This article Click to fly – Express Computer offers one of the better definitions of “dynamic packaging”, the buzzword that in ’04 made it even into the general media such as the Wall Street Journal.
It certainly is the next big thing in online travel, especially when defined properly as in this article. Two key aspects are “customer control” and “bundled or packaged price”.
The first one is about giving the traveler the tools for “self-assembly” of her desired vacation trip, multi-component, multi-destination all based on customer choice, not pre-planned and packaged by some tour operator. This, of course, requires a certain level of familiarity by the customer with the destination and the available options. To get that level of familiarity should not require visits to all sorts of websites, but the elements should be presented in logical sequence of DREAM – LEARN – PLAN – GO! right on the online travel company site, leading from planning to booking. This poses numerous challenges in website development, especially usability and technology integration. Another initial stumbling block is very likely the lack of familiarity by customers with such a new type of site as it quite likely will be different in look & feel from today’s first generation travel sites.
The second issue poses another challenge. Today, online travel seems to be all about price. Everything is geared to finding the lowest fare from A to B and the lowest accommodation. Guess what the margins on this business are! Unfortunately customer perceptions are hard to change, however, to thrive online travel companies need to be able to re-claim a margin. This is hardly possible in a totally transparent market for individual travel components. Bundling of these components – self-assembled bundling by the customer, nonetheless, or truly dynamic packaging is the logical progression and more so, the value added proposition that leads to increased profitability. The challenge is to convince the online travel shopper that such a trip is cheaper than the individual adding up of components.
It will be interesting to see how this is tackled by the online travel players.