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Elizabeth A Craig Founder, CEO liz@oneglobenetwork

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  1. New Revenue Management Tools Elizabeth A Craig Founder, CEO liz@oneglobenetwork.com

  2. 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 Craig Founder, CEO liz@oneglobenetwork.com

  3. The ‘big picture’ of revenue

  4. Corporate traveler – extended stay rate Weekend last minute package Corporate traveler The ‘big picture’ of revenue Is composed of Microsegments Weekend – Family Plan Discount Corporate Rate Weekend – special event rate

  5. concept • 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. context disruption issues answers advice

  6. concept context • 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. disruption issues answers advice

  7. Sample Weekend Package Booking Pace Historical Booking concept Behind Pace Strategy Open / Create Discount Categories Pace 100% Current Reservations Booking Pace context 75% disruption 50% issues answers 25% advice Day Of Arrival 60 days 45 days 30 days 14 days 7 days 3 days

  8. Sample Weekend Package Booking Pace Historical Booking concept Traditional RM strategy Ahead of Pace Close out / Restrict Discounts Pace 100% Current Reservations Booking Pace context 75% disruption 50% issues answers 25% advice Day Of Arrival 60 days 45 days 30 days 14 days 7 days 3 days

  9. 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 concept context disruption issues answers advice

  10. Last Minute - global customer segment packages

  11. Last Minute - global customer segment Hotels

  12. Last Minute - global customer segment Travel

  13. Ease of cost comparison

  14. Ease of cost comparison

  15. Shift to domestic markets

  16. 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 concept context disruption issues answers advice

  17. Reclassification of market segments

  18. Beyond Distribution Channels - Distribution Relationships

  19. Distribution relationships - Travel as integral to special interests

  20. Distribution relationships

  21. Distribution relationships

  22. Distribution relationships www.active.com Online registration for sporting Events Team websites Over 2.5 millions users

  23. Distribution Relationships with special interest groups Via ‘community’ sites incorporating Facilitating services Travel can be event Related… or personal. Savings as a member benefit

  24. Distribution Relationship Flight/Lodging offers in the event Registration confirmation

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

  26. Shared Workspaces (P2P) as Potential distribution points. www.groove.net P2P – Peer to Peer or Distributed computing Groove is KaZaa for business applications

  27. Distribution Relationships – P2P space Alternatives to corporate travel networks

  28. E-collaboration ‘Blogs’ or Weblogs Latest online trend

  29. 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) concept context disruption issues answers advice

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

  31. Landmark Hotel’s Destination Mini-site - Focus London Weekends (prototype) www.landmark-weekends.com Vs. www.landmarklondon.co.uk

  32. Mini-site tests weekend package price points

  33. concept • 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!!! context disruption issues answers advice

  34. 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 - Refresh • Change components until you get the right ‘recipe’. • Have fun…experiment! • Ideas from other industries…Take a look at: • www.cokemusic.com • www.dealdenfer.fr concept context disruption issues answers advice

  35. Ideas from other industries www.cokemusic.com Games+ Viral+ Chat+ Record music+ Offline Promo+

  36. Ideas from other industries

  37. Ideas from other industries www.mcdonalds.fr Summer promo

  38. Ideas from other industries dealdenfer.com Specialty site Minimal branding

  39. Ideas from other industries Travel next ?

  40. Site59.com Lastminute.fr Weekend last minute package HotelGuide.com Expedia.com Travelocity.com Corporate traveler – extended stay rate Corporate traveler Weekend – Family Plan All-hotels.com Weekend – special event rate Ratestogo.fr Discount Corporate Rate Activeeurope.com Orbitz.com Highwire.com

  41. Your site+ Mini sites + Select third party sites = Revenue Maximization

  42. 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 liz@oneglobenetwork.com