Dis trib uti onCo stStu dy- Ho tel s In fra ta 20 18This report has been prepared in accordance with the scope of Infrata Limited¡¯s appointment with itsclient and is subject to the terms of that appointment. Infrata accepts no liability for any use of thisdocument other than by its client and only for the purposes for which it was prepared and provided.The conclusions and recommendations contained in this Report are based upon information sourcedin the public domain and provided by others and upon the assumption that all relevant information hasbeen provided by those parties from whom it has been requested and that such information isaccuratermation obtained by Infrata has not been independently verified by Infrata, unlessotherwise stated in the Report.Certain statements made in the Report that are not historical facts may constitute estimates,projections or other forward-looking statements and even though they are based on reasonableassumptions as of the date of the Report, such forward-looking statements by their nature involve risksand uncertainties that could cause actual results to differ materially from the results predicted. Infrataspecifically does not guarantee or warrant any estimate or projections contained in this Report. Infrata disclaims any undertaking or obligation to advise any person of any change in any matteraffecting the Report, which may come or be brought to Infrata¡¯s attention after the date of the Report. DisclaimerDis trib uti onCo stStu dy- Ho tel s In fra ta 20 18Hotel Distribution: Executive SummaryPage 3Dis trib uti onCo stStu dy- Ho tel s In fra ta 20 18Shifting customers to direct has no impact on net contribution tohotels Page 4 The claim that direct distribution is ¡®considerably cheaper¡¯ than indirect distribution for a typical hotel isextensively reported. (pg8) Our analysis shows the averagenet contribution*of all the directdistribution channels is €4.59 perbooking greater than the average of all the indirectchannels. (The overallnet contributionfrom allchannels is €80.94) (pg9) However, if we compare solely thenet contributionof the OTA with Brand, then thenetcontributionis€78.43 with OTA channel contributing €0.12 more per booking than the Brand. (pg10) Were a hotel to shift their entire inventory (away from the OTA channels to Brand), there would be astatistically insignificant change in the overallnet contribution**.This shift assumes anet cost***rebalancing. This also assumes all other market dynamic factors remain the same.(pg11) However, a hotel is likely to face a significant drop in occupancy, which would require a material increasein spend in the areas of: customer acquisition, online marketing, technology development and customerservices.When selling indirectly, these costs are usually borne by the intermediary from commission proceedswhereas if the hotel would have to directly expend resources in these areas if there was a shift fromindirect to direct channels. Furthermore, the hotel is likely to lose the positive impact of the billboard effect (between €7 -€10 perbooking). (pg12) Source: Infrata * Net Contribution is the preferred Key Performance Indicator as this takes into account both channel costs and their respectivechannel revenues. Av. ADR of €112normalised across all channels to allow examination of costs in isolation. **areduction in average net contribution from €80.94 to €80.92 (or0.03%) *** e.g. removal of commission, addition of SEO costs, etc ¡£¡£¡£¡£¡£¡£