The purpose and power of dynamic packaging

Release Date: Apr 01, 2007
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Dynamic packaging is a hot topic these days. With online travel bookings increasing each year, more and more travel websites are finding creative ways to bundle travel components to create multi-faceted custom packages. The traveling public is also becoming more comfortable utilizing the Internet to gain access to the same information that had previously only been available to travel agents. This allows consumers to use popular travel websites such as Travelocity to plan and book vacations that include airfare, hotel, and car rentals, along with numerous events and activities.

In the accommodations industry, the practice of combining travel components all together for the purpose of creating custom packages is known as “dynamic packaging.”  This month’s feature article will explore the basics and benefits of this practice. Next month’s feature article will discuss how hospitality businesses can benefit by applying the same principles that large travel websites employ to construct and sell creative dynamic packages.

Wikipedia defines dynamic packaging as:
“Dynamic packaging is a method that is becoming increasingly used in package holiday bookings that enables consumers to build their own package of flights, accommodation, and a hire car instead of a pre-defined package. Dynamic packages are similar in that often the air, hotel, and car rates are available only as part of a package or only from a specific seller. Dynamic packages are primarily sold online, but online travel agencies will also sell by phone owing to the strong margins and high sale price of the product.”

What are the benefits of dynamic packages?

• Consumers have the flexibility to create custom itineraries with one stop shopping.
• The traveler ascertains the cost of all the major trip components.
• Dynamic packages often save consumers money over booking each service separately.
• Dynamic packages also benefit individual businesses contributing to the packages.  Customers who book dynamic packages typically book earlier, stay longer, and spend more money—all bonuses to the businesses involved.

As an independent hospitality business, should I offer dynamic packages?
Even the smallest business can benefit from creating and selling dynamic packages!  Even though smaller businesses will not attempt to bundle airfare and car hire into the packages that they sell, combining the many other elements of traditional dynamic packages is smart business. Lodging, spa services, food and beverage items, romance package items, tours, special event tickets and more can be bundled to create highly effective dynamic packages. Remember, the fundamental element behind dynamic packaging is to bundle goods and services in order to increase the overall amount that the consumer spends.

Dynamic packages can be quite simple or extremely complex.  Next month, we will delve into the specifics of bundling component parts of a dynamic package, but the most obvious place to begin is exploring combining room rate discounts with other upgrades and activities.  Packages that offer significant price savings or appeal to the customer’s desire to stay in your nicest rooms are more effective than traditional specials that just offer a small percentage pricing discount on your lodging choices. If you are trying to increase weekday business, begin by offering a free night on Thursday, Sunday, or Monday if the guest reserves both Friday and Saturday nights.  Continue by adding in components particular to the profile of the traveler you are trying to attract.  Another effective strategy is to offer a free upgrade to a nicer room if a guest stays two or more nights. Combining room upgrades and discounts with additional components can be even more effective. If your property offers spa services or you can partner with someone who does, it can be very effective to offer massages and romance packages that include bundled products along with your room rates. If you have a major tourist destination or good restaurants in your area, partner with those businesses to offer reduced ticket prices, dinner specials, and other appealing package items. Finally, if your area has local special events during the off-season, offer package deals during those slower times to capitalize on traffic that may already be planning to come to the area. It may sound like simple advice, but we have seen many businesses fail to offer attractive packages during the most obvious times. Above all, realize who your target customer is and make sure the package is compelling enough to that audience to have them feel compelled to act.

What is the best way to create effective dynamic packages?
Next month’s feature article in RezNEWS will offer handy tips and useful examples on how to create highly effective dynamic packaging—perfect for success at any property!