Focus on ancillary revenue


Even on its shorter cross-Channel routes, P&O Ferries offers a number of bar and lounge options including a Club class


free model to an impulse and indulgent shopping experience, focusing on less volume and on more quality and higher margin goods. We are developing travel entertainment; selling accessories, gifts and souvenirs; and creating a beauty store. In short, we are applying appropriate space to the sales and earning potential – e.g. creating brand statements in the store for the key lines. ST: We are at the premium end of the market, but we are aware of the economic pressures on our customers, which is why we have kept our 2012 price increases to the absolute minimum despite the relentless rise in the cost of oil. We offer a range of fares based on length of stay, time of day, day of week, season, etc., and on-board eating experiences ranging from an à la carte restaurant to a self-service cafeteria. On-board sales are very important to us.


Sales of tobacco and alcohol have declined since the end of duty free in 1999, but we still sell large quantities of tobacco on the Spanish routes because it is taxed at low Spanish rates. We have bars, restaurants, boutiques and cinemas to sell. We have noticed discretionary spend fall slightly this year. The demand for reclining seats is in decline.


Most passengers take a cabin and travel overnight to make the best use of their time, saving miles of driving by sailing direct to their holiday region. We are the long-haul ferry operator and invest a lot in ships and the on-board experience by providing free entertainment to make it feel like a mini-cruise.


What specifically are you doing to grow revenues over and above those derived from ticket sales? SJ: We have a much clearer focus on margin, particularly on the retail side of the business. The days of devoting large areas of floor space to low-margin goods such as alcohol and tobacco are gone. Low-margin lines require us to shift big volumes, and that puts on logistics pressure in terms of maintaining stocks. So we're increasingly particular about our retail offer. An extensive display of designer label sunglasses takes a fraction of the space required to offer a modest range of high-bulk,


low-margin goods. We're growing our beauty and fragrances category on board, along with impulse-buy luxury goods. On the catering side, we're growing sales by offering a far greater range of 'light bites' at modest prices. What we've found is that if we get the offer right, customers make multiple purchases, buying one for consumption on board, and one for later, and although we suffer some dilution in our formal restaurants, we benefit overall.


"We have a much clearer focus on margin, particularly on the retail side of the business"


Our first point of contact with customers is on


our website and through our call centre. This is where we start to build AR by selling upgrades, foreign exchange, and our new shop-and- collect service. Combine this with e-marketing initiatives and we can target specific opportunities. Say, for example, we have a run of departures with weak Club class bookings. We can reach out to a target group of customers to incentivise them to upgrade. When done well, this blends first-class customer service with effective up-selling. We also use social media and have grown to


40,000 Facebook fans in just over a year. ST: We highlight the menus and things to do on board in our on-board magazine Voyage, a copy of which is given to each car upon check- in in the UK. Generally, we ensure that every aspect of our


service is of the highest quality and invest a lot in customer service training, as a result enjoying incredibly high levels (approximately 50%) repeat business. The challenge for us is to attract first-timers, particularly as there is a generation that has passed ferries by, having been weaned on a diet (albeit an uncomfortable one) of no-frills airlines.


“While à la carte drives AR, which is vital for the bottom line, bundled services drive market share” says Tiago Phillimore, head of strategic marketing at TAP. Do you agree? How highly do you value customer loyalty? SJ: The heart of our business is that customers want to get from point A to point B reliably and punctually, with value for their money. If we put a big tick in that box, that's where we secure customer loyalty, and that is hugely important to us. We've a strong brand built on dependability; P&O marks its 175th anniversary this year. Our passenger numbers have held up


remarkably well during the recession because people trust us to deliver. At Dover, for example, I've lost count of the number of ferry


www.onboardhospitality.com 43


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