may not have accepted some extras on one occasion , they may do so at another time depending on the purpose of the transaction i . e renting a vehicle , financial position and frame of mind when completing the transaction .
Distribution is another important element across all industries . Variations exist depending on the nature of a business and the strength of its brand . Customer acquisition costs as a percentage of overall revenue for the airline and car rental industries is much smaller ( approximately 3-6 %) when compared to the hotel industry which is approximately ( 15-25 %). Why ? Because there are many more accommodation properties than airlines and car rental companies .
Customers often know their preferred airline or car rental brand and therefore go directly to that website far more often than an accommodation website – where the market can be saturated with many competitors .
Excluding OTA ’ s , and for example , “ the BIG4 website is the second most visited accommodation website in Australia ”, further highlighting the power of the brand in helping to minimise acquisition costs in today ’ s booking landscape .
Clearly , the ability to allow customers to make bookings online is an important space to be in , since it is a major source of bookings on a global platform . However , it is equally important to manage distribution well within the process of revenue management and support initiatives that aim to keep the playing field fair for industry .
The online booking field is a competitive landscape within itself , and technology will drive continuous change for all operators in this space . This will challenge the dynamics of our management strategies and relationships
across all industries with perishable inventory , given that consumers can and will continue to book with third-party online providers , benefiting from the many search options that they offer , saving them time – and potentially – money .
Regardless of the tweaks we need to make to the process across industries due to operational differences , none of them can drive any revenue management strategy without one consistent element , a regular and accurate forecast .
A key discussion point raised by a speaker at Ted ’ s Technology Summit , which was held in Sydney a few months ago , resonated with me – “ Idle Capacity / Idle Assets ”, which I could relate back to the revenue management process .
Reference was made to companies like Airbnb , Uber and Bla Bla Car , which have created a market around capacity that did not previously exist . They have driven millions of dollars from unlocking the value of under-utilised assets by “ matching needs and haves ” [ haves meaning existing assets ].
The process of revenue management focuses on driving revenue from assets by “ matching needs and haves ” with customer sensitivities . Idle assets ( empty rooms , empty cabins , empty dining seats and time slots , empty spa rooms , empty conference space or space that can be used for a commercial purpose ) are a missed revenue opportunity with millions of dollars being left on the table every year .
Part of my own definition of revenue management is “ to drive maximum return on investment through effective utilisation of space ”.
So , how well do you manage your space ?
www . revenuemanagement . com . au
Better Revenue I Better Industry I AUS & NZ 19