Travel industries has become one of the most competitive. And now a days everyone enjoys accessing large number of options to book trips and accommodations. Mobile apps for flight and hotel booking have become major concern for the traditional travel agents for a while now.
Alike Airbnb, online bookings are increasing through websites and mobile apps. Even, airlines, hotel chains and car rental brands have been developing their own websites and apps. For boosting their brand, loyalty programs are conducted where they try to convince customers that have no reason to use OTA search engine to find the best deal.
This becomes obvious for the travel agencies difficult to survive! Having website is not the solution. Expedia, Booking.com, Priceline and many others are the rising competitors and launching a new travel app means to go against them. To stay in this fierce competition, travel agencies must be something different.
Let’s have a look how popular travel brands operate and provide recommendations for the agents who wants to navigate into online world.
Source inventory of Expedia and Priceline
Companies like Expedia and Priceline source their inventory by negotiating directly with the hotels and using GDS (global distribution systems) to book hotel reservations, cruises, air tickets, car rentals, different attractions and services. GDS systems is expensive to access, and so travel agencies generally do not prefer inventory if they can avoid.
How do online travel agencies make money?
Online travel agencies uses these business models, to monetize their products.
Agency business model: OTA acts as a middleman between industry operators and customers, making commission on each transaction. Expedia's rates for commission ranges from 20 to 25%.
Merchant business model: In this model, OTA is the merchant. Bookings are done on the company's own website or mobile app. To use this model, online agency buys large number of hotels at wholesale rates and then markets rooms to travellers according to the agency's rate. Priceline sells hotel reservations according to this model, whereas Expedia totally relies on the merchant model, that offers higher margins.
Advertising business model: Priceline earns 0.3% of its revenue from advertising fees. Moreover, TripAdvisor is driven by advertising. For small travel agents seeking for travel apps or websites, advertising model is the most affordable. Alternatively, you can even use the existing infrastructure to build new services and earn money along with them. Many travel agencies make money on flights and hotels charging cost-per-click to OTA and supplier websites.
Differentiate your Product offerings
1. Go Mobile
Recent survey by Euromonitor International stated that, the travel industry will have highest percentage of mobile bookings of any retail industry by 2020. Since then, the market for travel apps will as competitive as for the web, it can be recommended to initiate your application with by targeting your existing customers. Your travel app can greatly increase your customer loyalty.
2. Get into new and niche Markets
Rather than targeting undeserved geographical area, travel agencies that do not wish to be endangered species can differentiate by catering the niche market. Some of the areas where agents are still succeeding included luxury and business niche where travellers value personal relationships and expertise over cost savings.
Moreover, you can also choose a niche to target based on interests like adventure, spirituality, history, extreme sports etc. You can also select based on demographics, special events as in olympics, rock concerts, festivals or even you can choose themes like camping, city breaks, wellness, family or luxury.
3. Technology to improvise Customer service
Expedia and Priceline care to the mass market, that consists of young people and are used to get instant information on the web and booking trips on their own.
If you are start up, that audience you attract is not same as the one like Expedia target. While online travel agencies have wide range of options, they do not offer customer services that is actually expected. Customer service is what traditional agencies are so good at!
Traditional agents search for flights and accommodations for their customers. Moreover, a traditional agency plans the entire trip without any awareness of their client. And if there are any concerns during or after the trip, travel agents are always ready to help. These advantages can be improved with the help of technology. And the agents who embrace technology to improve the client experience, it is obvious for their survival.
If you want to know more about your travel app, feel free to contact us!
No comments:
Post a Comment