Ancillary revenue can help boost revenue for tour operators, just as it has for airlines, hospitality, OTAs and other travel companies. But what ancillary strategies work best?
See how one of our early adopters, G Adventures, utilized ancillary strategies to address their customers' pain points throughout the booking journey.
The ancillary sales masterclass
Ancillaries bolster airline revenue, especially in difficult times. Up to the pandemic, global airline ancillary revenue rose yearly. Even with the total revenue drop of 2020 resulting from the pandemic, ancillaries contributed 13.6 percent of global airline revenue in 2020. In November 2021, ancillary sales increased by thirteen percent compared to 2020, reaching $65.8 billion and contributing 14.4 percent to global airline revenue. That was well above the airline ancillary sales in 2012, 2013, and 2014. Airlines’ worst crisis in decades may have slowed bookings, but ancillary revenue held up.
What ancillaries sell best?
A la carte services (ancillary services) became quite popular during and post-pandemic, as travellers like to pick and choose services that reflected their travel preferences. For simplification, we can group ancillaries into two categories: stress reducers and pleasure items.
1) Stress Reducers
- Baggage allowances
- Roomier seating
- Visa applications
- Early boarding
- Frequent Flyer Miles
2) Pleasure Items
- Hotel booking
- Pre-booked meals
- In-flight entertainment and WiFi
Generally, stress reducers outperform pleasure items in generating ancillary revenue. A recent IdeaWorks, CarTrawler study found that pleasure ancillaries (onboard services and travel retail) contributed 23 percent of revenue for traditional airlines outside the US*. Stress reducers (baggage fees and other services) earn the largest share of ancillary revenue for airlines—a combined 62 percent.
When can ancillary products and services be sold?
Airlines sell ancillaries at various points of the booking flow—in-booking flow, post-booking flow and during flight. More importantly, airlines make purchasing ancillaries easy and simple, reducing the chance of abandonment of the overall purchase.
For example, airlines offer ancillary products and services at other significant touchpoints in the travellers journey:
- In the booking confirmation e-mail
- In the ‘manage booking’ customer profile
- In the travel app or reservation
- In any pre-trip messaging through email
- During the journey
- On the return home
Using valuable traveller attention for purchases of ancillary products, airlines can maximize the per traveller revenue. In fact, according to CarTrawler, in 2021, ancillary revenue per passenger increased by 15.47$ compared to 2012.
Other travel companies have adopted airlines’ best ancillary practices.
When OTAs began to embrace ancillary offers in 2015, the result was a dramatic 85 percent increase in revenue. The critical contribution of ancillaries to travel revenue endures, creating opportunities for innovative start-ups.
“Factors like sustainability, choice of provider, accessibility, ancillaries and connecting itineraries with other types of transport and accommodation are all top of mind for us and for travellers.”—John Mangelaars, Skyscanner CEO.
Let’s look at how one tour operator gets ancillaries right.
One of sherpa’s early adopters, G Adventures, offers travellers friction-reducing solutions as they search for their ideal package, starting with their home page.
- G Adventures’ Travel with Confidence Hub answers questions on any travel and visa requirements.
- G adventures create destination-specific landing pages, showcasing all the top attractions and all the relevant tours offered by the company. G Adventures also utilizes a pre-populated sherpa° Trip embeddable Element to give travellers a deep dive into the travel and visa requirements of the destination. This helps travellers feel prepared and reduces the stress of travelling.
- On tour-specific web pages, package details are easy for travellers to know what to expect to be included in the price of the tour. The booking button also steers travellers towards discounted travel dates.
- G Adventures offers travellers add-on options for activities, extra days and accommodations. Any package extensions are as easy as pressing a button— adding it earlier or later (or both).
How else can tour operators gain from ancillaries?
There are no limits to the revenue-building potential of an ancillary strategy if you streamline the e-commerce experience for your travellers, as G Adventures has done.
Here are some other questions to consider to get your travel brand soaring on ancillaries:
- What are some of the “pain points” of tour travel? Can you convert solutions into ancillaries?
- What do you give away now that might make a better value-added ancillary product?
- What products or services could you sell as premium or VIP ancillaries?
- How will you seamlessly work ancillary offers into your booking flow?
- Don’t forget to remind customers of ancillaries available before they travel too. As the travel date nears, people are more willing to buy upgrades for comfort and services for peace of mind.
If you’re interested in adding sherpa° travel and visa requirements as part of your destination and tour pages, fill out this form, and someone from our team will be in touch!