If dynamic packaging was a living being, at what stage in its life-cycle is it currently at?
It is still in its infancy. Dynamic packaging is a natural progression from the traditional operator model. You have to be the lowest cost producer and to do that you have to drive volume for the hotelier to give you the best rates. If you get the best rates you get the volume – it is a virtuous circle.
How do you see dynamic packaging developing in the short term?
When dynamic packaging came along it was primarily accommodation-only, now the major players have added transfers, insurance and other ancillaries. My favourite word is ‘co-opposition’ – you have to co-operate and compete at the same time, there’s no choice.
What gives dynamic packaging firms an advantage over traditional tour operators?
You have to provide the cheapest seat in the marketplace irrespective of where it comes from, so you cannot own an airline. That’s why we will continue to beat traditional operators because many of them are committed to filling seats. Dynamic package tour operating is zero-risk we do not commit to beds or seats and we are consumer focused not asset focused.
What’s the recipe for a successful dynamic packaging company?
Low-cost carriers have established a model of selling cheap early on and punishing people for booking late. That means any operator wanting to work with a low-cost carrier must link to its reservation system and the package price is dictated entirely by their flight price. That’s a radically aggressive model and the opposite of the big tour operators. We are driving a stake right into the heart of traditional tour operating.
Is it all about competing on price?
No, the weakness of dynamic packaging has been delivery in resort, that is why we set up Destination Care. On Holiday Group and Holiday Taxis send 750,000 people a year to overseas airports and, if we’re not careful, we could be waving them goodbye. We should be waiting for them at the airport, offering car hire, currency, a table at a restaurant. Delivery of holidays is moving towards personalised service. If I was an operator I would be doubling the number of reps.
Does the merger of Thomas Cook and MyTravel herald a resurgence of traditional operators?
It will slow down change. The history of travel shows two plus two equals three. When these two giants come together you are going to have the management team distracted, they are going to cut capacity and effectively be putting a big neon sign up saying ‘come and have a go’. The big tour operators have to change their models within two years or they are going to go backwards. They have the wealth, the knowledge and the people, you can’t assume they won’t evolve.
Do you think the public is aware of what dynamic packaging is and where they stand if something goes wrong?
As long as they get a good holiday, whether it is manufactured dynamically or with a traditional operator, they don’t care. Consumers flying with low-cost carriers know a seat at that price cannot be bonded. They see bonding as being like extended warranties at Dixons. If they did want it we would give it to them. That’s why Fresh Holidays is completely bonded and Holiday Brokers is unbonded.
How important is dynamic packaging for agents?
Dynamic packaging is the best thing that’s ever happened to independent agents because it’s complicated. The more accommodation-only providers on the web, the more complicated it becomes and successful agents will become experts in web tools and do the work for the consumer. But that is not going to be done sitting behind a desk in a high-street shop. The future is community-based retailing – getting off your backside and going to the consumer.
- Discussion: Same old, same old? on the Travel Weekly forums
- Discussion: Web 2.0 and dynamic packaging on the Travel Weekly forums
- From the blog: Can Web 2.0 improve dynamic packaging holidays?