Switzerland, Germany and Britain are all saying that customers  want more immersive, individualised experiences, and are stepping up efforts to help tour operators and travel agencies cater to the new desire. By Raini Hamdi, Prudence Lui and S Puvaneswary

Swiss’ grand hopes
By Raini Hamdi

Switzerland Tourism’s latest effort to encourage overseas visitors to do a grand tour of the country (TTG Asia e-Daily, August 18) comes at a time when Swiss hotels – still suffering declining or stagnating arrivals from traditional sources – are keen to attract new markets. At the same time, Asia, especially the drivers China and South-east Asia, seem hungry for new products and destinations, according to Switzerland Tourism’s director global accounts and director Asia-Pacific, Simon Bosshart, who is urging the trade to respond with “new and deeper products in order to satisfy the customer demand”.

The Grand Tour of Switzerland, which the NTO has mapped, is launched to attract higher-spending FITs, get them to stay longer, spread demand to lesser-known destinations such as Valais, Ticino or eastern Switzerland, as well as spread the season, said executive vice president markets & meetings, Urs Eberhard. Traditionally, the winter season is peak; markets such as Asia can help fill the gap hotels suffer in summer.

The whole route covers 1,600km and is designed to make it convenient for the trade to promote self-drive or train journeys, not just through the entire tour but segments of it that fit clients’ duration or specific interests. With it, the trade can easily flesh out a tailored itinerary for clients, with rental car or Swiss train pass and hotel vouchers included, said Eberhard.

“We want to be the go-to destination for individuals seeking immersive experiences without worrying about safety issues or discomfort. Switzerland is easy to explore as it is well-connected. It may be small, but it has diverse attractions – no two places are alike. Visitors can have a safe, hassle-free and comfortable experience,” he said.

Swiss hotels in areas that are relatively new to Asians are starting to see the market’s appearance and are hoping to get more of these visitors.

Asia is “bubbling”, said Pierre Berclaz, general manager of the luxury wellness hotel, Les Sources des Alpes, in Leukerbad, the largest thermal spa resort destination in Valais boasting no fewer than 65 natural hot springs. “Leukerbad is synonymous with health, not just wellness, a place where you can have a rejuvenating holiday yearround in all sense of the word,” said Berclaz.

Art Furrer, who pioneered tourism in Riederalp and now owns a string of hotels there, has been tapping Hong Kong and Chinese visitors for three years, and is now receiving Asians in both summer and winter. Furrer is glad for them, saying business has changed, with the traditional markets such as France, Italy and Germany being “no longer here” as a result of the strong Swiss franc and other issues. Riederalp, also in Valais, offers different attractions compared to Leukerbad or famous Zermatt. Said Furrer: “Zermatt has the Matterhorn; we have the Aletsch glacier.” The 23km long glacier with 27 billion tons of ice is the mightiest glacier in the Alps and is a UNESCO World Heritage site.

Over in Arosa, in the canton of Graubunden in eastern Switzerland, the veritable Tschuggen Grand Hotel is also seeing more Asian tourists. The hotel used to operate only in winter but massive investment in the property in the past seven years (see article below), which include a CHF35 million  (US$38 million) spa designed by Mario Botta, a CHF7.5 million private mountain railway for guests and a luxurious renovation of rooms and suites, has propelled the hotel to woo the summer business since 2008. The hotel is now open from July to April each year.

Said general manager Leo Maissen: “Since the investments, we have brought down the age of our clientele by 17 years to an average of 42 years old. Our clients are also more international now, with 50 per cent being Swiss and the rest from Germany, Benelux, England and Russia. New markets include China and Japan, especially during summer, and Brazil in winter.”

He added: “The Chinese visitors come for the spa as Mario Botta has done several work in China.”

A new cable car linking Arosa with Lenzerheide, home to Roger Federer’s new family chalet complex, triples the slopes for skiers to some 225km and opens more trails for walkers and hikers. “The coming winter is the first season when we’ll see the real impact from this. We are confident this will attract new clients to Arosa,” said Maissen.

Eventful Germany
By Prudence Lui

Germany is banking on several theme events, including the 25th anniversary of the fall of the Berlin Wall this November 9, to further boost international arrivals.

In Berlin, a major highlight of the anniversary of German reunification will be a 12km light installation using thousands of illuminated white balloons running along the former course of the Berlin Wall through the city centre on the November 9 weekend, said Visit Berlin director of market management, Ralf Ostendorf.

A GPS-guided walking tour on the trail of the Berlin Wall, guided or self-guided bicycle tours on the Wall path, visits to former watch towers, Wall memorials or the GDR Museum and a drive into the east of the city in an original GDR Trabant car, are among immersive events clients could enjoy.

German National Tourist Board has also unveiled Beyond the Cities – Holidays in the German Countryside and Scenic Routes of Germany themes for 2015, and Holidays in the Heart of Nature for 2016.

Asian agency CEOs such as Beijing Bejoy International Travel Service general manager, Du Hai, welcome any move that focuses on German history, culture and heritage.

“Frankly, Germany can’t compete with the French beaches and Swiss mountains, however, its culture, particularly the UNESCO sites, make it stand out from the neighbours. That’s why I have focused on cultural tours for years as the Chinese have limited knowledge that there is much to offer in areas like north Germany,” said Du Hai.

Making it convenient for international visitors to explore picturesque small towns, Frankfurt Airport Services Worldwide has launched Riverside Romance tours, cooperating for the first time with partners DB Bahn and Eurotours Deutschland.

Senior manager Stefan Kopp said: “Sightseeing destinations are quite spread out around Germany, so our aim is to promote unforgettable and romantic experiences starting from Frankfurt Airport, by rail, car or partly by boat or bicycle. It’s bookable from tour operators and we target agencies that do tailormade products.”

There are already plans to extend the tours and provide information in Mandarin. “The potential from Hong Kong and China is unbelievable as I observe more travellers from Shanghai and Beijing (30-35 years old) who speak perfect English and like individualised tours. They want to be free, for instance, to bike along the River Rhine. We hope to tap repeat visitors and will hold four roadshows in secondary Chinese cities next year. In June, China Southern Airlines inaugurated Guangzhou-Changsha-Frankfurt services,” said Kopp.

Visa rules for Chinese tourists have been further relaxed, with interviews no longer required.

Arrivals from Asia to Germany rose 6.8 per cent last year over 2012, with China/Hong Kong being the highest potential market with 870,748 arrivals, from 757,290 in 2012.

Britain steps up training and support
By S Puvaneswary

VisitBritain has taken training to the next level in Asia-Pacific, tailormaking its BritAgent programme to specific niches including shopping, heritage, music, sports, culture, countryside and food.

“Travellers are maturing and becoming very sophisticated, even in emerging markets. Thus, it is important to educate agencies to go beyond the generic multi-tours into specific offerings,” said VisitBritain’s regional general manager, Asia-Pacific and the Middle East, Sumathi Ramanathan (above).

The NTO has also been identifiying strategic partners since 2013 for jointly funded advertising and promotional campaigns in key markets such as Australia, India, China and Japan. These pacts are a step-up from previous tactical campaigns as they involve proper planning and commitment to build up a market over a three-year period, and include the sharing of databases and hosting of fam trips for media and travel consultants.

Among partners VisitBritain is working with thus far are Cox & Kings and Mercury Travels, India; CITS and Caissa Travel, China; and STA Travel, Australia.

VisitBritain’s travel trade website has also been revamped. The trade can now search for suppliers in the UK for specific products and services. Agencies also have a toolkit comprising sales collaterals, itineraries, images and posters for downloading.

Yuva Arumugam, sales manager-emerging markets, Apex Hotels UK, said Chinese guests to the group’s eight properties in the UK are growing in numbers and, to cater to this market, the hotels have welcome letters written in Mandarin. Agencies with clients who have special requirements or require halal food can also be catered for, if these needs are made known in advance.

Michael Bremner, managing director of Edinburgh-based Highland Experience Tours, said business from the Indian market has grown and his tours cater for Indian vegetarians. “Now we want to create halal tours to tap the Middle East and South-east Asian markets,” he said.

Tourists from Asia-Pacific, Middle East and South Africa (APMEA) to the UK rose seven per cent last year from 2012 to a record 4.3 million visits.

The top five APMEA markets in 2013 were Australia (1.1 million visitors, up 7.7 per cent); India (375,000, up 10.6 per cent); GCC (590,000, up 11.3 per cent); Japan (221,000, down 9.1 per cent); and China (196,000, up 9.7 per cent).

Ramanathan said APMEA is important for the UK as the visitors stay 12 to 16 nights.

This article was first published in TTG Asia, September 12, 2014 issue, on page 14. To read more, please view our digital edition or click here to subscribe

Airlines and airports are not shy to spend on technology. Raini Hamdi finds out why and how the investment will change the way passengers travel in the future

A media roundtable organised by SITA in Singapore recently painted a picture of future air travel that is, in one word, smart.

Imagine the day when a client, upon arrival at the airport, is whisked away by a service staff who has every relevant information about him literally on eye or hand through smart glasses, watches or phones.

Or when long and horrifying US immigration queues are a thing of the past, thanks to self-service immigration clearance kiosks.

Or when a client passing through the airport gets just the discount vouchers he needs popping up on his smartphone or tablet because ‘beacons’ installed around the airport track his whereabouts.

Or when arrival and departure information boards will be non-existent because beacon technology will prompt a client’s smartphone when he should board, at which gate and how long it takes to get to the gate.

All these technologies are being trialled today by airlines and airports. They will have implications for the travel trade which will be felt in time.

Airport IT spending has grown at a compounded annual growth rate (CAGR) of 12 per cent since 2010, despite airport revenues rising only 2.8 per cent CAGR over the same period, according to the latest Airport IT Trends Survey sponsored by SITA.

In 2013, airports were tipped to spend 5.4 per cent of their revenues on IT, up from 4.9 per cent in 2012 and 4.3 per cent in 2011. This equates an IT spend of US$6 billion by airports globally.

With the exception of Europe, where 35 per cent of airports expect a decrease in IT spend this year, in all other regions – North America, the Middle East and Asia-Pacific – their airports expect IT spend to remain stable or increase further this year. In Asia-Pacific, China airports’ IT spend is forecast to reach 5.9 per cent of revenues last year, well ahead of the global average and worth US$580 million in absolute dollar terms. It is expected to rise further this year.

Airlines are spending less on IT than airports, however, at 2.2 per cent of their total revenues this year (source: the latest SITA-sponsored Airline IT Trends Survey), but that still is a massive amount.

SITA’s record revenue of US$1.63 billion last year only attests to IT spending by airlines and airports. This was on the back of a record US$2.2 billion in contracts, more than half of which was new business. SITA, 100 per cent owned by the air transport community, operates on a commercial-cooperative model.

Why are airlines and airports prepared to invest in IT? According to Ilya Gutlin, SITA president Asia-Pacific, “for the last two years, customer experience came up as the number one reason for investment, not factors such as cost savings, security, etc”.

Reducing cost of operations comes second after improving passenger service as the aim airports hope to achieve from IT spending, the latest Airport IT Trends Survey shows.

Many airports in Asian countries, especially those in emerging markets, are being driven to spend on IT by extraordinary passenger growth. Indonesia, the biggest aviation market in South-east Asia, counted over 68 million passengers in 2013; the market is forecast to reach more than 300 million passengers by 2025.

This motivated Angkasa Pura I, which operates 13 airports across Eastern Indonesia, to deploy technology. In May, it awarded SITA the contract to install IT that allows any airline to use any agent desk, gate position or self-service kiosk for passenger check-in and bag drop, and to incorporate the electronic passenger service charge into the passenger flow monitoring system, which provides accurate revenue collection, faster check-in and passenger processing.

“We have set an aggressive timeline to deploy the technology in all our airports within a year. This will allow us to cater for the doubling of passenger numbers expected in Indonesia over the next five years,” said Tommy Soetomo, CEO, Angkasa Pura I, in a statement.

The rise of low-cost carriers (LCCs) in Asia is also fuelling IT spend in the region. In June, Kuala Lumpur’s new LCC terminal klia2 deployed technology that makes check-in and boarding simpler, and processes baggage efficiently, ensuring on-time departures, which is key for LCCs. Airlines such as AirAsia, Malindo Air, Cebu Pacific and Tigerair are already using the system.

For the last two years, customer experience came up as the number one reason for (IT) investment (by airports and airlines), not factors such as cost savings, security, etc.
Ilya Gutlin
President
SITA Asia-Pacific

What’s next

The next steps, according to Gutlin, would be wearable technology, beacon technology and more customer self-service technology.

Results of the wearable technology trials Virgin Atlantic and Copenhagen Airport did recently with SITA were promising, he said.

Virgin tried with two devices, Google Glass and Sony smartwatch, which were worn by its Upper Class staff to see if this could result in better customer experience.

“The main idea is to free staff from being behind a wall looking at passenger details,” said Gutlin. “But the problem it (Virgin) ran into with the Sony watch was, as the staff kept having to look at the watch for the details, it was as if they were sending the signal to the customer that they were bored by him. So the staff became uncomfortable using the watch or their smartphone (which was also trialled).

“With the Google Glass, it was the passengers who were a bit nervous; they were asking questions like, ‘What’s going on? Are you taking my picture? What are you seeing in there?’ But after a while, they got excited and asked, ‘Can I see what you are seeing in there?’ They became quite involved and got used to it within a short period of time.

“Virgin learnt that the glasses, though a bit geeky, were fairly comfortable to wear. The staff felt they enabled them to provide better service and there was a lot less paperwork along the way. But they also found the battery life was not great and the glasses needed to be recharged often.

“So whereas Virgin is not going to go with the Sony watch or the smartphone, it is still considering how it can roll out the Google Glass.”

With beacons, airlines can easily provide passengers with indoor directions, walk times to gates, lounge access and alerts about boarding, to name a few uses. iBeacon is a technology Apple introduced with iOS 7 that uses Bluetooth to trigger the display of location-relevant information on devices at the right time and situation.

A pilot project at Dallas/Fort Worth International Airport is the world’s biggest airport deployment of beacons to date, while SITA has launched a Common-use Beacon Registry, so that beacons are consistently deployed at all airports. “We’re still in a discovery phase on how this will work. We’re looking at this potentially as the breakthrough in improved customer service,” Gutlin said.

Self-service is also expected to rise. “People are a lot more comfortable using their smartphones and tablets, and self-service kiosks. As people get more comfortable with self-service, they prefer to deal with equipment rather than people,” Gutlin said.

According to the Airport IT Trends Survey, check-in kiosks will be an option at 98 per cent of airports by 2016. Existing kiosks are being upgraded to allow bag-tag printing, with more than four out of five airports offering the service by 2016.

Nine out of 10 airports will offer bag drop as well, with two-thirds offering unassisted bag drop by 2016. Self-boarding gates are being adopted at a similar pace.

Meanwhile, new self-service passport control kiosks at Miami International Airport are processing passengers in less than two minutes. The kiosks scan a passenger’s passport, collect flight information and declaration data, take a photo and give the passenger a receipt to present to an agent on the way out.

Currently for US passport holders and returning Canadian passport holders entering the US, the kiosks will be extended to nationals of visa-waiver countries, including self-service fingerprint capture, in the second phase.

This article was first published in TTG Asia, September 12, 2014 issue, on page 5. To read more, please view our digital edition or click here to subscribe

When is development stumbling? Bali debates the way forward as it balances the desires of hotel investors against the threat to its nature and culture

Hotel developments in Bali are  continuing unabated despite escalating land and construction costs, causing concern among industry members that Brand Bali may lose its identity.

Speaking at the Indonesia Hotel Investment Conference held in Bali in June, Indonesia Hotel and Restaurant Association chairman, Yanti Sukamdani, said: “There are 67 hotel projects in Bali until 2016. I don’t know where these hotels are going to be built, and we have no more rice fields.”

This year, the number of hotel rooms in Bali is expected to hit 34,226, compared with 30,100 in 2013 and 22,000 in 2011.

“When we build more hotels, we also need more supply of water, electricity and food, things that tourism stakeholders need to consider,” said Yanti.

Not excessive, but wrongly placed
Bali has been portrayed as paradise with its rice terraces and rich culture and tradition, but there are fears it will become an urban island like Waikiki or Phuket.

Accor Indonesia-Malaysia vice president for development, Rio Kondo, said: “The interest in building hotels is mind boggling. I have received requests for hotels in the oddest places, with investors deciding to go ahead with the location despite my advice against it.

“So the problem is not necessarily overdevelopment but development in the wrong places. Of the 67 hotels coming up probably half are not feasible…Those building  hotels in a mature market like Bali have to be careful.”

Some companies are already exercising caution. Ciputra Property, for instance, has a massive 80ha luxury resort and residential project in Tabanan. General manager for business development, Agustono Effendy, said: “Land prices in south Bali are very high, so we are looking for new areas. We believe developments will shift from Kuta to Seminyak, Canggu and Tabanan.”

Echoing these sentiments, Rio added: “There has been too much development in the south, but there are opportunities to grow in the east, north or west. However, infrastructure is the issue.”

A ring road around Bali is needed to spread developments out to other areas, he suggested.

Beyond Bali, Lombok has also been singled out as an alternative, but development there is still nascent.

Agustono said: “Although it is hard to find a big space in expensive Bali, it is still the best bet for us. Lombok has potential,  but will take time to develop.”

Panorama Group group CEO, Budi Tirtawisata, added: “Many investors are eyeing Lombok, but everyone seems to be waiting for someone else to kick off something before considering entrance.”

To restrict or not
With land being costly in Bali, investors have called on the government to relook the regulation that requires buildings not to exceed the height of a coconut tree (up to four or five storeys high).

Rio opined: “It is a very controversial issue….From my discussion with some people, maybe what (the authority should do is) just designate an area where high-rise buildings are allowed.”

However, Budi said allowing high-rise buildings would not help but “would only push prices higher as the interest to build will also increase”.

Still some like Douglas Wallace, general manager of Gending Kendis Luxury Villas & Spa Estate, felt that retaining the current regulation would keep Bali’s character.

“I have a picture of Kuta Beach I took 30 years ago, and although developments have taken place, the view over Legian and Seminyak is pretty much the same because of the restriction on building heights.”

Ida Bagus Ngurah Wijaya, chairman of Indonesian Tourism Industry Association (GIPI) Bali Chapter, said: “Bali’s assets are its people, culture and tradition. Some 80 per cent of the people’s income is from tourism, so Bali cannot be developed the same way as other destinations in Indonesia. Bali without its culture is another Singapore.

“We have seen the Balinese culture diluting in the overdeveloped Badung area (in south Bali). Performances, shows and attractions in the area are dominated by non-Balinese ones.”

Ngurah explained that while the locals were not against development, they did not want development to outpace capacity. As such, high land prices as well as more stringent government regulations and licensing should be the way to go.

Regional cooperation needed
Although Bali’s governor had issued in 2010 a moratorium on principal licences for tourism accommodation in Badung and Gianyar regencies as well as Denpasar municipality, the concept of regional autonomy has placed property development licensing in the hands of the regency and municipality governments.

Ngurah said: “So at the end of the day, it is up to the regencies to decide if and when they should stop issuing licences for hotel development.”

GIPI Bali Chapter, which was established to become the government’s think-tank as stipulated by the Tourism Law, has repeatedly called for the regional government to impose a moratorium on hotel development, Ngurah said, adding that the other problem is that Bali does not have a development masterplan.

“The provincial government has made a draft masterplan, but it needs the approval of all the regencies and municipalities before implementation. The governor needs to lobby the regencies to get the masterplan going.”

In his keynote address at the Indonesia Hotel Investment Conference, former minister of culture and tourism, I Gede Ardika, reminded the industry to consider Bali’s carrying capacity and unique characteristics as a destination.

Ardika, a Balinese who is also a member of the UNWTO committee on Global Code of Ethics for Tourism, said: “The approach that we have adopted so far is unlimited or open-ended development. This is one of the reasons why the world faces global warming. Development with no limitation creates overexploitation of resources.”

He urged that development should be based on what the destination needs and not what the industry wants, pointing out that it is the way of life, nature and culture that make Bali what it is and why travellers keep coming back.

Look ahead, not backward
The urbanisation of Bali is an inevitable direction for the destination, according to Bill Barnett, managing director of C9 Hotelworks, highlighting that the changes that Bali faces have also been occuring across Asia since the global economic crisis in 2008.

“The global financial crisis turned the tables. In the past, we looked to the West, people coming from longhaul destinations,” he said. However, the burgeoning economy in Asia and the surge of low-cost carriers have given rise to more intra-regional travel, changing the game.
“Airlift is a major driver, redefining our destination…Bali and the rest of Asia are dealing with entirely new dynamics.

“What is important for Asians is not the beaches. They are not like the Europeans,  who spend one or two weeks on the beach. (With Asians), it’s about retail, about spending money, about tourist attractions; they are also multi-generation travellers.

“So the new Bali is going to look at these new markets and adjust accordingly. It’s not going to go back to the old days which aren’t going to be back,” Barnett quipped.

To that end, urbanisation is not necessarily always a bad idea. “I have heard people saying Bali is overbuilt, but the culture is still here. I have been visiting this place for the last 30 years and (its attractions) are not only the beaches and idyllic locations, but the people. All these continue to exist,” he said.

Alexander Jovanovic, general manager of The Trans Luxury Hotel Bandung, whose owner CT Corp is developing another property – the five-star Trans Resort Seminyak, added: “At Sunset Road, the land price has increased 10 times in the last five years.

“(But) Indonesia has a growing economy and middle class. Young Indonesians are looking for something different and experiential. We should not forget that they are the ones we will be serving in the future.”

This article was first published in TTG Asia, September 12, 2014 issue, on page 6. To read more, please view our digital edition or click here to subscribe.

With more legacy airlines unbundling their products and LCCs distributing through B2B, booking of ancillaries through the GDS has become more seamless

How different are ancillaries booked on LCCs vs full-service carriers (FSCs)?
Today, most FSCs are just selling baggage and pre-reserved seats, while LCCs offer the full suite like meals, comfort kits, in-flight entertainment and early boarding. The main difference is fulfilment. For FSCs, the issuance of EMD-A is needed by the agencies for fulfilment. EMD-A is clearly not needed for the LCCs.

Why have airlines been slow in making ancillaries available to agencies?
For FSCs, unbundling to itemise ancillaries and charge for them separately is retrospective, and so, much more costly and involved. In many respects, their response has therefore been pretty fast.

The defence from some quarters is that Asians like all-in packages and that ancillary strategy and full-service brand strategy don’t mix: in a recent poll we conducted with Asia-Pacific carriers, almost eight in 10 still experience resistance

from travellers in paying for services that used to be included in the fare. Asian carriers are also hesitant as they don’t see a net revenue gain on ancillaries yet, once the operational adjustments have been costed in.

But ancillaries are now gaining momentum, given the strong competition from LCCs with their more flexible fare structures; ancillary-friendly industry standards being developed by ATPCO and IATA; GDSs’ ability to support the ancillary-friendly industry standards via evolving technology as well as sale of ancillaries via XML connectivity; and ease of fulfilment of ancillary sales via EMDs.

Around half the LCCs based in Asia-Pacific are now integrated with Abacus to access the B2B channel for ancillaries.

Why have agencies been slow in booking ancillaries through the GDS?
They have not been slow. They are responding to customer demand for ancillaries and are providing them as a value-add to their offering, within the ancillary provision of the GDS. They are selling these ancillaries without any incentive or commission from the carriers.

Where we need to move faster, however, is in integrating the ancillaries into the more complex workflows, as with the managed travellers gaining pre-ticket approval and then adding ancillaries post-ticketing. We are working on it.

The alternative for some full-service airlines – the introduction of premium economy class, has gained immediate traction. Currently, up to seven per cent of Abacus bookings are premium economy.

How are you encouraging bookings?
With Abacus Air Extras, ancillary options are visible to agencies during the shopping and pricing workflow. Agencies are able to offer the specific product attributes customers want using Abacus point-of-sale technology, without having to check other sources like the airline’s website. The graphical interface allows easy sale of excess baggage, pre-reserved seats, lounge access, Wi-Fi and more. These ancillaries can then be fulfilled easily with the Abacus EMD-A document.

Many carriers have chosen to bundle ancillaries into fare families, presenting them to Abacus agencies as branded fares. It’s a tactical marketing tool for the
carriers to compete more effectively. Travellers are given more packages to choose from, priced accordingly. Our research shows that the majority of carriers are choosing to package ancillaries rather than present them in an à la carte menu, so branded fares have their place.

How many airlines do you have selling ancillaries?
So far, we are working with nine carriers on Abacus Air Extras, with many more offering fare families.

What is the most-booked ancillary by agencies?
Pre-reserved seats.

What is the most profitable ancillary for agencies?
Agencies are not making any profit from ancillary products at present. There’s no commission given by the carriers for ancillary sales. In one respect, they are profiting from the confusion among consumers over what is included or excluded online. Travellers are more inclined to use a travel consultant when it begins to look complicated and they want advice.

How can agencies make money from ancillaries?
Either add a mark-up or service fee.

How different are ancillaries booked on LCCs vs full-service carriers (FSCs)?
LCCs have been ‘creative practitioners’ of the ancillary revenue art, while FSCs are still catching up.
LCCs typically rely upon a mix of à la carte fees to generate good levels of ancillary revenue. FSCs’ ancillary activity, on the other hand, may consist of fees associated with excess or heavy baggage, and limited partner activity for frequent flier progammes.
However, we have also noticed that FSCs are also moving towards adopting à la carte fees. All Nippon Airways, for example, is testing the sale of upgrading meals to economy class passengers on longhaul routes.

Why have airlines been slow in making ancillaries available to agencies?
Airlines are facing some of the most challenging times in the history of aviation. With increasing fuel prices, cut-throat competition and rising traveller expectations, airlines are looking to opportunities like ancillary services to drive new revenue.

Travellers’ appetite for ancillary services is growing as well. The IATA’s 2013 Global Passenger Survey found that nearly half (48 per cent) of passengers bought ancillary products in the last 12 months, compared to 34 per cent in 2012.  In the beginning, ancillaries were primarily offered via an airline.com website, but today, airline sales strategies have evolved to include B2B channels like the GDS. Technology advancement has been crucial to enable the successful sale of ancillary services via a B2B channel.

Why have agencies been slow in booking ancillaries through the GDS?
Ease of booking, system reliability, cost efficiency and content aggregation are top concerns for travel agencies. Historically, booking ancillary services could mean learning new commands, more time investment without necessarily any financial gains.

However, as travellers today expect a more personalised service, travel agencies must be able to advise quickly and efficiently while being able to book a completely customisable ticket. This often means being able to offer clear value-added services from the airline, such as extra leg room, advanced seat selection or a comfort kit, and depending on the travel agency’s preference, being able to charge for this value-added service via service fees.

How are you encouraging bookings?
Amadeus believes that the ability to advise and book a completely personalised  fare allows travel consultants to deliver far greater value to their customers. Our role is to make this process as seamless as possible.

The Amadeus Selling Platform is a fully integrated solution that completely incorporates ancillary services into the booking flow, ensuring that the booking and pricing of ancillary services is as simple as booking airfares.

Additionally, we are also integrating ancillary services into Amadeus Web Services and our online corporate travel booking tool, AeTM, to enable ancillary sales via the online travel agency channel. We have also invested heavily to evolve our solutions to ensure they are built in the same way that travel agencies think.

How many airlines do you have selling ancillaries?
To date, 56 airlines are using Amadeus to power their ancillary service sales, including Tigerair, Qantas and AirAsia, with 25 already selling ancillaries across 108 markets.

What is the most-booked ancillary by agencies?
Advanced seat selection. This is largely because airlines have not only started to unbundle seat reservations from their lowest booking fare, but also because travellers have come to appreciate seat reservation as an ancillary option.

How can agencies make money from ancillaries?
Travel agencies will be able to provide an enhanced level of customer service through the personalised ancillary offering – differentiating them in a highly competitive travel landscape while also providing them with an opportunity to enhance their service fee strategy.

How different are ancillaries booked on LCCs vs full-service carriers (FSCs)?
Traditionally, LCCs have opted for a more unbundled product offering and hence, ancillaries are booked more often and played a bigger part in an LCC revenue stream.

However, we are now seeing hybrid and FSCs unbundling their ancillary products. An example are those airlines that distribute fares on industry standard (like ATPCO) while distributing ancillaries via a more flexible direct API connect.

Why have airlines been slow in making their ancillaries available to agencies?
Airlines have been slow due to the lack of flexibility in distributing ancillaries. Previously, airlines were limited to distributing ancillaries through industry standard such as ATPCO.
According to a study by SITA, 87 per cent of airline ancillary revenues come from direct channels although indirect channels account for nearly half of the ticket sales. This presents great opportunity for the airline to capture additional ancillary revenue by making their offering more available through the B2B channel.

This is changing with the Travelport Merchandising Platform, which enables airlines to distribute and differentiate all of their content and products via the agency channel, connecting to Travelport exactly how they choose to – whether it be industry standard, direct API connect, or a hybrid of both.

Why have agencies been slow in booking ancillaries through the GDS?
Traditionally, agencies have to go outside of their normal booking flow to the airline’s website to book ancillaries for their customers. Not only is this extra process time-consuming, it also makes the accounting, payment and fulfilment process more complicated.

However, this does not mean that agencies don’t want to sell ancillaries. In a series of interviews conducted by Travelport in November 2012 with 33 global corporations – 88 per cent of agencies want to offer baggage allowance, 87 per cent want to offer seat upgrades.

This has again changed with Travelport Merchandising Platform, which enables agencies to fully understand and compare products and offers from those airlines within the agencies’ existing desktop environment.

How are you encouraging bookings?
Travelport Merchandising Platform has three core components, which are accessible from our Smartpoint desktop:

• Travelport Aggregated Shopping – aggregates LCC content alongside those of traditional carriers, all on the same screen.
• Travelport Ancillary Services – allows agencies to sell airline ancillaries or ‘optional extras’, such as lounge passes, seats and bags, within their existing workflow rather than via an airline website.
• Travelport Rich Content – enables airlines to fully differentiate themselves with graphical content and product descriptions to help agencies become more informed about their offering to increase upsell and cross-sell opportunities. This component is currently in alpha testing.

How many airlines do you have selling ancillaries?
FSCs like Air Canada, KLM, Qantas, Air France, Alitalia, Air New Zealand, Aegean and Air Berlin, as well as LCCs like EasyJet, Jet2.com, Transavia.com, Tigerair and AirAsia.

What is the most-booked ancillary by agencies?
Checked baggage and seats with extra leg room.

What is the most profitable ancillary for agencies?
The key is not to focus on ancillary profit, but the overall service they can offer to customers, who expect a one-stop-shop from the agencies.

To be profitable, agencies need to satisfy the increasing demands of today’s consumers within the same workflow; upsell through easy access to detailed product and fare information; and improve customer loyalty.

How can agencies make money from ancillaries?
By providing a high-value service. The opportunity always exists for mark-ups for value-added services. Some airlines do pay commission on ancillaries.

Travel agencies weigh in…

Additional reporting from Paige Lee Pei Qi and Kathy Neo

This article was first published in TTG Asia, September 12, 2014 issue, on page 18. To read more, please view our digital edition or click here to subscribe.