Stopover Finland. Benchmarking Iceland

Transcription

1 Stopover Finland Benchmarking Iceland

2 Content of the benchmarking study Executive summary Objectives of the benchmarking study Methods used Findings Stopover traveler Stopover products Stopover travelers impact on the society Roles, distribution and marketing FINTRA OY

3 Executive summary The Icelandic Stopover concept is developed and run by Icelandair and has been in the market for 40 years passengers made a stopover in 2014 staying on average 2.9 nights and creating overnights. Stopover travelers brought USD 51.5 million revenue to Iceland in The airline uses all its marketing channels to promote the stopover services. It is estimated that 50 % of the international presales is done through tour operators and 50 % through the airline, mainly its web site. Hotels are an important sales channel. The main suppliers of Stopover programs to Icelandair channels are private companies Reykjavik Excursions and Iceland Excursions, who also offer their own daily tours and tour packages to tourists. The Stopover portofolio on Icelandair website is fully based on market demand and the service providers carry the business risk Joint marketing efforts are limited to advertising in selected online channels and print 3

4 Objectives of the benchmarking study Finland aims to increase the number of registered overnights by 45 % and to generate 80 M more travel industry export earnings from Asia by Furthermore, by 2020 Finland should be the best known stopover destination in the Nordic countries. The purpose of this benchmarking study in Iceland is to describe the local Stopover concept, the operational model and distribution channels used as well as marketing investment made. There are plenty of previous studies and reports made on Iceland stopover, so this study is an update of the current situation. The findings will be used when designing and structuring a stopover business model for Finland. 4

5 Methods used This benchamarking study of Stopover Iceland was conducted for Finnish Trade Organisation Fintra Ltd by Pekka Mäkinen in August As the consultant is the Country Manager for Iceland Air in Finland, he is well connected with the key players of the Stopover Iceland concept. He used his network to update the information from previous studies. 5

6 Stopover traveler

7 Volume and length of stay The number of travelers to Iceland has grown strongly during the last 5 years due to general interest in Iceland and Icelandair s expansion: the growth rate for the last years has been + 20 % and Stopover volumes are developing with same degree 2015 Neither the Icelandic authorities nor general visitor surveys provide statistics on the Stopover concept However, the visitor surveys confirm that 13.6 % of visitors mention the Stopover opportunity impacted their decision 19 airlines operate to Iceland, but only Icelandair promotes Stopover as an opitional elelment for transatlantic travelers In 2014 Icelandair operated 32 citypairs. In 2016 it will have 16 direct destinations in North America through its hub Keflavik passengers made a Stopover in 2014 staying on average 2.9 nights and creating overnights 80 % of the Stopovers are during April September, but the seasonality is considered as potential for growth The length of stay varies by season and is longer during May-August and German travelers staying on average 3.4 nights 7

8 Departure of origin USA represents about 60 % of the Stopover passengers, followed by UK, Scandinavia, Germany and the Netherlands 10 % each North American travelers originate from the following cities in the USA and Canada Boston Daily, during summer months 14 flights a week New York Daily, during summer 16 flights a week Seattle Daily Denver Daily Toronto Daily, twice per day 4 times a week during summer Edmonton 4 flights a week 8

9 Target group - segmentation Target groups are not specified, but Stopover is made available to anyone traveling across the North Atlantic There is no exclusive focus on any spesific market or country Stopover is limited to max. 7 days stay Majority of Stopover clients are 2-4 person parties and mainly couples Stopover is frequently included as an option to honeymoon or other celebration trips A number of tour operators include the Stopover in their programs to Europe and to North-America 9

10 Stopover products

11 Activities for transit passengers Kelfavik Airport (KEF) is under construction and will be ready in 2016 it s currently experiencing lack of capacity The airport itself is not providing any advanced services - the focus is on basic services only i.e. good variety of shops, restaurants and a lounge for premium travelers Reykjanes area around KEF has several service providers and can be seen as a supporting function for transit passangers Blue Lagoon Spa is located 25 minutes from the Airport and is considered as a draw for KEF. The Spa has projected to build a 5-star hotel in connection to the Blue Lagoon. General services at the airport include airport transfers, pick ups and normal meet-and-greet services 11

12 Top activities for Stopover Reykjavik, Iceland destinations services and tour options are impressive and unique. They include pick up services from all hotels and accommodation sites. A number of guaranteed departures makes it easy for customers to book online services prior to arrival or onsite. All hotels sell and assist clients in booking the services. The main volume attractions all year around in Iceland are: Blue Lagoon and public outdoor swimming pools Golden Ring Sightseeing and Reykjavik City Sightseeing Whale Museum and Whale Watching Tours Fákasell Horse Show and guided short and long horse riding tours The high volume attention and seasonal attractions in Iceland are: Inside the Volcano and Icecave at Langajókull Northern Lights tours with bus or Superjeeps The top activities are not exclusive for Stopover passangers, but accessible for all visitors. 12

13 Key attractions The main focus in Stopover products is on nature and unique Icelandic elements e.g. horses, whales, volcanoes, glaciers The Northern Lights, Wellness, Culinary scene and Cultural events are included frequently 13

14 Stopover travelers impact on the society

15 Economic impact for Iceland The average spending for a tourist in Iceland is 1200 USD / Stay excluding airfare or sea transportation Stopover passengers spending is indicated to be slightly more than the average due to shorter stay 2.9 vs. average 5.5 days Stopover visitors total spending in Iceland is USD 218 / per day x travelers x 2.9 days = 51,5 mill. / USD ( 2014) 15

16 Roles, distribution and marketing

17 Roles of participants in the Stopover concept Iceland Stopover is completely run and organised around Icelandair group as the product is designed to increase the airline s revenue The airline uses all its marketing channels to promote the stopover services. Furthermore, Icelandair Holidays offers stopover packages including flight, hotel, transfer and excursions. However, most stopovers are sold with the flight and accommodation, and the activities are purchased separately. Promote Iceland is not actively promoting the Stopover but it is involved in supporting the brand Icelandair chooses partners for stopover programs based on quallty, capacity and attractiveness. There is no exclusivity for any partner, supplier or service provider. The frequent partners include operators of all main attractions in the Reykjavik and in South Iceland The main suppliers of Stopover programs are private companies Reykjavik Excursions and Iceland Excursions which also offer their own daily tours and tour packages to tourists. Icelandair Hotels as a daughter company is the selected partner, as they offer 10 hotels in Iceland E.g. Hilton Reykjavik, Hotel Natura and Hotel Marina and New Hilton Canopy Icelandair works with Hotels.com for accommodation and with Cartrawler.com for car rentals 17

18 Icelandair markets the Stopover Icelandair provides the main channels for marketing and offers paid advertising and product presentation channels for its partners Separate Stopover marketing is not done. Stopover is an integrated part of all direct and partner marketing and sales efforts and used as a unique selling point on a corporate level The main marketing channels are the international websites, social media, on board, inflight entertainment and inflight publications Departure countries (e.g UK and USA) choose their additional activities and partnerships (e.g. Google, Uber, Expedia, Tripadvisor) All activities are tactical and agreements are made between the airline and the suppliers without any third party distribution Airport transfers and selected other products are also sold on board and Stopover is included in all material on board 18

19 Marketing budget Stopover Iceland does not have a separate marketing budget by any stakeholder It is an integrated part of all PR activities, on board sales and communication The complimentary services for media and travel trade representatives are seen as a joint marketing investment Marketing efforts are different for all markets and the investments are mainly done by the airline Estimated, stipulated investment in PR and Marketing is USD 750 to 950K per year The Stopover product is well-established as it started 40 years ago as a technical must (airplanes had to stop for fueling over the Atlantic) To differentiate Icelandair from other carriers on North Atlantic, Stopover has been actively used as unique selling point (USP) for the last 10 years 19

20 Distribution channels Flights with Stopover are made available in all major GDS systems Travelport, Sabre and Amadeus for travel agencies. GDS distribution of flights that can combine a stopover is estimated to be 50 % Travelport, 40 % Amadeus and 10 % Sabre Systems Purchase of Stopover flight ticket is made possible in all distribution systems. All booking classes can be combined and open jaws are possible. Purchase is also possible on the Icelandair website. An estimated 50 % of the international sales comes through tour operators and 50 % through the airline Icelandair Holidays is a key distributor especially in the US and UK and represents around % of the Stopover sales 20

21 Icelandair website markets & distributes the packages Once booked, the customer will receive two s. One containing the electronic air ticket, and the other the package Booking Confirmation and general information. Approximately three weeks later, the customer will receive additional information containing specific details about their travel arrangements from the Icelandair IHUSA Confirmation box. Icelandair s own package offering generally include flight and accommodation, whereas incoming operators offer daily excursions and activity packages. 21

22 Purchase funnel portal policy There are several vendors offering booking portals for services and all function with an affiliate and CPP model These partners mainly use Icelandair channels and websites for marketing and sales and pay a % commission on sold services Reykjavik Excursions and Gray Line are the largest providers of services and accept single products from individual suppliers to the portofolio. The consumer can buy one product at a time, no shopping basket. Sales are normally vefrified by Google Analytics and the consumers make the purchases directly from the vendor s inventory Client has agreement on flight with the airline and for other services directly with vendors who take the risk for no-shows The portofolio is fully based on market demand and the providers carry the risk customers create the criteria by choosing the product Joint marketing efforts are limited to advertising in selected online channels and print 22

23 Hotels as a distribution channel Hotels play an important role in distributing and selling the Stopover excursions in Iceland. They function as an outlet for most suppliers and services. Most hotel receptions (some 200 sales points in total ) around the country make reservations for Stopover excursions. Hotels and DMCs / Service providers have a bilateral compensation practice; hotels sell and accept payments from travelers against a % commission from suppliers. There is no public information available about the volume or relative share of Stopover excursions sold through hotel receptions 23

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