The evolution of business travel – an industry perspectiveeTravel Europe Amsterdam, October 04, 2016Philip Kramer, Head of Growth Markets

2Confidential – not to be distributed © A brand of HRS Group

Growth in business travel will driven by new global growth champions like India and China

Top 10 Markets in bn USD

Business Travel Spend

Source: GBTA 2015, China Industry News 2014

• China will surpass the US in 2017 as biggest Business Travel market

Growth 2014 - 2019

26

31

32

32

36

44

58

62

Germany

Japan

UK

S. Korea

Brazil

Italy

France

262

US

China

288

India

+61%

+51%

World in bn USD

2014

1,600

2019

+37%

1,170

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Business travel management takes evolutionary steps and will reach Managed Travel 4.0 soon

Procurement=> Cost saving

Duty of Care=> Risk Management

Managed Travel 4.0=> Consumerization

• Sourcing

• People locator

• Personal (Recommendation)• Mobile ubiquidity• Hassle-free travel (Payment &

Expense Management)• Bleisure

Travel managers

Traveller

Yesterday

Tomorrow

2.0

3.04.0

Shift of power

Traditional Travel Management

• Introduction of corporate travel mgmt.• Centralized responsibility and guidelines • Selection of professional travel

mgmt. service providers

1.0

China

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Today, markets are in different stages of the corporate travel evolution

Procurement=> Cost saving

Duty of Care=> Risk Management

Managed Travel 4.0=> Consumerization

2.0

3.04.0

Traditional Travel Management1.0

Spain

Brazil

Italy

Australia

Switzerland

US

Germany

Japan

UK

France

India

Russia

Source: Euromonitor 2015, Worldbank, Country Expert Interviews

Travel Evolution Horizon

Basic Advanced

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Travel industry – market share2015, Retail Value in €

Lodging takes a considerate stake in the travel business – and is shifting to online and mobile

Source: Euromonitor 2015Note: Travel industry includes transport and lodging (online and offline)

35% Lodging

65% Rest travel industry

Trends

• By 2017 every 2nd hotel booking will be made on mobile devices

20152014

Mobile hotel sales

+ 40%

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Corporations face 4 major challenges regarding hotel program management

Source: HRS Global Survey, 2014 (n = 250)

Content supply

Costs

Process compliance

Fragmentation challenge

Sourcing a global program

Leakage due to channel fragmentation

Travelersatisfaction

Consumerization challenge

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Content supply: Fragmentation of the industry makes it difficult to manage a large portfolio

Share of chain and independent hotels around the worldPercentage

Source: Euromonitor 2014, Smith Travel Research 2012

48

Chain hotelsIndependent hotels

91

Asia Pacific

100%

Middle/East / Africa 80 20

South America 9

North America 48 52

Europe 86 14

China 70 30

2377

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Europe

42.762

27%

156.000

101.000

North America

35.24550%

70.000

48.000

5.607

5%

112.000

67.000

China

+

Brazil

2.500

12%

21.600

14.600

Asia Pacific

7%

13.464

180.000

107.000

Comparison of hotel portfolio 2015, HRS vs. Global Hotel Supply HRS Total hotels

x% GDS Content Coverage

GDS

Source: September 2015, Euromonitor, Reuters

Therefore the GDS historically only covered a small fraction of the global hotel supply

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Outsourcing hotel procurement can save 9% direct costs – but only 14% of firms do it

Source: HRS Global Survey 2014 and 2015 / GBTA / American Express

On average, savings add up to

9% This represents a global annual savings potential of

= 29 billion US$

Huge savings potential… … but few firms leverage it

14%

71%

14%

Outsource negotiations to a service provider

Negotiate rates by themselves

Use a tool to supportwith negotiations

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There are several challenges connected with sourcing a global hotel program

Source: HRS Global Survey, 2015

Most challenges are connected to rising prices or lack of market transparency

Lack of local market know-how

Lack of benchmark information

Non-transparent booking and billing data

Fragmented hotel market

High expenditure of time and resources

Need to consider various/different interests

Increasing hotel prices

26%

32%

37%

39%

39%

46%

48%

Rising Costs Lack of market transparency

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Big data put into action – For HRS customers, big data saves millions of EUR in hotel sourcing

450,000 Rates

10 Mio. Room-nights

Room nights

$

# ###

Rat

e$$

$

Renegotiating rates

Bundling room nights

Replacing hotels

$25m

BIG DATA BIG INSIGHTS BIG ACTIONS

40,000 corporates

Booking patterns

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Leakage can be fought by mandating booking channels & an effort by all players in the value chain

HRS‘ multi-channel approach

100.000

150.000

Traveler

Chain

Independent hotel

100.000

200.000 TMCGDS

OBT

HRS for Corporates

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Traveler satisfaction will require full content with customized recommendations irrespective of channel

HRSRecommendation

Engine

Travel policy

CorporateLocation

Hotel Program

Reviews Preferences

Customer A Customer B

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Customized mobile apps for large corporations are one answer to the consumerization trend

Thank you!

philip.Kramer@hrs.com