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“6 nights is not sexy”
However:
“Tour Operators and Travel Agents need to provide products to their target audiences in the most efficient, cost-effective and compelling way”
Enabling customers to be active participants in creating their own trip
Through dynamic packages, the customer evaluates and selects the individual travel components that best suit his/her needs and travel wants. Savings available through buying multiple
single components in one shopping trip can be
promoted and this in turn adds a further incentive for the customer to buy their
dynamic package in one store at one transaction. The extent
to which these can be uniquely tailored to the
customer attracts those who find the mass market pre-
packaged holiday less appealing.
Metasearch providers are one group of industry players who have capitalised effectively on
this trend. They offer the consumer near-instantaneous
visibility into the price and availability of single travel components, especially air.
For instance, once directed by the metasearch provider to a site selling the consumer’s preferred air product, the
consumer is presented with an array of further travel
products – hotel, car hire, etc – which they can bolt-onto
their air product to create a customized dynamic package.
The challenge for the vendor is to offer as much good
quality and suitably priced inventory for all the different
travel components in one place.
Air commission reductions & GDS Fees have been the primary driver for product adjustment
Emergence of the “merchant model” has changed the pricing model forever 25% vs. 10%
Total transparency has created downward pressure on prices and margins – low cost and hotel only
Rapid growth of 3rd party online distribution has created a distribution power shift
New technological advancements creating higher traveller expectations
Result = A new leisure marketplace has been created
Mass-market Tour Operators – extending their specialist holiday businesses = Flexible packaging
Independent Specialists – extending their product range to include low cost and hotel-only = Widening the choice for their clients
Online Travel Agencies – actively promoting the widest range of independent travel components = Complete transparency & flexibility – biggest growth
Intermediaries – looking to provide a one-stop dynamic packaging portal for travel agents = Shift in focus to capitalise on new marketplace
“The report of my death was an exaggeration.” Mark Twain 1897
Package Holidays sold increased by 30% in 5 years
Slow to take off online and not enjoying the growth curve
Dogged by antiquated technology with lack of consistent standards
Lack of quality consumer driven content that supports the sale
Rigid commercial model of charter flight + hotel commitments
Not enough component flexibility
Dynamic Packaging is 100% consumer driven
Consumers becoming more independent
Shift to late booking
Control, choice, flexibility, competitive prices
Customer expects to search for, price and book all products in real-time
Desire to start self-packaging
Decline of traditional 2 week holiday
0% 10% 20% 30% 40% 50% 60% 70%
Face to Face Contact
Good Content
After sales support
Time required to book
Choice
Price/value for money
Key focus is to present a customer with:
The Right Product
At the Right Price
At the Right Time
And most importantly At the Right Margin
It’s just like selling sweets at a supermarket check-out
Customer:
Unprecedented choice of product Great Deals – Savings passed to customer Real-time availability Quality consumer driven content Tailor-Made itineraries
Company:
Margins are always maintained Move distressed inventory Upsell and Cross Sell Pricing is constantly updated Avoid incremental costs i.e. brochures