The promotion promised to refund customers who booked a holiday in a defined period if a certain amount of snow fell on set locations in Canada on New Years Day. Some of the lucky holiday buyers got their wish when over 5 inches of snow fell at Halifax airport.
There aren’t any details on the amount of holidays that qualified for a full refund but it leads one to think how profitable these deals are. The promotion received plenty of press in Canada and iTravel2000 were heavily promoting the offer on their website, so one would assume that their customer base were aware of it. The great thing about this kind of offer is that if the awareness is high enough it can encourage your customers to buy your product or service within the period of the offer which is a great way to increase demand in periods that can be otherwise slow. I’m sure the promotion will have been worthwhile for iTravel2000 given the increase in holiday bookings it will have driven, making the cost of underwriting the deal with Weatherbill worthwhile.
From Weatherbill’s point of view I’m sure it was a worthwhile deal too. While they will have to make payments to cover the refunds I’m sure the weather derivatives that underpin these deals will cover the losses. Had the snowfall been more widespread and triggered refunds for many more customers it could have been a different story, but that’s the joy of the unpredictable nature of weather risk management.
You can read the iTravel2000 press release here.