Expedia is poised to start trials of a new dynamic packaging service on its website that will allow its customers to keep track of savings as they bundle products.
The OTA giant believes its approach of offering a full range of travel product on a single technology platform gives it a competitive edge over rivals that link components on separate product specific websites.
To give customers buying packages more flexibility in terms of cancellation terms Expedia will offer an insurance whereby the customer will be able to opt to forego a percentage of the bundled saving and the OTA will allow the customer to cancel and make changes.
As well as giving packaging functionality greater prominence on its own sites, Expedia is also offering a white label packaging solution to partner hotels.
The MGM Grand resort and casino in Las Vegas, the city where Expedia held its annual partners conference last week, was announced as the latest customer for the dynamic packaging technology.
The new packaging path on Expedia’s websites is known internally as shopping cart. It prompts users who have chosen a single item to add related products and then automatically calculates the savings from bundling products as more are added.
Nathan Johnson, director product at Expedia, told partners at last week’s conference that package customers travel more often, spend more, book earlier and cancel less frequently and yet only 15% of the firm’s 600 million unique monthly users ever exposed to package savings.
“There is a reason,” said Johnson. “We force you to select a select flight or hotel, we force you to choose a path and when you choose a path you do not see package savings. It’s our structure that we have built.
“Only 15% choose packages, what if we can show savings to all 100% of shoppers? We will show what you can potentially save. If we show customers a good saving that makes them better customers for you and for us.”
Hoteliers were told that they could offer opaque savings targeted at package bookers as incentive and this would not undermine their public pricing policies. Expedia itself may also fund customer savings by reducing its margin on bundled products.
Initially the OTA is going to test bundling flights with car hire in the US but will eventually assess the impact when other products are added like flights with multiple hotel stays for complex itineraries, insurance, tours and activities and packages including cruise.
Ike Anand, Expedia vice president of strategy, said: “You have to give customers savings to book packages as a trade off for less flexibility. And you have to give them savings early in the process. It cannot be last minute distressed inventory in the package path. You have other [Expedia retail] products for that.”
Aman Bhutani, Expedia brand president, said the OTA already sells a decent amount of packages in Europe where the market is more established than in the US, and he expected shopping cart to work well in European markets.
Asked about how Expedia expects to compete with established package operators, he said: “Expedia continues to compete. Already we have a decent share of the beach market.
“We compete but we also power. We recently did a deal with Thomas Cook to provide hotels. We do not see it as we have to beat them or compete with them, we bring something different to the table.
“We intend to make our product faster and feel we can compete with anyone in the world.”