Aug 20, 2015

Revenue Management helping you to deal with the sharing economy.

As you know, I like to define Revenue Management as a way to manage hotels focusing on PROFITS and coordinating all the departments of the hotel and all the members of the chain of value. I, strongly, believe that the last part of the definition “ALL members of the chain of value” is very important and sometimes misunderstood.
If you want to transform a threat into an opportunity you have to analyze it with a holistic vision/approach. In Tourism this means finding ways to gain the trust of the tourists and add value to him/her from the beginning to the end of the trip. Otherwise, others will do this for you and you will become a commodity. Let’s apply this approach in the sharing economy, shall we?
There are apartments near to my hotel that have become competitors. Ok, I agree you have more suppliers! In 1,2,3 theory this is number 2.
There are some tourists that prefer going to apartments because it’s cheaper. Others because they like the possibility to live together with a resident of the city and in this way have a different tourism experience. Others because they want to enjoy the freedom of not having schedules or selecting and creating their own food (for instance, think about families with small children or vegans…). Others, because they prefer to have a bigger sharing space. Do you think a group of friends, a big family or a start-up developing a new product could be good examples? Others, because... Ok, I agree you have different segments with different necessities to satisfy! In 1, 2, 3 theory this is number 1.
Plenty of new intermediaries have appeared offering this kind of offer: airbnb, homeaway, niumba, windu, housetrip….. even booking, tripadvisor and Expedia are running this race! As usual, data aggregators or metasearch engines have appeared: tripping, hometogo, hundredrooms… Ok, I agree this is part of number 3!
If you analyze tourism market structure (suppliers, demand, intermediaries…) as independent parts, you usually will propose/create partial solutions. For instance, the chain of hotels Hyatt offers complementary services to onefinestay’customer as you can read here.
That initiative is OK, BUT… You run a hotel! You are an expert in Tourism! You manage an enterprise and have the contacts of an enterprise (Contacts to offer complementary services, to do marketing campaigns, to get finance, to get human resources…) Are you unable to compete with the unprofessional owner of a flat?
If this happens, it is because you compete basically on price, offering a place to stay and food and beverage. You have to compete in the high value league! It is NOT about offering more and then looking for customers. Take the Canary Islands, for instance, they are thinking on ““encouraging tourists on all-inclusive package trips to 'leave the hotel' and spend money”. This idea makes me tweet “this is a good example of Oxymoron”. It is NOT about offering more for less. Those are partial solution focusing on the supply (number 2). You have to discover new segments, even create new ones conveying to people the necessities that they have and that thanks to Tourism will be fulfilled. Then customize and aggregate a supply. Then build a chain of value…. This is a holistic/complete solution!!!
So, you can provide a partial solution OR you can create a complete/holistic solution. Do you want to be and remain competitive? Follow the complete/holistic approach! Become a Touristologists!!!
BeMate the community/central reservation created by the chain of hotels RoomMate is a case in point: 
They define a segment (tourists desiring the freedom of an apartment but also the services of a hotel), then they define the offer (go to theses apartment near to my hotel and you will have what you are looking for) then they create a meeting place and a central reservation system. A good example of 1,2,3 theory!
Can you go further on? Of course, you can! You can follow the example of the hoteliers (Vail Resorts) who targeting international customers, create a chain of value: An incoming travel agency ( and a specialized social networking site ( as we saw here.
Or you can go deeper in the segmentation process (forgetting about Dr. Frankensteins) and looking for international communities desiring to travel for any of the benefits that Tourism can provide: International contacts/experience, a boost of creativity, bonding experiences for professional or family groups… 
Ummmm, this seems a kind of study case to me! If you are a Touristologists you can’t help it… your mind is already finding solutions! Do you want to share it with your brothers in arms?
- But Jordi, I just want to sell my rooms, my food and beverage, my meeting space….
Well, It is your choice… but from my point of view… Your business is NOT selling rooms or F&B… Your business is to satisfy your customers, providing what they need, when they need it, in the way they need it!  Anything able to provide the highest value for the customer and the highest margin to your business!
- But Jordi, I don’t want to create on-line travel agencies or social networking sites!
Why not? Are the owners of RoomMate out of their mind? Is ACCOR also crazy for opening their central reservation system to other hotels? It was also crazy  Wyndham when they created as we explained here.
I repeat… Do you want to be and remain competitive? Follow the complete/holistic approach! Enjoy the benefits that modern Revenue Management can bring you…Become a Touristologists!!!

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