Ensuring revenue growth in markets with severely failing demand characteristics
Published: 17 Nov 2008
Revenue Management Special
In the face of an impending recession, it is critical to assiduously manage revenue in a challenging environment and avoid rate erosion over the long-term.
Clearly, hotels need to be conscientious of the demand factors in their market and identify pockets of opportunity to maintain or improve revenues in the face of a recession.
According to Jay Hubbs, director - revenue management, Expedia Partner Services Group, in most markets that can include taking advantage of opportunities through online channels, especially opaque and packaged products, looking to capture increased share of corporate business and evaluate group strategies.
"However, in markets with severely failing demand characteristics, it is important to analyse overall pricing strategies and implement an approach that will ensure revenue growth," Hubbs told EyeforTravel.com's Ritesh Gupta in an interview.
Dynamic packaging does not rely on distressed inventory, but it certainly remains useful for distressed inventory.
On how the technology is absolutely ideal to help hotels and airlines manage off-peak, early bird and low season travel, Hubbs said it is difficult for hotels and airlines to implement yield management strategies that capture all segments of demand.
He said clearly, there are segments of the market that can be stimulated by aggressive pricing over off-peak periods.
"By using dynamic packaging tools that OTAs and others provide, suppliers are able to effectively move that demand to those times and if they can replace that business with higher-rated business over peak dates then it is a win-win for the supplier and the consumer," said Hubbs.
Commenting on hoteliers' approach towards technology costs and support costs, he said, "I think hoteliers are always trying to find the optimal point in a cost benefit analysis with regards to technology."
"However, often that analysis is difficult to accomplish since there are so many factors that impact the business. Clearly, hotels and other businesses want to focus their energies on the highest lifetime value customers but investing in technology and resources to segment those customers and develop strategies to retain them is an expensive undertaking," added Hubbs.
The fundamentals of protecting the brand and price the airline or hotel offers an online travel agent disappears in an opaque pricing model.
"Travel suppliers should use dynamic packages, fixed packages and other opaque distribution means that support their revenue management and brand strategy. If they are not comfortable with the fundamental product an OTA or wholesale packager is offering them, then it is their responsibility to work with that distributor to ensure their needs are being met," said Hubbs.
Revenue Management and Pricing in Travel Conference Europe 2008
Hubbs' colleague Murad Hajbeehoy, Vice President, Partner Services Group, Expedia is scheduled to speak during EyeforTravel's Revenue Management and Pricing in Travel Conference Europe 2008 in Munich (2-3 December). For more information, click here:
http://events.eyefortravel.com/rmeurope/agenda.asp
or Contact: gina@eyefortravel.com, +44 (0)207 375 7197
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