Skift Take
Innovation comes in many forms. Sometimes it’s a new technology. But for a growing number of online travel companies, it’s about disrupting traditional business models.
Online Travel This Week
One of the most interesting developments in online travel these days is companies upending existing business models with AirAsia, eDreams Odigeo and Hopper leading these efforts. See the article : Delta’s Business Travel Optimism.
These three are not the only ones changing the way travel companies have traditionally done business online, but they provide interesting test cases.
Airlines have traditionally made their money by selling flights, entering into lucrative deals with credit card companies and charging for extras such as baggage fees.
Whether it succeeds or not, Capital A, which runs AirAsia, can now boast that the Malaysia-based airline group’s super app 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 Singapore Airlines .
As a way to expand its network and revenue stream, AirAsia partnered with Czech Republic-based Kiwi.com to offer customers tickets on other airlines. AirAsia calls the offer FlyBeyond.
Sure, airlines often sell partners’ flights as codeshares or as part of joint venture agreements. It is not new. But AirAsia doesn’t necessarily have deep partnerships with the airlines in FlyBeyond, trying to make its super app a one-stop shop for customers to fly to destinations AirAsia doesn’t serve.
It remains to be seen if AirAsia’s super app strategy proves to be a success. Several years ago Accor hotels tried to list non-affiliated independent hotels on their website and it didn’t work. But AirAsia’s efforts, as part of its super app strategy to offer banking and payment solutions, as well as retail products and ride-sharing, appear to have some upside.
Edreams Odigeo, based in Spain, is among a new crop of companies changing the way they operate to tilt their businesses towards subscriptions or memberships. As detailed in a recent Skift Research report, Edreams Odigeo Prime subscription program, which offers discounts on flights and hotels, now has more than 3 million travelers who pay $60-$75 per year to be members.
Edreams Odigeo generated about 40 percent of its €424 million revenue in the 12 months through May 2022 from its Prime subscription plan, the report found.
In addition to Edreams Odigeo, many travel businesses, including AirAsia, metasearch and reviews company Tripadvisor, hotel brand Selina and luxury accommodation provider Inspirato, are orienting their business models to include subscriptions.
“Travel performance indicators have traditionally focused on volume, pricing power and unit revenue (eg for hotels RevPAR, for airlines PRASM),” the report said. “A shift to a subscription model means travel companies must also put in place training, systems and procedures to track and understand a new set of engagement metrics such as upfront cost to acquire a customer, churn and customer lifetime value.”
Montreal-based Hopper is also changing the traditional business model of online travel agencies. With its range of fintech-oriented products, such as freezing the prices of flights and hotels for a week or two for perhaps a fee of $25 or $45, Hopper recently claimed that the rate of revenue is 30 times higher than in 2019.
Hopper is betting, based on the technology, that it will recoup much more money in fees than having to pay the difference for higher airfares or hotel prices 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, and not from selling the trips themselves, although that percentage is likely to be lower in 2022.
Critics argue that Hopper brand these products as trendy “fintech” offers are hype, and they are actually a form of insurance. Either way, if an online travel agency makes much more money from price caps than from flight and hotel commissions, it will disrupt parts of the online travel agency business model, and imitators will undoubtedly follow suit.
In Brief
MakeMyTrip Joins the Growing Club With SuperApp Ambitions
In a Skift interview, MakeMyTrip Group CEO Rajesh Magow said the online travel agency not only wants to achieve super app status in India but also in the Middle East, where it has started operations. He also seemed to hint at a deeper partnership with Amazon. Shift
Lastminute.com Group Gets an Interim CEO
Apart from Jie Sun in China, there are not many CEOs of online travel companies who are women. But Amsterdam-based Lastminute. Read also : Putin promises to overcome ‘colossal’ high-tech problems caused by sanctions.com Group, after its CEO and CEO were detained in a Swiss investigation into Covid-19 relief fund fraud, appointed Laura Amoretti as interim boss. Amoretti previously served as customer manager. Shift
Airbnb Co-Founder to Step Away From Day-To-Day Operations
Airbnb co-founder Joe Gebbia said he planned to step away from the day-to-day operations of the company, where he led the in-house design studio Samara. Read also : Organon hopes to maintain the status quo in women’s health. Gebbia will remain on the Airbnb board and will remain involved with the independent nonprofit organization Airbnb.org. Shift
