Edreams Odigeo · BME:EDR
Edreams Odigeo — Investor Day (November 2016)
81 slides from Edreams Odigeo's investor day presentation, Nov 18, 2016
Slide 1: Investor Day
Investor Day 18th November 2016
Slide 2: We provide customers with their perfect trip at the right price
We provide customers with their perfect trip at the right price Video being played live – not viewable on webcast 2
Slide 3: Agenda
Agenda We provide true value to customers & suppliers The value we bring to customers The value we bring to suppliers Our market is attractive and we are well positioned versus competitors We are uniquely able to deliver We are delivering a successful transformation for long-term sustainable gro
Slide 4: eDreams ODIGEO appeals to over 17 million customers of all demographics and needs
eDreams ODIGEO appeals to over 17 million customers of all demographics and needs … large range of group sizes Our … travelling to all sorts of destinations customers … with a variety of purposes are diverse … and differing price sensitivities 3 out of 4 of our The majority does not customers travel
Slide 5: Customers book with us because we provide strong value and choice
Customers book with us because we provide strong value and choice, in the most convenient way We make it <100 seconds for users to book a direct flight easiest to book We give They can 8 vs 3 customers the customize every >1,000 direct flight best choice element of their new product features options
Slide 6: Customers can save on each booking by using eDreams ODIGEO
Save Customers can save on each booking by using eDreams ODIGEO money 9 major pan-European Average final price saving per booking, carriers and LCCs eDreams v airline % AOV 45% > 5,000 43% 41% common routes on 37% 36% 36% 36% or same date, same payment 26% €134 20% average saving including all fees
Slide 7: Broad inventory selection means that eDreams can be cheapest: one example
Broad inventory selection means that eDreams can be cheapest: Save one example money Price of return flight, 1 pax, EUR 20-40% cheaper 161 149 142 Example trip: 123 120 Barcelona > 99 Brussels (return) 18th-21st November Airline A Airline B Airline C Airline D Airline E 7 SOURCE: Airline websites, a
Slide 8: For each route, we offer many more direct flight options per day
For each route, we offer many more direct flight options per day Best choice Average number flights per day per route1 Airline 14.3 10.4 9.7 7.6 7.1 7.0 6.5 8 direct flight 5.5 5.0 4.7 4.9 vs options per day 4.3 with airline 3.6 3 (on average) 2.3 1.6 1.5 Airline A Airline B Airline C Airline D Airl
Slide 9: eDreams offers twice as many flight options as the next nearest airline
For the same route as before, eDreams offers twice as many flight Best options than the next nearest airline choice 9 06:00 08:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 Example direct one-way trip: 3 Barcelona > Brussels 18th November 9
Slide 10: Customers can book their trip much more quickly by using eDreams
Customers can book their trip much more quickly by Convenience using eDreams Time to complete booking, minutes Direct Multi-leg Flight and hotel 13mins 9m 30s 4mins 5mins 3m 20s 2m 30s 1m 30s Airline Meta Meta Meta Additional 20-25s can be saved if card payment details are stored SOURCE: eDreams, me
Slide 11: You can book a return trip on eDreams 4x faster
You can book a return trip on eDreams 4x faster Convenience (vs meta and airlines) Risk of return leg being repriced or Metasearch and airlines made unavailable in the time taken to book first leg 2:00 PM 100% 2:00 PM 100% 2:00 PM 100% 2:00 PM 100% 2:00 PM 100% 2:00 PM 100% 2:00 PM 100% 2:00 PM 100%
Slide 12: Each step of a customer's journey allows them to customize their trip
Each step of a customer’s journey allows them to customize their Customization trip to suit their exact needs Inspire and Compare Order and Search Pre-travel Travel Post-travel plan and select confirm Personalized engagement Tailorable suite of products and Services to tailor trip to preferences met
Slide 13: We have market-leading customer service
We have market-leading customer service Best service Award-winning 24/7 round the clock customer service customer service Customer service recognized 1 2 as better than competition 3 Trustpilot score ranking 4 5 6 Ebookers 7 Lastminute 8 AirFrance 9 Airline 1 06:00 - 20:001 easyJet 10 Expedia 11 Air
Slide 14: Customers love our service
Customers love our service Best service Perfect customer service. I made a I had never travelled with mistake with my booking and they eDreams, but I will definitely sorted everything out for me. use them again. Invoice in 10 minutes on a Sunday. I requested an invoice for some services I contracted
Slide 15: Agenda
Agenda We provide true value to customers & suppliers The value we bring to customers The value we bring to suppliers Our market is attractive and we are well positioned versus competitors We are uniquely able to deliver We are delivering a successful transformation for long-term sustainable gro
Slide 16: The demand an OTA brings to an airline allows them to improve yield management
The demand an OTA brings to an airline allows them to improve Airlines their yield management Airline Each incremental 1% of demand is worth an extra Airline has to sell more seats at cheaper prices with lower demand 0.8% revenue Extra demand allows an airline to close cheaper fare seat categories e
Slide 17: OTAs present a 50% cheaper means of indirect customer acquisition for airlines
OTAs present a 50% cheaper means of indirect customer Airlines acquisition for airlines Estimated acquisition cost per booking (indirect traffic), EUR External acquisition (via OTA)1 Internal acquisition2 Additional investment also required for technology and infrastructure to support these transact
Slide 18: We are helping airlines grow and are an important strategic partner
We are helping airlines grow and are an important strategic Airlines partner to them Airlines are benefiting from our growth 95% of our partner contracts have performance components eDreams ODIGEO has been always Our strong global partnership with Our dedication to you a very important partner, our
Slide 19: Our market is attractive and we are well positioned versus competitors
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors Market overview and our position within it Our relationship with metasearch players Scale advantage We are uniquely able to deliver We are delivering a successful transf
Slide 20: Large and growing OTA market is poised for further expansion
Large and growing OTA market is poised for further expansion Market Travel is the biggest eCommerce …and OTAs are the fastest growing segment within segment… the European market Total European online travel market, EUR bn 146 101 64 +13% Software & apps Online travel 3x OTAs Direct suppliers 40 size
Slide 21: The European market's high online travel growth makes it attractive for OTAs
The European market’s high online travel growth makes it Market particularly attractive for OTAs Improved macro environment creates an …as well as greater continuous shift from attractive environment for OTAs… offline to online travel Passenger traffic growth vs GDP growth Online travel penetration
Slide 22: Flight market dynamics in Europe make it especially suited to OTAs
Flight market dynamics in Europe make it especially suited to OTAs Market US Europe 120 Number of airlines1 60 Supply 75% Market share of top 4 airlines2 29% Airline brand recognition High Low Domestic 23% 20% Proportion of domestic vs. International Customer habits International travel1 77% 80% Fra
Slide 23: OTAs are the only players that serve all customers' needs
Full offer Partial offer No comparability OTAs are the only players that serve all customers’ needs Market Compare and Order and Inspire and plan Search Pre-travel Travel Post-travel select confirm At-scale OTA Challenger OTA Meta Airline 23
Slide 24: Our market is attractive and we are well positioned versus competitors
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors Market overview and our position within it Our relationship with metasearch players Scale advantage We are uniquely able to deliver We are delivering a successful transf
Slide 25: Metasearch engines depend on OTAs for content and income
Metasearch engines depend on OTAs for content and income… Metasearch Share of traffic directed to OTAs (France) Percent 90 80 Meta 2 70 Meta 3 60 50 Meta 1 40 Adjusted EBITDA margin, Percent Traffic demonstrates meta dependence on OTAs to provide customers content Partnerships with OTAs are more
Slide 26: Moving beyond their current model would require significant investment
… and moving beyond their current model would require Metasearch significant investment Retail distribution Post- Inventory booking Sourcing ownership Displaying con- customer Marketing Pricing support tent and offer Barriers to entry Relation- Technology and Technology Customer care ships and algor
Slide 27: The customer experience through a metasearch site is much less convenient
The customer experience through a metasearch site is also much Metasearch less convenient Metas lack the customer data to fully understand how to The customer booking experience is slower communicate with them and has fewer service options Metas’ lack of customer data means “the sector is Flights ca
Slide 28: The customer experience through a metasearch site is much less convenient
The customer experience through a metasearch site is also much Metasearch less convenient Video being played live – not viewable on webcast 28
Slide 29: Even Google has found it hard to build a model as a flight meta
Even Google has found it hard to build a model as a flight meta Metasearch Launch of Google Flights Sep 2011 Oct 2014 Mar 2015 “Google Flight Search, loved Our traffic from Google “While no longer in beta, by some and ignored by Flights is limited today Google Flights still isn’t others, hasn’t turn
Slide 30: Our market is attractive and we are well positioned versus competitors
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors Market overview and our position within it Our relationship with metasearch players Scale advantage We are uniquely able to deliver We are delivering a successful transf
Slide 31: Our scale enables us to continue growing market share
Scale Our scale enables us to continue growing market share advantage Scale OTA players are gaining market share, % Local OTA Global OTA 26 23 30 74 77 70 2013 2015 2017 Source: PhocusWright 31
Slide 32: We have a significant scale advantage over our competitors
Scale We have a significant scale advantage over our competitors advantage European flight revenue Long-tail of other OTAs (not-exhaustive) Latest FY (€m) 367 <150 128 62 Source: OAG Analyser, based on number of seats for 2015; Industry Research 32
Slide 33: Leading player in the online leisure flight sector and category leader in Europe
Leading player in the online leisure flight sector and a category Scale leader in Europe advantage # Position in the market European OTA flight market share 2 2 2 27% 2 1 # 1 eDreams ODIGEO: 1 2 the leading flights retailer in Europe 1 1 1 SOURCE: Internal analysis, Amadeus bookings data, PhocusWrig
Slide 34: The benefits of scale drive long-term, sustainable competitive advantage
The benefits of scale drive long-term, sustainable Scale competitive advantage advantage 1 Scale leadership 5 2 More customers More bookings and higher margins 4 3 Better products, More investments in customer experience technology, product and brand and marketing 34
Slide 35: This scale means we are best placed to serve the mobile travel customer
This scale means we are best placed to serve the mobile travel Scale customer advantage IT Mobile developer capability comparison, European OTAs FTE Dedicated mobile 400+ ~70 ~60 ~50 ~40 ~30 ~20 ~20 ~40 OTA A OTA B OTA C OTA D OTA E OTA F OTA G 35
Slide 36: Customers are responding to our investment in technology and specifically mobile
Customer are responding to our investment in technology and Scale specifically mobile advantage Customers recognize our superior mobile offering … … and we are positioned to grow our lead Average global app ratings, current version Share of mobile flight bookings, Q2 2017 29% OTA 1 17% OTA 2 OTA 3 O
Slide 37: Our scale of inventory combined with technology delivers more to customer
Our scale of inventory – combined with technology – delivers more Scale to customer advantage London to Hong Kong example Delivering to customers ▪ Broader content ▪ Superior prices ▪ Customer service Direct flight Connected flight Customer Berlin London Frankfurt Hong Kong Paris Mumbai Geneva Barce
Slide 38: eDreams ODIGEO
eDreams ODIGEO
Slide 39: We are uniquely able to deliver
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors We are uniquely able to deliver Best-in-class customer experience underpinned by scaled technology capabilities Cost efficient acquisition and retention through scale Pr
Slide 40: Our scale allows us to generate a competitive advantage
Our scale allows us to generate a competitive advantage TECHNOLOGY AND PRODUCT DEVELOPMENT Harnessing the power of 50 agile teams with developer capacity 5-6x the size of our competition MARKETING Leveraging multi-terabyte customer databases to generate sophisticated customer insights, driving reten
Slide 41: We are uniquely able to deliver
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors We are uniquely able to deliver Best-in-class customer experience underpinned by scaled technology capabilities Cost efficient acquisition and retention through scale Pr
Slide 42: Our technology has significant scale and allows us to offer customers the best experience
TECHNOLOGY AND PRODUCT Our technology has significant scale and allows us to offer customers the best experience 750 million monthly searches 120,000 peak searches per second 80 million supplier searches per day > 450 airlines 7 billion pricing calculations per hour 42
Slide 43: The value of this scale is a competitive advantage throughout development
TECHNOLOGY AND PRODUCT The value of this scale is that it gives us a competitive advantage throughout our development process Our large development scale Large allows us to produce a huge development range of new ideas for scale products and features Quickest delivery Best We are continuously testin
Slide 44: Our in-house development scale allows us to develop many more ideas than competitors
TECHNOLOGY AND PRODUCT Our in-house development scale allows us to develop many more ideas than our competitors Relative size of in-house development capability Number of developers ~ 50 Airline OTA (IT dept) OTA A Airline 1 ~ 40 ~ 60 (IT dept) OTA B Airline 2 ~ 80 ~ 30 OTA C ~ 40 Airline 3 ~ 140 40
Slide 45: We can roll out these ideas globally on a huge platform
TECHNOLOGY AND PRODUCT We can then roll out these ideas globally on a huge platform Develop once, roll out globally The power of 400 developers in 50 agile teams focused on a single platform covering 5 brands 143 websites 20 languages 30 currencies 45
Slide 46: We are establishing a world-class product release speed
TECHNOLOGY AND PRODUCT We are establishing a world-class product release speed by reducing our process from ‘time of idea’ to ‘time of launch’ Time taken to release ideas to market >70% reduction in delivery time in last twelve months >70% 2-3x increase in number of A/B tests running We have achieve
Slide 47: Releasing multiple new products a week allows continuous testing with customers
TECHNOLOGY AND PRODUCT This ability to release multiple new products a week allows us to continuously test our features with large numbers of customers We rapidly test and trial product features in our UX Lab on a Kano surveys across geographies weekly basis UX Lab Qualitative survey Business case c
Slide 48: Our scale is balanced by a high level of agility to execute on ideas
TECHNOLOGY AND PRODUCT Our scale is balanced by a high level of agility to execute on ideas rapidly 50 1,000 25 A/B minutes tests agile teams releases p.a. best case delivery 3,600 simultaneous of top development time from develop- A/B tests possible talent ment to code live per day 41 48
Slide 49: The result is a seamless booking experience with a greater range of products
TECHNOLOGY AND PRODUCT The result that our customers see is a seamless booking experience with a greater range of products and services Inspire Compare Order and Search Pre-travel Travel Post-travel and plan and select confirm Location heatmaps Baggage information Free cancellation Destination guide
Slide 50: eDreams ODIGEO
eDreams ODIGEO
Slide 51: We are uniquely able to deliver
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors We are uniquely able to deliver Best-in-class customer experience underpinned by scaled technology capabilities Cost efficient acquisition and retention through scale Pr
Slide 52: We use our scale and advanced technology to reach customers in ways competitors cannot
MARKETING We use our scale and advanced technology to reach customers in ways our competitors cannot Search Engine 321M 35 1.5TB Marketing keywords bids per second database database monitored and algorithms Marketing 542k Keyword and 15TB insights campaigns route of company performance database acro
Slide 53: Our marketing strategy is built on deep at-scale insights
MARKETING Our marketing strategy is built on deep at-scale insights into who our customers are and what they want Retain Attract customers Increased more through efficiency customers scale We have increased efficiency of our We have worked to attract the right We are developing the capability to ret
Slide 54: We have derisked the business by increasing efficiency of marketing spend
MARKETING We have derisked the business while improving performance by Increased increasing the efficiency of our marketing spend efficiency We have reduced our reliance on paid …by evolving our other marketing search while increasing bookings… channels Bookings by source Proportion of total booking
Slide 55: Data-driven segmentation allows a more targeted approach to attracting customers
MARKETING Data-driven segmentation has allowed us to take a much more Attract more targeted approach towards attracting customers customers Inspire and Compare and Order and Search Pre-travel Travel Post-travel plan select confirm Every customer fits into one of our We invest in retargeting customer
Slide 56: We are focusing on using scale to continue building customer retention
MARKETING Retain We are now focusing on using this scale and capability to continue customers building strong customer retention for the future through scale Recognizing the value of repeat Currently working on opportunity to retain Resulting in increasing customer customers more customers across ch
Slide 57: eDreams ODIGEO
eDreams ODIGEO
Slide 58: We are uniquely able to deliver
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors We are uniquely able to deliver Best-in-class customer experience underpinned by scaled technology capabilities Cost efficient acquisition and retention through scale Pr
Slide 59: We developed a 3-step strategy to deliver market-leading customer service
We developed a 3-step strategy to deliver market-leading customer service Proactive care Self-care Assisted care Providing seamless customer Bringing relevant information and self- Increasing availability and quality of experience by actively addressing known care capabilities to our customers’ serv
Slide 60: We have identified and acted on customer pain points to improve their experience
We have identified and acted on customer pain points to improve Proactive their experience care Inspire Compare Order and Search Pre-travel Travel Post-travel and plan and select confirm We have addressed key pain Flight status information, including push notifications points at their root cause • P
Slide 61: We have invested in improving self-service across the customer journey
We have invested in improving self-service across the whole Self- customer journey care Inspire Compare Order and Search Pre-travel Travel Post-travel and plan and select confirm Revised, comprehensive Help Center Market-leading “My Trips” 1 Self-service modification of existing booking 400% growth
Slide 62: Strategic investments have allowed us to deliver market leading customer service
Strategic investments have allowed us to deliver market leading Assisted customer service care Inspire Compare Order and Search Pre-travel Travel Post-travel and plan and select confirm +10% +15% 1 Roll-out of new contact center availability rate resolution rate technology platform Scale enables us
Slide 63: Our customer service transformation has reduced our cost per booking
Our customer service transformation has reduced our cost per booking and improved service … and are delivering market-leading customer service Trustpilot score ranking Ebookers 1 Lastminute 2 AirFrance 3 easyJet 4 Expedia 5 Ryanair We have reduced our service cost per 6 Lufthansa booking … 7 Alitali
Slide 64: eDreams ODIGEO
eDreams ODIGEO
Slide 65: We are delivering a successful transformation for long-term sustainable growth
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors We are uniquely able to deliver We are delivering a successful transformation for long-term sustainable growth Q&A
Slide 66: Our performance has been driven by a successful transformation journey
OUR VISION Our performance over the past 18 months has been driven by a successful transformation journey focusing on the customer and developing scale Dana Dunne Appointed CEO Phase III (FY18-20) Leverage market leadership Now (FY16-17) with sustainable revenue Accelerate transformation model to bu
Slide 67: Our transformation put the foundations in place to deliver a strong customer experience
OUR VISION Our transformation put the foundations in place to deliver a strong customer experience, at scale From To Marketing • Multiple platforms cause • Most platforms unified Mobile inefficient development • Leading edge development • Highly dependent on Google • Large reduction in Google relian
Slide 68: Our transformation put the foundations in place to deliver a strong customer experience
OUR VISION Our transformation put the foundations in place to deliver a strong customer experience, at scale From To • Highly dependent on Google • Large reduction in Google reliance Marketing • Insufficient focus on world-class efficiency • Dramatic improvement in non-paid search performance, platf
Slide 69: This has translated into good growth in topline and EBITDA
OUR VISION This has translated into good growth in topline and EBITDA Revenue margin and EBITDA growth (% YoY) 10% rise in bookings 6% Revenue 5% 9% reduction in variable margin 2% cost per booking 22% 37% increase in metasearch 6% and advertising revenue EBITDA margin in FY16 -24% 46% growth in mob
Slide 70: The market is evolving as customer needs change
OUR VISION The market is evolving as customer needs change 36% see transparency as a key decision factor Clear and transparent pricing 53% abandon booking upon seeing final price Rest of market Access to a wide range 65% want to buy on a single online platform of products and services with ease 2.4x
Slide 71: We are one of the first to change in response to these needs
OUR VISION We are one of the first to change in response to these needs Our response Evolving our pricing Clear and and the communication transparent pricing of that pricing Rest of market Access to a wide range Offering an exciting of products and services range of innovative products and services
Slide 72: This will include a number of specific releases and new product ventures
OUR VISION This will include a number of specific releases and new product ventures We believe we can sell a We are also branching out …and will continue to number of traditional flight- into more innovative flight- build our business related ancillaries at fair related features beyond flights price
Slide 73: We expect a short-term softening of topline performance
OUR VISION We expect a short-term softening of topline performance Now Future Traffic Conversion Repeat rate Attach rate Marketing spend per booking Decrease in traffic Increase in conversion Uplift in repeat rate as Increase in attach rate Reduction in marketing as some customers are as increasingl
Slide 74: This shift sets us up for continued market leadership and a higher quality business
OUR VISION We believe this shift sets us up for continued market leadership, and a much higher quality business Strategic shift Resulting competitive advantage More robust, higher-quality Less dependent on one product, with good growth and diversified revenue opportunity both across products and tap
Slide 75: Our financial strategy is in line with these choices
OUR VISION Our financial strategy is in line with these choices We will control the transformation pace to continue Long-term target of EUR 125-140m to grow absolute EBITDA EBITDA by 2020 We expect a period of softer top-line performance More robust revenue profile to reflect longer-term investm
Slide 76: The results of this strategy are being monitored in a series of performance indicators
OUR VISION The results of this strategy are being monitored in a series of performance indicators Repeat bookings Acquisition spend per booking Product diversification ratio Customer revenue from non-pure flight service fees Bookings coming from mobile channels 76
Slide 77: All of these factors combined set us up for long-term success
OUR VISION All of these factors combined set us up for long-term success Lower-cost customer Low, transparent prices acquisition and access Great range and choice, Strategic Provision of a wide range Customers tailored to individual of non-flight products partners preferences A seamless experience b
Slide 78: Agenda Q&A
Agenda We provide true value to customers & suppliers Our market is attractive and we are well positioned versus competitors We are uniquely able to deliver We are delivering a successful transformation for long-term sustainable growth Q&A
Slide 79: In summary…
In summary… Customer value Growing market Industry structure Scale Market leadership Investment Results 79
Slide 80: In summary…
In summary… Customer value Growing market Industry structure Scale Market leadership Investment Results 80
Slide 81: eDreams ODIGEO
eDreams ODIGEO