By EyeforTravel.com Correspondent<br><br>Is dynamic packaging important for hoteliers? This was one of the questions pos
Published: 15 Nov 2005
By EyeforTravel.com Correspondent
Is dynamic packaging important for hoteliers? This was one of the questions posed by Richard Lewis, managing director, Preferred Hotels, during his presentation at the recently concluded Travel Distribution Technol
"It is a near necessity!": Lewis said.
As the hotel industry fights back, Lewis added, "Dynamic packaging for hoteliers resulted in the changing landscape - merchant model collapse." He also referred to other factors such as controlling hotel's market position and competitive stance, keeping the customer focused, improve revenue management and GOPPAR, maintain rate strategies and create a dynamic FIT sales environment.
Comparing dynamic packaging vis-à-vis traditional one, he said dynamic packaging offered unlimited choice, complete flexibility, fast, dynamic systems, option of booking online, multiple pricing options, add-on options and independent, customer choice. On traditional packaging, he said package components are set in advance, customers purchase from tour operators and travel agents who are in full control, itinerary dates usually fixed, pricing is fixed, destinations are fixed, mode of transport is fixed and its like joining the crowd.
There is no standard definition for dynamic packaging, according to Lewis. "The term is used in different contexts by different vendors. Definition dependent on how individual components and the package price changes: Flexible packages (fixed components can be changed); Dynamic pricing (combine and save components); Dynamic packaging (assembling multiple products into one itinerary to give one single opaque price, in real time); Most online Dynamic Packaging today still consists of simple multi-component itineraries - air, hotel, car. "Business rules" are used to select components and rates," he said.
Importantly, of all travel components, hotels represent 64% of the total satisfaction of any travel experience.
He added that online travel is due to grow 20-25% in the UK in 2005 and dynamic packaging expected to grow 60%. He also referred to following: Growth of low cost carriers - 2 to 50 in EU alone; Product adjustment - a new leisure market place created; Unbundling of traditional packages; The internet has made it possible!; Biggest growth area is City Breaks; USA most advanced - almost 25% of air, hotel and/or car bought in single purchase - 79% of this total created by the customer.
On the drivers of dynamic packaging, Lewis said that form consumer demand pull perspective it is factors like price and value for money, choice, accessibility, late booking patterns, ease, and speed to book, mix and match, instant service and consistent communication. From an intermediary perspective, he referred to factors such as Must match supply and demand; Demise of the merchant model; Looking for sustainable margins; Need to offer high customer satisfaction; Must befriend the suppliers to get inventory; Need to add value to the process; Low transaction costs; Ability to up-sell.
From supplier inventory push side, he referred to Electronic distribution rising; Need to be competitive and flexible; Must have discreet pricing to help rate parity; Low cost distribution essential to increase GOPPAR and NOPPAR; Market penetration and awareness.
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