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Wednesday, May 26, 2010Wednesday, May 26, 20102:00 2:00 –– 3:30 PM EDT3:30 PM EDT

Growing RMs’ Knowledge of Internet Marketing

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HSMAI University Alliance PartnersHSMAI University Alliance Partners

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POLL QUESTION #1POLL QUESTION #1How many people are participating in

this webinar at your location today?

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Panel Moderator: Jeff Higley, VP,

Digital Media & Communications

HotelNewsNow/STR STR/STR Global

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TodayToday’’s Presenters: s Presenters: Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Bobby Bowers,

Senior VP, STR

Trevor Stuart-Hill,

President,

Revenue Matters

C. A. Clark, VP,

Electronic Publishing,

Miles Media

Nick Cohen,

Senior E-Marketing Mngr.,

Sabre Hospitality

Loren Gray,Director of E-Commerce,Ocean Properties, Ltd.

HSMAIRevPar – Past, Present & Future

26 May 2010 Bobby Bowers

Smith Travel Research /

STR Global

[email protected]

www.strglobal.com

615.824.8664 x3321

Want a copy of the STR portion of the presentation?

Have questions about the presentation?

Total United StatesKey Performance Indicators Percent ChangeApril 2010 – Trailing 12 Months & Year-to-Date

Total United StatesWeekday / Weekend Percent ChangeApril 2010 YTD

Weekends = Friday / Saturday

Total United StatesRevPAR - Monthly Percent ChangeJanuary 2008 – April 2010

20092008

Total United StatesOccupancy - Monthly Percent ChangeJanuary 2008 – April 2010

20092008

Total United StatesAverage Daily Rate - Monthly Percent ChangeJanuary 2008 – April 2010

20092008

Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to April 2010

2008 Smith Travel Research, Inc.

2.9%

-1.7%

-1.1%

- 4.8%

-6.6

Total United StatesOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to April 2010

-3.4%

-6.8%

-4.5%

-7.4%

-4.7%

0.1%

- 9.6%

Total United StatesRevPAR Percent ChangeTwelve Month Moving Average – 1989 to April 2010

2008 Smith Travel Research, Inc.

-10.5%

- 11.5%

Chain Scales

STR Chain ScalesSelected Brands by Category

• Luxury – Four Seasons, Ritz Carlton, Fairmont

• Upper Upscale – Marriott, Hilton, Hyatt, Sheraton

• Upscale – Cambria, Courtyard, Hilton Garden Inn

• Midscale with F&B – Ramada, Holiday Inn, Best Western

• Midscale no F&B – Comfort Inn, Fairfield Inn, H.I. Express

• Economy – Econolodge, Days Inn, Red Roof

Chain ScalesSupply/Demand Percent ChangeApril 2010 YTD

Chain ScalesOccupancy/ADR Percent ChangeApril 2010 YTD

Luxury, Upper Upscale, Upper Tier IndependentsTransient / Group - Percent ChangeApril 2010 YTD

Markets

Top 25 Markets versus rest of U.S.Key Performance Indicators Percent ChangeApril 2010 YTD

Key 15 MarketsRevPar Percent ChangeApril 2010 YTD

Excludes Las Vegas

Key 15 MarketsOccupancy Percent ChangeApril 2010 YTD

Excludes Las Vegas

Key 15 MarketsADR Percent ChangeApril 2010 YTD

Excludes Las Vegas

Projections

U.S. Economic OutlookBlue Chip Economic Indicators – May 2010

2009 2010F 2011F

Real GDP -2.4% +3.2% +3.1%

CPI -0.4% +2.0% +1.9%

Corporate Profits -3.8% +19.4% +8.1 %

Disp Personal Income +0.9% +1.3% +2.6%

Unemployment Rate 9.3% 9.6% 8.9%

Total United StatesActive Development Pipeline - RoomsChange From Prior Year

April 2010 April 2009 Change % Chg

In Construction 77,404 170,242 -92,838 -54.5%

“Planned” Pipeline 289,676 363,326 -73,650 -20.3%

Planned Pipeline includes projects in Final Plannin g and Planning phases

Source: STR / TWR / Dodge Construction Pipeline

Total United StatesKey Performance Indicators Percent ChangeFull Year 2009 Actual & 2010 / 2011 Forecast

Total United StatesKey Performance Indicator Outlook Scenario

2010E by Chain Scale

2010 Year End Scenarios

Chain Scale

Occupancy

(% chg)

ADR

(% chg)

RevPAR

(% chg)

Base Best Worst Base Best Worst Base Best Worst

Luxury 5.7 7.3% 4.6% -3.7 -2.3% -4.7% 1.8 4.9% -0.2%

Upper Upscale 3.3 4.8% 2.3% -2.0 -0.5% -3.0% 1.2 4.3% -0.8%

Upscale 2.6 4.1% 1.6% -4.5 -3.1% -5.5% -2.0 1.0% -3.9%

Midscale w/ F&B -1.0 0.5% -2.0% -2.3 -0.8% -3.3% -3.4 -0.4% -5.3%

Midscale w/o F&B 1.3 2.8% 0.3% -2.0 -0.5% -3.0% -0.7 2.4% -2.6%

Economy 1.0 2.3% -0.2% -4.3 -2.9% -5.3% -3.4 -0.6% -5.5%

Independent 1.9 3.4% 0.9% -2.3 -0.8% -3.3% -0.4 2.6% -2.4%

Takeaways

• Performance trough likely past• Supply growth slowing• Demand slowly improving• ADR weakness continues • Moderate improvement 2010• Meaningful growth anticipated 2011• Value is king

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Trevor Stuart-Hill,

President,

Revenue Matters

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The 5 Internet Models

� Retail

� Wholesale (Merchant)

� Opaque

� Auction

� Referral

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Retail Model

Commissionable – normally 10%

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Retail Model

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Merchant Model (hotel only path)

•Net Rate Structure

•Merchant of Record

•Promotions

•On Line Advertising

•Direct Marketing

•Stores & Mini-Sites

Question: How well do you know your Market Manager?

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Merchant Model

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Opaque Model

•Net Rate Pricing

•Something is hidden from consumer

(Price or Product)

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Opaque Model

� Room Only – “Brand Shield”

� Packages – “Price Shield”

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Auction Model

•Net Rate Pricing

•Customers bid on Product

•May have an Opaque element to it

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Auction Model

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Referral Model

•Call to action is defined by supplier

•PPC, Listing Fees or Commissions

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Referral Model

� Consumer Searches

� Links to your website for booking

� Channel Connect through RedX

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Referral Model

� Web site

� Top 20 Newsletter

� Referral Model - Hotel Direct Bookings

� Advertising Program

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Referral Model

� Travel journals, reviews and photos

� Travel planning

� CPC Advertising

� Targeted Text & Travel Deal Links

� On Line Advertising

� Pick of the Week Destination Advertising

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Strategic Approach

RetailWholesaleWholesale 2OpaqueAuctionReferral

-365 -300 -240 -210 -150 -90 -60 -30 -15 -5 0

Integrated Model

Days prior to Arrival

One look at an integrated model of online distribution options.

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Other Factors to Consider

� Contribution Potential (tracking)

� Room and Ancillary Revenue

� Distribution Costs (and production)

� Cannibalism

� Ease of Management

� Marketing Exposure (billboard effect)

� Relationships!

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Nick Cohen,


Sabre Hospitality

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Maintaining Revenue Management Strategy Through Your Proprietary Internet Presence

� Search Engine Optimization

� Search Engine Advertising (Pay-Per-Click)

� Linkage and Interactive Media

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Search Engine Optimization

SEO is directly related to yourWebsite’s visibilityin the organic results of the Search Engines

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As a revenue manager, are you thinking about the following?

� Based on my target markets, what keywords should my Website be appearing for and is my Website optimized for these terms?

� Am I talking to my team internally about my organic keyword strategy?

� Are the Search Engines driving qualified traffic to my Site and resulting in conversion?

� What keywords are my comp set appearing for in the Search Engines?

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Tracking Search Engine Conversion

Keyword search

YOUR WEBSITE $

Booking Engine Transaction

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Know your competitive set’s keyword strategy

Available Tools:

� SpyFu

� Google AdWords

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Search Engine Advertising (Pay-Per-Click)

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As a revenue manager, are you thinking about the following?

� Am I targeting keywords to complement my SEO program?

� Are my keywords and ad copy constantly changing seasonally as Ipromote new rates/offers? Rate parity applies to PPC too!

� Is my PPC campaign driving qualified traffic to my Site and resulting in conversion?

� What keywords/ad copy are my comp set running in paid search?

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Strategies to keep in mind:

� Targeted and localized keywords will generally have higher conversion rates than broad terms (‘NYC boutique luxury hotels’ vs. ‘NYC hotels’)

� Buy Your Brand Name - This gives you more exposure in the SE’s (owning the search result page), allows you to promote offers, and places you amongst the 3rd party sites and competitors

Available Tools:

� SpyFu� Google AdWords

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Linkage and Interactive Media

What is Link Building?

� Link popularity helps support SEO

� It’s not simply the number of links, but the quality of links which connect to your Site

� Consider directories (Yahoo, DMOZ) and localized linkage (CVB’s, University Sites)

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Interactive Media Categories include:

� Annual (i.e. TripAdvisor, CitySearch)

� Branding (i.e. Yahoo Travel)

� Promotional (i.e. Kayak, SmarterTravel, TravelZoo)

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Source: Google

Travel Site Visits Made Per Consumer 30 Days Before Booking

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Promotional media is an excellent way to complement your revenuemanagement strategy

� Consider promotional media during your most important need periods

� Keep your booking window in mind when running this type of media

� Know what sites your competition is on

Available Tools:� AdGooRoo� Google AdPlanner

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Emerging Technology

3rd Party and Search Engine content integration

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Emerging Technology

Semantic Web

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C. A. Clark, VP,


Miles Media

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Measuring Performance

What should you be paying attention to?

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Traffic

How many individuals looked at your site?

Measuring Traffic

Visits: browsing sessions in a time periodVisits: browsing sessions in a time period

Visitors: new vs. returningVisitors: new vs. returning

Uniques: by day, week or monthUniques: by day, week or month

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Bounce Rate

How many people actually stayed long enough to do

something?

What is a “Bounce?”

HomeHome AboutAbout DealsDeals DiningDining CampaignCampaign OtherOther

Entered Exited without clicking

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Why is Bounce important?

$10,000 Campaign

20,000 Visitors

20% Bounce

$.63/response

$10,000 Campaign

20,000 Visitors

80% Bounce

$2.50/response

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Click Through Rate (CTR)

How many people clicked through

10%

15%

50%

30%

1%

Buying Funnel

Campaign or Advertisement

Landing Page

Room Types

Amenities

Booking Engine

BOOK!

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Conversion Rate

The bottom line

2%

Look-to-Book

Campaign or Advertisement

Landing Page

Room Types

Amenities

Booking Engine

BOOK!

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Let’s Do Some Quick Math For PPC (Pay Per Click) Campaigns

1. Impressions – 10,000

2. ‘Click Through Rate’ (CTR) – 3.5% =350

3. ‘Bounce Rate’ – 40% (350-140)=210

4. Conversation Rate – 10% (210X.10)= 21 bookings

5. ‘Length of Stay’ (LOS) – 2.5 days (21X2.5)= 52.5 nights

6. ‘Average Daily Rate’ (ADR) - $100 (100X52.5)= $5,250

7. ‘Cost Per Click’ (CPC) - $1.10 (350X1.10)= $385

8. ‘Return On Investment’ (ROI) – 13 to 1 (5,250 / 385)

Now Some Questions to ask….

•What is the minimum acceptable ROI threshold?

•How do I calculate it?

•What is the benefit to my revenue management strategy?

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Revenue Management Practices in eCommerce

Accounting For Market Segmentations And Their Percentage Contributions

35%

65%

% Cost Per Channel

Channel Contribution %

10%

20%*

25%

45%

10%*

20%

*Is represented in the reservation center if unbranded

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Revenue Management By Channel Contribution

Transient Breakdown By Channel – example; $100 ADR Total Forecasted Revenue $100,000 (1000 RmNts)

•OTA- 100 Room Nights @ 25% cost = $75 ADR = $7,500

•Brand – 200 Room Nights @ 10% cost = $90 ADR = $18,000*

•Internet- 250 Room Nights @ 10% cost= $90 ADR = $22,500

•Reservation Center - 450 Room Nights @ 10% cost= $90 ADR = $40,500

•Corporate -100 Room Nights @ 15% cost= $85 ADR = $8,500*

•GDS – 200 Room Nights @ 15% cost= $85 ADR = $17,000

*would be absorbed into the Reservation center and the average % cost

would be modified accordingly

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Modulating the Market Channels by Cost

OTA – Cost is fixed by contract

Brand – Cost is fixed by contract

Internet – Several Channel cost variables

Rez Center – Cost is a variable of volume

Corp – Cost is fixed by volume

GDS – Cost is fixed by flat rate

OTA – Inventory / Rate

Brand – Always on - controlled by ‘gates’

Internet – Specific to channel -Always on

Rez Center – Always on - controlled by ‘gates’

Corp – Inventory

GDS – Inventory

Cost Parameter by Channel Managed Control by Channel

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How to Maximize Your Online Channel ‘Leverage’

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To Answer A Question……

•Internet should represent at least 25% of your transient market source.

•As such it represents 25% of your attainable ADR.

•At 10% cost (averaged) makes a minimum ROI of 10 to 1 as baseline just for it’s segment.

•For it to affect any other channel contribution or cost it must perform at at .25 modifier per % point shift multiplied by the variable cost between its channel cost to that of the channel being replaced.

EX: ADR=$100 / Internet ADR=$90 / OTA ADR= $75

Objective: Shift 1% from OTA to Internet

Internet Cost%-OTA Cost%(10%-25%)=15% (15%X.25)=3.75 is the modifier, namely for every room sold above 25% total segment contribution by the internet it ‘removes’ 3.75 rooms needing to be sold via the OTA for the same revenue.

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How to Maximize Your Online Channel ‘Leverage’

(The Last Slide…<smile>)

•The more SEO contributes to your site the lower the channel cost

•The higher the conversion % the more productive the channel

•The more you displace other more costly market channels you can extend the ‘logic’ of the modifier calculation to determine flow thru and forecasted revenue by segment

•Realize that online does not mean discounted

•Capturing more potential guests higher in the consumer funnel means less ROI but higher incremental Revenue.

•Sources of almost ‘zero’ channel cost are expanding, (social media, Mobile and geo targeted interactions)

•There’s a lot more math that can help but this is it…Thank You

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Questions?Questions?Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Bobby Bowers,

Senior VP, STR

Trevor Stuart-Hill,

President,

Revenue Matters

C. A. Clark, VP,


Miles Media

Nick Cohen,


Sabre Hospitality


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Upcoming HSMAI University ProgramsUpcoming HSMAI University Programs

If you haven’t registered for the entire 10-part Revenue Management series going through December 14, 2010, you can do so now. Details on this series and other upcoming webinars at www.hsmaiuniversity.org

Next session: July 27, 2010 –

“Use Data to Drive Revenue Management Decision Making”

Also coming soon…

June 1, 2010: “Guess who's coming to visit?” - What to do when your property owner calls a meeting with your property leadership

July 1, 8, & 15: Mobile marketing, in-depth social media strategies, and social media case studies & best practices

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June 21, 2010 �� Orange County Convention Center

Orlando, Florida

Save the Date!

This leading conference is brought to you by the thought leaders at the forefront of the increasing convergence of the revenue management and internet marketing fields within the hospitality industry.

�You’ll learn about the latest trends and best practices in these two important disciplines – and what they can mean to you and your company.�It is a not-to-miss event especially if you are a senior or regional hospitality professional with direct responsibility forRevenue Optimization and Pricing and/or Online Marketing, or are a management leader with an interest in staying ahead of the curve.�The conference will address the issues and challenges that you are facing, summarize the implications, and provide solutions and strategies for 2010 and beyond.

revmanagement.org | travelinternetmarketing.org

June 21, 2010 �� Orange County Convention Center

Orlando, Florida

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The Evolving Dynamics of Revenue Management: A Comprehensive Revenue Optimization Road Map for

Hotel Owners, Operators and Practitioners

By Kathleen Cullen & Caryl HelselPublished by HSMAI Foundation in partnership with the HSMAI Revenue

Management SIG Advisory Board and TravelCLICK

Coming Soon!

Revenue Management has continued to grow as a science and an art over the past several years in many industries, and especially in the hospitality industry. On the most fundamental level, the basis for success is to have the right revenue management organization in place to support the revenue strategy. A solid understanding of revenue management is critical throughout an organization, from top to bottom. This HSMAI Foundation publication brings you and your property the very latest information on understanding the market, market segmentation, forecasting, revenue strategy, pricing, inventory control strategies, and performance analysis. Included are a plethora of case studies to help you optimize revenue at all levels.

Expected publishing date: July 1, 2010. Pre-order today at www.hsmaipublications.com.

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EvaluationEvaluation

� Please take a moment now to click on the Evaluationlink in the LINKS box and complete the evaluation.

� Be sure to click on “Submit” when you have completed the evaluation to send us your responses.

� Your comments & suggestions are very important to us, and they help us to provide you with quality programming.

TodayToday ’’s webinar is copyright 2010 by the Hospitality Sale s & Marketings webinar is copyright 2010 by the Hospitality Sale s & Marketing Association International Association International with All Rights Reserved.with All Rights Reserved.

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