Ancillary Revenue Commission based solutions for DMOs February 2011

Ancillary RevenueCommission based solutions for DMOs

February 2011

http://www.visitsweden.com/sweden/

Ancillary revenue

A la Cartefeatures

LoyaltyPrograms

MediaCommission

basedProducts

Hot item for airlines

AirlineAncillary Revenue

as % of total revenue 2009

AllegiantSpiritRyannaireasyJetTiger AirwaysJet2.comAir Lingus

29.2%23.9%22.2%19.4%19.4%18.1%14.4%

Top 5 airlines ancillary revenue – Euros per passenger

2009 2008

€ 20.00€ 17.14€ 14.97€ 14.75€ 14.28

AllegiantUnitedAer LingusAmericanJet2.com

€ 9.95€ 9.55€ 8.52€ 7.35€ 7.17

AllegiantVuelingRyannairAer LingusLTU

Source: IdeaWorks

AirlineAncillary Revenue

2009

UnitedAmericanDeltaQantasRyanaireasyJetUS 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

SelectingPlanning

ComparingReviewing

Booking

Travelling

VisitingEnjoying

RecommendingEvaluating

2/3 weeks up to 3 months


Dreaming Enthusing

SelectingPlanning

ComparingReviewing

Booking

Travelling

VisitingEnjoying


HotelsAirline

Up to several months

Car rental Up to one month

Sightseeing

Dinner reservations

When do people book:


Dreaming Enthusing

SelectingPlanning

ComparingReviewing

Booking

Travelling

VisitingEnjoying


DMOCore Business


Dreaming Enthusing

SelectingPlanning

ComparingReviewing

Booking

Travelling

VisitingEnjoying


DMOFull range


Dreaming Enthusing

SelectingPlanning

ComparingReviewing

Booking

Travelling

VisitingEnjoying


DMOFull range

Airlines


Dreaming Enthusing

SelectingPlanning

ComparingReviewing

Booking

Travelling

VisitingEnjoying


Airlines

Conversion rate for thirdparty products between 0.5% and 3%

DMOFull range

Travel search: the DMO site

In general, how useful are the following types of web sites forresearching a possible vacation destination?

Rate each web site using a 5 point scale

3.9

3.8

3.7

3.6

3.6

3.5

3.2

3.0

2.9

2.9

2.9

Destination site

Search engine

Hotel site

Travel search engine

travel reviews site

airline site

OTA

car rental site

cruise operator site

Tour operator site

Other

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 2002 -> 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: www.reclaimvs.com – Too optimistic business plan

Examples


Visitbritain

Visitbritainshop

Visitnorway (Q1 2011) / Visitsweden (online)The National Booking Switch

PropertyExtranet to DMS

PropertyPMS direct connect

Hotel groupSub headline

Hotel groupSub headline

FlightLow cost carrier

FlightRegular flight

Ferry

EventsSub headline

ActivitiesSub headline

AmadeusFlight

Train

iTicketrezView

CRS

NorwegianTravel SwithAnd National

Booking

Visitnorway.com

10 million visitor

White labelRegional DMO

Local vendorAPI (DMO, Supplier)

PMSDirect

DMSDest system

DMSDest system

DMSDest system

AmadeusFerry & train

OpenJawFerry & train

CRS

CRS

CRSSynxis, Rezidor, Pegasus RezView

PegasusSwitch

Visitnorway: search control examples

Visitfinland

DMOs in the Mediterranean


Spain.infoHotel guide

Spain.info

Hotel guide

Spain.info

and start all over…

Spain.info

second window opens…

Spain.info

Spain.info

After clicking “book”third window opens…

Spain.info

and then the bookingpage 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

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 ASupplier BSupplier CSupplier D

Booking

NTO domain


Visitbritain determines suppliersand establishes the link

Visitbritain

Contract

Metasearch(one price)

ConsumerBooking

NTO domain

Viamichelin


Franceguide


Contract


Travel switch oftechnical provider

ConsumerContract

NTO domain


Any supplier that uses thePlatform of the provider,

Subject to certain conditions

Visitsweden

Booking


NTO domain


extranet

Visitcyprus

DBSearch

Bookingat

private party

Consumer


Contract


Consumer

NTO domain


KLM

PrivateCommercial

partner(ISEATZ)Search

Booking

Contract

ISEATZ determines suppliersand establishes the link

Consumer


Contract

NTO domain


Visitfinland determines suppliersand establishes the link

Visitfinland


extranet DB

Travelplanner

Booking is recorded in the travel planner

Booking

Metasearch

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


Ancillary Revenue Commission based solutions for DMOs February 2011

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