Ancillary Revenue Commission based solutions for DMOs February 2011

Ancillary revenue

Hot item for airlines Airline Ancillary Revenue as % of total revenue 2009 Allegiant Spirit Ryannair easyJet Tiger Airways Jet2.com Air Lingus 29.2% 23.9% 22.2% 19.4% 18.1% 14.4% Top 5 airlines ancillary revenue – Euros per passenger € € € € € Allegiant United Aer Lingus American Jet2.com € 9.95 € 9.55 € 8.52 € 7.35 € 7.17 Allegiant Vueling Ryannair Aer Lingus LTU Source: IdeaWorks Airline Ancillary Revenue 2009 United American Delta Qantas Ryanair easyJet US Airways € 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 & 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 Selecting Planning Comparing Reviewing Booking Travelling Visiting Enjoying Recommending Evaluating 2/3 weeks up to 3 months

Process of buying travel Dreaming Enthusing Selecting Planning Comparing Reviewing Booking Travelling Visiting Enjoying Recommending Evaluating Hotels Airline Up to several months Car rental Up to one month Sightseeing Dinner reservations When do people book:

Process of buying travel Dreaming Enthusing Selecting Planning Comparing Reviewing Booking Travelling Visiting Enjoying Recommending Evaluating DMO Core Business

Process of buying travel Dreaming Enthusing Selecting Planning Comparing Reviewing Booking Travelling Visiting Enjoying Recommending Evaluating DMO Full range

Process of buying travel Dreaming Enthusing Selecting Planning Comparing Reviewing Booking Travelling Visiting Enjoying Recommending Evaluating DMO Full range Airlines

Process of buying travel Dreaming Enthusing Selecting Planning Comparing Reviewing Booking Travelling Visiting Enjoying Recommending Evaluating Airlines Conversion rate for third party products between 0.5% and 3% DMO Full range

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: PhoCusWright 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 > 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: –Too optimistic business plan

Examples

Visitbritain

Visitbritainshop

Visitnorway (Q1 2011) / Visitsweden (online) The National Booking Switch Property Extranet to DMS Property PMS direct connect Hotel group Sub headline Hotel group Sub headline Flight Low cost carrier Flight Regular flight Ferry Events Sub headline Activities Sub headline Amadeus Flight Train iTicket rezView CRS Norwegian Travel Swith And National Booking Visitnorway.com 10 million visitor White label Regional DMO Local vendor API (DMO, Supplier) PMS Direct DMS Dest system DMS Dest system DMS Dest system Amadeus Ferry & train OpenJaw Ferry & train CRS Synxis, Rezidor, Pegasus RezView Pegasus Switch

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

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 watchb4go.com

Enit.it / italia.it

Visitportugal.com

Visitgreece.gr

FranceGuide

You do not see yet at which provider you are going to book…

FranceGuide

Business models – DMOs & hotel suppliers Metasearch (list of prices) Consumer Supplier A Supplier B Supplier C Supplier D Booking NTO domain Supplier A Supplier B Supplier C Supplier D Visitbritain determines suppliers and establishes the link Visitbritain Contract Metasearch (one price) Consumer Booking NTO domain Viamichelin Supplier A Supplier B Supplier C Supplier D Franceguide Supplier A Supplier B Supplier C Supplier D Contract

Business models – DMOs & hotel suppliers Travel switch of technical provider Consumer Contract NTO domain Supplier A Supplier B Supplier C Supplier D Any supplier that uses the Platform of the provider, Subject to certain conditions Visitsweden Booking Supplier A Supplier B Supplier C Supplier D NTO domain Supplier A Supplier B Supplier C Supplier D extranet Visitcyprus DB Search Booking at private party Consumer Supplier A Supplier B Supplier C Supplier D Contract

Business models – DMOs & hotel suppliers Consumer NTO domain Supplier A Supplier B Supplier C Supplier D KLM Private Commercial partner (ISEATZ) Search Booking Contract ISEATZ determines suppliers and establishes the link Consumer Supplier A Supplier B Supplier C Supplier D Contract NTO domain Supplier A Supplier B Supplier C Supplier D Visitfinland determines suppliers and establishes the link Visitfinland Supplier A Supplier B Supplier C Supplier D extranet DB Travelplanner Booking is recorded in the travel planner Booking Meta search

CSF for implementing third party, commission based products  Credibility, awareness and trust  Customers knowledge...  …and offer what they really need…  …and when they need it  Promote full offering  Choice  Easy access / simple procedures  Feed sales data back into your system  Measure!  Attractive prices

Thank you