How to market and sell unbundled travel

How to Market and Sell Unbundled Travel

October 30, 2012

K

Kevin MayEditor / Moderator

Gene QuinnCEO / Producer

Panelists

Brian BeardAmadeusExecutive, Travel Technology & Consulting

Scott GillespieAuthor, Gillespie’s Guide To Travel+ProcurementFounder, Travel Analytics

Poll no. 1

Poll no. 2

Scott Gillespie

Author, Gillespie’s Guide To Travel + ProcurementFounder, Travel Analytics

Predictive Bundling

Types of Ancillary Revenues

Other SourcesFlight-Specific Sources

• Lounge Pass• Extra Miles/Points• Booking Method• Payment Method

• Bag Fees• Seating• Priority Boarding• Food & Beverage• Entertainment• Pillows, Etc.

• Car, Hotel Bookings• Destination Content,

e.g. Concert Tickets

• WiFi• Catalog Sales• On-Board

Advertising

Airline’s Products

Partner’s Products

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Too much information

To Bundle, Or Not To Bundle?

|

The Cost of Shopping

Number of ChoicesOneBundle

ManyOptions

High

CostToTraveler

Source: Scott Gillespie

|

The Cost of Shopping

Number of ChoicesOneBundle

ManyOptions

High

CostToTraveler

Cost ofUnwanted Features

Source: Scott Gillespie

|

The Cost of Shopping

Number of ChoicesOneBundle

ManyOptions

High

CostToTraveler

Cost ofUnwanted Features

Shopper’s Time

Source: Scott Gillespie

|

The Cost of Shopping

Number of ChoicesOneBundle

ManyOptions

High

CostToTraveler

Cost of Unwanted Features

Shopper’s Time

Total Shopping Cost

Source: Scott Gillespie

|

The Cost of Shopping

Number of ChoicesOneBundle

ManyOptions

High

CostToTraveler

Cost ofUnwanted Features

Shopper’s Time

Total Shopping Cost

Source: Scott Gillespie

|

Bundling Makes Sense When

High

CostToTraveler

Unwanted FeaturesDon’t Cost Much

Shopper’s TimeIs Very Valuable

TotalShoppingCost

Source: Scott Gillespie

Number of ChoicesOneBundle

ManyOptions

|

Bundling Makes No Sense When

High

CostToTraveler

Unwanted FeaturesCost a Lot

Shopper’s TimeIs Not Valuable

Total Shopping Cost

Source: Scott Gillespie

Number of Choices

OneBundle

ManyOptions

General Conclusion

• Bundle for Business Travelers• Unbundle for Leisure Travelers

General Conclusion

• Bundle for Business Travelers• Unbundle for Leisure Travelers

Marketing Implications

Fare Families

General Conclusion

• Bundle for Business Travelers• Unbundle for Leisure Travelers

Marketing Implications

Fare Families

Traveler Personas

General Conclusion

• Bundle for Business Travelers• Unbundle for Leisure Travelers

Marketing Implications

Fare Families

Traveler Personas

And eventually…

With Rich Customer Profiles…

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Predictive Bundling

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Predictive BundlingCurrent Search Parameters - Dates, Times, Destination - Number of Pax - Number of stops

Recent Purchases - Dates, Destinations - Cabin, Seat Choice - Days Advance - Price, Booking Class

Airline StatusCorporate Link?

OA’s Likely Bundle?

Co-Branded Credit Card

- Ancillary Fees

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Predictive Bundling

• One Checked Bag• Priority Boarding• Window/Aisle Choice

Examples of

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Predictive Bundling

• One Checked Bag• Priority Boarding• Window/Aisle Choice

Examples of

• Lounge Day Pass• $20 credit for on-board

F&B, Entertainment, WiFi

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Predictive Bundling

• One Checked Bag• Priority Boarding• Window/Aisle Choice

• Lounge Day Pass• $20 credit for on-board

F&B, Entertainment, WiFi

• Priority Standby for Upgrade• Best effort at empty middle seat• 50% off Change Fee, if needed

Examples of

• Access to appropriate data sources– Facebook, Twitter, LinkedIn, Klout, etc.– Credit scores, purchase patterns

• Drawing good conclusions about which bundles to present

• Offering bundles at point(s) of sale– Online shopping sites (speed and accuracy issues?)– In the booking path– At check in– Via mobile phone

• Potential conflict with corporate T&E policies

Predictive BundlingChallenges of

Poll no. 3

Poll no. 4

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Unbundled Travel Services

Traveler Perspectives and Technology Impact

Brian Beard, Executive, Travel Technology & Consulting, Amadeus

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Unprecedented Complexity

Airline ancillary revenue will reach

$36.1 Billion in

2012

Proliferation of Choices Bags or No Bags Board early or take the risk Bring food Bring Wifi or take the risk

Frustration and Inconvenience Plane checked bags Slow Wifi In your face advertising

Travelers expectations Know options ahead of time Easy payment Listed in Itinerary

Source: Amadeus and IdeaWorksCompany Press release

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The Business Traveler Dilemma

Please remember me Services selected previously Basic preferences Last time I traveled My favorite bundle

Expense or not Expense? Out dated travel policies Personal travel costs Expense systems

The partially functional OBT Lacking travel products and services Completeness of the Itinerary Ability to change a reservation

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Travel Manager Pain Points

Travel Policies out of control A policy for every service Impacts of bundling Constant changes

Reporting has become more difficult Lack of available Data Reporting tool upgrades Expense systems

Impact on supplier negotiations Addition inputs Stability of unbundled services May be too early to tell

Most US corporations have yet to set policies regarding ancillary service

offerings

Poll no. 5

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Future Paths

The supplier Direct solution The EMD Solution The supplier API solution Fare Families System Integration Data collection

Earlier this year, Amadeus and IdeaWorksCompany reported the ancillary revenue disclosed by 50 airlines for 2011. These statistics were applied to a larger list of 176 airlines to provide a truly global projection of ancillary revenue activity by the world’s airlines in 2012. The Amadeus Worldwide Estimate of Ancillary Revenue marks the third year Amadeus and IdeaWorksCompany have offered a projection of global ancillary revenue activity.

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Technology’s Role/Impact

It’s all about Data Big Data, Small Data, timely data Access and Sharing Privacy and compliance

Next Gen Booking tools Mobile and fully functional Evolution of the travel tool Power to the traveler

Social and More Unbundled product will be increasingly

impacted by social input Multiple payment mechanisms will exist Apps become the new widgets

5 Billion people will

have access to

mobile broadband

by 2016

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Conclusions

Traveler frustration will drive change

TMC’s must adapt to the increasing needs of the travel manager

Leisure traveler’s will continue to have an increasing number of choices for travel products

Technology will make selecting and tracking unbundled services easier

Sharing data across the travel supply chain will be a key driver for change

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Brighter, Bolder, Betterwith Amadeus

Q & A

Thank You!

Please

Please send your questions and comments to Kevin May, kevin@tnooz.com

Replay of today’s webinar and presentation will be available tomorrow at www.tnooz.com