Transcript AAHOA LEADERSHIP CONFERENCE


Introductions
 Goals

Revenue Management (RM) Review
 Questions and discussion

History of Electronic Distribution
 Questions and discussion


Self-Assessment Activity
Break

Every act of management is an act of
marketing.

Selling the right product to the right
customer at the right time for the right price
through the right channel….to optimize the
inventory and maximize revenue.
•
GDS Originates in Airline Industry
• SABRE created by American Airlines 1960/70s
– CAB sets US airline rates
– Hotel, Rental Cars added
•
Airline Deregulation
• Airline Deregulation Act of 1978
• Increase in competition - Price wars
•
Legacy of GDS
• Delivers travel products to 780K travel agents
• Powers many OTAs, higher ADRs despite little growth
•
1980s:
– Hotel industry responds to 1982 and SBLA crisis
•
1990s
– Hotel industry responds to first Gulf War and
economy
•
2000s
– Hotel industry responds to 9/11 and post millennial
economic slow down
•
2010 and beyond
– Hotel industry faces convergence of distribution and
marketing: Demand Management
5
Revenue Management is NOT:
•
A secret formula
•
A technology or computer system
•
A specialist sitting in front of a computer, in the
basement, of your hotel
•
An isolated team at “central command”
6
It’s about Revenue Management.
AND
It’s about Expense Management.
•
Revenue Management today must focus equally
on driving revenue and controlling expenses.
•
Periodic capital investments in technology are a
permanent reality.
•
Disparate devices and new platforms proliferate.
8
•
Search engines changed the field/Review sites
changed the field
•
Online Travel Agency (OTA) balance of
distribution power with branded sites
•
Hotel chain distribution mix growth in both GDS
and branded supplier sites projected*
*PhoCusWright, Inc.
•
Conversation economy – social media
•
Growth in mobile globally – still being figured
out domestically, technology yet to catch up
•
IT and brand management culture of
communication
10
•
Revenue Management (RM) =
– Demand Analysis + Pricing + Restrictions
•
Past Web 2.0 Marketing =
• Distribution + Channel/Internet Marketing
•
Demand Management* =
– RM + Demand Creation + Distribution Management +
CRM + Internet Marketing
*Adapted from Anderson and Carroll, Journal of Pricing and Revenue Management, 2007

Demand creation
 Sales force; single-image inventory management
 Traditional brand and marketing:
▪ Advertising, Sales Promotion, PR
 GDS placement, agency relations
 CRM, keeping past guests coming back
 Internet marketing
▪ Distribution channels AND marketing channels
▪ They ARE BOTH simultaneously
Demand Forecasting
• Involves the historical patterns and current
trends to determine revenue decisions.
• Separate forecasts must be created for group
and transient travel.
• Unconstrained demand: the request for rooms
for given nights by prospective guests that are
not affiliated with a group event or seasonality.
• Must be calculated by market segments to
determine proper demand.
Inventory Control Strategies
Stay Controls
• Leverage high
demand periods by
closing shorter stay
patterns and
eliminating low
rates
Overselling
• The practice of
accepting more
reservations than
actual rooms.
• Key terms: wash
factor and walk cost
Stay Pattern
Management
• Stay Pattern is the
combination of
arrival date and
length of stay
Channel
Management
• An understanding of
the complicity of
channel
management and
the dangers
associated with it

Channel Management
 Both marketing to and acquisition of customers
 Search engines are windows to channel
 Group sales and small group sales websites
 Customer acquisition by channel
▪ Pay attention to the many costs
▪ Transaction fees, GDS, switch
▪ Marketing/placement fees
▪ Production and competitor analysis by channel


Customer Relationship Management
It costs less to keep a customer than acquire
or create a new customer.
 Beyond email
 Social media meets frequent traveler: Reviews
 Groople.com/other group travel platforms
 Mobile technologies, “App me”
 Measuring success of loyalty promotions
 Reducing cost of customer acquisition
•
Channel/Internet Marketing
–
–
–
–
–
Every distribution channel is a media channel
Search engines and the cost of finding you
Chain websites and vanity URLs
Media sharing sites
DMOs, Chambers of Commerce, Business
Improvement Districts
– ROI on all of them – monitor the cost as well as the
revenue production
– But is this the channel where my customer shops?
SUMMARY

Morphing and merging of many disciplines

Revenue management and demand
management

Channel explosion = proliferation

Revenue is only half of the equation,
managing expenses and understanding the
ROI of every RM effort is essential to decision
making.

All of these trends can make an impact in the
face of slowing travel demand.
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Today’s evolution of Revenue Management
into Demand Management demonstrates the
power of this statement:
Every Act of Management is an Act of
Marketing or Demand Management