Nustay Marketing Strategy

Nustay has set in motion the next stage of its post-COVID strategy. The decision to take this step follows from the increase in global hotel searches and bookings, as well as the recently announced loans Nustay has received from Vaekstfonden (see press releases of the August 3^rd 2020).

The objective of Nustay’s COVID strategy is to swiftly get back to the sales levels of Q1 2020, especially January-February 2020 (approx. DKK 46 million). 

Nustay believes that because it’s share of the market has been so small, a return to these levels are not dependent on a complete recovery of the travel market, but rather a question of capturing a larger market share through metasearch marekting. To this end, the company has spent the operationally inactive months making important data-led improvements to its platform and product, as well as to the Company’s processes and structure. See the company’s market update of the 15 July 2020.

Recent market data indicates that the recovery will not be smooth and that it will vary significantly between countries and regions (you can find a brief analysis on the current trends in the Appendix below). This outlook has been integrated into the Company’s recovery strategy.Marketing will now aim to be ROI (Return On Investment) positive on every booking, meaning Nustay will be profitable on all bookings when comparing marketing costs vs the commission earned on each booking.

To achieve this, the marketing approach will move exclusively to a CPA model, which focuses on lifetime value. Nustay has now got access to a new bidding option with the Company's biggest marketing channel: Google. It is a CPA model called "commission per stay", meaning Nustay will only pay Google a commission when a customer has stayed and checked-out of the hotel. This is in contrast to the CPA model used previously, where Nustay would have to pay Google even if the customer would cancel their booking at a later point. Importantly, in only paying Google after the customer has checked out, this new bidding option will offer better cash flow. For example, if a customer books a hotel in January 2021, Nustay will not pay till February 2021. Whereas with the previous model Nustay would have had to pay Google – no matter the check-in date of the booking – in the next invoice.

Furthermore, Nustay will also start marketing with the global metasearch site, Trivago, as well as a further two locally focused metasearch sites: lookingforbooking.com (strong in Germany, Netherlands and the UK) and hotelscan.com (strong in Italy, Greece, Spain).

Nustay’s supplier approach has also been improved to focus on working with bigger hotel suppliers which will give the Company a more stable and secure performance. This includes a new partnership with the global Rakuten Travel Xchange, and other more locally specialised suppliers such as Destination Italia. Nustay will of course keep working with historical top performing suppliers such as Agoda and Hotelbeds.

The strategy has been developed to be as flexible as possible in order to meet the challenges of continued instability, where marketing will be adjusted (by intensifying or reducing activity) in accordance to the situation in specific countries. This means that Nustay’s marketing cost will be highly optimised to move in tandem with market demand on a country-by-country basis.
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Appendix - Market Outlook Analysis

The global travel trend is seeing a steady recovery, with market research (1)  showing an uptick in hotel searches and booking across all major markets over the last two months. As can been seen in Figure 1 below, global searches (orange) for all destinations continue to move in an upward trajectory. This demonstrates growing travel intent, although increasingly further out into the future. Figure 2 demonstrates this with the YoY difference of booking volumes being smallest (bar the present month of July) for May 2021. Accordingly, there has been a notable slump in bookings in the first three weeks of July, which can be attributed to the increased COVID infection rates in the Americas.

 

Figure 1. Global search and booking volume for all destinations

 

Figure 2. Share of future booking volume global

 

In countries where the virus has been brought largely under control, the recovery in hotel bookings has been better than those where the virus continues to spread more widely. Figure 3 below shows the case of Italy, which was the first country to introduce lockdown measures, and has since largely kept the virus under control. By contrast, the US’s recovery has been stalled (after having seen an initial lift) following the jump in infection rates at the beginning of June (see Figure 4 below).

 

Figure 3. Global search and booking volume with Italy as destination

 

Figure 4. Global search and booking volume with US as destination

 

Another differential between countries and their respective recoveries has been the origin of the searches and bookings. That is, whether these represent domestic or international consumers. In the case of Italy, there has been a much greater international (mostly European) increase, than in the US’s case, where domestic travel has been the driver. The Asia Pacific region offers another reality, where the source of bookings has oscillated between domestic and international (mostly regional) as travel bubbles and corridors have been introduced and then withdrawn (see Figure 5 below).

Figure 5. Domestic hotel booking volume

 

For further information about Nustay, please contact

Investor Relations, Nustay A/S

E-mail: investor@nustay.com

Website: www.nustay.com

This information is information that Nustay A/S is obliged to publish following the EU Market Abuse Regulation. The information was provided by the contact person above for publication on August 4th , 2020.

 

About Nustay

Nustay is a Danish online hotel booking company established in 2014. The company has developed an innovative booking platform offering the lowest possible hotel prices while also enhancing customer’s booking experience. Nustay has set out an ambitious vision to become the global leader within the online hotel booking industry, and is confident its large hotel room inventory, novel pricing strategy, and transparent booking process, will achieve that goal.

 

(1) All data and charts are sourced from Sojern (https://www.sojern.com/covid-19-insights#report)