By EyeforTravel.com Correspondent, recently in Amsterdam<br><br>The decision making related to revenue management is evo
Published: 28 Nov 2005
By EyeforTravel.com Correspondent, recently in Amsterdam
The decision making related to revenue management is evolving due to several factors including the increase in the number of channels, less information about customers, difficulty in tracking
EyeforTravel.com spoke to several speakers, who presented during the EyeforTravel.com’s ‘Revenue Management and Pricing in Travel Europe 2005’ in Amsterdam, about their major initiatives taken this year for sustaining consistency in revenue management across all your distribution channels. Excerpts:
Welmer Blom, vice president pricing and revenue management, Europe, KLM: All the reservation requests from the different distribution channels are handled based on point of sales by the revenue management system. Based on value of each flow the system grants access. In principle we do not discriminate between distribution channels . Commissions are further reduced, reducing the difference of the cost of the various channels. Also surcharges like CRS and paper tickets are further reducing the differences between the channnels.
Elisabeth Stevens, city revenue manager, NH Hoteles: We moved away from consortia preferred pricing. Moved away from giving discounts to any local company to giving them BAR. Tightened the terms and conditions with Tour Operator and Wholesalers. Started negotiations about mark-ups / commission levels with TPW. Implementation of RM System.
John Waddington, manager of revenue management, Eurostar Group: The RM team at Eurostar have made significant headway this year in understanding the customer’s behaviour over peak travel times and special events. There has also been more of a focus on the price-sensitivity of passengers this year, with the ongoing project of implementing a Price-Sensitive RM system in Quarter 2 of 2006.
Another major development within RM at Eurostar is the building of closer relationships with other departments in the business. Links have been developed with the marketing teams across all 3 countries, leading to much more integrated and successful Promotions and Sales activity. Working relationships have also been built with the Business planning teams to ensure RM strategies get included in the budget process, and with the operational teams to limit the problems faced over peak travel dates.
(Eurostar has stated that traveler numbers are up 4.3 percent in first 9 months of 2005 and sales revenues up 10 percent during same period) . From a Revenue Management perspective this is clearly a successful result for Eurostar with a 5.5% increase in yield. However the details behind these results are disguised by an increase in the proportion of Business to Leisure travellers, which naturally leads to an increase in yield.
The real successes from an RM perspective relate to the times of peak travel, where a significant amount of effort has been invested in forecasting and understanding demand at the highest prices. This increased understanding enabled RM to put together a supply-side strategy (additional trains, mix of standard and first class capacity and over-booking) for these events. This in turn led to a significant increase of revenue over peak times, and a shifting of lower priced demand away from the peak times.
Dyan Stone, group yield and strategy director, Thistle Hotels: Thistle Hotels and Guoman Hotels have centralised yield management of our 19 hotels in London under one central Revenue team based at our Corporate Head Offfice Victoria. All required systems and yield management industry electronic tools are accessed via citrix and reflect our real time availability. We have established direct connectivity with some of our business partners which again enables a powerful platform and a simple one to execute our yield strategy from. We have merged Database, Distribution and Revenue management under one team of people who are referred to as the Yield & Strategy team.
Carl Oldsberg, director of revenue management, Choice Hotels Scandinavia: What we have done is we have set up three different functions in three different countries – Denmark, Sweden and Norway. We are rolling out a new PMS CENIUM which is an ASP solution, which can look at the occupancy for all our hotels.
These central functions can look at the occupancy, put the information into the model that gives us a price we need to put on the basis of the occupancy. And also calculate the rates, that gives us rate parity in different channels. However, we are experimenting by offering different rate for different channels. We believe that is different demand and cost attached to various channels, that give us the opportunity to use different pricing which will lead to channel conversion to the most profitable channels.
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