As the economic downturn starts to take hold across many countries, a downward turn in demand for travel is starting to affect many travel companies worldwide. This poses key questions - should revenue managers be chasing profit or revenue during this period? Is there a simple strategic solution to leverage revenue management during an economic downturn?

Published: 23 Oct 2008

As the economic downturn starts to take hold across many countries, a downward turn in demand for travel is starting to affect many travel companies worldwide. This poses key questions - should revenue managers be chasing profit or revenue during this period? Is there a simple strategic solution to leverage revenue management during an economic downturn?

Dr. Reed Holden, co-author of ‘Pricing with confidence’ and contributor to the Revenue Management Forum, suggests one solution many companies turn to is to cut costs and drive efficiency. This is fine and serves to increase profit margins however he warns solely relying on this strategy is not enough as you can only cut costs so far before the quality of your product and service becomes impaired.

Another solution is to offer more discounts to hit revenue targets. The main problem with this is the advent of price wars. In the Asia Pacific region EyeforTravel Research has already found that price wars have become an issue in the hotel sector. The impact of such wars can only be damaging for all companies involved.

An interesting point that Dr. Holden makes is that one of the keys to success in a downturn is to stop chasing unrealistic revenue goals with price discounts. ‘Chasing declining revenue with price discounts just makes the problem worse–you end up with less revenue and no profit. Smart pricers look for ways to eliminate discounts, especially on high value products and services--even in a downturn!’

He highlights the example of Ford Motor cars who predicted many months ago that a downward turn in demand was on the cards and so cut capacity and stopped discounting their prices. They are now one of the few automotive companies to still be making a profit.

To find out more about how your company can optimally price and manage revenues during this period, leading revenue managers from Aer Lingus, Air Malta, Avis, Best Western, Choice Hotels, Club Med, Czech Airlines, Expedia, Hilton, Scandinavian Airlines, Spanair, Thomas Cook, TUI, Virgin Holidays and more will be meeting in Munich, 2-3 December at EyeforTravel’s Revenue Management & Pricing in Travel Europe conference.

They will be discussing how to manage revenues and set the right prices in an economic downturn. They will also be examining how the role of revenue management in travel companies will evolve over the next 5 years as well as key topics such as forecasting, consumer-centric revenue management practices and much more.

For more information please see www.eyefortravel.com/rmeurope or contact gina@eyefortravel.com.

To see who will be attending this event please visit http://events.eyefortravel.com/rmeurope/who-you-will-meet.asp or scroll to see the list below. Note that early bird prices expire Friday 7th November.

You can read the full post from Dr. Holden mentioned in this article at http://rmforum.blogspot.com/2008/05/profits-are-more-important-than-reve...

Revenue Management & Pricing in Travel Europe 2008 attendees so far:-

Head of Revenue & Pricing, Aer Lingus
COC, Air Malta
Operations Research Analyst, Air Malta
Head of Pricing, Airmiles
Head of Analysis and Research, Airmiles
Business Development Manager, Amadeus
European Pricing Manager, Auto Europe
Country Revenue Manager, Avis Norway
Director of Pricing & RM, Avis Scandinavia
Commercial Director, Avis Scandinavia
Country Revenue Manager, Avis Sweden
Director Electronic Distribution & Information, Best Western Hotels Deutschland
Founder & Senior Lecturer in Tourism technology, Revenue & Prof, Betterrevenue
Country Revenue Manager Sweden, Choice Hotels Scandinavia
Revenue Manager Norway, Choice Hotels Scandinavia
Regional Revenue Manager, Choice Hotels Scandinavia
Director of Revenue Management, Club Med
Head of Revenue Management Virgin Rail Group, Cross Country Trains (Arriva)
Director of Revenue Management, Czech Airlines
VP - Operations, EasyRMS
Revenue Manager, ebookers.com
Professor Revenue Management, Ecole Hoteliere De Lausanne
VP Lodging and Destination Services EMEA, Expedia
Vice President Revenue Development & Guest Services, Hilton Hotels
Sales Manager, Hotel Adriatic, Maistra
Business Intelligence Manager, Hotel Adriatic, Maistra
Manager, Hotel Orto De Medici
Publisher, HOTELMARKETING:COM
Head of Contracting, HRS Hotel Reservation Service
Global Marketing Co-ordinator, JDA Software
Group Revenue Manager, Jurys Inns
Business Controller, KRAS (TUI Travel PLC)
VP Travel, Lixto Software
Reservations Manager, Millennium
Senior Manager Revenue Management, Octopus Travel
Director of Global Strategy, OctopusTravel
Senior Lecturer, Oxford Brookes University
Revenue Account Manager Central Europe, Preferred Hotel Group
Group Revenue & Distribution Manager, Premier Inn
Head of Revenue Management, Premier Inn
Finance, PROS
Revenue Manager, Reconline AG
Account Manager, Rubicon
SVP & Chief Scientist, Sabre Travel Network
VP Profit Optimization Strategies, SAS Institute
Head of Pricing / Senior Revenue Manager, SAS Scandinavian Airlines
Area Revenue Manager, Scandic Hotels
Business Planner & Analyst, Scandic Hotels
Head of Business Develop. Hospitality & DCC, SIX Multipay
Senior Manager, RM, Spanair
Director Revenue Management, Steigenberger Hotels & Resorts
Regional Revenue Manager, Swissotel Hotels & Resorts
Marketing Director, Tallink Grupp
Head of IT Development, Tallink Grupp
Head of Yield Management & Business Development, Thomas Cook
Revenue Manager, Thon Hotels
Revenue Manager, Thon Hotels
Revenue Manager, Thon Hotels
Director of Revenue Management, Thon Hotels
VP Strategic Pricing, Travelport
Head of Pricing Development, TUI UK Yield Management
Revenue Management & Forecasting Analyst, Virgin Holidays

To visit the conference website see www.eyefortravel.com/rmeurope