E-commerce

And Social Media

Business Models

Business models are plans, activities, processes designed to result in profit

8 key elements1. Value proposition2. Revenue model3. Market opportunity4. Competitive environment (life cycle)5. Competitive Advantage6. Market strategy7. Organizational development8. Management team

E-COMMERCE Revenue MODELS

$ MODEL $ SOURCE Example

Advertising Paid for messaging Yahoo, Google, OTAs, blogs

Subscription Paid access to content or services

WSJ.com, consumerreports.org

Transaction fees Commissions for executing or enabling exchange

E-bay, E*trade, previously OTA fees

Sales Direct selling of goods, services information

Amazon, retailers

Affiliate $ for business referral

MyPoints, others…

Technology is the Enabler

• Ubiquity• Global reach• Universal standards• Richness• Interactivity• Personalization and customization• Information density• Social networking technologies

It’s the Technology, Sunny!

• Hardware: Web servers• Software: OS and Server Software• Networking: Routers• Security: Encryption• E-commerce Software for B2C, B2B• Streaming and Rich Media, RSS• CRM Software

It’s the Technology, Silly!

• Payment systems – the technology behind iTunes story, and PayPal

• Performance Enhancements• Databases – the big ones Oracle, MS, IBM• Hosting services – getting you on the

“highway”

• What might be next? Where?

Influences of Internet

Porter’s Five Forces Model• Substitutes– Pro: expand size of market– Con: threats of substitution

• Power of Suppliers• Rivalry among existing competitors• Barriers to entry• Bargaining power of channels• Bargaining power of end user

Social media: select categories

• More than Facebook• Streaming video• Media sharing, Pintrest, YouTube• Blogs and microblogs, Twitter• Review sites, TripAdvisor• Wikis, widgets• RSS feeds, message boards

http://ezproxy.library.nyu.edu:2736/Chart.aspx?dsNav=Nr:P_ID:137872

Social Media & Distribution

• Social media contribute to search engine optimization.

• Social media can improve travel experience. • Social media is the new “PR”• Social media can feed traditional media such

as talk shows, news programs, and vice versa.• Most social media outlets are owned by

established media (newspapers, TV, other)

Facts about Social Media & Travel

• Features used while travel shopping:

• 66%: interactive maps• 62%: consumer reviews• 52%: professional reviews• 47%: professional photos• 41%: consumer photos

Facts about Social Media & Travel

• Features used while travel shopping:

• 29%: social network posts (FB, Twitter)• 26%: professional video• 23%: consumer video• 20%: travel company’s social network (FB, etc)

• SURPRISED? (PhoCusWright 2012)

Attribution of Social Networks to…

• OTAs – 3.5%• Airlines – 6.1%• Hotels – 3.3%• Cruise – 7.0%

• 89% of consumer “Like” or “Follow” brands but on 29% do so for TRAVEL…..

Social Network Behavior

• 43% post comments or photos about travel• 33% Ask for advice on travel using networks• 28% share travel deals• 30% search for deals for travel• 42% post and share WHILE traveling• 25% download apps to use on social network

pages for or about travel

• Thoughts?

C U S T O M E R E X P E R I E N C EConsumer Behavior Today

Dreaming

Shopping

Consuming

Sharing

S E O & S E M

• Organic Search

• Local Search

• Paid Search

• Retargeting Ads

R E V I E W S & D I G I T A L I N T E R A C T I O N

T O P L I N E Revenue B E N E F I T S

Review Sites % of Total # of Travelers Reviews2008:OTAs – 53% Review Sites – 47%

2011:OTAs – 71% Review Sites – 29%

Some Thoughts on Reviews

• 86.6% of all Reviews (NOT on OTAs) are on TripAdvisor (watch TA)

• # of Reviews is Proportional to room supply in Star categories

• When ADR (US$) goes up, positive reviews (“Sentiment Index”) goes down.

• Economy & Luxury manage guest expectations• 2, 3, and 4 Stars have challenges doing so

Hamilton Island Case Study

• Encouraged guest reviews– 77 percent increase 2011 to 2012– Cooperation between operations, revenue

management, and marketing departments• Closely monitored and responded to reviews– 60 percent increase in responses 2011 to 2012

Hamilton Island Case Study

• Visits to Brand.com tripled 2011 to 2012• 94% increase in room nights SOLD in 2012• Direct revenue from TripAdvisor doubled• Conversion – Every dollar spent managing TripAdvisor

converted to $6 in direct online sales

P R O P E R T Y 2012 R E V I E W S

T O T A L R O O M S

R E V I E W S/ R O O M S

James NY Soho 459 114 4.0360 Thompson 242 100 2.42

Mondrian Soho 634 270 2.35The Standard 652 338 1.93

Hotel Gansevoort 381 209 1.82Crosby St. 122 86 1.42

R E V I E W S: More Reviews = More Positive Scores = More Revenue

(Source: Revinate)

R E V I E W S Case Study: M O N D R I A N S O H O p e r r o o m

2012 Ratio

2.35

2012 Comp Set Rank

3

2012 Comp Set Average

2.29

2012 Reviews per Room Index102.61

(Source: Revinate)

G R O U P S O F P R O P E R T Y R E V I E W S R E S P O N S E S % R E S P O N S E

All Properties 5470 2458 45%

Hudson 1225 440 36%

London Hotels 600 365 61%

Miami Hotels 1380 695 50%

Mondrian 1223 630 52%

Northeast Hotels 2531 1051 42%

West Coast Hotels 977 347 36%

R E V I E W S: M O N D R I A N S O H O r e s p o n d i n g t o r e v i e w s 2012

(Source: Revinate)

G R O U P S O F P R O P E R T Y

★★ ★ ★ ★

★ ★ ★ ★ ★ ★ ★ ★ ★ ★

All Properties 48% 44% 45% 45% 33%Hudson 31% 36% 38% 44% 31%

London Hotels 61% 63% 69% 86% 60%Miami Hotels 55% 48% 48% 42% 38%

Mondrian Hotels 51% 52% 60% 53% 46%Northeast Hotels 45% 40% 41% 46% 31%

West Coast Hotels 33% 40% 42% 32% 19%

R E V I E W S: M O N D R I A N S O H O r e s p o n d i n g t o r e v i e w s

(Source: Revinate)

• Encourage additional reviews from guests and patrons

• Respond to additional reviews

• Continue to monitor and analyze reviews

• Monitor and analyze Twitter and Facebook chatter

R E V I E W S: A C T I O N A B L E I T E M S

Increase total reviews

Respond to 75 percent

1. Become leader in digital competitive set2. Increase total digital chatter3. Increase traffic to brand.com4. Enhance guest experience5. Increase room nights and revenue

R E V I E W S: I N C R E M E N T A L B E N E F I T S

Social media helps

1. Drive traffic to brand.com2. Highlight brand distinctions 3. Increase brand awareness 4. Promote guest retention

Thoughts on Mobile

• Hotel bookings: Last Minute• Travel experience enhancement• Destination Marketing opportunity• Business travel managers have not endorsed• BUT…..it is the device of social

• SO-LO-MO is here

How Mobile is Fueling Social

US Moms Buy & Buy Travel