Perhaps the journey is as important as the destination, but not when it comes to airline ancillary revenue.
There are plenty of opportunities for airlines to capitalise on travelers’ desires to see more of a place once they get there, as the CEO of destination activities aggregator Trip Republic, Joen Schauman, explains.
Trip Republic most recently struck a partnership with airline Germania, which flies to 55 destinations in Europe, North Africa and the Middle East, to offer passengers destination activities ranging from tours to sports events.
Shauman says of the deal:
“Germania is at the forefront of ecommerce innovation by investing in the growth of ancillary revenue. The destinations catered by Germania puts the airline in a unique position to earn on in-destination content with an efficient and integrated activities solution.”
So, what’s changed in the tours and activities space to make it a more attractive ancillary offering for airlines? Schauman . He says this market has shifted in recent years from mostly offline bookings to a considerable share of online transactions.
“Today 15% of bookings are online for T&A tours and attractions. That's set to rise rapidly in the coming years. Equally, if you look five years backward, most suppliers were not connected to any specific software which could enable bookings.
"Now it 45% that are using third party reservations system. These statistics actually make it possible for technology today to aggregate content so that you get enough relevancy for all the destinations.”
It’s critical that travelers find enough variety of activities to increase the likelihood that they will book with the airline, and ensure they will make a habit of booking in future trips.
Personalization also makes conversion much more likely, Schauman says:
“If you want to actually achieve results in selling T&A you have to understand if the customer is a family versus a single business traveller, leisure business, all of these parts that matter.
"Are they a first timer in the city or a regular traveller in the city, then you're looking for a different type of content.
“If someone is going to London for the first time, they're definitely want to go see the Tower of London, but someone has been there 10 times might be more interested in musical tickets. So have to have both. You have to have a large event catalogue to supply to consumers.
“If you're providing in destination content to passengers, we think it's important that you have always something for that traveller.”
The level of personalisation can vary, depending on the passenger details an airline specifies.
“Some airlines we are working with now have the abilities to give parameters based on aggregate behaviour, which is of course more powerful and the higher conversion will be noticeable,” he says.
Trip Republic offers a white label platform which allows airlines to present choices during booking and also send relevant offers to customers closer to the travel date.
“The timing window for tourism activities is very short. You can widen it by looking at sports events and theatre tickets, which you'll buy in the early part of your trip bookings process.”
Schauman also sees an opportunity for airlines to take advantage of chatbot and messenger interactions to send relevant tours and activities offers.
This might be done with an opt-in bot subscription as a reminder feature inspiring travelers to explore more of their destination.
According to the latest CarTrawler-sponsored Airline Ancillary Revenue Rankings report, the top 10 airlines are earning more than $28 billion in ancillary revenue, compared to $2.1 billion, about 10 years ago.
Back in May at the Phocuswright Europe conference, Trekksoft boss Jon Fauver said airlines did not realise what opening up tours to passengers could add to their offering.
It will be interesting to see if tours & activities reach the status of being separately broken out in the annual report in the next few years.
Image by Seb