elizabeth a craig founder, ceo liz@oneglobenetwork
DESCRIPTION
New Revenue Management Tools. Elizabeth A Craig Founder, CEO [email protected]. The Company Established 1997; US office – Boston; EU office - Paris Purpose – help clients drive revenue results, from the Internet - PowerPoint PPT PresentationTRANSCRIPT
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
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
context
disruption
answers
advice
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
context
issues
disruption
answers
advice
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.
concept
context
issues
disruption
answers
advice
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
context
issues
disruption
answers
advice
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
answers
advice
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
concept
context
issues
disruption
answers
advice
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
concept
context
issues
disruption
answers
advice
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
concept
context
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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!!!
concept
context
issues
disruption
answers
advice
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
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
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