TDS Asia 2008 SpecialRevenue management alone without sensitivity to the impact of price on demand will fail to successfully drive business in 2008, according JDA Software Group, Inc.

Published: 15 Apr 2008

TDS Asia 2008 Special

Revenue management alone without sensitivity to the impact of price on demand will fail to successfully drive business in 2008, according JDA Software Group, Inc.

The company, which presented its vision of Price Sensitive Revenue Management at the EyeforTravel's 2008 Asia Travel Distribution Summit in Singapore last month, shared that during the conference there was a consensus for new price-sensitive strategies that improve upon the current breed of solutions that rely on predetermined demand forecasts as bedrock indicators.

During the conference, JDA, a provider of pricing and revenue management solutions, facilitated a thought-leadership workshop focused on Price Sensitive Revenue Management. The sessions were attended by over 200 operators evaluating new strategies to meet the dynamic business needs of revenue managers in Asia's expanding hospitality market. Conference attendees addressed industry challenges, including how to manage distressed inventory and drive revenue in a likely softer 2008 travel market.

JDA Group Vice President, Revenue Management, Andy Archer, said, "As price transparency increases and becomes a revenue reducing instrument used by both consumers and competitors, especially in the Asian market, successful revenue managers in 2008 must anticipate the need to constantly refine the price at which their inventory can achieve optimum profit on any given day."

The company stated that due to the Asia-Pacific region's market expansion and hyper-transparency of price, conference attendees advocated development and implementation of price-sensitive approaches to gather and use competitor rate intelligence. Asian operators indicate they require effective, new real-time pricing solutions to capitalise on fluctuating market opportunities, while also mitigating revenue loss due to volatile market forces.

"Traditional revenue management models factor in demand as a static element; this is a flawed assumption since demand changes quickly based on market price," said Archer. "These legacy revenue management models focus on inventory controls that are only effective when demand outstrips supply. In contrast, JDA's Price Sensitive Revenue Management approach, or PSRM, develops optimised pricing decisions for all future dates and recognizes that demand is fluid, dynamic and constantly affected by price. This industry is long overdue for a fresh approach to Revenue Optimization, and JDA Software's price sensitive approach is proving to be much more effective in the current economic environment and AsiaPac operators are recognising this."

Changing customer needs in hospitality and other travel verticals over the last two years has prompted JDA to develop and implement a next-generation PSRM solution based on the price sensitivity approach representing a paradigm shift in revenue management, shared the company.