CXO Accent

Click to fly

Satish Pendse

Dynamic Packing is likely to boost online bookings for travel

Come December and the travel season rises to its peak. Every year there is a drastic surge in the number of people who carry out their travel bookings online. Breaking away from the “brick and mortar” mould, the convenience of online booking motivates them to make travel plans on the Internet. As effective as online booking services have become in terms of speed, choice and pricing, there are still aspects of customer-service, which are not completely fulfilled by the online booking systems. In such cases, a travel agent can make the difference by enticing browsers to book online by introducing a concept called “dynamic packaging.”

Before going into the details it is important to understand, what is so dynamic about “dynamic packaging”. Simply put, dynamic packaging can be described as one where customers can put together elements of their trips including flights, hotels, car rentals, local tours and tickets to theatre and sporting events on a travel website. In the offline world, such packages have long been put together by tour operators in brochures. The growth of online travel services, have made it easier to book flights and accommodation. However, customers are also concerned about whether their bookings are safe. If this can be handled by online companies as efficiently as by tour operators, customers will prefer to carry out their transactions online. Many people investigate their travel options online but book offline. Even in such cases it makes perfect sense to encourage the concept of dynamic packaging, since people like the ability to put together their own holidays. In other cases travellers use the offline medium to confirm that their online reservation was booked. This demonstrates the effectiveness of the concept of dynamic packaging.

Technology insight

The solution used to popularise the concept of dynamic packaging involves bundling all the components chosen by the traveller to create one reservation. Regardless of where the inventory originates, the package that is created is handled seamlessly as one transaction and requires only one payment from the consumer. It automatically applies rules defined by the suppliers and the travel marketer to build and price travel packages. This package configuration process determines which components are used, what combinations of components are allowed or required, and handles inclusions such as taxes, fees or additional package features. Rules also determine how the final retail price is computed. It is important that these online packages provide a seamless online experience enabling vacation package booking through a secure, encrypted interface. Real-time online credit card authorisation and verification ensures the integrity of all transactions.

The making of a successful travel package comes back to the question of value. Whether it is the convenience of buying everything in one place or leveraging the benefits of economies of scale, dynamic packaging is here to stay. The fact that dynamic packaging is gaining popularity with every passing season has its roots in strong economic factors. Packaged deals are formed as result of internal arrangements between different elements related to travel such as hotels and airlines. This boils down to the fact that the individual cost of various components is usually opaque. If a person planning a trip checks out the rates of these individual components, it would definitely cost more than a package. For instance, there are numerous packages involving deals between suppliers and travel agents. Many a time an agent promotes a particular hotel or airline in return for a discounted rate.

Success rate

The concept of “dynamic packaging” is directly dependent upon the popularity of online booking. According to the PhoCusWright Consumer Travel Trends Survey carried out in America, 35 million Americans bought travel online in 2003, a 17 percent increase over 2002. Travel makes up the biggest chunk of B2C e-commerce, accounting for about one-third of online consumer spending. Having gone through the website, the traveller already has a clear idea about various packages offered before making a final phone call. Booking a return flight from Australia to India online is relatively easier than planning a tour for a family of four with details of the various hotels, the type of rooms, the places for sightseeing, the modes of transport available at the destination and other such details. The fact remains that the variety of packages with its various permutations and combinations can only be offered in an online mode with a ready availability of complete package costs. With the success of dynamic packaging, travel is likely to become one of the areas where most sales happen online.

The author is the IT- head of Kuoni Travels