Evolution of the vacation package: from a standardized product to a personalized travel

25 mai. 2010 | Written by Julia

The vacation package, flagship of the travel industry, ensured low risk sales to producers (airlines, hotels, cars rentals…), added value to tour-operators and guaranteed attractive prices to final customers. But since the last decade, the vacation package is encountering a significant mutation.

Indeed, the Internet has changed  access to information and offers. So, studying the evolution of the packaged vacations helps us to perceive all the current issues of the travel industry: stocks accesses in real time, customer-centricity, new productions processes, semantic web for tourism…

This evolution of the travel package is in the heart of the evolution currently at stake in the industry which consists of a switch from a model centered on the offer (standardized vacation packages and mass products) to a customer-centric model (products excessively personalized).

From products pre-packaged to dynamic packaging

Launched in 1841, the vacation package was booming at the beginning of the 90′s. It has contributed to make travel more democratic and to the development of mass tourism.

Thanks to the tour-operators’ negotiation power, several products can be assembled and create a travel package at an attractive price (inferior to the addition of the price of each component). The classic vacation package is assembled several months early and is composed at least with a flight and an accommodation. This pre-assemblage mechanism had allowed tourism to enter in industrial processes.

However, the supremacy of this mode of production is increasingly cast into doubt. These pre-assembled travel packages are not very flexible: classic stay duration is 7 or 15 days, departure dates are not adjustable, itinerary can only be changed in the limits of the options… The advent of the Internet has made packages prices less and less a true differentiation point. Moreover, the allotments mechanisms are restrictive for producers and allow not much adaptation to the demand.

Thus, the evolution from a pre-packaged model to dynamic packaging seems to be natural. Dynamic packaging helps to answer to the final customer (travellers) in a better way by bringing flexibility and personalization. It also improves management of stocks for the producers and raise intermediaries’ margins (tour-operators, online travel agencies…).

Dynamic packaging is characterized by (suppr the) real time requests to multiple suppliers’ stocks and by the use of a rule engine to set the possible products assembly and its prices. It equally suppose a previous negociation with his supplier-partners to ensure global prices inferior to the addition of each component’s price.

From the final customer eyes, a dynamic package is very similar to a classic vacation package (pre-packaged). The only difference is its more personalized aspect.

Dynamic Package and recommendations engine : the future of the touristic products sales

Today,the main OTA have developped dynamic packaging tools: Lastminute.com, Expedia, Govolo, Ebookers… and surveys show that 23% of European people have already used it. Tour-operators and travel agent networks are also using them like Thomas Cook, Kuoni, Thomson Holidays, First Choice… with their own tool or with the help of IT companies like Orchestra or TravelTainment.

The use of dynamic packages in 17 EU countries within the last two years (% of citizens). Source: Consumer Detriment Survey in the Package Travel Context 2009

As we can see, competition is rough around dynamic packaging. Hardly the technologic barrier has been overcome that players have to search for new functionalities to boost final customers’ (and travel agents’) adoption level.

Dynamic packaging brings flexibility and customization in packages, but for the moment it is more a self-booking tool than a truly counselor in travel. Booking functionalities are quite completed, so the stake is to enrich user experience.

Pearltrees - Example of a tool that use collective intelligence to organize the content of the web

Thereby to be more relevant, these tools must provide more qualified and more targeted information about products. This information can come from institutional organisms as well as (modif ordre) from private players (DMC, guide/journalists, tour-operators…) or from travelers themselves (via blogs, reviews websites, mobile apps…). However, all the content created on the web is not standardized. So, to aggregate it in high quantity and in a qualitative manner, two solutions appear: rely on communities to organize it and/or use semantic web.

Moreover these tools for dynamic packaging should also be an instrument for inspiration and recommendation (based on explicated customer’s interests, but also on customer’s behavior or on their social network), and go ahead in improving the user experience in search and booking (we used cryptic, then point-and-click, the next level is intuitive interfaces).

To conclude, we can say that the future of vacation package is dynamic. It relies on tools always more customer-centric, capable to solve interoperability problems and access stocks in real time. Dynamic packaging tools must also provide ultra customized answer to customers’ queries, and be able to aggregate, organize and display always more informative content to enrich products.

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