Published on Monday, April 18, 2005

Agents 'must adopt dynamic packaging'

A review of TTI’s spring 2005 conference by Paul Richer, senior partner, Genesys – The Travel Technology Consultancy

With package holiday sales via the web on the increase, the days are numbered for those agents that continue to rely on making a living from commissions earned on the sale of tour operator’s packages.

Agents need to be seen to add value, they need to be selling online, they need to be dynamically packaging components that perfectly match their clients’ holiday requirements. This was the theme of Travel Technology Initiative’s recent spring conference.

The day kicked off with a keynote speech from ABTA president Martin Wellings.

He stressed the importance of agency staff being properly trained so they can put together the right packages for their customers. These may well include a no-frills flight, but agents could bundle these with independent hotels that are not so easy for the average consumer to find online.

Agents who dynamically package in this way could compete head-on with operators, often under-cutting standard package holiday pricing.

Next up was Colin O’Neill, sales and marketing director of Advantage. He sees Mintel’s prediction of a 66% market share for independent holidays by 2009 as a great opportunity for agents. For retailers, smart investment in the right technology will allow them to compete on the worldwide stage, both on-line on the web and in the high street.

Of course, Advantage has developed the necessary technology for its members. His belief is that the cost of a dynamic package can be 40% lower than a standard package, with enhanced margins for the agent and excellent value for money for customers.

The technology panel session at the conference featured three system suppliers: Anite Travel Systems, the sponsor of the event, RWA Ltd and OpenJaw Technologies. They all stressed that good dynamic packaging requires highly developed systems.

Anite thinks that the new Dynamic Packaging marketplace will bring together dynamic sourcing - utilising automated online purchasing, dynamic pricing - with few or no published prices and dynamic packaging - whereby complex business rules set-up within the systems will determine how individual component prices are combined and discounted.

After the technology panel, Andy Tidy, managing director of Up Trips, explained how Thomas Cook formed this subsidiary to specialise in new product development, providing the dynamic speed and flexibility required in new, developing, and/or fast moving markets. The company’s portfolio of brands includes Club 18-30, flexibletrips and roomsandhotels.com.

Andy thinks that consumers really don’t care whether a package is pre-assembled or dynamically assembled. To them, they are all just package holidays. The Up Trips tour operator system reflects this and integrates the searching and booking of both dynamic and standard packages within a single sales process.

The latter part of the conference was devoted to three new dynamic packaging businesses: lastminute.com’s holidayandmore, Steve Endacott’s HolidayBrokers.co.uk and Paul Evans’ lowcostbeds.com.

Vic Darvey, general manager of holidayandmore strongly disagreed with those traditionalists who think that dynamic packaging is just a new name for tailor-made tour operating. His belief is that total component flexibility is key to the success of a dynamic packaging operation. He criticised traditional tour operators for their product-centric approach which results in long contract-to-sell cycle times, poor potential for manoeuvring prices, fixed costs that are too high and legacy systems that do not support new business models.

He contrasted this with a dynamic packaging operation that puts the customer at the centre, assembling together packages that the customer actually wants, dynamically pricing these in response to current market conditions and all with lower fixed costs as a result of reduced or nil inventory commitments.

Both Paul Evans and Steve Endacott talked about their long experience within traditional tour operating and how they have seen the unsustainability of these businesses in the face of structural changes to the travel industry. Paul Evans illustrated the changes that are taking place with the statistics that about three quarters of UK holidays booked via the four vertically integrated travel groups in 1999 but this has now dropped to under half.

Steve Endacott, like several other speakers, stressed the importance of net pricing. Like so many of the speakers, he firmly believes that the savvy travel agent can use dynamic packaging to under-cut traditional tour operator package prices whilst still earning the agent a higher margin.

In conclusion, all speakers at the conference agreed that dynamic packaging is here to stay and will take an increasing share of the market. Agents can get on the bandwagon by investing in the complex technology needed, joining a consortium such as Advantage or making use of the new dynamic packagers such as lowcostbeds.com, HolidayBrokers.co.uk or holidayandmore.

Quite where this leaves the traditional tour operators is open to debate. Certainly, the word “dinosaurs” could be heard on the lips of several conference delegates and speakers.

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