I’ve spent the last couple of months chatting to revenue management and pricing professionals from across all sectors of the travel industry. And by all accounts, this is an exciting (albeit challenging!) time to be a revenue manager. As travel companies increasingly put RM and pricing at the core of their business decisions, it’s clear that the role of the revenue manager is rapidly expanding and diversifying.
There’s no doubt that effective revenue management is now integral to future strategy. However, in order to have the greatest impact on their company’s fortunes moving forward, revenue managers need to ensure that they are carrying out a number of key activities which will maximize their impact on growing market share, adding value and maintaining profitability.
Based on my research for EyeforTravel’s upcoming Revenue Management Europe event, I’ve identified 4 essential activities that revenue managers need to be carrying out in light of current market conditions:
1.Become more Strategic
Increasingly, revenue managers are becoming more strategically involved in all aspects of sales and distribution. Today’s successful revenue managers are evolving into corporate leaders who chair rate-strategy committees, train product managers in pricing strategies, and guide sales and marketing teams in the most effective positioning for their selling strategies and campaigns.
Steve Pinchuk, the chairman for our Revenue Management Conference Series since its inception back in 2003, confirmed this trend in a recent interview. Recently appointed SVP Resort Profitability for Westgate Resorts, Steve’s new role will see him oversee not only RM and Pricing, but also distribution, sales, marketing and reservations.
He explained how his new role reflected his long held view regarding the strategic importance of RM: “Because I am in charge of sales and marketing, this allows me to integrate these areas. Rather than being an outsider, coercing people to co-operate, I am able to institute strategies and enforce best practice across the whole organization…Normally people with an RM background are not in charge of these areas, but in my opinion it is highly appropriate. In times of high demand, it’s easy for the revenue manager to simply focus on yield, but as demand erodes, revenue managers need to focus on distribution and pricing too.”
2.Maintain Price Integrity
Occupancy levels and load factors are way down across the travel industry. The temptation is to slash prices to stimulate demand – and some are doing this already. However, history warns of the dangers of this strategy. The decisions you make today could affect your profitability for years to come. So cutting prices may delay your ability to benefit when the economy does bounce back. Revenue managers have a key role to play is deciding when, how and where to discount, as well as looking for ways to add value without cutting prices.
All this requires creativity and focus from revenue management, CRM and marketing teams, as they work together to create packages and promotions for specific customer segments.”3.Become more Customer Centric
Retaining loyal customers is a number one priority for all travel companies. Today's travel leaders are those who not only understand their customers, but are also rolling out customer-centric pricing strategies that reflect this knowledge (not all customers are cutting their travel budgets right now) and putting the right options in front of them at the right time.
Good revenue mangers need to understand the importance of segmentation, and how value driven customers are driving even greater convergence of RM, marketing and distribution
4.Increase Influence on Distribution
An understanding of distribution and customer touch points is now essential for any revenue manager. Whilst linear programming optimisation may be at the heart of revenue management theory, it doesn’t take a holistic view of the customer or the transaction. Today, distribution is an organisational challenge, where the role of revenue managers is becoming increasingly important. The role of revenue management in ensuring the right products appear in the right channels at the right price is more important than ever in today’s challenging economic climate.
All these issues and more will be discussed in depth by some of Europe’s leading Revenue Management professionals at this year’s Revenue Management and Pricing in Travel Europe Conference, taking place in Amsterdam on 24-25 November.Eurostar, provider of high-speed rail journeys between the UK and the Continent, has several firsts to its credit when it comes to distribution.
The company, which has embraced several new channels over the past few years, says it has no ambition to drive its customers to one channel over any other.
“Our intention is to be available at the best price wherever a customer wants to buy us,” says Matthias Mahr, head of e-commerce and customer management, Eurostar.
Mahr, who is scheduled to speak at EyeforTravel’s Travel Technology Summit, to be held in London (November 11-12) this year, spoke to EyeforTravel’s Ritesh Gupta about its approach towards distribution. Excerpts:
Eurostar recently emphasised on the appeal of high-speed train travel over air travel. How has your distribution strategy differed for a product like high-speed rail to meet the needs of various customer segments?
Because of our unique status in high-speed, point-to-point rail, our distribution strategy needs to straddle the rail world and the more traditional airline-led travel world.
Unlike many of our competitors, we have no ambition to drive our customers to one channel over any other. Our intention is to be available at the best price wherever a customer wants to buy us.
On the one hand, many of our customers want to purchase their tickets directly from us through the standard channels – stations, our call centre and of course, the Internet. Then there are our business customers, who need us to be available through their travel management companies or integrated into their self booking tools. And finally, many of our leisure customers book through other third parties such as online portals and travel agents. So we have had to find ways to be present in all these channels, sometimes adapting our offering to the airline-led world. We are in fact the only rail operator in the world to be on primary screen GDS.
To its credit, Eurostar has several firsts when it comes to distribution. How do you approach your distribution strategy and what sort of technology constraints the group has had to overcome from time to time?
We straddle the rail world and the airline world so our distribution strategy must adapt accordingly and be able to serve customers and agents in both settings. This has been challenging at times, because it means extra work but also because both worlds are not perfectly adapted to the products we are selling. On the rail side, there is relatively little standardisation so even simple things like interlining can become quite complex. On the air side, there is a lot of standardisation but much of it is not suited to a railway operator – so for example, we have needed to adapt quite a bit to be properly integrated on GDSs.
Can you provide info on how the buying behaviour of customer segments has evolved over the years? Also, how are you pushing new booking platforms especially mobile in today’s environment?
In common with other travel operators, we have seen a shift towards direct booking on the Internet in recent years, in particular for our leisure customers. We’ve encouraged this somewhat through greater emphasis on our website and search engine marketing, but a lot of it has been “organic” growth as customers have become more accustomed to booking travel online. Having said that, there are still many customers who would rather book through other channels. We do not have a mobile platform at the moment but are looking at it closely, especially given the success of other railways in this area. Travellers are by definition mobile so we need to make sure we can be accessed wherever they need us.
Which according to you is the best way to connect to third party distribution systems to make the best use of your inventory? What should one be wary of?
We are available on GDS and that is certainly the preeminent way to connect to third party distribution systems today. However, we have recently noticed the growth of web services solutions which present an interesting alternative to direct connection to GDS so we believe the future will probably be a combination of the two.
Of course, the major consideration with any system is cost – with the web services solutions, it is primarily implementation cost whereas with GDS solutions it is primarily the unit cost.
Three years ago, Eurostar developed its GDS gateway and gave the option of booking and selling Eurostar’s high-speed rail alongside air on the same system. Now, Eurostar has deals with several GDSs. To what extent have you succeeded in pushing business travel bookings through this channel?
The migration from our own system to GDS has been a great success overall, with more functionality available to users and higher yields for us. However, it was a long term process that needed to overcome initial resistance from the business trade, as it meant switching not only systems but also from a “rail” environment into an “air” environment.
It was also a necessary move for us because it now allows us to be present in SBTs which was not the case before, and is something that is being requested more and more.
Eurostar recently signed an e-ticketing deal with Virgin Atlantic, allowing consumers to buy train tickets at the same time as they book their flights. What factors did you take into consideration before going ahead with such tie-up?
About 10 percent of our customers currently come from overseas (i. e. outside of Europe) and use Eurostar as part of a trip to Europe. Naturally, we want to encourage this and one way to do that is to tie up with the airlines that bring those customers to Europe – so that overseas travellers can book everything in one go.
We have worked with Virgin for some time in the US market with many successful joint sales and marketing initiatives and the e-ticketing deal was a natural progression for us as soon as our technology had been developed to enable it.
This is a pilot agreement for us, which we will monitor closely to decide on future rollouts – we’re pleased so far but it’s early in the process.
Overall, which technologies can help you maximise your revenues and control costs across multiple channels?
The key technologies are a strong revenue management system and a fraud control mechanism. In addition, across all channels, we are very diligent in understanding our cost drivers and customer preferences to make sure we get the maximum revenue without overpaying for it in terms of distribution cost.
EyeforTravel’s Travel Technology Summit
Matthias Mahr, head of e-commerce and customer management, Eurostar is scheduled to speak at EyeforTravel's Travel Technology Summit, to be held in London (November 11-12) this year.
There’s no doubt that effective revenue management is now integral to future strategy. However, in order to have the greatest impact on their company’s fortunes moving forward, revenue managers need to ensure that they are carrying out a number of key activities which will maximize their impact on growing market share, adding value and maintaining profitability.
Based on my research for EyeforTravel’s upcoming Revenue Management Europe event, I’ve identified 4 essential activities that revenue managers need to be carrying out in light of current market conditions:
1.Become more Strategic
Increasingly, revenue managers are becoming more strategically involved in all aspects of sales and distribution. Today’s successful revenue managers are evolving into corporate leaders who chair rate-strategy committees, train product managers in pricing strategies, and guide sales and marketing teams in the most effective positioning for their selling strategies and campaigns.
Steve Pinchuk, the chairman for our Revenue Management Conference Series since its inception back in 2003, confirmed this trend in a recent interview. Recently appointed SVP Resort Profitability for Westgate Resorts, Steve’s new role will see him oversee not only RM and Pricing, but also distribution, sales, marketing and reservations.
He explained how his new role reflected his long held view regarding the strategic importance of RM: “Because I am in charge of sales and marketing, this allows me to integrate these areas. Rather than being an outsider, coercing people to co-operate, I am able to institute strategies and enforce best practice across the whole organization…Normally people with an RM background are not in charge of these areas, but in my opinion it is highly appropriate. In times of high demand, it’s easy for the revenue manager to simply focus on yield, but as demand erodes, revenue managers need to focus on distribution and pricing too.”
2.Maintain Price Integrity
Occupancy levels and load factors are way down across the travel industry. The temptation is to slash prices to stimulate demand – and some are doing this already. However, history warns of the dangers of this strategy. The decisions you make today could affect your profitability for years to come. So cutting prices may delay your ability to benefit when the economy does bounce back. Revenue managers have a key role to play is deciding when, how and where to discount, as well as looking for ways to add value without cutting prices.
All this requires creativity and focus from revenue management, CRM and marketing teams, as they work together to create packages and promotions for specific customer segments.”3.Become more Customer Centric
Retaining loyal customers is a number one priority for all travel companies. Today's travel leaders are those who not only understand their customers, but are also rolling out customer-centric pricing strategies that reflect this knowledge (not all customers are cutting their travel budgets right now) and putting the right options in front of them at the right time.
Good revenue mangers need to understand the importance of segmentation, and how value driven customers are driving even greater convergence of RM, marketing and distribution
4.Increase Influence on Distribution
An understanding of distribution and customer touch points is now essential for any revenue manager. Whilst linear programming optimisation may be at the heart of revenue management theory, it doesn’t take a holistic view of the customer or the transaction. Today, distribution is an organisational challenge, where the role of revenue managers is becoming increasingly important. The role of revenue management in ensuring the right products appear in the right channels at the right price is more important than ever in today’s challenging economic climate.
All these issues and more will be discussed in depth by some of Europe’s leading Revenue Management professionals at this year’s Revenue Management and Pricing in Travel Europe Conference, taking place in Amsterdam on 24-25 November.Eurostar, provider of high-speed rail journeys between the UK and the Continent, has several firsts to its credit when it comes to distribution.
The company, which has embraced several new channels over the past few years, says it has no ambition to drive its customers to one channel over any other.
“Our intention is to be available at the best price wherever a customer wants to buy us,” says Matthias Mahr, head of e-commerce and customer management, Eurostar.
Mahr, who is scheduled to speak at EyeforTravel’s Travel Technology Summit, to be held in London (November 11-12) this year, spoke to EyeforTravel’s Ritesh Gupta about its approach towards distribution. Excerpts:
Eurostar recently emphasised on the appeal of high-speed train travel over air travel. How has your distribution strategy differed for a product like high-speed rail to meet the needs of various customer segments?
Because of our unique status in high-speed, point-to-point rail, our distribution strategy needs to straddle the rail world and the more traditional airline-led travel world.
Unlike many of our competitors, we have no ambition to drive our customers to one channel over any other. Our intention is to be available at the best price wherever a customer wants to buy us.
On the one hand, many of our customers want to purchase their tickets directly from us through the standard channels – stations, our call centre and of course, the Internet. Then there are our business customers, who need us to be available through their travel management companies or integrated into their self booking tools. And finally, many of our leisure customers book through other third parties such as online portals and travel agents. So we have had to find ways to be present in all these channels, sometimes adapting our offering to the airline-led world. We are in fact the only rail operator in the world to be on primary screen GDS.
To its credit, Eurostar has several firsts when it comes to distribution. How do you approach your distribution strategy and what sort of technology constraints the group has had to overcome from time to time?
We straddle the rail world and the airline world so our distribution strategy must adapt accordingly and be able to serve customers and agents in both settings. This has been challenging at times, because it means extra work but also because both worlds are not perfectly adapted to the products we are selling. On the rail side, there is relatively little standardisation so even simple things like interlining can become quite complex. On the air side, there is a lot of standardisation but much of it is not suited to a railway operator – so for example, we have needed to adapt quite a bit to be properly integrated on GDSs.
Can you provide info on how the buying behaviour of customer segments has evolved over the years? Also, how are you pushing new booking platforms especially mobile in today’s environment?
In common with other travel operators, we have seen a shift towards direct booking on the Internet in recent years, in particular for our leisure customers. We’ve encouraged this somewhat through greater emphasis on our website and search engine marketing, but a lot of it has been “organic” growth as customers have become more accustomed to booking travel online. Having said that, there are still many customers who would rather book through other channels. We do not have a mobile platform at the moment but are looking at it closely, especially given the success of other railways in this area. Travellers are by definition mobile so we need to make sure we can be accessed wherever they need us.
Which according to you is the best way to connect to third party distribution systems to make the best use of your inventory? What should one be wary of?
We are available on GDS and that is certainly the preeminent way to connect to third party distribution systems today. However, we have recently noticed the growth of web services solutions which present an interesting alternative to direct connection to GDS so we believe the future will probably be a combination of the two.
Of course, the major consideration with any system is cost – with the web services solutions, it is primarily implementation cost whereas with GDS solutions it is primarily the unit cost.
Three years ago, Eurostar developed its GDS gateway and gave the option of booking and selling Eurostar’s high-speed rail alongside air on the same system. Now, Eurostar has deals with several GDSs. To what extent have you succeeded in pushing business travel bookings through this channel?
The migration from our own system to GDS has been a great success overall, with more functionality available to users and higher yields for us. However, it was a long term process that needed to overcome initial resistance from the business trade, as it meant switching not only systems but also from a “rail” environment into an “air” environment.
It was also a necessary move for us because it now allows us to be present in SBTs which was not the case before, and is something that is being requested more and more.
Eurostar recently signed an e-ticketing deal with Virgin Atlantic, allowing consumers to buy train tickets at the same time as they book their flights. What factors did you take into consideration before going ahead with such tie-up?
About 10 percent of our customers currently come from overseas (i. e. outside of Europe) and use Eurostar as part of a trip to Europe. Naturally, we want to encourage this and one way to do that is to tie up with the airlines that bring those customers to Europe – so that overseas travellers can book everything in one go.
We have worked with Virgin for some time in the US market with many successful joint sales and marketing initiatives and the e-ticketing deal was a natural progression for us as soon as our technology had been developed to enable it.
This is a pilot agreement for us, which we will monitor closely to decide on future rollouts – we’re pleased so far but it’s early in the process.
Overall, which technologies can help you maximise your revenues and control costs across multiple channels?
The key technologies are a strong revenue management system and a fraud control mechanism. In addition, across all channels, we are very diligent in understanding our cost drivers and customer preferences to make sure we get the maximum revenue without overpaying for it in terms of distribution cost.
EyeforTravel’s Travel Technology Summit
Matthias Mahr, head of e-commerce and customer management, Eurostar is scheduled to speak at EyeforTravel's Travel Technology Summit, to be held in London (November 11-12) this year.
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