Since March 2020, I have had calls with 107 different travel agencies, OTAs, bedbanks and travel technology companies around the world. The purpose of those calls was pitching our profit optimization solution, but I like to apply the "we have 2 ears and one mouth in order to listen double than what we speak" rule. In these conversations, I heard some great ideas, innovative solutions, smart management decisions and many more actions companies are taking in order to increase profitability and lower costs. Here are the most profitable changes travel companies have made to their business since the start of the pandemic.
Optimize the pre-booking process
Multi-destination itinerary planning has been an area ripe for disruption. Creating a complex itinerary is a task that can occupy a lot of time, while leaving potential earnings on the table by not choosing the optimal route that balances between costs and flight time.
But just like other aspects of the travel journey, A.I was destined to optimize this segment of the travel business. Many companies have shifted over to A.I-based tools to help travel agencies of all sizes optimize the travel itinerary planning process and capitalize on "lost" earning opportunities by quickly finding the optimal, most balanced route in a matter of seconds.
Accept Crypto as a payment option
Unless you have been hiding under a rock for the past decade, it is impossible to neglect the rise of cryptocurrencies and it´s quick adaptation rate worldwide. One of the strong core values of the early crypto adopters is the lack of confidence in the use of fiat currency. This community (there are over 100,000 Bitcoin millionaires, not to mention tens of thousands of other crypto millionaires from other projects) seek to interact with business using crypto and not fiat currency.
Two companies that have taken advantage of this trend are Travala and Xcel Trip. While some companies have added payment options for the major crypto currencies, these two companies have focused their entire value proposition as the go-to-sites for crypto enthusiasts to pay for their travel using crypto. There is no doubt that this is a trend that will continue to grow and other companies should consider accepting crypto as a payment method as well.
Capitalizing on hotel price volatility post-booking
Most price comparison efforts (for all travel products) are done prior to making the reservation. What companies didn´t realize is that even though they thought they got the best deal at the moment of booking the hotel via their suppliers, in 40% of the reservations, they were actually overpaying for the hotel.
Hotel pricing is like a roller coaster, and this roller coaster doesn´t stop just because you sold your customer a hotel reservation. Pruvo´s A.I-driven solution helps travel companies take advantage of hotel price volatility by automatically rebooking their existing reservations once the net price drops.
The benefit for companies is actually two fold. Not only are they increasing profit margins on their sold hotels, but they are enhancing performance compared to their occasional manual re-bookings done by their staff. Having employees try to do post-booking price optimization is an expensive task with low efficacy, since they don´t have the same room-mapping capabilities that an A.I-driven technology has
Customer acquisition via collaborations
Many companies I have spoken with have lowered their advertising budget and shifted focus on collaborating with non-competing companies that have a similar target audience. This has allowed companies to focus on paying per result rather than upfronting the costs of customer acquisition in a post-Covid delicate environment.
Buy now, pay later
One of the most innovative fintech solutions over the past 7 years has been allowing customers to "buy now and pay later" at zero interest costs. Companies like Afterpay, Klarna, Uplift and Affirm have taken the industry by storm, allowing e-commerce sites to offer their customers a flexible payment option with better payment terms than credit cards.
This trend has caught the eye of travel companies as well, constantly seeking to increase conversion ratios. Over the past 18 months, many travel companies, including Kayak, Uniglobe, Priceline and others have implemented the buy now pay later option in their checkout process.
Focus Domestic
Many companies managed to successfully switch their focus and supply to domestic offerings, allowing them to continue operations while international borders were closed. What I found most interesting when speaking with these companies was the speed they managed to adapt and integrate a completely new product offering to fit the new environment. In addition, one of the more successful domestic travel promotion strategies was selling last minute weekend getaways. Those quick to innovate will stay afloat.
Renegotiate fees with suppliers
In Spanish, there is a popular saying: "quien no llora, no mama", or in other words, he who doesn´t ask will never receive. Focusing on reducing costs was critical during these past 18 months. But the lessons learned by operating on less should continue to accompany us even as we transition back to normal. If you need a lesson on how to renegotiate fees with suppliers, make sure to read how SnapTravel managed to do so effectively and become profitable in June 2020. Just make sure to ask, you have nothing to lose.
Conclusion
While these past months have been challenging, the lessons learned and innovations implemented will strengthen those companies who have seized the opportunity to innovate.