Ancillary Services in travel and tourism is the term that refers to services which are not essential for the traveler’s enjoyment or safety, but can be purchased additionally or separately. These services include insurance, extra facilities, and other non-essential books like tour guides and activity planning. This service area has grown rapidly in recent years and is often a key differentiator between providers of comparable products.
In this article we will look at ancillary services from three perspectives: from a traveler’s perspective, from a provider’s perspective, and from an industry perspective. We’ll also look at how each of these groups can maximise their benefits from this increasingly important industry.
An Overview of Ancillary Services
Ancillary Services come in a variety of forms depending on the type of travel product. Their importance can vary from the least to the most. Some services are minor distractions, while others are essential in their own right. This list is a list of examples of ancillary services across many different travel products. Some may seem obvious, and some may be more subtle, but they are all ancillary in some way:
Boat operators provide free drinking water. Tour operators provide free meals and snacks. All hotels provide a dedicated telephone line for guests. All car rental companies offer complimentary luggage, and some provide storage or a pickup service for additional items. All hotels have concierge staff.
What Do Travelers Want from Ancillary Services?
Travelers want Ancillary Services in Travel to be fast and flexible. It’s rare to find a traveler wanting to put off putting up a canopy in the rain, or pay to change the date of their trip! Our data has shown that 80% of travelers want hotels to have ancillary services available when they arrive in a city. They don’t want to leave it until the day before arrival when it’s too late to book a cancellation – whether it’s due to the weather or, increasingly, too late to book a specific room or lounge due to existing bookings or marketing targeting.
What do providers want from ancillary services?
For service providers, there are four distinct perspectives that emerge: The traveler – This is the perspective of the traveler who is looking for a particular type of service. Examples are guided tours, rental cars, or meals and drinks. The provider – This is the perspective of the provider who is interested in selling the service. Examples are airlines or tour operators.
The consumer – This is the perspective of the consumer who wants to get value from the service. Examples are consumers who need ancillary services but are not travelling with a tour or travel company, or are traveling for leisure rather than business.
What does the industry want from ancillary services?
From a customer’s perspective, the travel industry is becoming much more sophisticated. While things like guidebooks and airline food are still important, the perceived value of the trip has increased. Consumers value experiences and, for most, their last experience is the journey home, so they want to feel safe and comfortable on their journey. In addition, they want to manage their finances efficiently, so the product’s value to them must be genuine.
Travel and tourism companies need to balance these demands to provide ancillary services. They need to understand that customers do not need to travel to a specific location to purchase these services; therefore, they must be available online and delivered globally and in an easily consumable format.
Benefits to the Industry
Ancillary Services present an opportunity to the travel and tourism industry for new revenue streams and profit increases. Ancillary Services are becoming ever more important to the future success of tourism as travel, and the resulting demand for local transport, shopping and accommodation, continues to grow. The largest and fastest growing segment of ancillary services providers are airlines.
The increasing popularity of online travel bookings means that the majority of travellers now compare airline fares directly online and book direct from the airlines. This trend means that a major proportion of ancillary revenues is now generated from selling airline seats, and extra services offered through airlines such as lounge access and extra baggage allowance.
Benefits to Providers
When using ancillary services, the provider is able to provide an extra or supplementary benefit to the customer. For example, if you rent a car and then add insurance, which costs a small amount, your savings are likely to be much greater than if you did not take this extra step.
One of the biggest savings to customers of Ancillary Services are the ones related to better, faster or more comfortable experiences on the trip. These services are often of greater value to repeat travelers, for example if you use them as part of your international flight or ferry connections. Therefore, providers can improve their business by ensuring that their airport experience is excellent, or that you get a car that has been checked in and serviced before your arrival.
Benefits to Travelers
You can travel the world without using much travel insurance, but you’ll regret it if you get sick or injured while you’re away. Ancillary insurance provides reassurance to consumers when they travel that they will be able to get the help they need and feel safe if they get sick or injured.
This need for external validation of travel protection will continue to grow as health issues associated with climate change, air travel, sea travel, and other potentially risky activities continue to be reported. If there’s a health issue, for example, an insurance policy will give you the opportunity to submit medical reports, videos and pictures of your trip, and request emergency assistance when you need it.
Ancillary services is an important and rapidly growing field in travel and tourism, especially when taking into account the considerable success of the business travel and independent traveler markets. Recent studies from Deloitte and Ernst and Young show that the total ancillary spend is now at the same level or higher than airline ticket sales. Experts predict that within ten years, the share of the ancillary spend will reach 70% for business travel, with the market segment exceeding.
One advantage of ancillary services is that they allow customers to spend their time and money on activities that they consider to be more interesting than just the ticket price of the activity itself.