Optimal Pricing & Market Positioning. Innovations in RM to maximise sales & optimise revenue

Transcription

1 Optimal Pricing & Market Positioning Innovations in RM to maximise sales & optimise revenue

2 Starting off on the right path Setting off on the right path Copyr i g ht 2013, SAS Ins titut e Inc. All rights res er ve d.

3 This have always changed.and fast!

4 Revenue Management evolution Meta Search Price > Value Flexible Retail Pricing Breakdown of Parity Rules Group Displacement BAR Derived Rates Big Data 1990s 2000s 2010s 2020s Yield Management Flexible Rate Contracting Rise of the OTAs Total RM Rise of Analytics Data Mining Machine Learning Text Analytics Digital Intelligence

5 Where Evolution meets Innovation Flexible Retail Pricing BAR Derived Rates Best Available Rate Pricing Fold-in derivative rates Account for competition Flexible Rate Contracting Account for Derived Rates in Pricing Management of Rate Availability Total RM Expanding into other disciplines Rational and disciplined approach Big Data Rise of Analytics Application of both descriptive and predictive analytics

6 How is the established mantra coping? You ve all heard this Right Product Right Channel Right Customer Right Price Right Time

7 The market is changing!

8 What about consumer sentiment?

9 How are we handling cost of acquisition?

10 What about price optimisation? D C PE P Demand + Capacity + Price Elasticity = Price Strategy

11 Innovations in RM Today: Harnessing Data & Optimising Revenues

12 Value Delivered Tackling the Big Data Challenge How do we drive competitive advantage with data-driven decision making? Decision not factored into Optimisation or Forecast ROI difficult to validate Fully Integrated Solutions Manual attempt to provide Support to a Business Decision Spreadsheet Based Methods Decision Support Systems Recommendation Output High Level Analytics Controls External Data Analysis Daily Analytical Updates Real Time Decisions Real Time Optimization Real Time Forecasting Multiple Data Sources Extremely Labour Intensive Quickly Out of Date Timeline

13 More data demand = greater analytical demand!

14 What data is going into the optimization process? F&B CRS/PMS Meetings & Events Rate Shopping STR Reputation Demand Tracking Weather? Flight? Other? Next Generation Integration ( NGI )

15 Big Data needs Actionable Insight Enhanced Data Visualization Visual Analytics / BI Tool Revenue Management System (Rooms, Meetings & Events) PMS/CRS Rate Shopping & Benchmarking Sales & Catering Online Rep Tool

16 More Strategic Revenue/Commercial Teams From Sifting Through Reports to Dynamic Alerts Manage by Exception Let RMS identify the key items for review Users monitor key items that are important to the business Users review significant changes not every day, day-by-day Be more strategic not tactical What-if Analysis Informed Decision Making Support Price Changes Overbooking Changes Marketing Campaigns Adjustments to Sales Strategy

17 Holistic Business Optimisation

18 Understanding and improving each area of the Revenue Management Cycle will allow you to target your growth effectively Systematic gathering of historical and current market trends, including competitor data, channels etc Benchmarking & Performance Monitoring Reporting & Impact Data Collection Data Analysis Effective use & Communication of the data collected in strategic decision making decision S&M, Ops, Finance, Technology Pricing Forecasting Optimal Pricing Approach Space Management Unconstrained Demand Forecast for RM purposes Select the right piece of business 18

19 Holistic Business Optimization Responding proportionately to all the business challenges Forecasting Total Unconstrained Demand by segment Robust demand and market-relevant pricing decisions Determining and achieving optimal business mix Accounting for cancellations and no-shows Dynamic evaluations of Group profitability Managing an ever more complex distribution network

20 Optimal Pricing & Segmentation: Tangible methods to optimise revenues

21 Pricing Analytics & Market Positioning Managerial, owner or investor pricing pressure Establishing pricing structures Launching new hotel properties New business, market or competitive dynamics Pricing confidently & competitively Optimal Business Mix Market Forecasts, Price vs. Competitor re-validation Business Mix comparisons & segment benchmarking Strategy & Segment (Re)positioning

22 Data Sources: Benchmarking & Rep Tools

23 Data Sources: Benchmarking & RateShopper Transient Pricing Analysis: Monthly Rate Shop Comparison JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC RATE-SHOP HOTEL BAR HOTEL BAR MAX HOTEL BAR LOW RATE-SHOP COMPETITOR BAR (AVE) HOTEL BAR MED

24 Revenue & Business Mix Analysis Segment Current Volume % % Variance to Sample Set Hotel ADR BAR 30% +11% Variance to Hotel ADR CORP 6% -16% CORPG 10% +2% Segment Current Sample ADR LEISG 25% +19% Volume % Set Volume % MICE 8% +7% Revenue Before Revenue After Variance PROM 12% BAR -16% 20% % ,898,042 7,637,483 2,739,441 CORP 23% 6% ,743,021 1,221,514-3,521,507 PROMO 30% 12% ,062,963 2,082,796-2,980,167 LEISG 7% 26% ,803,925 6,503,658 4,699,733 MICE 1% 9% ,657 1,738,020 1,480,363

25 It takes more than just a tool! PROCESS TECHNOLOGY Effective Revenue Management and Pricing can only be achieved through the optimal alignment of people, process and technology capabilities ORGANI ZE Ravi Mehrotra President & Founder IDeaS PEOPLE

26 Review market with macroeconomic and supply & demand indicators Review and validate all competitive sets by segment Contextualize vs. reputational data Validating Market Positioning Validate transient (BAR) price positioning historically and future Align to summary level Rate-Shop data and existing rate spectrums Price Performance Trend Analysis Validate comp-set accuracy Does our pricing need review? Which competitors are we targeting? Scrutinize our metrics and take action! Contextualise against benchmark KPIs Compare existing business mix vs. BAR to understand rate relationships Can we attempt competitor business mix benchmarking? Simulate scenarios with changes in pricing & mix based on data Are we losing market share due to reliance on wrong segments? Benchmarking Pricing of other Segments Make Some Revenue Projections!

27 Thank you! Neil Corr Senior Advisor, uk.linkedin.com/in/neilcorr Copyright Integrated Decisions and Systems, Inc. (IDeaS A SAS COMPANY)