The travel landscape has undergone a seismic shift. Consumers no longer accept a one-size-fits-all approach to travel. They crave personalised experiences, tailored to their individual needs and preferences. This demand for customisation has transformed how travel companies operate and interact with their customers – and has made ancillary services more relevant than ever. And, according to our market research done in partnership with Skift in 2024, 72% of travel industry executives see ancillary services as a key component of their company’s overall revenue strategy.

Ancillary services: a win-win for businesses and consumers

Ancillary services, encompassing everything from seat upgrades to travel insurance and airport lounge access, empower travellers to personalise their journeys. This ability to customise creates happier customers, reduces complaints, and fosters loyalty, ultimately leading to a rise in the demand for travel.

For travel companies, ancillary services represent a key revenue stream. In an industry often characterised by thin margins, ancillary services can help monetise bookings while also increasing customer value. The ability to offer a frictionless, value-added experience is a win-win for both the traveller and travel supplier, leading to higher customer lifetime value, a competitive edge, and sustainable growth. 

Navigating the challenges of ancillary marketing and optimisation

While the potential of ancillary services is undeniable, travel suppliers face challenges in effective marketing and optimisation. One common pitfall is the ‘extremes’ approach – for example, offering too few options, limiting customer choice, or overwhelming travellers with an excessive array of choices, leading to decision fatigue and booking abandonment. Another hurdle is the disconnect between internal teams and customer understanding. Travel companies often possess deep product knowledge that customers lack, leading to unrealistic expectations and potential frustration.

This ability to customise creates happier customers, reduces complaints, and fosters loyalty, ultimately leading to a rise in the demand for travel

Overcoming these challenges requires a holistic understanding of the customer journey. For example, we offer a wide variety of travel insurance options, enabling travellers to tailor their choices to fit their needs. The range of offers is designed to address potential factors that could cause stress and anxiety, as well as those that bring peace of mind, throughout the journey. 

This solution-oriented mindset, coupled with the strategic focus on the timing of offers, is essential in helping travellers get the best protection based on the plans they are making. In this way, we can ensure that the traveller is being offered the right product at the right time at the right place and for the right reason. We call this ‘optimisation’.

Optimisation, however, goes beyond simply offering the right products at the right time. It involves continuous experimentation and a willingness to innovate. A/B testing, machine learning, and other data-driven techniques can help identify what resonates with customers, improving both the customer experience and business performance. The marriage of human creativity and technology like machine learning is essential for success, and our Allianz Fusion platform demonstrates the power of this combination, using advanced machine learning to personalise offers and enhance the customer journey.

Personalisation: the key to exceptional customer experiences

True personalisation involves tailoring the travel booking experience to individual customer needs and preferences. By analysing data points such as travel dates, destinations, booking windows, and loyalty status, travel companies can anticipate customer needs and offer relevant ancillary products. For example, travellers planning trips to the US will take comfort in knowing that they have medical protection as part of their travel insurance; families travelling with children might appreciate an offer for early boarding; and travellers with long layovers might value lounge access. In this way, personalisation transforms ancillaries from generic add-ons to valuable enhancements, improving customer satisfaction and driving revenue.

The impact of personalisation and optimisation on ancillary revenue
Personalisation and optimisation can have a significant positive impact on ancillary revenue. By keeping the customer at the centre, travel companies can increase conversion rates, boost average order value, and foster customer loyalty. 

Using our platform, we’ve worked with many global airlines to optimise the travel insurance offering and have seen growth in conversion rates and revenues. With over 1,800 tests in how we present that insurance offering conducted annually for our partners, we consistently discover that even minor adjustments – even as seemingly simple as format changes – can significantly impact customer engagement and satisfaction. 

For example, by reminding travellers of the benefits offered in travel insurance during the travel booking, one airline’s revenue from travel insurance increased by 22%. On average, our optimisation efforts contribute to a revenue lift of around 10%, underscoring that the key to growth lies in improving customer experience and relevancy of the offer at the time of booking. 

The importance of innovative partnerships

Collaboration with innovative partners is essential for maximising the potential of ancillary services. Our partnership approach emphasises working closely with travel brands to understand their customers and tailor solutions accordingly. This collaborative approach fosters innovation, accelerates growth, and enhances the customer experience, which ultimately drives customer satisfaction and loyalty.

Evolving customer expectations

Customer expectations continue to evolve, particularly in the realm of insurance and trip protection. The Covid-19 pandemic heightened awareness of the importance of travel protection, prompting travellers to seek greater flexibility and peace of mind. Brands that prioritised customer care and demonstrated empathy during this period earned customer loyalty. Travellers now demand greater transparency, self-service options, and proactive support from travel companies and insurers. Our role is to really show the consumers what they need by serving them customised insurance options that are most relevant to them.  

Leveraging technology for enhanced customer service

Technology plays a vital role in meeting the evolving demands of travellers. Our platform illustrates the power of technology to streamline distribution, optimise offers, and personalise the customer journey. However, technology and data insights alone are not sufficient. Human expertise and empathy remain crucial for understanding customer needs and providing the customer service that travellers need at the time of booking. That human connection to what we offer is still incredibly important.

Collaboration with innovative partners is essential for maximising the potential of ancillary services

The future of ancillary services

The future of ancillary services lies in continuous innovation and a customer-centric approach. Travel companies must leverage data, technology, and human expertise to create relevant, personalised experiences that enhance every stage of the customer journey. Doing so will allow travel suppliers to unlock the full potential of ancillary services, driving revenue growth and building long-term customer loyalty.