Can cruise, ski and long haul be dynamically packaged? Linda Fox reports on travel sectors that are ripe for the mix’n’match approach
Contents: cruise | ski | long-haul | other
As the dynamic packaging trend grows, the industry is turning its attention to new growth areas.
Long-haul, cruise and ski are three areas that are currently being talked about and some companies, such as Holiday Brokers and lowcostbeds.com with ski and youtravel.com with cruise, are already advancing in those sectors.
Each of the sectors presents its own opportunities and challenges. Finding competitively priced flights for long-haul is an issue, and pricing is likely to come under increasing pressure as the cost of fuel soars. Low-cost long-haul flying is very much in its infancy with some of the existing low-cost airlines beginning to make noises in that arena.
In the ski market it is accommodation that presents the most hurdles. Hotels and chalets would rather fill their properties for weeks at a time than offer flexible durations and weekend breaks. However, with huge low-cost flying capacity available, consumer demand rising and other ancillary companies gearing up to provide winter programmes, ski looks ripe for a further move into dynamic packaging.
Finally, there is the cruise sector. Cruise companies have already recognised the need for flexibility and allow consumers to join or leave at various points along an itinerary.
Cruise operators have also recognised the value of agents, and with the tremendous growth in ship orders and capacity, third parties look set to remain a viable distribution channel.
However, distribution costs are a challenge and it seems likely that commissions will be squeezed and the sector will go to net pricing. There are already many call-centre and online agents who are packaging up a cruise, low-cost flights, transfers, pre and post-trip accommodation and number of tours and experiences.
These are not the only opportunities for growth in the dynamic packaging market, and where low-cost flights are introduced to new destinations, accommodation-suppliers are quickly following suit.
Other suppliers, including youtravel.com and Holiday Brokers, see growth through international expansion and are focusing on setting up a presence in other countries including Italy, France and Germany, as well as potential content partnerships to get a foothold in other destinations.
Dynamic packaging: Cruise
Cruise website 1st4cruising.com is a good example of a company combining cruises and other travel components.
The company sells a mix of traditional cruise holidays and packages composed of a basic cruise with components from accommodation-only suppliers and other elements.
Alternatively, customers can decide what they want to do and 1st4cruising.com will create a package and offer an experience such as a helicopter tour or harbour cruise. Although there is a view in the market that cruise companies want to lessen their reliance on agents, Fair claimed there was no evidence of that.
“Cruise operators continue to be loyal to agents but a lot ofthem offer a mixture as we do.” However, he added that component packaging will become a larger part of the market in the future.
Already cruise retailers represent a good proportion of business for companies such as DoSomethingDifferent.com.
Commercial director Ian Coyle said: “We are getting pre and post-cruise business and retailers are putting our product within an itinerary.”
He added that the company is getting a lot of demand for tours and experiences in Thailand such as harbour dinner cruises and temple tours on the back of cruises.
Advances in technology will help agents looking to package up cruises with other elements. Traveltek claims to be the only provider to offer cruises in a dynamic packaging environment. The company introduced its system for building components around cruise about a year ago and gives agents access to about 35 of the major cruise operators.
Traveltek managing director Kenny Picken said: “If they admitted it, cruise operators would say packaging it is the most costly element and, ultimately, they want to sell cabins. We have seen the slow but certain growth in the number of cruises being booked online and the uptake of cruise dynamic packaging is relatively low, but consumers are experimenting.”
He also said that accommodation-only suppliers are beginning to add stock in the places where cruises start and finish.
Last November youtravel.com signed a deal with easyCruise enabling agents to dynamically package easyCruise Life Greece itineraries with low-cost flights and accommodation.
Youtravel.com sales and marketing director Paul Riches said: “We are working with retailers that are doing cruise-and-stay so we offer those elements and agents package it up as a holiday concept.”
Riches added that the company is looking at the potential of the wider cruising market if inventory becomes readily available and the technology to access it is in place.
“Cruise companies put together their own add-ons because that’s what customers want. That type of bespoke itinerary is why there are so many strong cruise retailers around.”
Dynamic packaging: ski
While the low-cost airlines have opened up European ski destinations to the possibility of dynamic packaging, the accommodation owners have not followed suit.
A couple of the accommodation-only suppliers – lowcostbeds.com, Holiday Brokers and Dublin-based Directski – have managed to break into the market, while others are adopting a wait and see approach.
The main issue holding dynamic packaging back in the ski market is the lack of access to flexible accommodation near the slopes.
However, it was only about eight years ago that resort hoteliers and tour operators were reluctant to break down traditional seven-night beach packages while today most operators are willing to package up most of their inventory individually. Although many view ski as the final bastion of the traditional package, the sector is likely to be dragged kicking and screaming into the dynamic packaging arena.
Youtravel.com sales and marketing director Paul Riches said: “Ski is massive for going on short breaks and long weekends but there is reluctance among hotels to split up the accommodation. The dynamics are not easy but you can’t ignore it and there will be some growth in that area.”
Ski packs including skis, boots and lift passes are being sold and transfer specialists such as Holiday Taxis have winter transfer programmes in place.
Holiday Taxis sales and marketing director Russell Parr said: “You used to have to go skiing for a week but low-cost flights into regional airports means ski destinations are thinking they are missing the weekend skiers.”
Dynamic packaging: long-haul
Of the three areas tipped for growth for dynamic packaging, long haul may be the slowest to make headway.
Agents have always organised bespoke long-haul holidays for customers, using consolidators for flights and ground arrangements, or going through specialist and upmarket operators.
The shortage of competitively priced seats in the long-haul market, as well as the need for more hand-holding and the demand for adventure and experiences to be built into holidays, will make it harder for component suppliers to break into this market.
However, in the past year we have seen some movement with, for example, Superbreak’s new range of hotels in Beijing and Shanghai.
Sales director Ian Mounser said: “We’re looking to make our offering more comprehensive. We have done well in Dubai and we’re focusing on the Middle East, India and China where we’ve got some contracting experience.”
He points out that long haul will also be initially hampered by the cost of contracting in these areas.
“About 80% of our sales will still be in Europe in two years’ time. Contracting is becoming easier but because of the volumes of sales you are getting, the return on investment is lower.”
He believes the future of dynamic packaging could be influenced by the ability to add on extras, such as in South Africa where agents combine standard elements, such as hotels and flights, with golf and safari.
DoSomethingDifferent.com commercial director Ian Coyle says agents are already grabbing the opportunities presented by the long-haul dynamic packaging market. Experience specialists are already gaining traction in North America, Australia and the Far East, especially independent agents and homeworkers.
“Homeworkers are the ones putting the bespoke itineraries together so they are adding customer service and increasing their margin,” said Coyle.
The general consensus is that long-haul dynamic packaging will come, but according Traveltek managing director Kenny Picken, it will happen in stages, with familiar destinations such as Florida, New York, Hong Kong and Dubai and single-centre holidays coming first, followed by twin and multi-centre long-haul travel.
Dynamic packaging: other potential growth areas
Experts say Europe is by no means done when it comes to dynamic packaging. As the low-cost airlines open new routes into eastern Europe, as well as further into countries such as Italy, accommodation suppliers will follow.
On Holiday Group chief executive Steve Endacott said: “We think there will be a massive boom in Italy and eastern Europe.”
Superbreak sales director Ian Mounser also sees potential for dynamically packaging city breaks to the fringes of eastern Europe. This could include cities as far as Moscow and places such as Budapest and Tallinn for people that have already visited Prague.
All-inclusive properties are now also being dynamically packaged as consumers seek to make their budgets go a little bit further.
Riches said: “All-inclusives are an area for growth because people are budget conscious.”
Dynamic packaging is also set to grow to mid-haul destinations such as Egypt and Turkey, as well as less well-known places including Tunisia and Malta.
“There is growth in the four-and-a-half to six-hour flying catchment because people are looking for something a little bit different,” Mounser added.
Bed suppliers are keen to take their existing stock and open it up to other markets across Europe. Youtravel.com wants to continue to increase its accommodation range as well as create a presence in other markets because the UK has reached saturation point.