DATABERG
Collaborating and partnering have been commonplace in the travel industry for some time. However, technological advancements are making these sales techniques more pertinent than ever.
With all the benefits these developments bring, there are downsides. For example, technological advancement is making the travel industry more competitive than ever. As a result, businesses have to place the customer at the center of their business strategy. Brands increasingly need to cater to the customer’s every demand, whether it is a smooth booking journey or providing specially-tailored ancillary products. In order to provide this all-encompassing personalized service, it is crucial that businesses collaborate to deliver the level of service customers expect. Here, we look at four case studies from the travel industry where businesses have used collaborating and partnering to drive profits.
1. Expedia’s multi-brand collaborating and partnering
Brandon Ehrhardt, Expedia’s Director of Strategic Initiatives and Research, has said that “partnerships are the bedrock of the travel ecosystem.” This is certainly a true statement; since the beginning of the global travel industry, agents, airlines, and hotels have worked together to sell their product. Now, this approach is expanding. From major airline alliances to relationships between hotels and OTAs, business partnerships promote enhanced customer service and drive profit.
Expedia is capitalizing on this conventional wisdom by partnering with numerous hotel brands including Marriott, MGM, and Omni Hotels. Expedia is furnishing these brands with their white-label technology products. Developed to help hotels grow their business, Expedia’s dynamic packaging technology allows these hotels to gain greater insights into customer behavior. This is a particularly shrewd move from the mega-OTA as hotel direct channels become the preferable route to insight-rich customer data and commission-free profits.
These partnerships are particularly effective as package holidays are witnessing somewhat of a renaissance. Previously seen as over-priced or outdated, customers are now showing a preference for the one-click, ultra-streamlined package experience. This is largely to do with the fact that package offers are becoming increasingly diverse, from glamorous boutique getaways to adventure escapes.
2. Star Alliance’s mission to fly to every city on the planet
Airline alliances were initially conceived as a single agreement between two brands. However since the late nineties, airline alliances have grown into ambitious global projects. Now, three major airlines alliances exist reaching over 1000 destinations and growing. For example, Star Alliance – the first and largest conglomerate – aims to “take passengers to every city on Earth.” Consisting of over 27 airlines including Lufthansa, United Airlines, TAP Portugal and Air New Zealand, the Star Alliance’s influence stretches to every corner of the globe.
The advantages of this model are twofold. Firstly, alliances offer customers a vastly expanded network through code-sharing agreements. This makes sales and connections more efficient, thus reducing flight times and costs. Furthermore, the financial benefits do not just reach the customer – they also reduce operational costs for the airline. Secondly, alliances make rewards programs more streamlined. Therefore, customers can accrue points faster enabling them to earn more rewards. This boosts customer satisfaction and encourages long-term loyalty, enabling customers to stay with their brand of choice no matter the journey.
3. NH Hotel’s approach to B2B partnerships
Generally, hoteliers want to drive direct booking wherever they can. Overall, hotel direct bookings are the best way for a company to provide the most personalized, profitable customer interactions. However, the industry still recognizes that agents and intermediaries are crucial to brand visibility. Even though direct sales are set to explode in the coming 5 years, OTAs and travel agents will remain relevant – especially as major technology brands like Google begin to enter the market.
Furthermore, this is especially the case when it comes to B2B transactions. For example, Spanish hotel group NH Hotels have initiated their ‘preferred partnerships’ scheme with selected travel management companies, events agencies, and corporate intermediaries. NH has also brokered lucrative long-term deals with more than 30 airlines. NH have exploited these partnerships to funnel business from ticket sales towards their properties. Rather like Expedia, NH is using collaborating and partnering to bring added value to their product. From here, the hotel group sets incentives for their partners to drive their business in markets where there is a need for growth. To illustrate, in Spain where brand visibility is high, this scheme is less of a priority.
4. Easyjet’s new travel insurance offer with Zurich
Ancillary sales are becoming increasingly important for airlines as the industry becomes more competitive. This is particularly the case for budget airlines, who try to maximize profit through added extras. Whether offering extra baggage, expedited boarding or in-flight refreshments, ancillary products are becoming a key driver of profit in an environment where basic seat costs are the primary differentiator.
Due to this climate, the customer naturally expects to be able to treat their airline as their one-stop travel shop. A number of airlines are now collaborating and partnering with hotel groups, car rental companies, and other service providers to drive sales. A good example is Easyjet, who have recently announced a partnership with Swiss insurer Zurich to offer travel insurance. This new partnership has also been brokered in collaboration with Collinson Group who will support customer service.
This new partnership gives Zurich access to 13 European markets, including the UK, France, Italy, Spain, Portugal, Poland, and Germany. Furthermore, Easyjet and Zurich will use customer insights to offer personalized insurance offers. For example, if a customer books a flight to a destination known for its ski resorts, Easyjet’s algorithm will suggest the customer purchases winter sports equipment and personal injury insurance.
Increasingly, customers expect a comprehensive purchase journey. They demand that their experience is fully personalized, whether they are buying airline seats, hotel rooms, or tours. Furthermore, they will expect to be able to purchase everything they need quickly and efficiently. As such, partnering and collaborating is a business imperative for the modern age. As travelers require an increasingly seamless service, businesses need to work together to improve customer experience.
