Think about the idea of ordering food at a restaurant. Diners usually have two options: full meals with
side dishes or a la carte, whereby customers can order individual items to create their own meal. Most restaurants offer both to increase the flexibility of their menu offerings and provide diners with the most options possible. This menu structure also allows restaurants to leverage more of their inventory of ingredients for overall sales, as well as create different pricing structures based on the availability and seasonality of ingredients like fruits and vegetables.
The same concept is true in today’s travel industry when it comes to how travel companies position ancillary services in a B2B platform and more widespread distribution network. Ancillary services can mean a variety of things such as meal supplements, city tours, spa and wellness services, entertainment opportunities, and other guided or curated activities. Just like how restaurants deploy different price points to sell items on the menu versus a la carte, travel companies have a variety of strategies to help facilitate these ancillary services and position them to customers at the right time to optimize overall bookings.
To better understand the importance of this kind of services in today’s travel industry, we must first clearly define the concept with all its associated elements, and secondly examine some of the benefits this model has for travel companies and travelers alike.
Ancillary services defined
For suppliers and travel companies in today’s complex, global landscape, ancillary services mean the ultimate in flexibility from both a supplier and customer standpoint. Working with suppliers to select which ancillary services have the most value to customers, travel companies can optimize selling to include selected services during certain periods at certain rates based on a number of restrictions and variables. These rates can be managed and altered based on popularity, availability, season, and other elements that dictate how well certain services are received by customers. And as we previously mentioned, these services can include a number of products and services ranging from guided tours to spa and wellness services, but they can also include more fundamental bookings such as hotel rooms, transportation, and dining.
The importance of how these ancillary services and accommodations are positioned stems from the flexibility in which suppliers and travel companies can offer them. These services can be offered to certain customer segments at certain times and other customer pools at different times. These services can also be mandatory during certain peak periods and optional during others.
For example, a hotel can offer services sold either as optional or mandatory. During peak season, a hotel can make certain ancillary services mandatory with all bookings, whereas the same services can be optional during the slow season due to lack of demand or an increase in availability. Where the ancillary services may be built into the overall room rate during the peak season, these services can be sold at a lower rate during the slow season.
Once again, like with dining at a restaurant, the ability of a hotel to modify pricing structures and the inclusive nature of ancillary services provides increased flexibility and agility in the kinds of products and services available to customers.
Benefits of ancillary services fro Tour Operators
As we’ve already seen, the prime benefit for suppliers and travel companies with ancillary services is the flexibility and agility provided by varying the inclusive nature and pricing structure with these services. But ancillary services and accommodations also provide suppliers and travel companies with a number of other benefits, such as:
Enhanced understanding of customer behavior. The ability to manage and monitor the pricing and availability of ancillary services during certain peak and slow periods can provide suppliers and travel companies with a greater understanding of customer needs and buying behaviors. Tracking how well services sell during specified time periods can help suppliers better strategize for the future by providing a de facto model for short and mid-term planning.
Flexibility in services offered. Simply put, some products and services don’t sell as well during certain seasons or time periods - outdoor activities during colder season, or indoor activities during warmer months. An ancillary services platform allows suppliers to account for these seasonal shifts by providing the flexibility in pricing and whether services are mandatory or optional. This flexibility means suppliers are not tied to a certain roster of products or services during specific periods.
Greater responsiveness to external factors. Perhaps more than any other industry, the travel industry is prone to cancellations, delays, bottlenecks, or breakdowns far outside the control of suppliers and travel companies. Weather, regional instability, and other elements all play a factor in what services a supplier can offer, how, and at what rate. An ancillary service platform provides suppliers and travel companies the agility necessary to respond to unforeseen complications in the travel industry to maintain customer satisfaction and retention.
