Dynamic Packaging 101
2003 will without a doubt go down as the Year of the Dynamic Package in online travel circles. It is a safe bet that the players with dynamic packaging capabilities, big and small, will continue to seek out value-added solutions for their supplier partners in this arena in 2004.

The ability to bundle different travel components together offers hoteliers and other travel suppliers value, flexibility, increased exposure to travelers and most importantly, gained revenue. It also enables suppliers to keep their yields and profits higher without feeling like they are losing control of their distribution. In fact, by partnering with a third-party distributor, hoteliers and other suppliers can be assured that their discounted inventory will be masked from consumers within a packaged deal. This eliminates the possibility of one hotel guest, for instance, learning that the person who just checked in ahead of him paid $50 less per night for his room and received a free breakfast. For the online sites dynamic packaging has allowed us to more quickly transform ourselves from passive resellers of travel to actual retailers with margins we are able to set and exclusive products that won’t be found anywhere else. Sally Traveler, of course, gets more bang for her travel dollar and can complete the booking in one hassle-free step without having to search a multitude of sites when making her travel plans.

Looking Ahead
Suppliers should anticipate a few things from their third-party distribution partners when it comes to selling their inventory in a package. How will the online sites compete with each other in driving consumers to their offerings?

Here are a few thoughts concerning how dynamic packaging will shake out in the remainder of 2004.

• Forrester Research has forecasted online packaged sales will grow across all outlets from $599 million in 2003 to $959 million in 2007. That sounds like a lot, but in my humble opinion the forecasted figure they are touting will be much, much higher – to the tune of several billion dollars when you combine the packaging business of all of the major online travel sites with supplier-direct sites and other big industry players.
• Because the online travel marketplace is so hotly contested amongst players big and small and because there are so many dollars at stake, it is a safe bet that we will all invest more money into marketing dynamic packaging engines. And besides traditional TV, radio and print advertising, you can anticipate that the online players will include more dynamic packaging messages in their e-mail campaigns and search engine marketing. The savvy supplier may want to consider ways to negotiate their own messages into the online travel sites’ dynamic packaging sales pitch.
• Look for more bells and whistles. The online travel sites will continue to invest heavily in their dynamic packaging shopping engines in offering consumers more options during the vacation planning and booking process. The ability to purchase extras like airport ground transfers, ski lift and attraction tickets will increasingly become the norm with all the big players, giving shoppers a complete all-in-one booking opportunity.
• The merchant is king. It is no secret that online travel sites emphasize merchant products in our dynamic package offerings. For instance, the hotel content sold in Travelocity’s TotalTrip dynamic packaging engine is 100 percent merchant and we have steadily balanced the ratio of merchant flights to published since the launch of the product in 2003.
• And on a similar note, look for the online travel sites to pursue more exclusive arrangements with select hotel groups and properties as they continue to take aggressive steps to differentiate their product offerings from one another. Not only is this another share shift opportunity for you but it also ups the ante for the third-party intermediary to sell, sell, sell your product. After all, it is one thing for you to strike a special offer with an online player for their dynamic package product, but it is an entirely different proposition for them to actually sell it and drive revenue to your bottom line. Keep careful tabs on exactly what your online partner is moving for you and do not be afraid to pick up the phone at anytime to see just how mutually beneficial the relationship is turning out to be.

It is an incredibly empowering time for you to be working with the online intermediary. As we all move ahead with our plans in 2004, I definitely think that it is still a key point for you to keep in mind. Dynamic packaging, like the merchant model, is a prime example of how mutually beneficial relationships can emerge when all parties are communicating effectively with the end goal of ultimate customer satisfaction in mind. Demand a “what’s good for our suppliers is good for customers” philosophy from your online intermediary partners. You should see just how powerful they can be in distributing your travel products and reaching the traveler who might not have purchased from you otherwise.

Bryan Saltzburg is vice president, packaging and cruises of Travelocity. He can be reached at bryan.saltzburg @travelocity.com.