I was reminded of these two stories during my meeting at PhoCusWright with Tina Fitch the President and CEO of EzRez. As you probably know EzRez is a provider of web based reservation and distribution services. This includes a mechanism for allowing travel distribution companies (including suppliers) to build multi-product (air, land etc) engines with cross sell and packaging. Effectively allowing a supplier/airline to look like an OTA.
This took me back to my earlier posts because in them I proposed three things that an online supplier (namely airline) should do to increase their online presence. I have updated this list from the earlier post. Here are my three recommendations to an airline:
- Cross Sell Complementary Product - Properly: Advising an airline to sell complementary land product is the easy part. The twist in this advice is they should not do it through through a simple white label and link on the home page that says "book hotels". It is another mistake to simply to bring online the offline holiday or vacation division of the airline (like what Qantas have tried with what used to be known as ReadyRooms). Instead they need to invest in being a true online hotel (land) business. One that lives by the principles and processes that have made the hotel only players successful - hotel flexibility in rates and availability, product focus and online product managers living and breathing their channel. Leaving it to the holiday division means that the hotel contracting style and results mirrors the less flexible world of wholesale. This does not produce the inventory and pricing you need to beat the hotel only players. Just as important you need to match the big OTAs in putting cross sell in the purchase path through both dynamic packaging and shopping basket style. Both of these things mean investing seriously in the complementary product. It will likely involve a third party inventory provider but for maximum effectiveness needs more than a link to a white label;
- Give Customer rewards and enticements beyond price: Web only deals and lots of them drove customers to Airline websites but with the OTAs and meta-search now using API connections and screen-scraping to provide customers with the same inventory, the airlines need to expand their offering to customers. They should use content, loyalty concepts/miles, customer service and bonuses (all the stuff that OTAs do) to open up another front in retaining customers. I talked about this in relation to how BA brought their Highlife magazine online. When using content to retain consumers, Airlines should seek to drive loyalty through building community, building brand and linking all elements to the customer experience not just to drive traffic and generate advertising revenue ; and
- Apply focused channel management and structure: Stop treating the online channel as...well...just another channel. Make it a separate business in itself. Put the person in charge, truly in charge such that they never have to enter into a debate over cannibalisation of other channels. Turn the site into a business that is independent of the airline's other sales activities.
I see a very interesting battle emerging between companies like EzRez approaching this market from the SaaS angle, the OTAs with customisable white label solution and now XML feeds and black box connectivity style companies such as TopDog. The winner will determined by whether or not players like EzRez can keep up with the technology strength of the OTAs (with their deeper pockets and larger technology teams) and can stay ahead with interoperability capabilities ( I have also mentioned these challenges before).
Gift Disclosure Tina was kind enough to give me a t-shirt during our interview.