Ancillary Revenue Commission based solutions for DMOs February 2011
Ancillary revenue
Hot item for airlines Airline United American Delta Qantas Ryanair easy. Jet US Airways Ancillary Revenue Airline 2009 € 1, 527, 310, 000 € 1, 507, 750, 000 € 1, 117, 120, 500 € 782, 903, 000 € 663, 600, 000 € 608, 796, 693 € 540, 589, 500 Ancillary Revenue as % of total revenue 2009 Allegiant Spirit Ryannair easy. Jet Tiger Airways Jet 2. com Air Lingus 29. 2% 23. 9% 22. 2% 19. 4% 18. 1% 14. 4% Top 5 airlines ancillary revenue – Euros per passenger 2009 € € € 20. 00 17. 14 14. 97 14. 75 14. 28 Source: Idea. Works Allegiant United Aer Lingus American Jet 2. com 2008 € € € 9. 95 9. 55 8. 52 7. 35 7. 17 Allegiant Vueling Ryannair Aer Lingus LTU
Ancillary revenue & hotels § Cross selling / upselling – Spa, Golf, sea sports, kids clubs, dinners, wine tastings etc. § Commission – sightseeing, tickets for events, concerts, theatre etc. § Media
Ancillary revenue & hotels
Process of buying travel Dreaming Enthusing Comparing Reviewing Selecting Planning Booking 2/3 weeks up to 3 months Travelling Recommending Evaluating Visiting Enjoying
Process of buying travel Dreaming Enthusing Comparing Reviewing Selecting Planning Booking When do people book: Hotels Airline Up to several months Car rental Sightseeing Dinner reservations Up to one month Travelling Recommending Evaluating Visiting Enjoying
Process of buying travel Dreaming Enthusing Comparing Reviewing Selecting Planning DMO Core Business Booking Travelling Recommending Evaluating Visiting Enjoying
Process of buying travel Dreaming Enthusing Comparing Reviewing Selecting Planning DMO Full range Booking Travelling Recommending Evaluating Visiting Enjoying
Process of buying travel Dreaming Enthusing Comparing Reviewing Selecting Planning DMO Full range Booking Travelling Recommending Evaluating Visiting Enjoying Airlines
Process of buying travel Dreaming Enthusing Comparing Reviewing Selecting Planning DMO Full range Booking Travelling Recommending Evaluating Visiting Enjoying Airlines Conversion rate for third party products between 0. 5% and 3%
Travel search: the DMO site In general, how useful are the following types of web sites for researching a possible vacation destination? Rate each web site using a 5 point scale Source: Pho. Cus. Wright 2009
Why the DMO site? § Independent § Lot’s of quality content which – is searchable (text, images, videos, blogs etc. ) – keeps the (online) conversation going § Closest to suppliers, the setting and the place § Trustworthy § They are official
DMOs: why online booking systems? § Good position to ‘close the deal’ § Market failure § Measure the effectiveness of your marketing § Market intelligence § Dynamic Packaging
DMOs: why cautious with online booking systems? § Provide information, not to make bookings § No commercial culture § Competition § Legal restrictions § Commercial message may disturb the general message § Commercial income? Cuts in public funding
DMOs: sources of income § Fees on sales of bookings § Merchandise shop § Affiliation programmes § Advertisements – Context sensitive Ads § Advertorials that look like editorials § Through newsletters by including some editorial § Sell enhanced entries to tourism suppliers
Ecommerce & DMOs: lessons learnt § Visitbritain – Englandnet established in 2002: the national tourism database – 2004: formal complaint for illegal state aid and unfair competition; – Englandnet was wrapped up and integrated into visitbritain; – Today they do not handle financial transactions or visitor’s personal and financial details § Visitscotland – – – – Established as a PPP in 2002 -> today public again; it did not promote all accommodation providers; overestimated industry’s appetite for online booking systems; High number of visitors, low conversion High cost leading to negative own capital Web site: www. reclaimvs. com Too optimistic business plan
Examples
Visitbritain
Visitbritain
Visitbritainshop
Visitbritainshop
Visitnorway (Q 1 2011) / Visitsweden (online) The National Booking Switch DMS Property Dest system Extranet to DMS Property PMS DMS Hotel group CRS Pegasus PMS direct connect Direct Sub headline Hotel group CRS Visitnorway. com 10 million visitor CRS Flight Switch CRS Flight Dest system Sub headline Low cost carrier Synxis, Rezidor, Pegasus Rez. View Amadeus Regular flight Ferry Open. Jaw Train Amadeus Events Sub headline Activities Sub headline Ferry & train White label Norwegian Travel Swith Regional DMO And National Booking i. Ticket rez. View DMS Dest system Local vendor API (DMO, Supplier)
Visitnorway: search control examples
Visitfinland
DMOs in the Mediterranean
Spain. info Hotel guide
Spain. info Hotel guide
Spain. info and start all over…
Spain. info second window opens…
Spain. info
Spain. info After clicking “book” third window opens…
Spain. info and then the booking page opens in Spanish…
Visitcyprus
Goturkey. com - English
Goturkey. com - Flights & Packages lead to Lovelyturkey - Hotel leads to watchb 4 go. com
Enit. it / italia. it
Enit. it / italia. it
Enit. it / italia. it
Enit. it / italia. it
Enit. it / italia. it
Enit. it / italia. it
Visitportugal. com
Visitgreece. gr
France. Guide
France. Guide
France. Guide You do not see yet at which provider you are going to book…
France. Guide
Business models – DMOs & hotel suppliers Visitbritain Supplier A B C D NTO domain Visitbritain determines suppliers and establishes the link Metasearch (list of prices) Supplier Supplier A B C D Booking Contract Consumer Franceguide NTO domain Supplier A B C D Viamichelin Metasearch (one price) Booking Contract Consumer
Business models – DMOs & hotel suppliers Visitsweden Supplier A B C D NTO domain Any supplier that uses the Travel Platform of the provider, switch Subject to certain conditions of Booking technical provider A B C D A B Contract Consumer C D NTO domain Visitcyprus Supplier Supplier extranet DB Search Booking at private party Supplier A B Contract Consumer C D
Business models – DMOs & hotel suppliers Booking is recorded in the travel planner Visitfinland Supplier Supplier A B C D NTO domain Visitfinland determines suppliers and establishes the link Travelplanner Supplier Meta search extranet DB A B C D Contract Consumer Booking KLM NTO domain Supplier A B C D ISEATZ determines suppliers and establishes the link Private Commercial Booking partner (ISEATZ) Contract Search Consumer
CSF for implementing third party, commission based products § Credibility, awareness and trust § Choice § Customers knowledge. . . § Easy access / simple § …and offer what they really need… § …and when they need it § Promote full offering procedures § Feed sales data back into your system § Measure! § Attractive prices
Thank you
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