains PRICED fare with no upsell
Ancillary
Booking proceeds on TRAVELPORT irrespective of
Booking proceeds on original SHOP GDS
original SHOP GDS
Branded fares displayed FOC in return for shared Branded fares displayed FOC in return for segment
analysis of traveller behaviour (propensity to upsell / shift to Travelport
cross-sell)Your Feedback
Branded Fares in Shop
Targeted for Q1 17
To offer a unique capability for customers
to make a more informed choice of the
most suitable flight option in a shopping
response based on the optional services
avaible for that flight.
- Checked Baggage
- Refundable Fare
- Re-bookable Fare
- Seat Reservation
- Meal
- WifiHow we can help
Search Price Book Fullfill
To help OTAs drive conversion and incremental
revenue throughout the customer experience
Boost customer conversion
by search results that are
more relevant now with the
appropriate persona, channel
or device.
Search Control Console
Customer acquisition Conversion Upselling Automation and Yield OptimizationPrice is obviously a key consideration for flight
planning
Features rated “extremely important”
when choosing airline tickets Offering the lowest
available fare is a key
51% Price 74%
measure of search
Most convenient
55% flight times 42% performance…
Fewer stops / better
52% connections
41% …but it is not the only
47% Airport location 37% thing that should be
considered when
Past experience
42% with airline 31% evaluating
business travelers
performance
leisure travelers
Source: Google – The air traveler’s road to decisionThe lowest fare is not always the most convenient
How does an 8 hour
stopover with a 2
year old after getting
off a 12 hour flight
sound?Search Control Console
by Persona Group
by Channel
74Handling a persona
Short but manageable
connections, emphasis
on direct flights, avoid
overnight stays,
comfortable departure
and arrival times.Search Control Console by channel A channel ID added to the Search request Rules a are loaded per channel and each will return results tailored for a device, a channel is saved with a user named sales channel or a persona group like family Channel ID
3 steps to improve conversion -
Travelport style
Conversion… 98%* of those who land on your site are likely to leave
without making a purchase
Branded Fares for Persona tailored
Optimize search
upsell alternatives
* Industry averageOptimize search Branded Fares for upsell Persona tailored alternatives Optimize search for the different Meta Channels with Search Control Console
Optimize search Branded Fares for upsell Persona tailored alternatives Display Branded Fares for upsell with the result when the customer is directed to your page
Optimize search Branded Fares for upsell Persona tailored alternatives
Display persona tailored
alternative flights in this
example more family Check out our Family Friendly options
friendly options with
Search Control Console
€ 242
€ 244Enabled on all devices
Mobile & branded fares
Search Select
ABC Travel ABC TravelMobile & branded fares
Upsell Branded Fares
ABC TravelHow we can help
Search Price Book Fullfill
To help OTAs drive conversion and incremental
revenue throughout the customer experience
Sell bags and seats to drive
customer loyalty and incremental
air revenue
Travelport Universal API
Ancillaries
Customer acquisition Conversion Upselling Automation and Yield OptimizationAncillaries…
The difference between optional services provided
included in a brand and ATPCO or API connected
ancillaries
Branded Fares ATPCO or API connected
Ancillaries
The Optional services offered within a Services that are not included in a
brand are included in the fare and do not Branded Fare and that are fulfilled
require any extra fulfilment or payment via an EDM or a credit card
process payment in addition to the FareAncillary services
Middle East
The following airlines Europe and Africa
provide ancillary Aegean (A3)
El Al (LY)
Air Berlin (AB)
services via Air France (AF) Ethiad (ET)
Universal API. Alitalia (AZ)
easyJet (U2)
Finnair (AY)
(Note: Some airlines may
Flybe (BE)
have content that is available Iberia (IB)
to alpha customers only.) KLM (KL)
LOT Polish (LO)
SAS (SK) Asia Pacific
Air New Zealand (NZ)
Virgin Australia (VA)
Qantas (QF)
Americas
Delta (DL)
United Airlines (UA)
Please click here to view
full details for each airline.Ancillaries – Seats
How we can help
Search Price Book Fullfill
To help OTAs drive conversion and incremental
revenue throughout the customer experience
Ensure an improved
Return on Trip through
process automation and
yield optimization.
Queue Control Console
Best Buy Plus
Automated Exchanges
Travelport Business
Insights
Customer acquisition Conversion Upselling Automation and Yield OptimizationTravellers want to feel empowered to self service
How do travellers update their itinerary while on a
trip?
Reach out to Airline or Hotel 55%
More than 7 in 10 travellers in the
Make changes themselves via App 39%
United States (78 %), and Spain
(73%) prefer using self-service
Reach out to an internal resource 19%
technology to manage their travel…
Although this is not always possible Reach out to my company TMC or
23%
agency
Reach out to my organisations Travel
23%
Department
Source: GBTATRIP CHANGE
change your trip in a minute
App Single GUI for all Travelport
systems & countries
Services One set of universal API
services
One pricing platform, support
for automated refunds,
Engine exchange of ancillaries,
“shopping”, 90+% of
exchanges supported
Simplified platformAutomated Exchanges - Travelport Universal API
Automate Exchanges (Rapid Reprice) through uAPI offers a standardized solution
for Travelport subscribers and developers to reprice and reissue a ticket .
Quote Modify Reissue
Offer your travellers the Reduction in incoming calls Debit memos resulting from
ability to self–service finding will leave more time for re-issues will be dramatically
the cost of alternative travel complex itineraries and reduced saving time and
options. sales. moneyFor your call centre
Or if you want to enable
self service
Assume..
100,000 tickets
4% exchanged (4k)
Assume 5 minute call..
333 hours or
9.5 weeks a year
New
capabilitiesConcepts
Fare Control Manager A web based fare management solution Allows the agency to rapidly add a fare mark-up or discount based according to user defined rules
The Value
Save Time Drive Revenue Improve competitiveness
• Rules uploaded and live
• Target fares through a • Applicable to all content
within 10 minutes.
simple to use interface irrespective of airline filing
• Ability to react quickly to
• Apply discounts across restrictions
stay competitive
multiple fares to generate • Agency fare mark-ups to
• Time based discounts to
demand in order to reach generate additional
gain market share and
airline incentives revenues
reach Airline incentives
• Manage fare adjustments • Ability to mark-up Low
• Stimulate demand in
by PCC groupings Cost Carrier content
underperforming marketsItinerary Primary Carrier Virgin Australia (VA) Origin Sydney Destination Brisbane FareBasisCode TSAVEGB
Margin Manager – The SCC User Interface
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