Recently, I gave one of OUR seminars about one of my favorite topics in Touristology. Yield Management.
As usual, one of the questions that appeared was…
As usual, one of the questions that appeared was…
What is the difference between Yield and Revenue Management?
Do you want to assist to the class and know my answer? Follow me please!
Some people define Yield or Revenue based on their evolution in practicing it.
- “When I was doing Yield … I did that. So, this is Yield”
- “When I do Revenue… I do that. So, this is Revenue”
The problem (main concern) of this approach is that Touristology is a science and we have to define our tools based on the problem that we have to deal with and the solution that our science provides. In Tourism (as in Health and Education) we have a very important difference with other sectors that Eigler and Langeard described with the word “SERVUCTION”. You can have more information here…!
As Eigler and Langeard highlighting long time ago, the customer is an input in the process of Servuction while that input it doesn’t exist in production.
This is both a boon and a bane to our beloved sector. A bane because if the Tourist is not here, we can’t create the service. But it is also a boon…
As the Tourist have to be here, we can create groups and become a magnet for other Tourists.
As the Tourist have to be here, we can increase the relationship between him/her and our enterprise/Tourism destination.
So, Yield? Revenue? Servuction!
Another usual question that sooner or later appear in OUR seminars is…
What is the main difference between Marketing and Yield/Revenue Management?
As we need the Tourist to create the service, we have to seduce the Tourist to be right here, right now.
As we need the Tourist to create the service, it is not possible to deposit the service. If it is not sold now it will be lost forever!
To me, Yield / Revenue are strategies and tactics aiming to achieve two objectives:
1) To get the Tourist here when it is important for the business (low occupancy, later cancellations….)
2) To manage the wave of reservation (the booking pace) in order to increase the reservations for a specific day when we are down and to reduce the reservations when we are at the top.
Here we have a representation of that:
Simple Yield/Revenue Managers have simple strategies and tactics. When we are at the top of the wave, they increase the price and cut the sells in OTA, CRS, Metasearch or Search Engines… When we are down do the opposite! WoW!!! If this is the only thing that you are able to do… in less that 5 years some robots will steal your job!
Can Touristology brings some deeper and profitable solutions? Let’s see some examples…
1) Simple Yield/Revenue Managers only think in one wave (booking pace).
The times of a single wave is over! Different segments have different waves. Time to create new waves! Time to compensate current wave with the new ones. As we can see in the next figure…
2) Seduce Tourists already here to stay longer. You can see an interesting example of Shangri-la trying to seduce business people to stay in the hotel during the weekend in this post...
Shangri-la... they have a problem of low occupancy (better to say a problem of less than desirable profit? YES!!!) during weekends because most of their customers are business people.
“So, you can promote to your customers… use you hard earned points of OUR loyalty program to appear in OUR hotel during weekends and enjoy especial activities for your kids. Not only you are a great professional you are the parent of the month! By the way, good example of Versions Of Me !!! The business people doesn’t appear during the weekends BUT yes, the lovely parent!”
3) Seduce new Segments creating or looking for something able to satisfy their need in the Hotel OR near to the Hotel. Here, we have a possible example of Motel 6, a pet friendly chain of motels, offering the training and how to avoid the red tape necessary to assist to an exhibition
4) Seduce traditional segments using customized 3 C’s (Content, Commerce and Community)
For instance, you know that one of your Tourists enjoyed a movie…now we have a sequel. Do you want to repeat the experience… What about stay in OUR hotel this day and make the reservation in this moment?
Differences between Yield and Revenue? I don’t care! I care about providing a solution to the problem of low occupancy, war prices and lack of direct reservations! Can you find new opportunities?
Don’t be a definition-provider! Become a problem-solver. Become an opportunity-finder! Become a Touristologists!!!
