Trade News
Inbound/ Domestic News
Outbound News
 
Home Trend Watch Details

TREND WATCH

Tuesday, 01 February, 2011, 12 : 00 PM [IST]

Revenues from third-party services set to grow ten times faster than general travel industry sales: Amadeus

An industry study, Cross-Sell Your Way to Profit, charts the untapped revenue potential of third-party ancillary services to the travel industry, with analysis providing a wake-up call to travel suppliers as it identifies growth of 30 per cent in revenues from third-party sales by 2015. The study, conducted by Forrester Consulting, identifies the growth of new ‘extreme’ services such as virtual reality tours and digital concierges set to transform the customer experience in the next ten years; highlights what travel providers must do to effectively market new services; and outlines the central role of mobile in driving adoption of new services in the next five years.

The study has been developed by Forrester Consulting, an independent research firm, and commissioned by Amadeus. Cross-Sell Your Way to Profit is part of the Amadeus Traveller Series which is a global research initiative designed to stimulate new thinking and innovation in the travel sector.

The study states that third-party ancillary services provide travel suppliers with an under-explored revenue-generating opportunity, expected to increase by 30 per cent by 2015 compared to 2010. There is growing recognition that third-party ancillary services will become important revenue contributors to travel suppliers, provided they offer a relevant product mix and make these services available throughout a journey and across channels. Third-party ancillary services offer the potential for travel suppliers to extend the length and breadth of traveller interactions before, during, and after a trip.

The study is based on quantitative research with 67 per cent of respondents drawn from travel brands that generate annual revenues in excess of USD one billion. In addition, the study includes qualitative input from industry experts across airlines, hotels, rail and cruise operators that details the scale of the revenue opportunity, the future third-party ancillary services set to drive sales and the shifting mix of channels required to effectively sell third-party ancillary services according to customer needs.

Key findings

Third-party ancillary revenue to grow ten times faster than general sales in next five years

Third-party ancillary revenue is expected to increase by 30 per cent during the period 2010 to 2015. Set against estimated travel industry growth of three per cent during this period, analysis demonstrates third-party revenue growth is ten times greater than that of general sales. The study finds third-party revenue is likely to represent 2.5 per cent of total provider income by 2015 - or USD 25 million for a USD one billion company.

‘Extreme’ ancillary services set to transform the passenger experience allowing providers to innovate in next ten years

While traditional third-party services such as insurance, car rental and hotel room sales are expected to remain popular, travel providers see great potential in a range of ‘extreme’, as yet unexploited, products and services. By 2020, more than half of travel providers (54 per cent) expect to offer virtual reality services that can help passengers experience airports, hotels and cruise ships before arrival, digital concierges to improve the in-hotel or airport experience (80 per cent) and in-journey spa treatments (37 per cent). Travel providers expect future services to be shaped by a combination of macro-trends with mobile having the greatest impact (81 per cent believe it important) and the rise in travel to-and-from emerging economies is also viewed as important (59 per cent believe it either important or important).

Mobile to match websites as primary channel for third-party sales

Although respondents recognise the limitations of mobile’s effectiveness to sell third-party services today, ranking it behind traditional channels such as airline ticket offices and hotel front desks, they expect a dramatic increase in importance over the next five years. Driven by the increasing penetration of smartphones and tablet devices, as well as the industry’s desire to develop more flexible selling capabilities travel providers believe mobile will be close second to websites in terms of effectiveness to sell third-party services by 2015. Increasingly mobile will be a primary channel for the sale of third-party services beyond the booking stage.

Respondents also highlight social media and self-service kiosks as increasingly important channels to reach customers with third-party offers.

According to Marcos Isaac, Director, Travel Services Business Group, Amadeus, “Today the industry is focused on the opportunity à la carte’ ancillary services offer, but this study spotlights the growing and significant contribution of third-party sales. Travellers are set to benefit from a host of innovative services in the future, often delivered by companies outside the travel industry. Travel brands of all types need to understand who to form partnerships with, what the revenue potential is and how best to sell third-party services if they are to maximise this opportunity.”

 
Post Your commentsPOST YOUR COMMENT
Comments
* Name :      
* Email :    
  Website :  
     
Receive the best of Travel content in your mailbox.
Enter your e-mail ID for our
Weekly e-Newsletter
   
© Copyright 2015 Saffron Synergies Pvt Ltd