Business Model Pres to AB 6th Nov Final

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    BUSINESS MODEL

    TOURISMlinkFood for discussion

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    SITUATION

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    Travel distribution chain (2010)

    AirlinesHotels

    RestaurantsComplementary offer

    Car rentalRail

    Tour operators

    Cruise linesDMC

    GDS

    OnlineB2B

    platforms

    B2Cplatforms

    Traditional agentsOnline agents

    Network agentsTMCs

    CustomersLeisure

    Business

    Suppliers Distributors Customers

    DMCwebsites

    Direct

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    Simplification of distribution value chain

    Magicbox

    Suppliers Distributors Customers

    AirlinesHotels

    RestaurantsComplementary

    offerCar rental

    RailTour operators

    Cruise linesDMCs

    Traditionalagents

    Online agentsNetwork agents

    TMCs

    GDSOnline B2Bplatforms

    B2Cplatforms

    DMCwebsites

    Direct

    CustomersLeisure

    Business

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    OPPORTUNITY

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    Value proposition Source Markets

    Travel agents

    Tour operators

    Access to niche market, destination by destination, including SME

    s. Access to all complementary offer, not only accommodation Creation of new and differentiated products for specialized customers Automatic process Reduction operating costs (less mistakes) Business intelligence module An authentication system for participating suppliers and distributors A settlement system

    Easy access to large market through only one channel, including SME

    s. Access to all complementary offer, not only accommodation Creation of new and differentiated products for specialized customers Automatic process Reduction operating costs (less mistakes) Business intelligence module An authentication system for participating suppliers and distributors

    A settlement system

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    Value proposition Destination Markets

    Accommodation

    Complementary offer

    Added value services (basic PMS, CRS, channel manager, business intelligence) One technical integration with various distributors; channel manager. Access to niche market and to complementary offer; possible creation of dynamic packaging Brand and channel control

    Business Intelligence, market knowledge An authentication system for participating suppliers and distributors A settlement system

    Added value services (basic PMS, CRS, channel manager, business intelligence) Basic PMS and CRS tools for SME

    s One technical integration with various distributors; channel manager. Creation new and high value product Access to new markets and niche Business Intelligence Customer and market knowledge An authentication system for participating suppliers and distributors

    A settlement system

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    Potential EU market (Eurostat 2010, ECTAA 2009)

    Accomodations**: +/- 150.000

    Distributors***: +/- 70.000

    Complementary Services****: +/- 200.000

    (*) Add 400.000 Farm and Village Tourism presents in EuroGites (28 countries)(**) hotels, apartment hotels, motels, roadside inns, beach hotels, residential clubs, rooming and boarding houses, tourist residences(***) Travel agents and tour operators(****) Restaurants, cafes, museums, natural parks

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    BUSINESS MODELS

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    Distribution models

    IDS/OTA ( eDreams, Expedia, Booking, Lastminute) Strong positioning in the online market Intermediaries between hotel and customer Net rates and commission-per-reserve Access to own external web

    GDS (Amadeus, Worldspam, Galileo) Sales tourism services (flight, hotel, train, rent-a-

    car) Sales through travel agencies (online/traditional) Connection between the suppliers

    reservationsystems (airlines, hotels, rail companies, rent-a-car)

    and the distribution Commission to services provide r

    CRS (Keytel, Transhotel, Hotelbeds) Offer reserves system to hotels Manage hotel inventory Commission-per-reserve or flat fee for adhesion

    Branding/ Management group (LeadingHotels, Worldwide Independent Travel Network )

    Differential mark for independent hotel/travelagencies (quality mark or management group)

    Adhesion to brand image and satisfy quality standard More pressure to negotiation

    Commission and annual flat fee Own reserves central

    Infomediaries (Kayak, Tripadvisor, Trivago) Intermediaries between info provider and info

    consumer Complex search to adjust specify needs client Revenue per advertising and sales

    Innomediaries ( Groupon, Letsbonus) Clients community Potentiate interaction between customer and

    enterprises Offer daily discounts by price to your members Ensure client maximum volume until limit

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    Example business models (cont.)

    MicrosFidelio (PMS) : license cost + monthly fee to hoteliers

    Google: advertising

    National Tourism Board: public money

    Expedia, Booking (OTA): commission or mark-up from hoteliers per booking

    Rate Tiger (Channel manager): license cost + monthly fee to hoteliers

    Trivago (Infomediaries) : commission or mark-up from OTA

    s per booking

    Hotelbeds (CRS): commission or mark-up from hoteliers per booking

    Amadeus (GDS) : Commission from hoteliers + compensation Travel agents

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    Business model options

    Option 1 Option 3Option 2 Option 4

    Amadeus Google

    Commission: Expedia Booking

    Fix fee: Rate tiger Microsfidelio

    Group on

    Trivago Google

    Travel Open Apps BookNorway TOURISMlink

    (2012-2014)

    distribution

    companies pay

    services providers

    pay

    both operators

    pay

    DMO public pay

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    Option 1: Distributors pay

    Operators distributors (travel agency, tour operators, IDS, GDS, OTA,TMC) pay by offered services. Examples:

    * adhesion fee* access to platform

    * transaction fee* delivered reserve fee* flat fee* commission-per-reserve delivered* new technology services* support services

    Normally distributors don

    t pay for platform access, nor fee and commissionper reserves. Only for technology, support services and advertising (Google)

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    Advantages/disadvantages

    - Time to market. It

    snow or never. Otherswill do it.

    - Incentive forproductivity

    - Difficult to implement-Strong competition forfree business models

    Advantages Disadvantages

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    Option 2: Services providers pay

    Services providers (accommodation, restaurant, destination web andcomplementary offer) pay by offered services. Examples:

    * adhesion fee * access to platform

    * transaction fee * reserve fee * flat fee* commission-per-transaction * new technology services* support services

    * buy distribution tools (PMS, channel, CRM, Yield)

    Fees and commissions are paid by services providers normally

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    - Hoteliers are used to it.- Extremely reduced cost

    (Standard, Open source, Saas,cloud) for innovative technology

    - Small fee or small commission- Simple to manage (fee

    s).- Time to market. It

    s now ornever. Others will do it.

    - Another intermediary with noadded value for technological

    developed hotels.- Focused on SME with low

    technological tools, witch aredifficult to reach.

    - A lot of tec. standards in everycountry.

    - Strong competition for maintechnological players thatdevelop tech. tools

    Advantages Disadvantages

    Advantages/disadvantages

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    Option 3: Services providers and Distributors pay

    Services providers and distributors pay by offered services. Examples:* adhesion fee* access to platform* transaction fee* delivered reserve fee

    * flat fee* commission-per-transaction* new technology services* support services* buy distribution tools

    Fee

    s and commissions are paid by Services providers, anddistribution companies pay for technology / distribution tools

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    - Hoteliers are used to pay - TA are not use to pay for

    platform access- Difficult to implement.- Need to show

    technological valueadded

    Advantages Disadvantages

    Advantages/disadvantages

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    Option 4: DMO (public money)

    Public institutions like Valencia Government pay for building up thesystem and maintaining it in the beginning. Examples:

    Travel Open Apps BookNorway Tourismlink

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    Option 5: Private sponsors

    Private sponsors (DMO or enterprises) pay for particular services likespecific B2B marketing support

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    - Pay for interestingservices or customservices

    - Market / commercialrisk- Not sustainability

    model

    Advantages Disadvantages

    Advantages/disadvantages

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    OPEN DISCUSSION