The era of the traditional vacation package has ended, according to Michael O’Leary, chief executive of Ryanair, Europe's largest discount airline.
O’Leary said at a recent press conference in Copenhagen:
“Sales of [traditional] package holidays have declined because what people are doing now is that there's so much readily available low-fares and services that people go online and book their own accommodations....
"That concept only existed 45 years ago because it was the only way you could get a cheap fare.”
The Irish carrier's CMO, Kenny Jacobs, has elaborated on the comment in an interview with Tnooz. He says that package holidays are being killed by digital:
“You’re seeing all of these digital businesses which are de-bundling the package holiday as we know it.
There are a few exceptions: Some Germans will still walk to the high-street travel agent and buy the classic two-week holiday. And in Scandinavia there has been more of a tendency for package holidays....
"But the UK and Ireland are more like the American market, where people choose to package their own holidays.”
Ryanair is focusing its own digital strategy on encouraging more of this mix-and-match holidays planning.
“In the Ryanair platform, what we're doing with Ryanair rules is that we have all options available. Most of the vast majority of our customers will still buy the flight, and then buy a different type of accommodation....
"Because people want to choose five-star hotels in some cases, or the same person may want to stay in a campsite another time of year. So we'll provide the choice that will fit certain European markets.”
The airline will use its evolving digital and content strategy to drive more of that business away from traditional leisure airlines.
“We have a lot of things that we're going to keep up with in the content base and the content social space. We're speeding up what we do in MyRyanair, because it's working very well.
We've got about one-third of the customer base and we really want to grow that. We want to grow it because it will reduce the marketing cost—which is already small—but we can do more of our marketing through Ryanair.”
As Jacobs tells us, this strategy comes with a bonus.
“It also makes life more difficult for the screen scrapers that we don't like because customers will say, ‘Well, I'm not going to go book it on another website. I'm definitely going to book it with MyRyanair because I'll get discounts, etc.’
"It's working well.”
The airline will be introducing more themed holiday deals into its content and social space, and Jacobs tells us Ryanair will also add “another big ancillary” by the end of the year.
“It's about getting more of the ancillaries that we sell today onto the app,” Jacobs says.
“We're very happy with the progress that we've made. I go back to when I started three years ago—explaining why we needed an app—and now 14 million people have installed the app...
"We're now the world's biggest airline platform and about 60% of the visits to our platform are now coming from mobile devices. If we were behind, we're now ahead.”
The Irish low-cost carrier is also nurturing relationships with tourism organisations and hoteliers to expand its inventory and possible package combinations.
“We're close to tourism organisations, and we will stay close in the future,” Jacobs tells us.
“If you take Spanish holidays, for example: The hoteliers — be they individual hotels or groups of hotels in Spain — would love to deal with us directly, because over the past few years they've been paying high commissions to a lot of the hotel online travel agencies...
"I think you will see more hotels go to the more direct route, pay less commission, and make their own hotel prices more competitive. It's going to be an interesting space over the coming years.
"We keep all our options open and we offer consumers the widest choice at the lowest possible prices as an alternative combination to package holidays.”
This raises questions on the ultimate fate of leisure carriers, if they fail to adjust their retail strategy to attract this do-it-yourself vacation buyer.
With the fate of Monarch in the balance, and TUI seeking partnerships to secure its future, Jacobs tells us Ryanair has no interest in getting mired with any mergers or acquisitions.
NB: Photo by Marisa Garcia.