Revenue management is geared toward optimizing financial results, predicting demand and making the best use of inventory and price availability through the informed use of analytics. The implementation of a software solution can help such tasks be performed faster and easier. Certain industries more than likely spring to mind as great candidates: airlines, hotels, car rental, financial services, medical services and telecommunications.
But let’s not be so limiting. A revenue management solution can benefit almost any business where it’s possible to gauge changes in levels of demand, some sort of fixed costs are involved and customers would be willing to pay different prices for the same product or service.
Some years back, Cornell University was one of the first in the world to establish a course in revenue management, as part of its School of Hotel Administration. It’s not surprising, then, that a detailed examination of the benefits of revenue management principles applied to some not-so-top-of-mind industries came from the New York institution.
Building upon this, let’s consider how some out-of-the-box industry-principles matchups remain relevant and can be boosted with the help of today’s technology and platforms available.
The Spa Industry
Responding to consumer demand for an expanded universe of spa offerings, if you will, the industry these days caters to a wide variety of destination, day and hotel spa options, each operated very differently. High fixed costs, perishable products and need for predictable demand put the industry right in consideration for traditional revenue management principles. These services require a high degree of customer interaction and adjustment, right in that sweet spot of today’s more complex business model reflecting a more agile, artificial intelligence-based and experience-driven environment.
Space is a key factor to consider when targeting profitability within this industry, as the different types of treatment rooms and associated staffing requirements require very specific data input for record-keeping and reporting purposes. Additional factors within this industry include time management and pricing variables
The apparel, fashion and luxury (AF&L) industry has certainly been one of significant upheaval during the COVID-19 pandemic, given the whiplash-inducing pivots of many corporations to the manufacture of face coverings and hand sanitizer and a larger focus on community assistance. Many of these firms still had to close operations, regardless. As noted in a 2020 article by McKinsey & Company, the fashion companies best equipped to handle the COVID-enforced alterations have been those well into the trend toward digital transformation. Based on survey feedback, McKinsey noted that during the pandemic, the slow uptick in offline traffic even after stores re-opened indicated a portion of offline sales could permanently migrate to e-commerce. For those fashion houses not already taking advantage of the robust digital and analytical capabilities available, the digital divide had started to widen even pre-pandemic. Digitally mature companies were outperforming their lagging competitors.
Digitized and robotized finance and back-office processes, the McKinsey report suggests, can help transform every part of the apparel value chain. The advantages include not only top-line growth, but improved speed, flexibility and sustainability across the supply chain.
As the McKinsey article states, “for executives in the AF&L sector and all related subsectors (such as beauty products and sporting goods), the imperative is clear: make digital and analytics a core element of your company’s strategy.”
As public institutions, art museums depend heavily on contributed revenue, including government subsidies, grant aid, endowments, donations and sponsorships. While running an art museum as a business and charging admission wouldn’t necessarily be popular among traditional board members, financial instability and reduced contribution opportunities have necessitated more of a focus on self-generated revenue opportunities.
The various channels for this include membership fees, special event space rentals, publication and media, catering and tour package revenue, to name a few. Revenue management opportunities abound among these streams and the strategic use of space, time management and pricing require the inclusion of complex business models best served by revenue automation consideration and increased dependence on available technology.
Many organizations are becoming more creative in applying revenue management techniques to best utilize their key industry assets – the museum spaces themselves. A more tricky line to walk is functioning as a business while managing the perception of a non-commercialized public institution.
The golf industry remains a growing one with golf course development, apparel and accessories markets remaining steady and the inherent social bond of the play as strong as ever. Revenue management applications include the use of space and time, with variables including the different types of courses and course offerings (executive course, par-3 course and approach course).
Golf courses can also generate revenue from channels including the clubhouse, lessons and food and beverage, not to mention other facilities such as spa, dining, shopping mall and banquet offerings.
As more within this industry move toward a digital solution to track all the complexities of these business models, the back office processes which buoy the glitzy golf world will become as reliant on technological solutions as the players themselves.
Returning a bit full circle as we examine the cruise line facet of the overall hospitality and tourism industry, the standard-bearer in putting revenue management principles to full use, consider the object of the cruise lines themselves. These passenger ships are all about the journey itself, the amenities and the midpoint destinations with a variety of ticket and price offerings and frequent customer transactions – the epitome of today’s more complex business with both a higher level of customer expectations for speed and responsiveness.
The ability to handle all the complexities within the space and time management expectations again requires the use of a more agile system capable of responding to thousands of varied customer interactions on a daily basis.
Contact us today to learn how RecVue’s solutions helped an icon of the car rental industry, global car rental leader Hertz, integrate its billing and partner payment processes across 43k franchise offices, in total handling over 4.5M rental agreements each month.