elizabeth a craig founder, ceo liz@oneglobenetwork

Elizabeth A Craig

Founder, CEOliz@oneglobenetwork.com

New Revenue Management Tools

The Company

• Established 1997; US office – Boston; EU office - Paris• Purpose – help clients drive revenue results, from the Internet• Clients – GDS, online booking systems for hotels, destination booking platforms ,Hotel Groups

Key Issues expressed by clients::: Which online channels to choose :: What rates/prices to publish in each channel:: When to discount inventory

In short, classic RM issues…

Elizabeth A CraigFounder, CEO

liz@oneglobenetwork.com

The ‘big picture’ of revenue

The ‘big picture’ of revenue

Weekend last minute package

Weekend – special event rate

Weekend – Family Plan

Corporate traveler

Discount Corporate Rate

Corporate traveler – extended stay rate

Is composed of Microsegments

concept

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disruption

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The ‘big picture’ of revenue, in reality, composed of micro-segments. These segments vary in:

Price sensitivity Purchasing behavior Channel preferences

Traditionally, aggregated data collected by the RM system was a predictive indicator of future customer demand…therefore the basis of pricing/inventory decisions.

That normally reliable data has been severely disrupted by a confluence of global factors.

The question:

How can pricing, inventory and timing decisions be made in the absence of reliable data?

Proposed solution: Specialized websites – create predictive data

target micro-segments test price and demand patterns determine ‘fail points’….without compromising your pricing

integrity.

issues

concept

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issues

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RM Basic Principles: Pricing, inventory allocations decisions are based upon supply and demand.

Supply/demand factors are data driven.

Revenue is optimized from your existing demand, based upon analysis of historical data.

Traditional RM Examples:If you are ahead of your historical booking pace, demand is up – there is the opportunity to increase rates and apply booking restrictions to optimize revenue.

If you are behind your historical booking pace, demand has weakened – opening additional discount categories will stimulate bookings.

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100%

75%

50%

25%

60 days

45 days

30 days

14 days

7 days

3 days

Sample Weekend Package Booking Pace

Day Of

Arrival

Behind PaceStrategy Open / Create

Discount Categories

Historical BookingPace

Current ReservationsBooking Pace

concept

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100%

75%

50%

25%

60 days

45 days

30 days

14 days

7 days

3 days

Sample Weekend Package Booking Pace

Current ReservationsBooking Pace

Day Of

Arrival

Traditional RM strategyAhead of Pace

Close out / Restrict Discounts

Historical BookingPace

concept

context

issues

disruption

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A collision of circumstances have impacted the travel industry, on a global scale.

We are all very familiar with these factors, which have had extensive press coverage:..SARS.. military action in Iraq..the threat of terrorism..airlines financial problems…

..and the rate of adoption of the Internet as a travel planning tool.

The results Causing historical data to become less accurate for predictive indicators…

Corporate travel restrictions, budget cutbacks

Globalization of ‘last minute’ as a market segment

Ease of comparative shopping online

Shifts in domestic travel

Explosive growth of 3rd party travel sites

Excess inventory supporting 3rd party booking sites success

Low cost airlines market penetration

packages

Last Minute - global customer segment

Last Minute - global customer segment

Hotels

Last Minute - global customer segment

Travel

Ease of cost comparison

Ease of cost comparison

VisitBritain encourages agents to sell England with the launch of the new marketing campaign.

VisitBritain, the new tourism body charged with marketing England within Britain, launches ‘Enjoy England’, the first campaign to market English tourism in almost ten years, pledging to work closely with the travel trade to help sell England. The campaign, which is endorsed by ABTA and the Tourism Alliance, is designed to raise awareness and generate interest in England as a destination for the British. It is also designed to stimulate sales by an extra quarter of a million holidays in advance of the peak summer period, against a backdrop of falling international package bookings.

Shift to domestic markets

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Emerging Issues :

Moreover, there are several emerging issues which could further invalidate historical data…as there is no history.

Reclassification of market segments – travelers are identifying themselves via special interests/events in addition to purpose of travel.

Newsweek magazine recently featured “Travelers of Tomorrow” –

New Market sources – Chinese outbound tourism, independent Russian travelers

The evolution of ‘distribution relationships’ - integrating online booking within special interest sites, where travel is essential to pursuing that interest.

Examples: NASCAR, Active.com, ActiveEurope.com

E-collaboration areas, shared workspaces, Blogs (web logs), P2P networks – as distribution access points.

Examples: Morpheus, Groovenetworks, Gawker, Skyblogs

Reclassification of market segments

Beyond Distribution Channels - Distribution Relationships

Distribution relationships - Travel as integral to special interests

Distribution relationships

Distribution relationships

Distribution relationships

www.active.comOnline registration for sporting Events Team websites

Over 2.5 millions users

Distribution Relationships with special interest groups Via ‘community’ sites incorporating Facilitating services

Travel can be event Related…

or personal.Savings as a

memberbenefit

Distribution Relationship

Flight/Lodging offers in the event Registration confirmation

Morpheus is a P2P free music, videos, software download site. Users earn cash by buying through the site. Travel, of course, is offered.

Shared Workspaces (P2P) as Potential distribution points. www.groove.net

P2P – Peer to Peer orDistributed computing

Groove is KaZaa for business applications

Distribution Relationships – P2P space Alternatives to corporate travel networks

E-collaboration ‘Blogs’ or Weblogs Latest online trend

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How to generate meaningful data for critical RM decisions?

Create specific mini-sites to target micro-segments.

Highly focused : specific interests ‘hot’ destinations + attractions specialized activities

Integrate online booking : create 3 to 4 price points assure differentiation – product, booking barriers aggressively e-market ‘organic approach’ to pricing - keep changing until you determine

what generates the most transactions

test for ‘fail points’

Examples: Choice Travel Sports – athletes, teams – very price sensitive; fans

– less price sensitive

Landmark Weekends (prototype)

Choice Hotels targets the amateur athletic market with www.choicesportstravel.com

Landmark Hotel’s Destination Mini-site - Focus London Weekends (prototype)

www.landmark-weekends.com Vs. www.landmarklondon.co.uk

Mini-site tests weekend package price points

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Analysis

What price +/ product yield the highest conversion ratio?

How does the rate compare to rates available in 3rd party sites, targeted at the same (micro) market?

What is the advance buy time?

Are there online actions that lead to a transaction? Example actions – sign up for promo announcement, download map

How does the data compare to your RM system data?

Can new data be factored to create revised benchmarks?

When you find what works – grow the business: distribution alliances, distribution channels, direct bookings.

Then – select another micro segment!!!

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Stay focused – start small…

2-3 pages, focus content on 1 factor e.g. weekend activities.It is not a product promotion – but linked to your product’s promotion.

Web Optimize

URL = your brand + site focus Lots of links – activities and interest, according to site focus -

quote media, use the link onsite (get permission) Meta tags – Use ‘wordtracker’ or other programs to determine

tags Use keywords that are popular with the target microsegment 1 or 2 good visuals per page; tag as destination Aggressively market online – to generate test traffic.

Modify - RefreshChange components until you get the right ‘recipe’.

Have fun…experiment!

Ideas from other industries…Take a look at:www.cokemusic.comwww.dealdenfer.fr

www.cokemusic.comGames+Viral+Chat+

Record music+Offline Promo+

Ideas from other industries

Ideas from other industries

www.mcdonalds.frSummer promo

Ideas from other industries

dealdenfer.comSpecialty site

Minimal branding

Ideas from other industries

Travel next ?

Ideas from other industries

Weekend last minute package

Weekend – special event rate

Weekend – Family Plan

Corporate traveler

Discount Corporate Rate

Corporate traveler – extended stay rate

All-hotels.comRatestogo.fr

Orbitz.comHighwire.com

Activeeurope.com

Expedia.comTravelocity.com

Site59.comLastminute.fr

HotelGuide.com

Your site+ Mini sites + Select third party sites=

Revenue Maximization

liz@oneglobenetwork.com

The Net as an RM tool…inexpensive …invisible to your competitor…business innovation…forward thinking research VS. past, polluted data

Questions, comments…radical answers ?

-- Liz Craig