Romance + Revelry = Mobile hotel bookings?

E-commerce used to be a desktop only activity however the rise of the smart phone has given consumers the ability to make last minute and/or spontaneous purchases. One industry that is benefiting from this trend is the online travel agencies. They are benefiting as bookings not advertising drive their revenues. A typical problem for most companies is that while mobile drives extra traffic it tends to be at lower average sales levels due to the smaller advertising and screen. This is a problem these agencies tend not to have as their money is made when a room is booked and because they are last minute purchases the revenue tends to be incremental and does not cannibalise desktop revenues.

This is backed up by the CEO of Expedia (EXPE) Dara Khosrowshahi, "most of our sites are seeing 20 percent or more of their transactions coming from mobile, it’s by far our fastest-growing channel.” Note mobile includes tablets. "Approximately 70% of our mobile hotel bookings occur within 24 hours of stay furthering our belief that mobile represents an incremental opportunity," said Expedia spokeswoman Mallory Seubert.  This is great news for the online travel agencies as last minute bookings tend to go direct to the hotels, now users can use apps on their phone to compare prices based on their current location at the last minute.

The major beneficiaries are EXPE the owner of Expedia, hotel.com and Hotwire and Priceline (PCLN) the owner of Booking.com and Agoda. The main difference between the two is that EXPE is a more US centric business while PCLN is more dominant in Europe. The trend to mobile has pushed PCLN into action acquiring Kayak for $1.8 billion due to Kayak's expertise and growth in mobile downloads and the ability to grow Kayak internationally.

Source: Priceline

EXPE has released the most interesting study teaming up with Harris to commission a study into the trend.Their findings suggested that mobile usage tends to spike around holidays late at night such as New Years.

The most common reasons to book a room was necessity, they had too many drinks and could not find a way home.

“The next most common reason was personal, they had found love (or believed they had) and choose to explore those emotions immediately, in a nearby hotel room. “(Wording straight from the Harris study.)

The study went further onto say that their busiest periods were Valentine’s day, St. Patricks Day and the weekend after New Years Eve suggesting that romance and revelry were the key ingredient to mobile bookings. Here’s to hoping a mobile booking for all on New Years Eve!

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long PCLN

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Investor christmas wishlist

It’s now December and Christmas present wish lists are front and centre for households. It's a dangerous time for parents if the deadline is not fulfilled with the potential for anxious and upset family members, this is sounding just like the fiscal cliff!

Our household wishlist consists of some of the products from the table below. These companies are better known for their brands. It’s a handy table for parents to know where their money is going. It also begs the question can I make some money back from these companies?

Hasbro	Mattel	Lego
My little Pony	Barbie	Lego
NERF	Thomas the tank engine	Lego
Transformers	Fisher Price	Lego
GI Joe	Hot Wheels	Lego

Source: Company websites

What about me?

As an investor where is my Christmas wishlist? Looking at the reports from the three rivals above by revenue Lego is the clear standout with revenues growing much faster than peers with a base 3x larger than that of rival Mattel which is slightly larger by revenue than Hasbro. Profits have also grown from 1,028 million Danish Kroner to 4,160 million over the past four years. Not too shabby for such a well known toy brand.

Source: Annual reports/Factset

Lego fan, join the club

On average every person on Earth owns 80 pieces of Lego with all bricks being fully compatible from 1958 to now! (source Lego). Apparently new launches account for 60% of their sales such as new lines like Star Wars and other franchisee or movie tie-ins. The company did not skip a beat during the global financial crisis as Lego was able to grow in the world's largest toy market the US with Lego increasing its market share to 6% by end of 2011 (source Lego Annual Report).

Unfortunately Lego is not listed, its too profitable it doesn't need money from anyone else to grow! While an annual report is available on the website it is still owned by the Kirk Kristianseen family, passed down to a grandchild of the founder.

Who knows how to get to Sesame Street?

Seems like Mattel and Hasbro are left by default. Mattel has added the power brands of Thomas the Tank Engine and Bob the Builder in an acquisition from private equity in the past year. This purchase was motivated by the loss of the Seasame Street license to rival Hasbro 3 years ago. Hasbro starting from 2011 has the right to make Sesame Street merchandise for 10 years after a 15 year agreement with Mattel lapsed. Sesame Street is a nonprofit organisation.

It is a simple analysis but as a growth manager we are going with the faster grower. While not growing anywhere near as fast as Lego Mattel at 9.4% it has a superior growth rate compared to Hasbro 8.2%. Our Santa wishlist has to go with Barbie (Mattel) over Seasame Street as while it is one of the best known brands it is a license and not owned content (Hasbro). Mattel is faster growing and has a better range of more famous and relevant brands for kids.

Santa if I can't buy Lego shares can you please just send a Lego car?

Source http://www.hongkiat.com/blog/35-lego-mega-constructions-you-probably-havent-seen-before/

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive has no position in any of the companies mentioned.

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

 

Mobiles, mobiles and mobiles

Kleiner Perkins Caufield & Buyers (KPCB) released their most recent internet trends presentation. Its an 88 slide blockbuster condensed here to 6 key slides. It's more of a chartathon than a blog but a KPCB picture slide is worth a thousand words. Well summed up in four words its mobile, mobiles and mobiles.

 

The great thing about emerging markets is that they can leapfrog developed markets in that they do not have to upgrade exisiting infrastructure, they can start from scratch. No need to buy a desktop computer if you can search through your phone. India mobile usage is already leading desktop and the world. 

 

 

 

 

 Kids Christmas wishlist, out of the top 5 products four are from Apple

 

Those kids that want Apple products above need them so they shop smarter during Black Friday

 



We all know print is structurally challenged as readers but advertisers still have a ways to go

Wintel (combination of Microsoft's software and Intel's hardware) have really been left behind by the move to mobile. By the look of this chart any response might be too late.

 

Smartphones still only 17% penetrated worldwide, stay long the mobile theme!



 

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long AAPL

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.