How To Maintain Success In The Online Travel Space – Part 3
Reaching The Consumer Is Becoming Increasingly Expensive – Increasing The Average
Revenue and Margin
The cost of reaching consumers is set to continue to rise 1 .
Key word price inflation on the likes of Google is expected to grow at 10%+ per annum, whilst the marketing cost
per visitor and per transaction has been growing in the more developed US market, a trend that
PriceWaterhouseCoopers expects to see in Europe too.
Three strategies to respond to and offset these pressures were identified in their report. Namely:
1. Increasing the revenue and margin per booking, through increased sale of high value packages
2. Continuing to refine the website presentation to lower the look-to-book ratio
3. Increasing the level of repeat business from existing customers.
For the next three articles in our series, we will take one of these strategies and explore how Sell-It Suite can help
to offset the increased consumer acquisition costs.
Increasing the revenue and margin per booking through the increased sale of high value
packages
Online travel sites are moving towards bundling various discrete elements of their offering in a dynamic way. To an
extent, this echoes what mass-market tour operators used to do in the days before the internet. However, the online
specialists’ current move towards modular bundling is likely to be more flexible than the traditional tour operator
model (although they too are introducing greater flexibility into their traditional model), offering the consumer more
choice in terms of their air and accommodation options.
Online travel agents are in some
cases also offering local ground
services unrelated to the
customer’s travel plans, such as
theatre tickets, restaurant bookings
and theme park entry. This allround service helps to encourage
consumers to stick with the site –
especially where the service would
be more difficult to obtain direct
before arrival, such as booking
tickets for a popular show. By
bundling multiple products
together, online travel agents are
able to generate higher revenues
per booking, helping to offset
increased customer acquisition
costs.
With commissions on flights now
virtually non-existent, margins on
hotel sales of 15 per cent to 20 per
cent are particularly attractive for
the online operators – and by
bundling various products
together the price transparency
typically associated with online
Figure 1 – Attractiveness of additional product offerings
travel becomes more opaque (see
Figure 1). The opaqueness of
pricing on individual components in dynamic packaging is also beneficial from a supplier perspective, as discounts
can be given on distressed inventory without compromising the “Best Available Rate” (or BAR) guarantees typically
made on suppliers’ own websites.
1
How To Maintain Success In The Online Travel Space – PriceWaterHouseCoopers Research Report
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How can the average margin be increased using Sell-It Suite?
ABILITY TO SELL A BROADER RANGE OF HIGHER MARGIN PRODUCTS
As highlighted in the PWC research report, the ability to sell a broader range of products, and in particular to add in
products which produce a higher margin is a key element of any strategy to offset the rising costs of reaching the
consumer. Sell-It Suite has been designed to enable travel companies to do just this.
Some Of The Product Types
Supported By Sell-It Suite
Sell-It Suite’s Inventory Manager
supports a wide variety of product
types enabling travel companies
to introduce higher margin
products into their dynamic or
fixed packages.
Transport
Other Land
Accommodation
Scheduled flights
Insurance
Hotels
No-frills flights
Car Rental
Villas
Charter flights
Ski Packs/Passes/Lessons
Chalets
Eurostar
Transfers and excursions
Yachts/Boats
Eurotunnel
Spa Treatments
Ferry
Theatre Tickets
Figure 2 – Examples of types of products supported by Sell-It Suite
Product inventory is defined as a combination of product ‘brochure content’ e.g. location, descriptions and pictures
of a hotel - see figure 3, and product costs, prices and availability e.g. the purchase cost, selling price and
availability of double rooms in the hotel.
Brochure Content
Sell-It Suite’s content management
system enables descriptions and pictures
of countries, regions, resorts, hotels and
other products to be loaded, managed
and displayed, both in the call centre and
online.
Content can be created for different
channels, different languages and
different seasons.
Brochure content can also be imported
from an external content management
system e.g. AO International’s Campaign.
Figure 3 – Pictures or videos of properties can be selected for display during the browsing and booking process
Product inventory can either be loaded or managed in Sell-It Suite e.g. hotel contracts with room allocations and
rates or accessed in real time via an external supplier link e.g. net or published fares and availability via a link to a
GDS. These products can then either be sold on their own (if permitted by suppliers/contracts) or combined in fixed
or dynamic packages.
Product Inventory
TM
• Internal inventory
• External inventory
•
•
•
•
•
Net fares
FIT fares
Published fares
Rack rates
BAR rates
•
•
•
•
•
•
•
Release allocations
Committed allocations
On Request
Online on-request
On-option
Free-sell
Fresh rooms
• Wholesale sales
• Retail sales
Figure 4 – Sell-It Suite’s Inventory Manager supports internal and external product inventory
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Sell-It’s support for accommodation includes the ability to specify occupancy rules for individual room types in, for
example, a specific hotel. These occupancy rules, including any applicable under occupancy supplements are
automatically applied by the system as part of pricing an itinerary.
Room Occupancy Rules
Sell-It Suite’s Inventory Manager contains
comprehensive support for loading and
managing accommodation inventory.
Occupancy rules for different room types
can be set up and will be enforced by the
system at the point of sale, even for
dynamic packages.
If rates are only applicable to particular
durations of stay or only available for
specific start days, these are also handled
by Sell-It.
Figure 5 – Comprehensive support for property contracts
You can sell any type of additional products you wish in Sell-It Suite as long as you can define that product in terms
of a cost price, a selling price and some form of availability (which can range from free sell to limited specific
numbers).
These products can be linked to other inventory within the system. For example, optional in-resort activities such as
water skiing and scuba diving could be linked to the resort, while optional hotel-specific activities such as spa
treatments or board upgrades would be linked to the specific hotel. These additional products will then be offered,
subject to any availability constraints, to the consumer when they go to book in that particular resort or hotel.
Figure 6 – An unlimited range of additional product types can be set up, managed and sold using Sell-It Suite
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ABILITY TO DYNAMICALLY PACKAGE
Within Sell-It Suite’s Inventory Manger, package rules can be created which describe how individual product
inventory can be combined at the point of sale to form dynamic packages. Sell-It Suite supports multi-channel
product sales enabling product offers to be created for sale via a call centre or one or more web sites.
Supplier Contracts
Products
Flights
Accomm
Car
Extras
…….
Insurance
Routes, Resorts, Hotels, Brochure Content etc …
Flights
Accomm
Car
C
C
C
C
C
C
C
C
Costs, Availability, Prices
Extras
Insurance etc. ….
Package Rules
Flight Only, Accomm Only, Fixed Packages, Dynamic Packages
Telephone, Internet (Agency, Consumer, 3rd party …….)
Figure 7 – Sell-It Suite’s Inventory Manager enables products to be combined into dynamic offers for specific sales channels
For example, a package rule can be used to define dynamic packages consisting of:
•
•
•
Contracted FIT or published fares on British Airways flights from Gatwick to Barcelona
All available hotels in Barcelona
Optional transfers, insurance and sightseeing trips
Once the rule has been defined, the channels over which the products can be sold is selected along with up to four
‘marketing types’ – see figure 9.
Package Rules
Sell-It Suite’s package rules
are used to specify how
individual products can be
combined to form either fixed
or dynamic packages for sale
over one or more channels.
A rule can include transport,
accommodation and a wide
variety of other product types
e.g. insurance, transfers,
theatre tickets, ski hire etc.
Package rules can be used to
generate a large number of
dynamic packages based on a
broad range of inventory or
very specific offers.
Each rule has a valid sale start
and end date and offers
automatically go on an off sale
based on these dates.
Figure 8 – A package rule in Sell-It Suite’s Inventory Manager
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ABILITY TO HAVE MULTIPLE PRODUCT CAMPAIGNS RUNNING AT ONCE
A key factor in increasing the average transaction fee, as identified in the research report is the ability to be able to
offer discounts on distressed inventory and offer ‘specials’ without compromising standard or peak rates.
A major benefit of Sell-It Suite is the ability to have multiple sales campaigns running at once. For example, a travel
company is able to offer discounts or ‘specials’ e.g. 2 for 1 on specific inventory for specific dates and run these
alongside standard pricing campaigns.
This pricing and campaign flexibility is a core strength of Sell-It Suite and is an absolute necessity in the internet
environment where pricing flexibility and marketplace responsiveness are key competitive differentiators.
ABILITY FOR POTENTIAL CUSTOMERS TO EASILY SEE ‘UPSELL’ OPTIONS AND BENEFITS
In article 1 2 of this series, we described the significant benefits provided by Sell-It Suite’s Holiday BrowseTM in
enabling web site visitors to easily see available price options for their holiday choice. Clearly presenting these
‘upsell’ options as part of browsing and booking process is another way to increase the average transaction fee. If a
potential customer can easily see that they can upgrade from a 3-star to a 4-star hotel for only an additional £5 per
person per night or can fly at a more convenient time for an additional £10 per person, they are more likely to
choose these options and thus increase the overall value of the booking.
ABILITY FOR POTENTIAL CUSTOMERS TO EASILY SEE AND BOOK AVAILABLE ‘ADD ONS’
This same is also true, of course, for clear presentation of optional additional products e.g. insurance, sightseeing
trips, spa treatments, lift passes. Sell-It Suite clearly presents to a web site visitor the available optional products (as
defined by the travel company) that are applicable for that visitor’s chosen holiday (original and destination airport,
resort and hotel). Only applicable and available add-on products are presented and these can be dynamically priced
and booked as part of one booking journey.
Figure 9 – Consumers are offered applicable optional products as determined by the travel provider
2
“The Consumer Holds Increasing Power - Giving The Consumer What They Want” – published by RWA Ltd.
RWA Limited 2007
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ABILITY TO ADD HOTEL AND OTHER LAND PRODUCTS FOR A TRANSPORT ONLY COMPANY
For a transport only company, Sell-It Suite therefore offers the ability to:
1. Continue to sell transport only and also start to sell dynamic packages combining the transport with
accommodation that has either been contracted or is accessed via supplier gateway.
2. Start selling additional high margin products such as insurance and transfers which increase the overall
booking value, the margin on the booking and the ‘value add’ for the customer.
3. Easily and quickly create calendar related special offers e.g. ‘Valentine’s specials’ based on specific flights
and specific hotels and also include additional optional or inclusive higher margin items e.g. champagne on
arrival, dinner for 2 etc.
Airline Res System
Hotels
Scheduled Air
Car Rental
or others
... or others
Products
Flights
Accomm
Car
Supplier Contracts
Extras
…
Insurance
Routes, Resorts, Hotels, Brochure Content etc …
C
C
C
C
C
Costs, Availability, Prices
…….
airline.com
airline-holidays.com
3rd party web site
Figure 10 – Example of an airline selling its own and other flights combined with hotel and other land products
It is clear from the above that what consumers want from an online travel web site is the ability to be able to quickly
and easily see and compare prices for a good range of destinations, be able to chose from a good selection of
hotels (where appropriate) with decent information on the destination and hotels, to be able to buy all of their
holiday on the site and to be able to do that via an easy booking process.
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ABILITY TO ADD AIR AND ADDITIONAL LAND PRODUCTS FOR AN ACCOMMODATION ONLY COMPANY
For an accommodation only company, Sell-It Suite therefore offers the ability to:
1. Continue to sell accommodation only and also start to sell dynamic packages combining the
accommodation with transport options e.g. scheduled or no-frills flights.
2. Start selling additional high margin products such as spa treatments and excursions which increase the
overall booking value, the margin on the booking and the ‘value add’ for the customer.
3. Easily and quickly create calendar related special offers e.g. ‘Valentine’s specials’ which include additional
optional or inclusive higher margin items e.g. champagne on arrival, dinner for 2 etc.
Hotel CRS
Scheduled Air
Car Rental
No Frills
…and more
Products
Flights
Accomm
Car
Supplier Contracts
Extras
…
Insurance
Routes, Resorts, Hotels, Brochure Content etc …
C
C
C
C
C
Costs, Availability, Prices
…….
hotelwebsite.com
hotelsownbreaks.com
3rd party destination sites
Figure 11 – Example of a hotel company selling its own accommodation combined with flights and other land products
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Summary
With consumers holding increasing power and demanding more from online travel sites, the pressure is on travel
companies to provide web sites which give the consumer what they want. Travel companies need to ensure they
have the right technology to power their web sites in order to provide their potential customers with compelling ways
of browsing through product offers and simple, reliable online booking capabilities.
RWA’s Sell-It Suite with its unique Holiday BrowseTM functionality provides all of the capabilities necessary to create
a compelling web site with the key drivers as identified by consumers. Web sites ‘powered by Sell-It’ have
increased online booking volumes for travel companies and provided their customers with reliable online booking
systems.
For further information on Sell-It Suite visit www.sell-it-suite.com
For further information on RWA visit www.rwa-net.co.uk
RWA Limited 2007
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