Luxury operator Kuoni’s decision to scrap its online discount has shown it did not drive more business and was unnecessarily alienating its travel agency partners.
The firm ditched its web discount last October and, although it has seen online bookings reduce more than anticipated, its own retail and third party business has made up for this.
Derek Jones, Kuoni vice president of distribution and operations, said this showed customers who were going to book anyway were simply going to its website to take advantage of the discount.
He claimed the decision to ditch the 5% discount was a risky move, but it was paying off as trade support has increased, particularly through independent partners since February.
Jones admitted he was nervous having scrapped the discount as the resultant upturn in trade sales did not materialise immediately.
But he told Travel Weekly: “The trade is much more easily dispensed than six months ago to pushing their customers in our direction.
“Knowing we are not undercutting them online means the conversation with the customer is very different.
“Talk to any frontline travel agent and they will tell you their biggest frustration is doing all the hard work and losing the customer to an online discount and not being rewarded for it.”
Jones said the tactic might not work for all brands, particularly in the more commoditised less-complex end of the market.
And he said Kuoni would continue to offer anyone who wants to book online with it the opportunity to do so.
But he believes that thanks to more sophisticated booking tracking techniques travel firms can ensure they are not discounting their product needlessly believing this is driving sales.
“For me it’s about confidence. Having confidence in the product you sell, or if you are third party travel agent the service you offer.
“If you are confident in what you are doing this whole issue of offline online becomes less important.
“I can see the more commoditised the product is there is a cost equation as if customers are happy to book online then arguably it’s more cost effective for them to transact entirely online.
“The real challenge going forward is conversion rates online are much lower historically so the amount of traffic you need to drive might be cost prohibitive.”
Jones said despite a reduction in volumes of online bookings he expected revenues to increase.
What the ending of the discount has done is to ensure offline bookings are transacted offline rather than switching channel at the last step.
“We are left with a reasonable number of people who even now are booking online without a discount,” Jones said.
The new strategy is likely to see Kuoni merchandise less on its website and provide content to inspire customers earlier on in the booking cycle.
“What we will do is make it really clear where our points of difference our in terms of product and service,” said Jones.
“We are starting to talk about this business not in B-b or B-C terms but P-P [people to people] in order to demonstrate the value of what we offer.”
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