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Ross Vinograd

To ancillary and beyond: How OTAs can up their cross-sell game

June 24, 2019

With every air booking comes great opportunity – not just for the traveler who has booked their next adventure, but also for the travel brand that has sold the ticket.

Just one air booking gives the travel brand a wealth of data on their traveler. Where that person is going, when they’re going, who they’re going with, and how long they’re going for. Armed with this information, the travel brand can offer relevant ancillary offers like hotel rooms and car rental and start bringing in additional revenue beyond the flight ticket. 

And yet, the majority of online travel agencies are not taking advantage of the upsell and cross-sell opportunities that come with every air booking. So what can OTAs do to start driving revenue beyond the flight? 
 

Becoming a one-stop-shop 

Many air-centric OTAs are missing the opportunity to become a one-stop-shop for their travelers. Once the traveler has booked their flight options and maybe added a bag, they have their mind set on searching for hotels, cars, and experiences. And where better to find inspiration than on the website where they have already booked? 

However, with the vast majority of OTAs not offering these solutions, travelers turn directly to the suppliers or aggregators who have become category killers in many markets. As a result, OTAs lose the revenue generation potential the air booking brings and sacrifice long-term customer value and loyalty in the process.  

And the potential is significant. The margins on products like car and hotel are far higher than air – just look at Expedia, one of the largest air retailers in the world. Only 8% of its revenue comes from air, while 68% comes from hotel, according to its 2017 annual report*.  

 

How to sell hotel and car content at your online travel agency 

The case for selling car and hotel content is clear, but what steps can OTAs take to get started?

There are two main methods of selling hotel and car content at your OTA: a white-label/affiliate model approach, or directly via GDS or API. There are pros and cons to each approach, which we’ve set out here. 

 

  • Method 1: Affiliate/Third party model 

Many OTAs who dip their toe in the non-air sales category do so via an affiliate model. This involves installing a while-labeled widget on their site, which redirects the traveler to another third-party website to book the car or hotel.  
 

Pros 

  • It’s easy to get up and running and likely requires little development cost. 
  • Your OTA can earn commissions from bookings made through third party websites. 
     

Cons 

  • You’re turning your hard-earned customers into marketing untouchables. The affiliate website will own the customer relationship, which limits your ability to engage with the traveler or build customer loyalty.
     
  • You’re unnecessarily sharing margin on the most lucrative part of the itinerary and foregoing upsell opportunities, brand development, and supplier relationships in the process.
  • Beyond the commercial, the setup fails to deliver a cohesive customer experience. So, while trading traffic for affiliate cash may be easy, in the long run it is unsustainable.   

 

  • Method 2: Sell content directly  

The second option is to integrate the content into your website and sell directly to the customer on your own channels via GDS. Again, there are pros and cons to this approach. 

 

Pros 

  • You are not sharing margin on the most profitable part of the trip, which means a significant revenue boost for your OTA. 
     
  • You will own the relationship with your customer and can tailor your offerings to their preferences. The flight itinerary data gives a clear indication of the type of traveler persona – for example you can identify families by passenger type codes, back packers by price and duration of stay, leisure weekend break or business traveler by days of the week.  You can then use this data to personalize your beyond-air content. For example, hotels with pools for families with young children or a hotel centrally located near the main sightseeing locations for the weekend traveler. For car rental, you can show a car solution that will fit the number of passengers on the itinerary.  All of these personalization opportunities allow you to enhance the customer experience and build longer relationships with your travelers – something that the affiliate model cannot deliver. 
  • You can build supplier relationships by highlighting your brand with preferred hotels and car rental companies, instead of the invisibility of the affiliate model. The relationships can evolve into negotiated rates and agreements that benefit both supplier and OTA. 
     

Cons 

  • Integrating hotel and car content from GDSs may incur development time or costs. However, by choosing a single API that can deliver a wide range of content like air, hotel, car, branded fares, and ancillaries, you can get up and running quickly with limited development overhead. Learn more about Travelport Universal API.
     

Seizing the opportunity 

According to our research 73% of travelers would return to an OTA that offers them the ability to book their entire trip in one place. By focusing on air alone, your agency is losing out on a valuable opportunity, not only to create new revenue streams, but to delight your travelers and turn them into repeat customers.

Join our webinar on July 3, where our experts will demo our hotel, car, and branded fares solutions, how to get started selling these products, and the ROI you can expect as a result. 

SAVE YOUR SEAT

 

*Expedia Annual Report 2017, p44 + 45