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Innovation comes in many forms. Sometimes it’s a new technology. But for a growing number of online travel companies, it’s all about disrupting traditional business models.
Dennis Schaal
Online Travel This Week
One of the most interesting developments in online travel these days is companies upending existing business models Air Asia, eDreams OdigeoAND Hopper leading these efforts.
These three aren’t the only ones changing the ways travel companies have traditionally done business online, but they do provide interesting test cases.
Airlines have traditionally made their money by selling flights, entering into lucrative deals with credit card companies and paying for extras such as baggage fees.
Whether it succeeds or not, Capital Awhich operates AirAsia, can now boast that the Malaysia-based airline group’s superapp has more than 10 million monthly active users, and among the twists, AirAsia is now selling flights through its app from other airlines such as .sh. Singapore Airlines.
As a way to expand its network and revenue stream, AirAsia partnered with the base in the Czech Republic Kiwi.com to offer customers tickets on other airlines. AirAsia calls the offer FlyBeyond.
Of course, airlines usually sell partner flights as codeshares or as part of joint venture agreements. This is not new. But AirAsia doesn’t necessarily have deep airline partnerships on FlyBeyond and is trying to make its superapp a one-stop shop for customers so they can fly to destinations AirAsia doesn’t serve.
Whether AirAsia’s superapp strategy proves successful remains to be seen. A few years ago, Akora hotels tried to list independent independent hotels on its website, and that didn’t work. But AirAsia’s push, as part of its superapps strategy to offer banking and payment solutions, as well as retail and ridesharing products, appears to have some upside.
Edreams Odigeo, based in Spain, is among a new group of companies changing the way they operate to tilt their businesses towards subscriptions or memberships. As detailed in a recent Skift Research report, the Edreams Odigeo Prime subscription program, which offers discounts on flights and hotels, now has more than 3 million travelers paying $60-$75 a year to join.
Edreams Odigeo generated about 40 percent of its €424 million in sales in the 12 months to May 2022 from its Prime subscription plan, the report said.
In addition to Edreams Odigeo, many travel businesses, including AirAsia, metasearch and review companies Tripadvisorhotel brand Selinaand luxury accommodation provider Inspiredare shifting their business models to include subscriptions.
“Performance indicators for travel have traditionally focused on volume, pricing power and revenue per unit (eg for hotels RevPAR, for airlines PRASM),” the report states. “A shift to a subscription model means that travel companies must also put in place training, systems and procedures to track and understand a new set of engagement metrics such as initial cost to acquire a customer, customer churn and customer value. customer’s life.”
Montreal-based Hopper is also changing the traditional online travel agency business model. With a variety of fintech-oriented products, such as freezing flight and hotel prices for a week or two for a fee of $25 or $45, Hopper recently claimed that its income level is 30 times higher than in 2019.
Hopper is betting, based on its technology, that it will recoup far more money in fees than in having to pay the difference in higher airfares or hotel rates for customers if prices rise.
In September 2021, Hopper CEO Fred Lalonde said that about 70 percent of the company’s revenue came from financial products rather than the sale of the ride itself, although that percentage is likely to be lower in 2022.
Critics claim that Hopper’s labeling of these products as trendy “fintech” offerings is advertising and they are actually a form of insurance. Regardless, if an online travel agency is making more money from price freezes than from flight and hotel commissions, this will disrupt parts of the online travel agency business model and imitators will undoubtedly follow.
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MakeMyTrip joins the growing club with SuperApp’s ambitions
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