Selling ancillaries such as travel insurance, airport lounge access or car hire is a great way to boost business and commission. Travel Daily spoke to a leader in the ancillary provider market to see what the market is like and what is in store.
How has business been for Holiday Extras in the last year?
Business has been going well, Holiday Extras is growing 10% all year since January. The Olympics has construed the numbers, but we are on track for double digit growth this year. We definitely powered through July and August strongly and did not see any of the dip that was reported by some travel agents. It has been a strong year overall but we have been working hard to make sure it is in the right direction.
What are the factors to your success?
There are lots of factors such as our prices, partnerships and the better booking process. The list is long and not down to one thing. As a company we are trying hard to have an attachment to as many holidays as possible and want to make sure we are in the customers’ mind when they book a holiday. At the moment I would say we are part of 20-30% of the millions of holidays that British people take each year.
How have you adapted processes for the trade recently?
We have changed the way we work with partnerships so now we ask them for a copy of the reservation and we do the rest for them. This proposition is a lot easier as the agent does not need to think about everything behind it; we are the expert and take care of what the customer wants.
Which products and channels are performing the best?
All our products are doing well. More people are attaching lounge access to their booking or pre-reserving dinner and breakfast in their hotels. We do huge volumes and can have up to 15,000 bookings a day. Our bookings come in a third from trade, a third direct and a third from airlines.
The airline business is increasing the most, while the travel agent business is not rising as strong but is still growing. Our direct business should be doing better but competition is tough and the airline business impacts us, although as we build partnerships in that area we are able to capture that business too. We do not want to be left fighting for customers.
What are the main challenges that the business faces?
There are definitely supply constraints with hotels at airports but more are being built. When concerts or major events take place and city centre hotels get full this means those trickle into the airport hotel rooms and it pushes up the price for people going on holiday. It makes a difference to our business if these are full or our customers have to pay more just because Robbie Williams or the Edinburgh Fringe Festival is in town. So we’d like to see more hotel supply around airports and some of the global chains are building them up.
Our other challenge is awareness and people knowing that these products are available. We do not just have insurance and lounges either but foreign exchange cards and SIM cards to use overseas. I am still surprised when customers book a hotel room and they decline the offer for airport parking although they say they are driving by car. When we call them nearer the time they say yes, when they could have earlier. It’s a constant battle and we always need to beat the drum about it.
Could this explain why lots of British holidaymakers do not take out travel insurance?
Anecdotally, most people only think about insurance and other add-on products at the last minute. There is a lot to remember when you book a holiday and it is just human nature to only think of some elements at the last minute. Both us and travel agents have to continue reminding customers during the booking process that these options are available.
There is also the usual problem with ancillaries that the attachment rate can get higher as agents add more things on and it makes a holiday cost more, but most customers realise later down the line that they need something like an airport car park or insurance anyway. It’s up to us to make these as easy to sell as possible and people are getting more savvy to the products available.
Do you have any cruise products and what has the response to these been like?
Yes and the cruise products have been popular so far; more than I thought they would be. It is a pretty bespoke product that has solved some very particular elements of cruise cover. We have an insurance product for cruises and we are seeing more people departing from UK ports. Recently we have added a few Southampton products but there are definitely more people going from all UK ports.
Do you have plans to add more products in the next few years?
Definitely, we believe the UK travel business is going to flatline in the next three to five years so our entire focus is going to building the basket and maintaining market share. We will add more products in the destinations themselves and leading up to this all there will be developments in our mobile offering to make it easier to book.
What other developments have there been at the company?
There has been a focus on developing the content and multi-media on our website which we use in our training with travel agents too. Our team has literally jumped on the hotel beds; driven through car parks and eaten the meals to test the products and we now have videos and testimonials on our website so that customers can see that.
At our headquarters we now have a space where experts can come in and present to our staff, or where they can learn a new skill. This is mainly to motivate our junior workforce and we bring in people from companies like Innocent to show them how business can be done.
Our main influence has been Dale Kelley who is the ex-COO of lastminute.com and has helped enormously in the last five years in terms of the direction we are heading. Our entire business has been designed on a new platform that includes the call centre, website, finance, database and all other aspects of the business.
My background is in technology and at Holiday Extras this part is pretty exciting as we have effectively moved from a travel company to a technology company that works in the travel arena.