Where can travel companies earn more revenue?

In these turbulent economic times, cutting costs is not enough. Many travel companies including hotels, airlines, cruise, car hire, rail companies, online travel agents etc are seeking innovative ways to earn more revenue.

Published: 02 Apr 2009

In these turbulent economic times, cutting costs is not enough. Many travel companies including hotels, airlines, cruise, car hire, rail companies, online travel agents etc are seeking innovative ways to earn more revenue.

Unless you have been hiding under a rock for the past 10 years, you will have noticed that the airline industry and in particular the no frills airlines, have been focusing on increasing revenue per passenger with impressive results. No frills airlines have unbundled their core product offering and added additional products and services to boost ancillary revenues. Having witnessed their success, the rest of travel industry, starting with the traditional carriers, are slowly starting to mimic the No Frills airline ancillary model and wake up to the abundance of opportunities to monetise the customer booking path and end experience.

The figures certainly speak for themselves - Ryanair earned over €488million in ancillary revenues in 2008 whilst easyJet’s ancillary revenue earnings jumped a massive 114.7% to €367million. Whilst many travel companies would not seek to go so far as Ryanair, who recently announced that they had considered charging their customers to use the toilets in-flight (!), key learnings can be taken from their (and other airlines’) ancillary revenue strategies and applied across the industry.

Like many travel companies, both airlines have enviable web traffic and a large customer base who are willing to relax their wallets if the right product is offered to them at the right time. Understanding your customer wants and needs and up-selling and cross-selling to them throughout the booking path has proven to result in significant revenues and temptingly high profit margins.

At EyeforTravel’s Ancillary Revenue & Partnerships in Travel conference, held last year in Dublin, Daniel Kerzner, Regional Director of Marketing, Starwood Hotels & Resorts told the audience of leading travel companies that they earned over $250,000 each year by selling a chocolate cake just in one of their hotels in Venice. Whilst this figure in isolation may seem fairly small, if they were able to sell the chocolate cakes (or a similar product) so successfully in each one of their properties across the world this figure would multiply to $2.24 million.

Recent EyeforTravel research has found that there is a vast, untapped opportunity for all travel companies and not just airlines to increase their ancillary revenues. Hotels whilst still focusing on maximising RevPAR, are beginning to implement innovative ancillary revenue boosting strategies. Accor Hotels for example recently partnered with isango!, Europe’s largest online ‘experience’ aggregator to power the innovative new ‘tours and activities’ offering.

Tours, activities, restaurants, nightlife, events, and car parking are just some of the many ways that hotels and other travel companies can use to cross-sell to their customers, whilst providing the customer with inspirational and useful, detailed information about the destination as well as potentially boosting SEO results.

Like Accor Hotels, most travel companies are aware however, that simply adding on ancillary product offerings can be a risky strategy. Ryanair’s fairly straight forward ‘sell as many products as possible’ seems to work for them many travel companies cannot afford to be so bullish. Who takes responsibility when something goes wrong? Upon what criteria should you choose an ancillary partner? How damaging can pushing ancillary products to your customers to your brand be? Who should be responsible for managing a complete end-to-end ancillary strategy for your business? How much is too much? How can you ensure that you offer the most relevant product, at the right time to the right customer? These are just some of the questions travel companies need to answer before implementing an effective ancillary revenue strategy.

Leading ancillary experts from BA, Eurostar, Starwood, Choice hotels, Gulf Air, Icelandair, Hertz, Avis, Booking.com, Expedia, The Trainline, lastminute.com and many more will go a long way to answering such questions when they convene to discuss this key topic at EyeforTravel’s Ancillary Revenue & Partnerships in Travel Europe conference. The 2 day event will be held in London, 19-20 May and comes at a time when the travel industry needs fresh, revenue generating ideas.

Integration and personalisation as well as key strategies to convert lookers to bookers will be dominant themes at the event. As the Event Director, Gina Baillie says ‘Improving the effectiveness of cross selling once the customers have purchased their travel tickets on the travel supplier website is a key challenge but once this is overcome the rewards are significant. In this price sensitive time, customers are looking for personalised special offers that add value to their trip thus providing travel companies which a huge opportunity to sell more’.

About the event
The EyeforTravel Ancillary Revenue & Partnerships in Travel Europe conference will take place at the business design centre in London, 19-20 May. For full event information including the early bird prices which expire this Friday 3rd April, visit http://events.eyefortravel.com/ancillary-revenue or email gina@eyefortravel.com

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