I tend to drop these posts on a Friday, but if I did it earlier in the week I might be able to rename this category Takedown Tuesday. Past winners include NCR and Continental Research; today it goes to Avis Europe for this quote from Travolution reporting on the Eye for Travel summit in London.
Sharon Lee, product development manager for Avis Europe, revealed some stats which suggested that car hire companies could sell ancillaries rather than just be sold as an ancillary. She asked people who booked with Avis Europe online whether they would be interested in buying other products from the web site. More than 40% of them would consider buying flights, hotels or parking at the same time. The figures were such as surprise that Lee’s boss made her go and do the research again to double-check! The findings came back the same.
I admit it is a bit unfair to hand out this award based upon a third party account rather than the original source, as I know on rare occassions my quotes have been taken out of context. I tried searching online for any slides from this presentation but couldn’t find them, so apologies to Sharon if she’s been misquoted.
I’ve made this point numerous times before, but what people say they will do is often very different to what they actually end up doing. Herein lies what is probably the fundamental problem with poorly structured market research. Make no mistake about it, ancillary revenue is not the exclusive domain of the airline, but for Avis, it probably won’t be coming from hotels and it definintely won’t be coming from air – at least not in numbers of any significance.
To illustrate this point, just take a look at what David Wyshner – Executive Vice President and Chief Financial Officer of Avis Budget Group said on May 7th, 2009.
Ancillary revenues increased 18% on a per rental day basis reflecting the considerable progress we’ve made on sales of insurance products and where to GPS rentals. …In our international car rental operations ….Excluding the impact of FX, ancillary revenues increased 10% per rental day, again reflecting our initiatives in this area.
Insurance, GPS, and Dynamic Currency Conversion – this is where the big money is in ancillary revenue for rental car companies. Flights? Hotels? Maybe not. Let me know if you need some help on the third iteration of that market research study.