Travel companies will increasingly turn to third party ancillary services as a means to increase revenue quickly and for a relatively small investment, says a new study.
The global research from Amadeus into the potential benefit to the bottom line from selling third party ancillary items reveals travel companies could achieve a 30% increase in revenue by 2015 by tapping into this market.
The report also projects revenue from third party ancillary items is to grow 10 times faster than general travel industry sales.
Marcos Isaac, director, travel services business group for Amadeus, said both business and leisure sectors could tap into the potential but that the trick for travel companies would be to hook up with the right products and services to avoid becoming part of an increasingly commoditised online world.
“Ancillary can be many different things so it’s about finding the right kind of product and travel providers making it part of their DNA and creating their own value chain,” he said.
The report highlights the potential for what it terms ‘extreme’ ancillaries such as virtual reality tours enabling consumers to experience elements before departure.
More than half of travel providers expect to offer these types of services by 2020 according to the study. Isaac also said as technology evolves it is becoming easier and quicker to integrate and sell third party services.
The study also reveals that sales of third party services via mobile devices is likely to equal sales via PC-internet by 2015 as mobile distribution offers a more flexible option after the main booking stage.
Social media and self-service kiosks are also highlighted as key distribution channels for ancillary services.
“Travel providers are starting to have a lot of interaction with customers through mobile technology. They offer consumers things that are convenient to them and I believe this goes beyond SMS-based offers to more pertinent, more accurate services.
Personalisation will improve because mobile is, by definition, a very personalised thing,” said Isaac. He added that while the internet has enabled travel suppliers to attract consumers to book direct, it is via ancillary products and services that companies can engage with consumers and foster loyalty.
The Amadeus ‘Cross-Sell Your Way to Profit’ study was conducted by Forrester Consulting. The research comes on the heels of a paper on airline ancillary revenue published in October from Amadeus and IdeaWorks which predicted worldwide airline ancillary revenue would hit US$22.6 billion in 2010.
A number of carriers within the study are already seeing ancillaries account for almost 20% of total operating revenue.