Love Holidays are proudly claiming to be the “World first Ryanair-verified package holiday provider” but fail to mention the whopping premium customers are required to pay Ryanair for the privilege of booking “officially”.

In their joint press release with Ryanair, Love Holidays misleadingly state “Loveholidays has agreed to only display Ryanair’s real prices, without mark-ups and will only pass accurate customer contact and payment details to the airline.”

However, it appears that Ryanair’s “Real Prices” are not the ones stated on their direct website, but ones that contain a considerable Ryanair booking premium. As illustrated in the three examples below for departures on the 1^{st of} Oct 2024, a couple of 2 adults must pay a “whopping” premium for the privilege of an “official” package

• Bournemouth to Majorca = £50.90 Extra per booking
• Manchester to Tenerife = £36.78 Extra per booking
• Liverpool to Ibiza = £47.60 Extra per booking.

Unlike other low-cost carriers who charge OTA’s a fixed API fee per flight sector, Ryanair seem to be yielding the charge depending on the competitiveness of the route and charging fees far in excess of any possible cost of operating the service.

Although I have no insider knowledge of Ryanair’s costs, it is generally accepted that distributing fairs via API to third parties, costs a maximum of £2.00-£3.00 per return flight, meaning that Ryanair are clearly “profiteering” at the expense of their customers.

Ironically, the Love Holidays deal and Ryanair’s ridiculous booking premiums, will strengthen the legal and moral arguments of other OTAs who continue to “Screen Scape” Ryanair’s fairs from its website.

Judges often base their decisions on preventing “Customer Harm”.

Ryanair has always accused OTAs of acting as “Pirates” illegally marking up the fair’s customers would pay on their direct website, to the detriment of customers. However, Ryanair has taken these fees to never-seen-before levels, charging Love Holidays customers a massive £50 premium to book their flights as part of an OTA package compared to their website.

In my opinion, few Judges will look upon this kindly!

However, it is the Competition and Markets Authority (CMA) that needs to wake up and fulfil its stated remit of “promoting competitive markets and tackling unfair behaviour”.

Ryanair has bullied the OTA market for many years, introducing extra “Facial Recognition” check-in steps to disadvantage customers booking via OTAs and blocking thousands of attempted bookings from OTAs. I believe this to be an “abuse” by a dominant market player, who is using these tactics to enforce unreasonable contractual terms for selling their flights via their official XML API’s.

I have today written to the CMA providing evidence of these unreasonable fees and hopefully will find support for this stance, within the remaining OTA community who are yet to buckle to Ryanair’s terms.

As stated previously, I completely understand that Love Holidays needed to secure guaranteed access to Ryanair’s flights ahead of their impending sale, but I do fear that unless Ryanair is successful in bringing other OTA’s like On the Beach to the table, that their price competitiveness will be badly damaged.

Historically, Ryanair was often provided the lowest fare lead prices for OTA’s, specifically, because the OTA’s where screen scraping and avoiding API fees. This led to 50% of many OTA’s holiday sales being based on Ryanair flights, making any sudden price increase in price due to API fees either highly damaging to price competitiveness or a massive opportunity if you continue to screen scrape.

The Ryanair V OTA battle is therefore like to escalate further, rather than be resolved by this API booking option.

Who will win remains to be seen, but a CMA investigation seems inevitable.

Initially, I was pleased to see that Ryanair has finally succumbed to common sense and decided to work in conjunction with Love Holidays to create “officially” authorised Ryanair Holidays.

Seats are being provided via an API integration, with Love passing all customer details to Ryanair so that customers can login to “My Ryanair” to check in, download boarding passes or amend flights.

Love Holidays, which has been looking for new owners for the last 18 months, needed this deal urgently to reassure potential buyers that they will have access to airline flight seats moving forward.

With Easyjet Holidays rapidly expanding its Holiday division, Love suffered from a strategic risk regarding how many seats Easyjet will allow OTA’s to access when the OTA is effectively creating a package to compete with the airline’s in-house tour operation. Combine this with Jet2, now selling 80% of seats as packages on many leisure routes, and you quickly see how important access to Ryanair seats is.

However, what cost is this access coming at?

The Love Holiday site now explicitly tells the customer how much of the package is being paid to Ryanair, so comparing these prices with the equivalent flight-only prices on the Ryanair site is relatively simple.

Amazingly, unlike Easyjet, which charges a fixed per passenger per sector API fee, Ryanair appears free to yield the fee as it sees fit.

For example, the fee is £27.00 on many flights, but on routes with little competition, like Bournemouth to Majorca, it jumps to £50.90 for a booking of 2 adults. Knowing Ryanair, these “Surcharges” will only get bigger.

The fee is also highly hypercritical, given that Ryanair has been campaigning against OTAs, accusing them of being “pirates”, marking up prices and charging customers more than they would have paid if they booked on the Ryanair site. However, it’s OK for this to happen if Ryanair receives the surcharge in their pockets!! 100% typical Ryanair customer service attitude.

I have long thought that Ryanair’s anti-OTA stance was nothing more than a tactic to push agents into a corner so that Ryanair could impose terms of their choice to allow agents to package their flights.

Love’s need to find a new owner has clearly forced them to do a deal with the Ryanair Devil on the Devil’s terms.

I must confess that I would have done the same in Love’s situation, but the winner is clearly Ryanair and the other low-cost carriers’ holiday divisions, whose packages suddenly look better value. 

Unfortunately, as usual, the biggest loser is the customer, who will end up paying more for their Love Holiday packages.

During the recent ITT conference in Qatar, I posed a direct question to Garry Wilson, CEO of Easyjet Holidays. I asked, “At present, 2% of EasyJet’s 100 million seats are sold as holiday packages. To become the market leader, this volume would need to triple to 6%. However, presuming the overall market does not expand this swiftly, from whom do you anticipate taking market share?”

Garry’s diplomatic response was that the growth would originate from converting more of EasyJet’s flight-only customers into holiday packages.

This straightforward remark underscores the significant strategic advantage of EasyJet Holidays over its competitors.

Over its lifespan, EasyJet has cultivated extensive brand recognition. This, bolstered by prominent advertising, generates enormous visitor traffic to its website. Here, customers are automatically presented with a cross-sell option to purchase a holiday package in addition to the flight to their chosen destination.

Naturally, my understanding of Easyjet’s intra-group financial allocations is limited. However, it is apparent that this approach endows Easyjet Holidays with the industry’s most competitive customer acquisition costs. Consequently, they are positioned to either offer the most affordable pricing, maintain superior profit margins, or effectively balance these considerations.

Converting another 4% of their 100m flight passengers to holidays is a straightforward task and itself would make Easyjet Holidays the UK market leader. However, why would they stop here?

Consequently, the question facing many travel boardrooms is, “Who will lose share as EasyJet Holidays expands?” and “How do we make sure it’s not us?”

The answer will be significantly influenced by the distribution channels EasyJet Holidays focuses its efforts on.

Jet2 Holidays have stolen the march in distribution via travel agents, flexibly allowing agents to decide their commission levels. However, if agents want price parity with the company’s online pricing, their earnings are limited to a low 6% commission payment, potentially making them vulnerable to attack by Easyjet.

Interestingly, Jet2 Holidays’ current success in transitioning its business into a tour operation-led group presents challenges to further growth. Currently, 60% of Jet2’s flight seats are packaged as holidays, and this proportion rises to 80% for “beach holiday” routes. Therefore, unlike Easyjet, they must broaden their route network to expand their holiday business further, leading to the initiation of new bases, like Liverpool. However, this expansion process is considerably slower than simply increasing the share from 2-6% of flight capacity.

Historically, Tui’s tour operating branch boasted a “differentiated” offering through exclusive hotel contracts with some of the most ideally situated establishments. However, the repercussions of Covid-19 and the substantial debt incurred by the Tui group have significantly reduced its exclusive inventory, exposing it to vulnerability in short-haul locations within Easyjet’s flight range. Nevertheless, Tui’s fleet of 13 Dream Liners provides a distinctive advantage, enabling the holiday firm to provide long-haul beach vacations to destinations such as the Caribbean, USA, Mexico, and Goa, an offering that Easyjet cannot match.

The top online travel agencies (OTAs) face the greatest threat from expanding low-cost carriers’ in-house tour operations, given that they lack proprietary airlines and rely on access to third-party flight seats. Paradoxically, their key strategic advantage is the access to low-cost seats of Ryanair, an airline that has publicly expressed disdain for them.

Featuring all the low-cost carriers equips the OTAs with a superior flight program in terms of route diversity and scheduling. However, if they are burdened with Easyjet’s API booking fees amounting to £6 per individual per sector, leading to a substantial £48 price disadvantage for a family of four, they evidently cannot compete on equal footing in terms of price with Easyjet. Nevertheless, by utilising Ryanair flights, they often can match or even surpass EasyJet’s holiday prices on numerous routes, making access to Ryanair, the only low-cost airline without an in-house tour operation, a vital strategic defence.

Online holiday consumers typically browse 23 websites before finalising their booking, reflecting their considerable promiscuity when choosing the holiday brand to book with. This tendency is frequently fuelled by Google PPC advertising, a sector primarily dominated by Love Holidays. Unlike its major competitor, On the Beach, Love has not invested in above-the-line brand-building advertising, potentially making them vulnerable as Easyjet enter this space.

While it is currently unclear who stands to lose, logic dictates that Easyjet Holidays is set for rapid expansion and will be the largest UK tour operator within 5 years.

So, whether the future is bright or not, it’s likely to be Orange.

Given the prolonged phase of low interest rates over the past decade, the profitability of cash flow seems to have faded from the memory of many travel enterprises.

Nonetheless, with present interest rates surpassing 5% on long-term deposit accounts, the way customer cash reserves are managed has become exceedingly vital.

An enterprise yielding £120m per annum and retaining customer balance payments for 8-10 weeks before departure would amass £23m annually. This permits the company to generate £1.15m exclusively from interest. For numerous businesses, this could represent 25% or more of their net earnings, thus making the optimisation of interest a strategic priority in the current economic climate.

Regrettably, numerous travel businesses that function as part of consortia are not benefitting from interest on funds held by the consortia on their behalf, thereby missing out on a substantial potential revenue source.

Some might contend that the Civil Aviation Authority (CAA) Trust regulations prohibit them from depositing customers’ funds into interest-bearing accounts, but this is a misconception.

Provided that transaction records for each booking are maintained, a transparent payment line for all components of the package is established. This ensures that the “excess” cash can be allocated to long-term interest-bearing accounts, as the continuous cash flow guarantees a foundational level always accessible for investment.

Therefore, travel businesses should be renegotiating to ensure that they can earn interest and look at their business models to make tweaks that maximise this profit stream.

Here are my top five suggestions:

1. Implement monthly payment schemes. Customers appreciate low deposits and many are open to paying for their holidays monthly. This approach aligns expenditure with income by evenly distributing the final balance payment and consequently enhances cash flow, maximising interest.
2. Amplify the proportion of Dynamic Packaging. As we transition out of the Covid disruption phase, Dynamic Packaging is regaining its appeal due to its higher margin opportunities and enhanced cash flows. ATOL bonded tour operators typically permit agents to hold customers’ funds for a few weeks, whereas bed banks or hotels rarely receive payments before departure.
3. Re-evaluate low deposits. The pressure to compete with low-cost carriers’ tour operations often drives the implementation of low deposits. However, even with a low deposit, it’s advisable to introduce a monthly payment scheme or secondary deposit 30 days after the initial payment.
4. Introduce “payment in full” discounts. Offer dual pricing, with the lowest price contingent on full upfront payment. If the customer opts out, charge them a 5% premium to compensate for lost interest. Remember, customers often focus on the headline price when comparing holiday options.
5. Understand your cash flow. A detailed analysis of cash flows on a per-booking basis allows for a comprehensive understanding of your cash flows. This enables you to maximise higher interest long-term deposits without ever being short of cash to pay suppliers.

Interest might currently be an overlooked profit driver in the travel industry, but given the present interest rate levels, it won’t be long before it takes centre stage in the business strategies of most enterprises.

As life returns to normal post Covid-19, I have again returned to the Ski slopes this winter to feed for my addictions for “white speed” and boozy Après ski nights out, with family and friends across European Ski resorts.

Historically, Ski holidays were part of the “mainstream” with each of the big four tour operations each having ski brands. These rarely made large profits, but were another way of utilising their internal charter aircraft in the quieter winter months, even though fixed weekend hotel “changeover” dates did force many peak Saturday or Sunday morning slots to be handed over to the ski division.

Each holiday was usually a weeklong and included all the key ski holiday elements of flight, accommodation, transfer, and ski packs for one inclusive price. This created both a convenient “one-stop” purchase for customers and allowed buying power via scale.

So why over time has this market virtually disappeared, with there now remaining only relatively small ski tour operators, who no longer operate or own charter flights?

Like many things in our industry, I believe it is a combination of the growth of low-cost carriers and customer access to the internet, which has created a large DIY marketplace.

For example, when traveling to Andorra to ski, I use Skyscanner to find the best combination of flights from the North and South of England, which arrive at similar times, so that I can combine the various members of my dispersed family on to one private transfer from Barcelona for the 3-hour journey to the resort.

I then use Andorra Travel service a local resort-based ground handler to book my hotel, lift passes, ski hire, and even restaurant bookings, to complete my complex ski needs.

Many upmarket Ski operations have built similar business models, using low-cost airlines to provide non-committed flight stock, to power their destination-specific tour operations to Verbier or other well-known ski resorts.

Ski holidays on average cost twice as much as a 7-beach holiday, so initially it may seem surprising that none of the top 5 UK ATOL holders, including the people providing most of the flight capacity for the ski market i.e. Jet2 or Easyjet, have created their own tour operations to exploit the demand created.

The complexity of the product is probably the main reason for the lack of interest, as it does not fit into a simple online booking journey and would require call center staff and in-resort, operations to deliver effectively. Brexit and in particular French restrictions have effectively banned UK staff from providing traditional repining and childcare services, that are still available in large beach hotels.

Transfers have also become much harder, as traditional weekend hotel “changeovers” have been scrapped, with customers now arriving throughout the week and often for 3-4 days ski breaks over weekends. Hotels have adapted, by charging more on a nightly basis to cover any gaps in occupancy compared to the easier back-to-back week holidays. 

However, it is now much harder for ski tour operators to focus enough demand to fill the 56-seat coaches, that used to dominate the transfer market now that they are not delivering 100s of skiers on one charter flight. Often, the airport-to-resort transfer element now costs more than the flight itself.

In some ski destinations like Andorra, local coach businesses such as “AndBus” are thriving, offering 2 hourly pre-bookable, low-cost shuttle services from Barcelona and Toulouse to resort. When talking to “Andbus” owners, it is fascinating to discover that hardly any sales come via UK tour operators or travel, with most customers discovering the service by word of mouth or Facebook groups.

I do have to wonder if homeworking groups are missing a trick here, by not working more closely with local ground handlers, to create high margin Ski packages for often affluent customers that may also book other high-end summer holidays. Bluntly, if you can afford to ski you often travel on holiday multiple times per year.

Adding expertise and value to complex long-haul holidays has allowed many homeworkers to thrive, so why not explore Ski?

It may be more complex but the crucial in-resort partners are out there if you look.

During the recent ITT conference in Qatar, I posed a direct question to Garry Wilson, CEO of Easyjet Holidays. I asked, “At present, 2% of EasyJet’s 100 million seats are sold as holiday packages. To become the market leader, this volume would need to triple to 6%. However, presuming the overall market does not expand this swiftly, from whom do you anticipate taking market share?”

Garry’s diplomatic response was that the growth would originate from converting more of EasyJet’s flight-only customers into holiday packages.

This straightforward remark underscores the significant strategic advantage of EasyJet Holidays over its competitors.

Over its lifespan, EasyJet has cultivated extensive brand recognition. This, bolstered by prominent advertising, generates enormous visitor traffic to its website. Here, customers are automatically presented with a cross-sell option to purchase a holiday package in addition to the flight to their chosen destination.

EasyJet has publicly stated that 88% of its Holiday Divisions traffic comes from “Free” sources, which gives Easyjet Holidays a dramatic advantage over OTA who spend 30% of revenue on advertising costs. Consequently, they are positioned to either offer the most affordable pricing, maintain superior profit margins, or effectively balance these considerations.

Converting another 4% of their 100m flight passengers to holidays is a straightforward task, and itself would make Easyjet Holidays the UK market leader. However, why would they stop here?

Consequently, the question facing many travel boardrooms is, “Who will lose share as EasyJet Holidays expands?” and “How do we make sure it’s not us?”

The answer will be significantly influenced by the distribution channels EasyJet Holidays focuses its efforts on.

Jet2 Holidays have stolen the march in distribution via travel agents, flexibly allowing agents to decide their commission levels. However, if agents want price parity with the company’s online pricing, their earnings are limited to a low 6% commission payment, potentially making them vulnerable to attack by Easyjet.

Interestingly, Jet2 Holidays’ current success in transitioning its business into a tour operation-led group presents challenges to further growth. Currently, 60% of Jet2’s flight seats are packaged as holidays, and this proportion rises to 80% for “beach holiday” routes. Therefore, unlike Easyjet, they must broaden their route network to expand their holiday business further, leading to the initiation of new bases, like Liverpool. However, this expansion process is considerably slower than simply increasing the share from 2-6% of flight capacity.

Historically, Tui’s tour operating branch boasted a “differentiated” offering through exclusive hotel contracts with some of the most ideally situated establishments. However, the repercussions of Covid-19 and the substantial debt incurred by the Tui group have significantly reduced its exclusive inventory, exposing it to vulnerability in short-haul locations within Easyjet’s flight range. Nevertheless, Tui’s fleet of 13 Dream Liners provides a distinctive advantage, enabling the holiday firm to provide long-haul beach vacations to destinations such as the Caribbean, USA, Mexico, and Goa, an offering that Easyjet cannot match.

The top online travel agencies (OTAs) face the greatest threat from expanding low-cost carriers’ in-house tour operations, given that they lack proprietary airlines and rely on access to third-party flight seats. Paradoxically, their key strategic advantage is the access to low-cost seats of Ryanair, an airline that has publicly expressed disdain for them.

Featuring all the low-cost carriers equips the OTAs with a superior flight program in terms of route diversity and scheduling. However, if they are burdened with Easyjet’s API booking fees amounting to £6 per individual per sector, leading to a substantial £48 price disadvantage for a family of four, they evidently cannot compete on equal footing in terms of price with Easyjet. Nevertheless, by utilising Ryanair flights, they often can match or even surpass EasyJet’s holiday prices on numerous routes, making access to Ryanair, the only low-cost airline without an in-house tour operation, a vital strategic defence.

Online holiday consumers typically browse 23 websites before finalising their booking, reflecting their considerable promiscuity when choosing the holiday brand to book with. This tendency is frequently fuelled by Google PPC advertising, a sector primarily dominated by Love Holidays. Unlike its major competitor, On the Beach, Love has not invested in above-the-line brand-building advertising, potentially making them vulnerable as Easyjet enter this space.

While it is currently unclear who stands to lose, logic dictates that Easyjet Holidays is set for rapid expansion and will be the largest UK tour operator within 5 years.

So, whether the future is bright or not, it’s likely to be Orange.

Having worked in travel all my working life, I have seen first-hand the benefits that traveling brings in terms of global understanding and tolerance. However, I have also become one of a growing number of “Green Activists” looking at how we can save the planet by slowing and eventually stopping Global Warming. In this role, I regularly hear fellow activists demanding that people fly less.

However, travel only represents 12% of an individual’s carbon emission and there are many other sources of Co2 emissions that if dealt with would have a much bigger impact.

 The travel sector does need to openly admit it will not be carbon neutral by 2030 or any time soon and address what it does to compensate for this. If it doesn’t “flying” could quickly become the equivalent of smoking and be seen by younger generations as a polluting/anti-social behavior.

A simple solution might be “compulsory carbon offsetting” for every flight taken, with the funds generated used to drive carbon removal programs around the world.

 Global warming can be reduced, by removing carbon from the atmosphere anywhere in the world, which is why I have invested/donated substantial funds to help develop modular hemp farming containers. These can be dropped into Africa to create hemp farms which are 4 times more effective per acre at extracting Co2 compared to planting trees and can be powered by generators that burn the oil created from crushing hemp so that it can create a material this is used for making clothing or building. These generators also power lighting and water irrigation, which allows food crops to be grown, making it a win for the local and global communities at the same time.

 The bottom line is that all extraction schemes need funding, and the best route is via “taxation” on polluting activities.  

 However, can we trust the UK Government not just to pocket any “carbon offsetting” tax in the same way it pockets APD tax, with no explanation on how it is spent or why it is even charged, apart from that it’s an easy stealth tax.

 The UK Travel Industry needs to admit it’s a polluter and pay its taxes, whilst ensuring they are well spent on reducing carbon emissions. If this cannot be done via our government, then the major airlines need to join forces and operate a compulsory carbon offsetting program themselves.

Travel also needs to widen the debate and focus customers’ minds on the bigger Co2 issues, which if dealt with would allow them to continue to travel with a clear conscience.

Unplugging, the petrol pump and buying an EV would cut 29% of an individual’s Co2 emissions, whilst reducing car running costs by 66%. Switching household heating from gas to electric or ground source heating, would rapidly eat into the 41% of emissions created by running our houses, but is less likely as electric heating is currently 4 times more expensive than gas.

However, what’s the point of moving the UK population to clean EV cars and electric heating, if they are powered by expensive and “dirty” electricity?

 The UK electricity board is one of the country’s biggest polluters, with 50% of electricity being generated by burning gas or other fossil fuels. The quickest solution to stopping this is a massive investment in nuclear power, but the Government is still dithering about funding the £500m required to start the process of deploying 20-30 Rolls-Royce “Small Modular Reactors” (SMRs). These will boost nuclear power back to the 25% share of production it used to be in the 1990s and give more time to develop other clean power projects such as solar and wind.

Action is needed now but if we think we have issues with travel being ignored by the government, try becoming part of the nuclear electricity sector!

 Travel will always be a force for good, but it needs to clean up its image via offsetting in the short term and less polluting fuels or power sources such as hydrogen in the longer term.

 In my opinion, we do not need to stop flying to save the planet, but we do need to compensate for the miles we fly to enjoy our holidays and drive change elsewhere.

Let’s act now to protect the industry we love.

Covid-19 created a generational change in our acceptance and use of video conferencing technology in both our business and social lives.

My weekly travel from Manchester to London has long gone, with most of my days now spent in my garden “office pod”, where in between Zoom or Team calls with colleagues or potential business leads, I type away on my computer.

The location we work from has changed for many people, with blended working between home and office becoming the norm. This has unfortunately impacted many of our high streets, with reduced walk-in traffic being reported by many high street agents.

Far from seeing this as the latest reason to predict the “Death of the High Street”, I see it as a driver that will force Highstreet agents to evolve their working practices to incorporate appointment-based video conferencing.

At homeworking business TSN, we have been working with video experts “U-SEE Technologies” to develop a bespoke video platform, that allows homeworkers to market their services via email, social media, or google “pulse” advertising to their local communities. The inquiries generated can be handled face to face or by phone, but increasingly customers are making appointments via the diary functions for Video conference calls.  

Agents can pre-prepare for these video calls, storing documents, videos, quotes, or even links to websites, for ease of use. These aspects of the platform are invisible to customers and allow a much slicker/more professional fully branded service compared to the mass market video platforms.

Incorporating these same tools into shop-based selling could seamlessly extend opening hours and drive higher conversion by offering greater convenience.

A simple bold poster in the window promoting this always-open “Video Appointment” system, would allow the shop to generate inquiries from customers even when it’s shut. A QR code on the poster, when scanned by the customer’s phone opens the shop meeting diary and asks the customer some simple qualifying questions. Date and times are then selected, giving the customer the convenience of a face-to-face consultation from the comfort of their home.

Some travel businesses already operate “out of hours” call center support to extend the opening hours of their shops, but there is always a natural conflict as shop staff don’t want the leads, they generate, converted by other staff who take a large cut of their commissions. It would be interesting to see if these shop staff will be willing to jump on evening video appointments to complete bookings or generate fresh leads. A key advantage is that unlike call centers there is no need to spend idle hours waiting around as only pre-arranged and diarised calls need to be handled, making any time allocated to this work highly productive.

The U-SEE diary function is highly tailorable and links into your personal diary, behind the scenes, so that business appointment hours are automatically blocked, when kid pick up/drop offs or other social events pop into the diary.

There are numerous product extensions that will create Travel Video 2.0, such as QR stickers on brochures or specific posters/social posts promoting destination or product expertise e.g., New York Breaks, Safari’s, and Adventure holidays. However, partnerships with high-traffic locations such as train stations, and supermarkets to promote “face-to-face” holiday booking via video may be the big volume drivers.

Seeing a customer’s reaction and adjusting sales pitches on the fly, drives higher conversions. Combining this with appointment-based selling, reduces wasted time and boosts convenience for both the customer and the travel agent.

PS. If anybody wants to hear more from U-SEE simple message and I’ll send an appointment link!

Hotels and airlines for years have successfully operated “loyalty” programs, which aim to lock frequent travelers into using their hotels via points-based schemes that offer room upgrades or free stays for family leisure trips.

These schemes are more successful the bigger the chain of hotels or airline networks involved and tend to focus on business travelers, where the company is picking up the tab.

Can individual hotels or beach hotel chains use these types of schemes?

A key weakness is the low frequency of customer stays, with even loyal holidaymakers only traveling to the hotel once a year for their 7-night beach holiday. This makes “points” schemes irrelevant for this market of customers, forcing them to look for other ideas to drive loyalty and direct bookings.

“Direct Bookings” have become a bigger focus for beach hotels in recent years, because of the evolution of the market away from “vertically integrated” tour operators who used to promote them via printed brochures and often “guaranteed” their rooms with big up-front cash payments. Today the UK OTA and low-cost carrier tour operators’ sites allow few opportunities for hotels to stand out and promote the refurbished, high-quality offerings they have invested so heavily in.

At the same time, the dominant hotel only OTA Booking.com has used its size and power to impose stringent price parity rules, which effectively means hotels cannot offer lower prices to direct bookers.

This neutralises the most obvious route for driving direct bookings, which is cheaper “Non-Refundable” room rates, where customers pay in full on booking via hotel direct sites, boosting cash flows and creating firm bookings.

Booking.com and other OTAs use their scale to demand access to these same rates even though in most cases they don’t pass on the cash for these “Non-refundable” rates any earlier.

This price parity demand means customers can get the same price via the booking.com website or app, which they use regularly for domestic and international travel. This frequency of use builds a level of brand loyalty and convenience, as booking.com holds all personal details and cards. This makes it a much quicker and simpler booking process, that a beach hotel will never be able to match.

At the same time, Booking.com advertises above hotels in Google, when customers search for a hotel name, ensuring that customers know they can book via this well-known brand at the same price as the hotel direct.

At HDC (Hotel Distribution Consultancy) we advise hotels to look at ways they can give their direct booking customers advantages that don’t breach these price guarantees, as booking.com distribution is key and needs to be protected.

We offer a portfolio of recommendations about how to focus on customer “needs” during their holiday stay to create a “Priority Access” schemes, which are only available to Direct Bookings.

These “Priority Access” schemes can be promoted to customers on the hotels’ websites as a reason to book direct and be rewarded during their upcoming stay, rather than having to collect points they can only use on future trips.

These schemes offer a workaround OTA “price parity” rules, to reward direct booking. This drives healthy early cash flows and greatly reduces the 30% cancellation levels delivered by the booking.com model, which under-commits customers as they can often cancel up to 24 hours before arrival free of charge.

Taking control of their own destiny via direct bookings must be a key focus for beach hotels.

Hotels are an “asset-heavy” business sector that has high fixed costs but makes substantial profits when they are full.

This makes them dependent on high room occupancies and often creates a competitive fight based primarily on price and strength of distribution, between similar hotels located on the same stretch of sandy beach in a holiday destination.

During the age of “vertically integrated,” tour operators and hotels often did “strategic” long-term deals, where tour operators in exchange for much lower room rates guaranteed the entire hotel.  Hotels that did not have guarantees, still relied on these tour operators to feature their hotels in their brochures and deliver customers to them.

Few beach hotels, ever invested in building their own “brands” or invested in direct marketing in major source markets like the UK. This left them at the mercy of their tour operator partners, who often paid them a massive 90 days after customers return home or not at all if they collapsed (Thomas Cook). How many other business sectors would accept these unfavorable payment terms?

The advent of the internet destroyed the stranglehold of access to holidaymakers that tour operators held via their 60% control of high street travel agency shops. This combined with the growth of low-cost carriers, allowed the “Dynamic Packaging” revolution to occur, which created today’s online travel agents (OTA’s) such as On the Beach and Love Holidays who between them carry 3.5m passengers. These businesses are “asset light” and rarely contract any hotels on a guaranteed basis, making hotels compete based on price.

The hotel-only giant Booking.com operates on the same basis and pre-Covid 19 was used in conjunction with Skyscanner or google to access flights,  by millions of customers to DIY their own dynamic packages. This market is not measured by ATOL but probably accounts for 5m plus holidays.

Tui remains the largest UK ATOL Holder at 5.36m passengers, but the debt mountain it incurred during the Covid-19 crisis, has destroyed its ability to create “differentiated” and exclusive hotels by guaranteeing up to 80% of its hotel stock. This has left many beach hotels for the first time in generations without any guarantees and desperate for new routes to attract customers.

The rapidly expanding “in-house” tour operations of the low-cost carriers have been the clear market winners over the last 5 years, with Jet2 Holidays taking most of the collapsed Thomas Cook market share and being set to continue to eat into Tui share as it slowly declines, having lost its differentiated hotel stock.

Easyjet holidays also needs to expand rapidly to key city investors happy and will therefore need to take share from Tui or OTA’s, as it’s less likely to take share from the established Jet2 Holidays.

Currently, few of these players see the benefit of “guaranteeing” hotel stock, outweighing the increased commercial risk, whilst operating in a UK holiday market where demand remains uncertain due to the energy crisis, rampant inflation, and rapidly escalating mortgage costs.

Therefore, hotels need to take their destiny in their own hands and increase their consumer direct distribution, but many lack the required expertise.

Reviewing a range of hotel sites ahead of the upcoming World Travel Market gathering at the London Excel center, I found a common theme.

1.    No option to book in £’s sterling. This immediately loses 30% of sales to players like Booking.com which are just one click away.

2.    No flights are offered. Customers can’t swim to a hotel and need flights. 40% of potential sales will be lost if a hotel site does not offer flights.

3.    UK phone numbers. The simplest way to offer “package holidays” including flights is to partner with a UK travel agency to use their ATOL licenses and staff to book packages. However, hardly any hotel sites offer this, and the only one that did have a UK telephone number answered it with a 5-minute pre-recorded message in Spanish!!

4.    Dominance of Google Brand terms. Hotels often secure the top spots for SEO-based google search’s for their brand name, but let competitors such as Booking.com pinch high-quality leads by advertising above them.

Direct marketing in other countries, is not a key skill set of many hotels as historically they have never had to do it.  

Finding local source market partners willing to be paid on a booking-delivered basis needs to be a high priority.  These partners should understand how to market on Google, Instagram, or traditional media, to create strong above-the-line campaigns, that can be converted into bookings via the hotel’s own booking sites.

Direct bookings after advertising costs may or may not deliver higher prices for a hotel room, but they 100% deliver cash earlier and in the current economic environment “Cash in King”