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If you’ve ever tried to book a flight to Bali or a hotel in Kuala Lumpur during the months of May or June, then it’s no secret that this is the peak travel time for people in Southeast Asia. Across the board, prices for transport, lodging, tours and activities, are at their most ‘predictably unpredictable’ during the Islamic holy month of Ramadan and leading up to a proper rush during Eid al-Fitr.
According to data-driven travel marketing provider Sojern, during last year’s holiday spike, 54 percent of local travellers remained in Southeast Asia. The top three countries for departures were Indonesia, Thailand, and Malaysia. Twenty-eight percent of these travellers aimed to have their trips last for two to three days. Twenty percent wanted to take 12 or more days for their trips.
With Malaysia working hard to keep its position as the top destination for Muslim travellers and Muslim-majority Indonesia representing 40 percent of the region’s population, Eid al-Fitr in mid-June is undoubtedly the time when it pays big for tour and activities operators to be on their game when it comes to pricing. As such, here are five strategies that savvy businesses should keep in mind ahead of annual surge.
1. Flash sales
The truth is that flash sales work in Southeast Asia. There’s just something about the phrase “For a limited time only” that arouses fast buying tendencies in the hearts of locals.
According to Nielsen, during Indonesia’s December equivalent to Cyber Monday (known locally as Harbolnas), online purchases for everything under the sun spike by more than 400 percent their normal levels. In total, IDR 4.7 trillion was spent (US$338 million). The revenue generated in the travel segment grew by a whopping 29 percent in 2017, up from the same period in 2016. This made it the second fastest-growing sales vertical behind fashion and sports clothing during the nation’s annual flash sale bonanza.
Important questions to answer before executing a flash sale include: Have I clearly defined my goals? Do I know which group of people I need to reach with this? Is the sale simple enough to understand? Have I chosen the precise and correct time to launch? Is the saving big enough to the point where my audience will do whatever it takes to get it? Do I have a digital way to track and measure the success?
2. Rates depending on day or time of day
This is one tactic that tour and activities operators can take straight from the playbooks of their counterparts in hotels and online ticketing sites. It’s a simple concept: increase the rate when bookings are scheduled for the weekend or a time when you know there will be a spike in business.
In the case of Eid al-Fitr 2018, operators will want to zero in on June 14 to 16 as the hottest window. It might be smart to even make a bell curve out of it, with prices gradually increasing starting on June 9, then incrementally decreasing back to normal starting on June 17.
Time-of-day pricing is another way to get the most from your revenue. With this method, prices should vary in accordance with the precise hour on the clock. If a popular time for customers to book your package is between 1pm and 3pm, you could add a higher margin to those times of the day.
When making use of this strategy, however, it will be important to protect yourself from being perceived as a “price goucher.” If you can (and out of respect to your customer), try to go no higher than 30 percent in additional revenue. Pad out the offering by providing ancillary value during expensive slots if you can. You’ll also want to make sure your prices are still competitive with those of rival operators.
3. Last-minute pricing
It may seem counterintuitive, but offering cheaper “last-minute” prices is an effective way to fill seats and maximise your revenue during Eid al-Fitr. In this strategy, you are attempting to flip the buyers who have already decided they don’t want to shell out the cash for your tour or activity. Offering an unexpected, quick-draw, last-minute rate is a good way to convert the frugal buyers.
In this scenario, however, you will need a quick and effective tool to broadcast the last-minute deal on the internet and social media. Otherwise, you won’t reach—nor will you flip—your closed-minded target audience who have already walked away.
4. Large party discounts
This is an art that big operators like Disney, Universal Studios and international cruise liners have perfected over the years. Offering large discounts for large parties is a good way to fill your tours and activities to their maximum capacities (e.g. no empty seats on your high-valued fishing boat trip) during Eid al-Fitr.
Ancillary perks are also a big draw in this scenario. According to iCruise, cruise lines will offer extras like onboard credit, bottles of wine, fruit plates and snacks, soda packages, cocktail parties, complimentary specialty dining, and more. They will also frame the discount in such a way that illustrates that at least one person in your headcount is participating for free.
5. Bundling
In bundle pricing, companies sell a package or set of goods or services for a lower price than they would charge if the customer bought all of them separately. This is something most savvy tour and activities operators do year-round, but it becomes absolutely vital in places like Bali and Phuket during Edi al-Fitr, when groups of travellers need to save headaches by opting for prescribed all-in packages.
Offering bundles during the holiday can almost be considered as a survival technique in Southeast Asia. Travellers can’t afford to spend their entire trip liaising and negotiating with vendors one-by-one. Waiting in line is not a fun way to spend a trip. Likewise, tour and activities operators can’t afford to sit idly by while customers labour to organise other aspects of their trips. They need to keep the revolving door in motion. For this, operators will need a strong network of third party businesses to partner up with. Getting plugged into a formalised network or community online is surely the way to go.
While some operators may find these tactics to be arduous—especially considering that certain strategies apply only once per year—there is a variety of digital solutions to help ease the pain.
But first, there are some important questions you should answer before diving in to get your company set up: Does your current booking system already account for all of these variables? Can your system convey your holiday price adjustments to all your different agents and distribution channels? Is it already automated? What are the unique pain points your business will need to address for itself this season?
