The Rev­enue Jour­ney - Part 1: Tak­ing the plunge

Tak­ing the Plunge

Tourism Tattler - - EDITORIAL - By Derek Martin. About the Au­thor: Derek Martin is the founder and CEO of TrevPAR World a hos­pi­tal­ity data an­a­lyt­ics com­pany that spe­cialises in to­tal rev­enue man­age­ment as well as ho­tel dis­tri­bu­tion in­clud­ing sales, mar­ket­ing and so­cial me­dia. For more i

And af­ter ho­tels came car rental com­pa­nies and car parks; how­ever, sub­se­quent ap­pli­ca­tion of rev­enue man­age­ment to other busi­nesses has been slow. Many in­dus­tries are re­luc­tant to ap­ply rev­enue man­age­ment prin­ci­ples, mis­tak­enly think­ing that it can­not ap­ply to them or will not be ac­cepted by their cus­tomers.

His­tory has shown, though, that rev­enue man­age­ment can be im­ple­mented in ways to drive rev­enue and be ac­cepted by cus­tomers.

What is rev­enue man­age­ment?

The dis­ci­pline of rev­enue man­age­ment is the struc­tured ap­proach to: 1. Cre­ate a de­tailed de­mand fore­cast, and

2. In­ter­pret this fore­cast and make pric­ing and in­ven­tory de­ci­sions.

Pric­ing of your prod­ucts is one of the key as­pects in get­ting the max­i­mum rev­enue out of your prod­uct. In ad­di­tion, if there is lim­ited avail­abil­ity of what you are sell­ing, you can make strate­gic de­ci­sions to op­ti­mize that in­ven­tory.

So get­ting the price right is key?

Yes, pric­ing is the key to be­gin op­ti­miz­ing your rev­enues. By bas­ing your pric­ing de­ci­sions on a de­tailed de­mand fore­cast, you can op­ti­mize both your vol­ume of busi­ness, as well as avoid leav­ing money on the ta­ble over busy days. This is the first step of your rev­enue man­age­ment ap­proach to driv­ing rev­enue.

Does rev­enue man­age­ment ap­ply to your busi­ness?

Rev­enue man­age­ment can be ap­plied in any busi­ness, pro­vided there is fluc­tu­at­ing de­mand, the cus­tomer can buy the prod­uct ahead of con­sump­tion, and there is a per­ish­able, ca­pac­ity-con­strained in­ven­tory that loses rev­enue op­por­tu­nity if un­sold to­day.

Some air­lines, ho­tels and car park com­pa­nies are prime ex­am­ples of this. One of the next log­i­cal sets of busi­nesses that could ap­ply rev­enue man­age­ment prin­ci­ples would be theme parks and at­trac­tion parks. There is an op­por­tu­nity to price dif­fer­ently on low, shoul­der and high de­mand days and cus­tomers can buy ad­mis­sion tick­ets ahead of time. Ad­di­tion­ally, the num­ber of peo­ple al­lowed into the parks due to safety reg­u­la­tions may be re­stricted to a cer­tain max­i­mum ca­pac­ity.

What other busi­nesses can rev­enue man­age­ment be ap­plied to?

An­other good ex­am­ple would be recre­ation parks and camp­sites. There are a lim­ited num­ber of spa­ces avail­able for cus­tomers to book – and book­ings can also be made ahead of time. Bowl­ing Al­leys are an­other good ex­am­ple since there are a re­stricted num­ber of lanes avail­able at the prop­erty, with peo­ple book­ing in ad­vance to se­cure avail­able space for them to play. I could con­tinue men­tion­ing things like bungee jump­ing, bridge climbs, glass-bot­tom boat ex­cur­sions, movie the­atres, wa­ter parks and many more.

The ar­eas where rev­enue man­age­ment con­cepts can be ap­plied are nu­mer­ous, the ques­tion is whether you be­lieve it can work for you.

Cu­ri­ous but not con­vinced?

An­swer these few easy ques­tions for your com­pany:

• Does de­mand for your prod­uct fluc­tu­ate?

• Can cus­tomers book your prod­uct ahead of con­sump­tion?

• Do you have a lim­ited ca­pac­ity per­ish­able prod­uct avail­able for sale?

If you an­swered ‘Yes' to two or all three of these ques­tions, you can safely con­clude that rev­enue man­age­ment prin­ci­ples can be ap­plied to your busi­ness, with rev­enue man­age­ment be­ing a strate­gic ap­proach to in­creas­ing your com­pany's rev­enue.

Start your rev­enue man­age­ment jour­ney to­day! Driv­ing topline rev­enues is im­por­tant, and it is the sin­gle most im­por­tant com­po­nent in driv­ing prof­its for your com­pany.

We all know that rev­enue man­age­ment has been around for a while. When we book our air­line tick­ets, prices change based on the time, de­mand, class of book­ing, rout­ing and other fac­tors. Then, about 25 years ago, ho­tels started to come on board and ap­ply the ba­sic prin­ci­ples of rev­enue man­age­ment. It was gen­er­ally un­der­stood that yield man­age­ment (as it was called at the time) could add sig­nif­i­cantly to a ho­tel’s top line.

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