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The Travel Marketing Digest
30th July 2012 - Volume 1, issue 2 |
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IN THIS ISSUE
Dear Industry Colleagues and Friends,
We received positive feedback from our first issue so please keep your comments coming.
In this issue we cover:
- The DOT fining Travelocity for fare misreprestantation
- An Amadeus report into airline ancillary revenues
- Exedia doing well on the back of online hotel sales
- Trip Advisor's social media strategy in question
- Farelogix's new merchandising solutions group
Best regards,
Duncan Alexander
Director
The Travel Marketing Store
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Travelocity face DOT fine of $180K for fare misrepresentation:
NBC, TTMS comments
Regulators have fined Travelocity alleging the online travel agency failed to show consumers the full price of some fares displayed on its website.
The Department of Transportation stated that an investigation in September 2011 found that Travelocity's "flexible dates tool" did not always include fuel surcharges that were part of many international airfares.
Also, full prices were only found on the final page before purchasing some itineraries.
At the time of the alleged violation, the only extra costs airlines or agents were allowed to leave out were government taxes and fees. In January, the Department implemented a new rule requiring these to also be displayed.
The online travel agency faces a fine of $180K. This action will undoubtedly have all online travel retailers reviewing their sites to ensure compliance. |
Amadeus report on the evolution of Airline Ancillary Revenue:
review by Michèle McDonald, Travel Market Report 
In a recent Amadeus report researched by IdeaWorksCompany Airlines' ancillary revenue grew to $22.6 billion in 2011, up from $21.46 billion the previous year.
IdeaWorks' definition of ancillary revenue includes the revenue airlines receive from financial institutions in exchange for frequent flyer miles, which represents a huge chunk of the total. The U.S. Department of Transportation, on the other hand, currently collects only data on baggage fee and change fee revenue. It has proposed collecting additional information, such as seat selection and travel insurance revenue.
By IdeaWorks' definition, United, Delta and American occupied the Top 3 spots in ancillary earnings in 2011, as they did in 2010.
United's ancillary revenues totaled $5.17 billion, up from $5 billion; Delta, $2.53 billion, down from $3.7 billion, due to a change in how it discloses revenue results; American, $2.11 billion, up from $1.95 billion.
Southwest made the Top 10 for the first time, occupying the No. 5 spot, despite not charging checked-bag fees. Southwest's ancillary revenues come from EarlyBird check-in, which allows passengers to check in automatically 12 hours before general check-in begins, improving the chances of getting a coveted "A" boarding position; from Business Select, whose package of services includes priority security screening, early boarding and a free drink, and from its revamped Rapid Rewards programme.
Low-cost carriers score the highest when it comes to ancillary revenue as a percentage of total revenue.
Spirit Airlines, which introduced the overhead bin fee to the U.S. market in August 2010, bumped Allegiant out of the No. 1 spot on that list, with 33.2%. Jet2.com, based in Leeds, U.K., grabbed the No. 2 spot, with 27.1%, edging out Allegiant's 27%.
Spirit occupied the No. 2 spot, with $41.75 in ancillary revenue per passenger in 2011.
In 2010, AirAsia X, AirAsia's long-haul counterpart, took top honours in the category, with $41.60 per passenger.
In a recent Amadeus report researched by IdeaWorksCompany, Airlines' ancillary revenue grew to $22.6 billion in 2011, up from $21.46 billion the previous year. |
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Expedia results beat market expectations on strong hotel revenue: Reuters 27th July
Online travel agency Expedia Inc posted second-quarter results that beat market expectations on stronger worldwide hotel revenue, sending its shares up 13 per cent in after-hours trade.
Strong demand from business and leisure travelers are helping US hotels and airlines post solid revenue and profit growth, in turn benefiting companies such as Expedia.
Worldwide hotel revenue for the second quarter increased 16 per cent, driven by a 22 per cent rise in room nights stayed, while worldwide air revenue was down 8 per cent as revenue per ticket sold fell 11 per cent.
Shares of the company, which have risen more than 40 per cent in the last three months, closed at $45.71 on Thursday on the Nasdaq. |
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Trip Advisor having a bumpy ride? Or is the strategy the right one?:
Bijoy Koyitty for Reuters, TTMS comments
In contrast to Expedia's performance last week shares of TripAdvisor fell as much as 19% over concerns that the travel recommendation site's shift away from search engine marketing to social media is hurting growth.
On Tuesday, the company reported second-quarter sales that missed analysts' estimates and said costs had jumped 33%. TripAdvisor's reported international weakness could prove to be an early warning for the hotel and airline companies that are due to report quarterly results in the coming weeks. Analysts had expected strong U.S. demand to drive revenue for U.S. hotels and airlines in the quarter, but Europe's economic woes and possible slowing growth in China and India could make for a murkier travel outlook.
TripAdvisor aggregates reviews and opinions about destinations and accommodations throughout the world, depends on advertising and subscription for its revenue. A shift in TripAdvisor's marketing to drive the site's user-generated content through integration with social media sites like Facebook is aimed at attracting traffic with higher conversion rates and getting advertisers to pay more. However, analysts are concerned the strategy would slow growth in the near term.
"Revenue growth rates will face a headwind in the near term due to lower traffic volumes, until bid rates from advertisers improve," RBC Capital Markets analyst Sun-Il Kim wrote in a note to clients.
Time and the market will be the judge if Trip Advisors' social media strategy is the right one. |
Farelogix establishes Merchandising Solutions Group:
Farelogix press release
Farelogix recently announced that its flagship FMS2 merchandising product (previously only offered with airline Direct Connects) has been enhanced to support retailing and personalisation across multiple sales channels, including airline.com, check-in kiosks, call centres, and travel agencies (direct or via GDS). Packed with new features for product and offer customisation and a fully integrated baggage pricing engine from ATPCO, FMS2 enables airlines to employ a common merchandising solution across multiple distribution outlets.
According to Farelogix CEO, Jim Davidson, the changes are in response to the exponential demand for airline product/service personalisation. "Merchandising is no longer only about earning revenue by selling a handful of options. We're hearing from full-service airlines that want to personalise their offerings for customer retention and recovery purposes. Other carriers want to integrate loyalty and redemption programmes with real-time trip opportunities and in- or off-airport retail offers. The bottom line is that each airline defines merchandising differently and with FMS2 the combinations are endless. The common thread for all however, is the need for dynamic, personalised offers."
Current users of FMS2 include AirTran Airways (Southwest) and Air Canada, for whom FMS2 is used to support both its AC2U programme and its Air Canada Rewards for Business programme. Additional FMS2 airline customers will be announced in the coming weeks.
FMS2 complements the Farelogix Direct Connect product line, which provides airline product differentiation and cost savings for indirect channel distribution. American Airlines and Delta Air Lines are among the carriers using direct connect and the Open AXIS Group XML standard to deliver ancillary products to travel agencies. |
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The Travel Marketing Store
Nicky Baxter
Editor
The Travel Marketing Digest |
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Photographes courtesy of Shutterstock
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