Changes in Hotel Distribution
Changes in Hotel Distribution William Newley – CEO MG Group
Rate Parity
Did rate parity ever exit ?
Bedbank
Bedbank
Bed Banks
Example of Bedbank Reach
Example of Bedbank Reach
Indonesia
Indonesia
Indonesia
Traditional Travel Agents
OTA Style
Indonesia • OTA’s share increased from 12% to 17% in 2010 to 2015 historically and is expected to continue increase to 29% in 2020. • Direct channel will continue to decline to 51% market share in 2020. • Bedbank Penetration will continue to grow
Bain and Company Consulting 2016 Research
Dangers – No Transparency • Package, Opaque or Bundled Rates are distributed Via XML without and possible control as to whether or not rates are actually packaged. • Frequent customer genius discounts are quite easily available and not limited to selected customers • Private Sales become very public sales
Dangers - Contracts • Early Bird with additional 15% of BAR for 1 month in advance • Last minute discount with additional 15% off BAR for last minute 0-14 days before arrival • Non Refundable additional 15% from BAR • 50% off BAR for Travel Industry • Override on the annual production
Dangers – Misguided concepts For many branded hotel properties, B2B channels are now driving more value, and increasingly more room revenue. • Franchise Fee: 6% • Reservation Fees: $4.24 • Transaction Fee: $0.0895 • Marketing Fee: 1% • Loyalty Fee: 4.5% • Large Global OTA Commission: 13% • Commission Processing Fee: $0.16 + 2% of commissions paid • Paid Search Fee: 9% • Credit Card Fees: 2% Other key data points: • ADR: $153.43 • Average Loyalty Discount: 4%
Brand.com Loyalty Member $153.43 N/A -$6.14 $147.29
ADR Merchant Discount Loyalty Discount Effective ADR Fees : Royalty Fee -$8.84 Reservation Fee -$4.24 Transaction Fee -$0.09 Marketing Fee -$1.47 Loyalty Fee -$6.63 Commission Fee N/A Commission N/A Processing Fee Paid Search Fee -$4.64 Credit Card Fee -$2.95 Total Costs -$28.85 New Revenue $118.44
Merchant Model $153.43 -$19.95 N/A $133.48
Large Global OTA on an Agency Model $153.43 N/A N/A $153.43
-$8.01 -$4.24 -$0.09 -$1.33 N/A N/A N/A
-$9.21 -$4.24 -$0.09 -$1.53 N/A -$19.95 -$0.56
N/A N/A -$13.67 $119.81
N/A -$3.07 -$38.64 $114.79
Deutsche Bank Research Report published July 13, 2016,
Rate Parity
Did rate parity ever exit ?
Bedbank
Bedbank
Bed Banks
Example of Bedbank Reach
Example of Bedbank Reach
Indonesia
Indonesia
Indonesia
Traditional Travel Agents
OTA Style
Indonesia • OTA’s share increased from 12% to 17% in 2010 to 2015 historically and is expected to continue increase to 29% in 2020. • Direct channel will continue to decline to 51% market share in 2020. • Bedbank Penetration will continue to grow
Bain and Company Consulting 2016 Research
Dangers – No Transparency • Package, Opaque or Bundled Rates are distributed Via XML without and possible control as to whether or not rates are actually packaged. • Frequent customer genius discounts are quite easily available and not limited to selected customers • Private Sales become very public sales
Dangers - Contracts • Early Bird with additional 15% of BAR for 1 month in advance • Last minute discount with additional 15% off BAR for last minute 0-14 days before arrival • Non Refundable additional 15% from BAR • 50% off BAR for Travel Industry • Override on the annual production
Dangers – Misguided concepts For many branded hotel properties, B2B channels are now driving more value, and increasingly more room revenue. • Franchise Fee: 6% • Reservation Fees: $4.24 • Transaction Fee: $0.0895 • Marketing Fee: 1% • Loyalty Fee: 4.5% • Large Global OTA Commission: 13% • Commission Processing Fee: $0.16 + 2% of commissions paid • Paid Search Fee: 9% • Credit Card Fees: 2% Other key data points: • ADR: $153.43 • Average Loyalty Discount: 4%
Brand.com Loyalty Member $153.43 N/A -$6.14 $147.29
ADR Merchant Discount Loyalty Discount Effective ADR Fees : Royalty Fee -$8.84 Reservation Fee -$4.24 Transaction Fee -$0.09 Marketing Fee -$1.47 Loyalty Fee -$6.63 Commission Fee N/A Commission N/A Processing Fee Paid Search Fee -$4.64 Credit Card Fee -$2.95 Total Costs -$28.85 New Revenue $118.44
Merchant Model $153.43 -$19.95 N/A $133.48
Large Global OTA on an Agency Model $153.43 N/A N/A $153.43
-$8.01 -$4.24 -$0.09 -$1.33 N/A N/A N/A
-$9.21 -$4.24 -$0.09 -$1.53 N/A -$19.95 -$0.56
N/A N/A -$13.67 $119.81
N/A -$3.07 -$38.64 $114.79
Deutsche Bank Research Report published July 13, 2016,
