NB: This is a guest post by Gerry Samuels, founder and executive director of Mobile Travel Technologies (MTT).
Ancillary sales are one of the most debated issues in the travel industry today. Forrester (with Amadeus) project that by 2015 ancillaries will account for up to 18% of travel suppliers’ revenue.
In their January 2011 study, Cross-Sell Your Way to Profit, they reveal that while traditional third-party services such as insurance, car rental and hotel room sales are expected to remain popular, travel providers see great potential in a range of ‘extreme’, as yet unexploited, products and services.
By 2020, more than half of travel providers expect to offer virtual reality services that can help passengers experience airports, hotels and cruise ships before arrival, digital concierges to improve the in-hotel or airport experience and in-journey spa treatments.
It’s clear that travel suppliers need and want to grow and diversify ancillary revenue. What consumers want is not so clear, and opinions are divided.
Depending on who you ask, consumers want the lowest possible fare with everything unbundled, or they want simple logical bundles and reasonable fares, or they want more value-added options and third party services or they are sick to death of being nickel and dimed to death, and want the whole mess to just go away.
While travel suppliers work to find the right balance for their brand and their customers long term, mobile offers an immediate opportunity to turn the problem on its head.
Front-loading optional ancillary services in your booking process can be effective for some services, but the mobile phone in every travellers pocket means that suppliers can interact with customers at every step of the journey (including planning and pre-trip preparation), and can choose to offer the right ancillary services at the time when the customer is most likely to need or want to buy.
Done well, ancillary sales via mobile will be seen by customers as valuable service, not sales.
Let’s look at some examples:
- At time of booking offers on ground transportation and airport parking are logical options.
- At mobile check-in, especially on the return leg of a trip, an offer to skip the queue at security and use the VIP lane could be well received. I know exactly what to expect from the security queue at my home airport, but I might well pay to sail to the front of the queue at O’Hare. This might also be a good time to remind me that I didn’t opt for an in-flight meal.
- Your flight is delayed for three hours – how about a day-pass to the lounge for a glass of wine with free wi-fi?
- Just before boarding an airline could push a mobile only offer for extra leg-room or seat upgrade. The extra fee may not have seemed attractive at time of booking, but after an hour in the airport a little extra space seems like a dream come true.
- A guest booked an executive room and checked-in after midnight; a quick tap on their mobile could order room service coffee for the morning.
- Guests who book family rooms may appreciate direct mobile booking for local amusement parks or family activities. Â Maybe even a reminder about the in-resort babysitting service and available (grown-up) dinner reservations.
- It’s the night before check-out. The kids are hyped up on sugar and you can’t find little Sally’s left shoe. Would express mobile check-out and a car to the airport tomorrow morning help?
There are a thousand possibilities.
A well developed mobile channel, integrated with your business systems, allows you to offer your customer what they want, when they want it and when they are willing to pay for it.
And that’s something that both travel suppliers and consumers want.
NB. This is a guest post by Gerry Samuels, founder and executive director of Mobile Travel Technologies (MTT). MTT develops comprehensive mobile apps and channels for airlines, hotels and travel intermediaries like AirAsia, EasyJet, Sol Melia, and Pegasus Solutions.
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Great stuff and I agree. This is coming like an avalance and especially the business travel industy needs go get on the horse and build a mobile stratey on how to cope with this. Already today the ‘a’ fees are an increasing nightmare, hard to control or reverse to exploit to increase the business travelles experience. ‘Relevance’ and ‘Location’ are keywords and who ever sits on quality data can help build that strategy – guess who
Gerry, great to hear from you. Sounds like you are up to some interesting stuff. For reasons that you and I share, I do hope that mobile travel really takes off this time. But I’m not sure that nickle and diming travelers is the right approach.
Mobile isn’t going to make me feel better about paying for an aisle or a window seat. How about offering me a discount on a center seat? Now that could be interesting.
Or letting me change to a later flight without a $150 change penalty. Now you’re talking.
I think the point Gerry is making is that mobile is the natural channel for ancillary services, and therefore the one that will convert best. This is wholly separate of the question of ancillary fees – generally or specifically.
You may or may not pay $150 for something, but if you will, mobile is the relevant medium when the decision is made, and with the right implementation it will be the most successful at conversion.
At EFT TDS last year, we had some interesting stats from Continental’s Jared Miller, whose iPhone app seemed to be driving some revenue as soon as it was launched.
I am with you in your thought process Nadav. I am a huge proponent of mobile for everything from entertainment to education to location based information to commerce.
I just think that the airlines have not given full thought to the whole process of how they market (and price) their product to their best customers. It is easy to get carried away with the profitability generated by ancillary fees.
But if something is a bad idea, mobile doesn’t make it better. That is simply my point.
Gerry,
As always great insight! I am in total agreement with your view that mobile is ideal for ancillary services (both airlines and land content) I recently completed some research that will be published later this month ” The always-connected traveller: How mobile will transform the future of air travel”" a study commissioned by Amadeus, where I draw the same conclusions. My interviews with airlines from around the globe showed that the carriers see this opportunity, but often lack the internal system cability to execute ancillary sales on mobile devices today. I am optimistic that most airlines will have these capabilities over the next 1-2 years.