FEATURE ARTICLE
How well do you manage your space ?
By Melissa Kalan , Managing Director of ARMA
Revenue Management – the art of maximising yield from any perishable product – is like a jigsaw puzzle . In the accommodation industry , your puzzle is your inventory , and from all the demand that wants to stay , there are some perfect pieces that fit the puzzle to optimise revenue .
The fundamental process of revenue management remains the same across any industry that sells a perishable asset . However , one must respect the differences and nuances present from one industry to the next , and therefore be mindful how one “ tweaks ” the process to maximise outcomes .
For example , ARMA is currently working closely with the holiday park industry , a very successful accommodation model synonymous with the Australian way of life , and a business with a rich history where many parks are family-run , often over a number of generations . Unlike some sectors of the accommodation industry , the park industry sells an “ experience ”, so if that “ experience ” is compromised due to lack of availability i . e reaccommodating overbooked guests to the nearest motel or apartment or trying to up-sell them from a site to a cabin is often not meeting the guests expectations , ( people are booking the site for the site experience ). In addition , its core business base is very loyal repeat customers , therefore caution must be exercised with this business segment before implementing any radical revenue management strategies which could risk losing this year-on-year business base .
Respect and mindfulness towards loyal customer segments and those that support you across periods of need is essential .
That being said , there are many ways to tweak inventory and grow revenue , and with the right approach , there are “ pockets of gold ” and opportunity to drive revenue and yields from all segments in all business models .
The cruise industry is another interesting example , a perfect combination of an airline and a hotel with accommodation and departure times . I was recently conducting a training session with some cruise industry staff who were calmly going back to work after my session to resolve an overbooking for a departure that afternoon . I found this very interesting – that such an important element of the revenue management process , and one that is often greeted with great trepidation , was so calmly approached by an industry that doesn ’ t exactly have another ship departing half an hour later like an airline , or a similar “ hotel ” across the road to accommodate the customer .
Yet here was an example of the benefits of analysing and understanding your demand ’ s “ wash or wastage ” patterns – the analysts were confident it would clear and were comfortable to take the risk .
In yet another example , I recently hired a rental car and was inundated with numerous up-selling options by the sales agent at the check-in counter . I found this amusing , as I knew the strategy was to increase ancillary revenue , and I was impressed at the consistent level of up-selling to customers taking place from across the counter .
They almost convinced me to purchase some of these extras , but I resisted the temptation only because they didn ’ t appeal to my needs at that point in time for that particular trip . However , had I been on a leisure trip I may have been tempted to accept some of these add-ons .
The message here is to emphasise the importance of consistency in our sales process and not only up-sell to drive ancillary revenue , but do so in a strategic and measured way . When presented as a service rather than an obvious sales-pitch for extras , it is much more enticing for the customer . It is also important to note that while a customer
18 Better Revenue I Better Industry I AUS & NZ