Collette Vacations on Revenue Management & Pricing in Current Economy

Continuing on our subject from EyeForTravel Session 1 on "Adapt & Update Your Revenue Management & Pricing Strategy to Profit in the Current Economic Climate".
Jeff Roy, Director of Air Revenue Management from Collette Vacations brought us some great information from some of the other side, the Air Travel side which is basically a direct flow through to Hospitality Revenue Management.

The highlight I pulled from Jeff's address was this "Discounting may not stimulate demand, but it can, and will affect Market Share."

Jeff really touched on how every Revenue Manager's first reply to the infamous "What do you think about discounting?" Question, will always reply with "Discounting does not create demand!" Basically, this mentality is BS, every one of them will say that to your face, then we all watch our Competitors and Market's rate's just dive and the rate war begins. The key thing to remember is that discounting done inproperly will result in Long-Term rate loss, importance in proper fencing should never be underestimated.
Here are some strategies Jeff suggested in fencing and providing value instead of straight discounts:

• Booking Incentives: Using Pre-Pay and Extended Booking Windows to fence discounts
• Best Rate Guarantee- Rate Change Guarantee's
• Door to Door pick up shuttle services
• Various Value Adds: Internet, Meal-Plan, Drink Coupons etc.

In this difficult time, forecasting has been one of the hardest things to do, Jeff has experienced success by breaking his forecasting into different channels. Such as forecasting Internet bookings versus call-in bookings and repeat customers.
They also have established Short and Long term goals to help keep their teams motivated. Long Term goals to keep the team from panicking due to the current economy, and focused on remembering that the downturn is not permanent. The Short Term goals are to keep the team motivated in the current times and maximizing that which they still are getting now.

The absolute best measure for success in the downturn is Market Share coming out of the downturn. The validity of your pricing in the new economy can be determined by your actions in the downturn.

Do you Chase Profits or Revenue?