The Future of Tour Operations On-Line

“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

PrepackBYOFlightOther

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