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Playa Hotels & Resorts On Track to Increase Consumer Direct Business to 50% by 2023

During Playa Hotels & Resorts N.V. recent Q4 2019 earnings conference call, CEO Bruce Wardinski emphasized the brand’s commitment to growing direct bookings and lowering customer acquisition costs.

“[We] are confident we are on target with our five-year plan to increase consumer direct business to at least 50% by 2023,” he said.

During Q4 2019, 25.4% of Playa’s managed room nights stayed were direct -- up 560 basis points year-over-year; and 33.9% of rooms booked were direct -- up 580 basis points year-over-year. Playa’s loyal direct customers also tend to have a higher ADR as they represented 36.2% of revenue booked during the quarter for future periods.

Playa Hotels & Resorts is seeing increases in direct bookings specifically at its Hilton and Hyatt branded properties.

Generally, as we think about direct booking growth partnering with globally recognized U.S. brands is key to driving the highest value guests at the lowest possible cost to our resorts by reducing customer acquisition costs, increasing our total addressable market, mitigating the impact of supply growth and minimizing the negative effects of competition,” Wardinski noted.

But the brand isn’t just expecting Hyatt and Hilton to do all the heavy lifting. In early 2019 it began a soft rollout of a new end-to-end upsell and rebook technology at selected resorts. It uses sophisticated algorithms to identify in real time, new revenue opportunities including selling ancillary items and additional room packages to targeted guests.

“This technology will also enable us to accept more of the room upgrade bids as we move further back to the booking window and enter a seasonally slower period of the year,” Wardinski explained. “We finished enabling the entire portfolio with this technology during the fourth quarter.”

The company also launched its proprietary travel agent portal during the first quarter of 2019. Travel agents can now make commissioned reservations directly without having to go through a tour and travel operator. This effectively removes a layer of costs that previously existed, saving Playa roughly 7% to 9% in commissions per booking while at the same time maintaining the economics for the travel agent on a basic booking and improving the economics in the case of upsells or pre-booked ancillary revenues.

And in Q1 2019 the company launched a new yield management system. It is live in nearly all Play hotels.

“We’ll operate the new system in parallel with our current forecasting process for at least a year to fine tune it leveraging historical data and judgment of our marketing teams, an important step given the seasonality of our business,” Wardinski explained. “We expect the real benefit of the system to show up in our financial results starting in late 2020.

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