Brian Kalms, managing partner, Travel and Transportation Practice at Accenture, and Andy Tidy, e-commerce project director with Thomas Cook talk to Travel Weekly about the dynamic packaging market
Dynamic packaging has been around for a number of years in one form or another. Consumers have benefited because it has made it easier to create the bespoke holiday packages they demand while still giving them the legal protection inherent in the traditional offering.
Historically, leading tour operators have used the principles of dynamic packaging to improve the products and services they offer while being able to react quickly to changing market demands. This method has also enabled them to increase the average size of each holiday package and reduce their distribution costs.
Travel agents have been able to absorb the additional risk associated with dynamic packaging because of the extra margins they can make and have therefore become the principle advocates of the system.
Suppliers have also used dynamic packaging to increase direct distribution ratios, maximise margins, and to distribute distressed inventory without devaluing their brands.
To date, the best-performing operators have been those that have implemented the right blend of technology and service. However, competition is now fierce as more suppliers and operators seek to replicate the techniques involved to reap these benefits.
We have also seen a rapid growth in the development of new technology to provide dynamic packages. This is posing a challenge to traditional players, as they now also face competition from travel technology companies entering the market.
The jury is still out on whether travel companies or travel technology firms can outperform the existing players in the dynamic packaging arena. Travel companies cannot wait around to find out, they must continually differentiate to stay one step ahead of the technology providers with new technology, services, product knowledge and domination of niche markets.
Most travel companies in the sector will turn to a third party to provide the technology solutions for dynamic packaging. While this is cost effective, chances are that most will be using the same system as their direct competitors.
In light of this, it is critical that a company selects the technology platform with the flexibility to enable them to differentiate, whether that is by product, pricing and packaging rules, or customer journey.
Dynamic packagers should invest in content, too – maps, photos and text descriptions at the bare minimum. Companies that excel will add customer reviews, destination guides and event calendars to provide a searching experience that captures what is really important to customers and presents inspirational results.
Brian Kalms, managing partner, Travel and Transportation Practice, Accenture
Andy Tidy, e-commerce project director, Thomas Cook