Will E-Sims provide the “Oxygen” for in-resort Ancillary’s income?

With the cost of acquiring customers via Google rising 20% since the pandemic to an average of ￡1.54 per click, maximising booking margins has never been more critical. Yet many travel businesses still have very low “Ancillary Sales” attachment levels.?

While most travel businesses allocate substantial resources to the initial booking and optimise the booking path to promote “Extras” like insurance, typically purchased at this stage, they often overlook the potential of their “Data Lake” to enhance post-booking ancillary sales.

The critical elements of travel “Data Lakes” are being able to contact customers via email or phone messaging and knowing their departure date. Other booking data, such as departure, Airport, and destination, make it easier to increase the range of products sold. Still, the departure date is the key trigger for understanding when to market products to customers.

For example, research shows that most customers only consider how they will travel to the airport and what foreign exchange they need within three weeks of departure, making 21 days before departure the key time for marketing these products, not the booking date.

A second key trigger is the online check-in process, usually within 48 hours of departure. Therefore, it is essential to hit customers at least twice with ancillary sales messages, with this last just before departure often being the most productive.

Customers expect pre-departure customer service messages from the travel business they book with, and few are upset by “Departure Checklists” that provide links to buy the items they may need for their holiday. However, using APIs to create a “basket approach” that allows single payment and discounts offered for multiple purchases is far more effective than numerous click-outs to various online partners. ?The latter is just too hard for most customers to be bothered with, and this is one of the reasons that “Holiday Extras” has been so successful.

It still amazes me that the large OTAs, homeworking groups, and consortia have not made the relatively small technology investment needed to build their own ancillary portals.

The following is the priority I would put adding “Ancillary Sales” to the core package of Flight, Hotel and Transfer.

·?????? Foreign Exchange. Every customer leaving the UK needs a foreign exchange solution, with customers, on average, spending ￡2,250 per couple when in-resort. With UK Banks ripping UK customers off with 2.95% transaction fees and 4.5% currency buffers, offering a competitive product is easy while earning 1% of ￡22.50 per booking. This has become even easier now that “Virtual” pre-paid cards can be loaded onto our phones to act as payment devices, removing the need to deliver physical pre-paid cards or cash.

·?????? Travel Insurance. Since COVID-19, the uptake of travel insurance has increased dramatically, with many more customers taking insurance at the point of booking. However, 40% of insurance is still sold within 2 weeks of departure, with comparison sites such as Money Supermarket taking the highest share, simply because travel businesses are not effectively marketing insurance products that exclude the unneeded cancellation cover that represents 35% of the premium.

·?????? Airport Car Parking. Airports adding ￡5-6 Taxi drop-off and pick-up fees has helped tip the tide towards airport parking, which, with an average weekly cost of ￡75, offers a healthy ￡7.50 margin per booking.

·?????? Car Hire. The lack of new cars after the pandemic created a car hire shortage during peak summer months in the last few years, but availability is beginning to return to normal. However Rental companies are keeping rental costs high, creating better margins for refereeing agents, even before selling independent CDW cover is considered.

·?????? The best of the Rest. Airport hotels, Fast Track, and Airline lounges have lower take-up but improve customer service and offer reasonable incremental margins.?

The In-Resort Opportunity

When Vertically Integrated tour operators roamed the earth, they employed thousands of Reps to provide customer support while making healthy profits by selling resort excursions to customers wishing to explore the local area or visit markets, etc.

Travellers’ tastes have developed, but a huge revenue opportunity is still available, from facilitating days out to the best beaches and beach clubs to nights out to popular bar areas or restaurants.

However, we need a few more developments to make these products genuinely saleable.

·?????? E-Sims. Many companies may initially overlook the importance of E-Sims, but they may provide the “Oxygen” need to drive downloads of in-resort apps. In the last 12 months, every UK carrier, except O2, has reverted to charging customers for data roaming within Europe, with an estimated average holiday cost of ￡58.25. However, this more than doubles when customers are travelling to long-haul destinations or principalities like Andorra.

On the Beaches has led the way by using the Hubby E-Sim tool to offer “Free” data bundles as “Added Value” to its customers. But this comes at a cost, even if they don’t pay for the 40% of customers who don’t download and install the E-Sim. However, why not use Free Data as a hook to get customers to download a combined transfer and excursion apps?

·?????? In Resort Transfers. Businesses like Holiday Taxis have been offering pre-booked airport-to-hotel return transfers for travel businesses to package into holidays for many years. However, the next evolution of these businesses will soon be offering “on-demand” services via their apps, which will be another crucial element of a modern in-resort excursion app.

·?????? AI Reps. My own Neural Voice business is developing an AI Rep that can chat with customers about tomorrow’s weather and their plans. Using their location, it will use Google Maps and reviews to offer food and beverage options that meet the party’s needs with full online booking capability, including a transfer to and from their hotel. Remember customers use far more taxis on holiday as they want to drink more and don’t have access to their own cars. The business we are developing it for has a B2B focus and will pay agents for crucial introductions to their travellers.

Virtually every travel business should aim to maximise income from existing bookings and increase customer retention by providing valuable in-resort services.

However, it's essential to recognise that many companies involved in the holiday process have this opportunity. The most obvious may be tour operators, but there is no reason Google, comparison sites, travel agents, travel insurance companies, or even airport car parking providers cannot play if they have the customers' departure dates and routes to market their apps.

The battle for in-resort income has only just begun, but it may be better to be a leader rather than a follower in this lucrative market as customers are unlikely to use more than one app. Building first-mover advantage and brand loyalty will be crucial in grabbing market share from a market currently dominated by volume players like Booking.com and TripAdvisor?

The good news is that new AI technology is creating a revolution that could easily topple previous giants in the same way low-cost carriers destroyed the Vertically integrated tour operating giants.

Grab the future now!

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