negotiate ‘fare families’ with their preferred carrier. A fare family, when considering ancillary revenues, could include elements such as in-flight wifi, meals, lounge access and assigned seats. Bundled prices would then be booked. Sabre’s Terry worked in the corporate arena before, so still has contacts and connections there. She says: “Anecdotally, there are some corporations which are saying to airlines: ‘Listen, we spend tens of millions of dollars with you every year, so why are you making us pay US$20 for an extra bag?’” She adds that corporate buyers are asking for more sophisticated targeting of products specific to their travellers’ needs. “Everyone is looking at 2013 for this, as most preferred supplier agreements for this year have been signed off,” she says. Again, widespread adoption of standards would help. However, Airplus’s Talbot thinks that some carriers are “dragging their heels”, quickly adding this is a personal opinion rather than the official party line. “We are vocal in pushing our corporate customers to complain to their preferred carrier to start using standards and pressure them into becoming more transparent,” he says. “The difficulty is most travel
managers don’t know what they don’t know, as it were, and they have a whole bunch of other things to worry about. Until the data about ancillary spend becomes widely available, corporations have little to work on when they are negotiating with preferred suppliers.” n
HERE TO STAY…
HOTELS ARE also interested in ancillary revenues, and the technology issues are no less complicated than for air. Niklas Andreen is Travelport’s group vice-president of hospitality and partner marketing. He is looking at the ancillaries issue as part of his hotel-focused brief .
Niklas Andreen
Hotels, says Andreen, can add value through ancillaries to agents, buyers and guests more
effectively than airlines. “Historically, airlines had a product – the flight – which had an all-in price that has been broken down in order to adopt menu pricing. Hotels have always started with the room and then priced the room according to the ancillaries.”
The demands of business and leisure guests differs greatly. Both might like breakfast included in the rate, while road warriors would be more interested in free wifi, business centre access and private transfers than holidaymakers, who might be looking for spa treatments, excursions or an evening meal included in the room rate. In terms of the technology, Andreen says the big chains are likely
to lead the way, as they have the technology resources and budgets to invest. Smaller properties can achieve a similar reach through representation companies, provided they can absorb the costs. Travelport recently announced a deal with Hilton, which Andreen claims puts the processes in place for hotels to offer menu-pricing as an option to buyers and agents. Hilton and Travelport are working on an XML feed that allows Hilton to get its products into the Travelport GDS without having to go via a switch company. Any developments are then worked out between the two. The role of the GDSs is to make bookings easier for TMCs, but in the austerity-led environment of 2012 the need for management information, fed back to the procurement and finance teams who can analyse the spend, is as important. “Hotel suppliers need to have new systems in place so that all information about the room can be fed back into the back-office so the management information can be pulled out, and that’s where we are heading with the Hilton deal,” says Andreen. He is confident that the concept of merchandising ancillary
revenues to add value to the guest, agent and supplier “is built into the hotel industry’s DNA”, and that once the technology has caught up, there is another potential win-win situation. “Hotels will be able to merchandise the same room in a number of different ways,” he says, “so a business guest will get breakfast and wifi, whereas a leisure guest can have roses and champagne on arrival. In the long-term, ancillary revenue potential for hotels is more exciting than air.”