Revenue Management

The evolution of Revenue Management Techniiques in the hospitality industry

Ancient Middle Ages: 19th Century Early 20th Mid 20th Late 20th
Times: Century Century Century
Bartering- Inns/hostelries- Ocean liners- Automobiles- Limited Airport hotels
prices set higher prices luxury ships motels service hotels for
based on with more charge emerge along emerge like convenience
availity to pay occupancy, last highest fares highways, motels, Dáy of air traveler
Merchants items highest for wealthiest Early hotel Inn Upscale
reserve best price travelers chains- Extended stay brands offer
goods for Railroads- Holiday Inn hotels for suites for
weaithiest higher fare on offers longer stays wralthier
customers popular consistency with kitchens customer
rouyes,
sleeper cars
for luxury
travels

Revenue Management is introduced as the process of managing capacity (the amount of space
available for sale, such as hotel rooms or airline seats) along with sources of income (ticket or room
sales) given the constraints of supply (the number of rooms or seats available) and demand (how
many customers want to purchase

The Earliest Applications of Revenue Management

 Bartering and early markets

 Inns and hostelries
 Ocean liners
 Railroads
 Automobilies
 Early hotel chains

Pricing Restrictions
Pricie Restriction refers to limitations or conditions places on ticker or product prices,
especially related to resale in secondary markets
CUSTOMER KNOWLEDGE AND CONSUMER BEHAVIOR
1.1 Definition of prosumer A prosumer is a consumer who takes on a dual role as both a producer
and a consumer of goods and services.
 Active participant in production: A consumer who gets involved in some part of the actual
production process of the products or services they purchase
 Professional consumer:
- Consumer who possess considerable knowledge about the products and services they
are purchasing, such as a serious hobbyist, regular viewer of how-to shows, or
technology expert purchasing for personal use
- They exhibit behaviors more like professionals in their research and purchasing decisions
1.2 DEFINITION OF PROSUMER AS PRODUCER AND CONSUMER
 Part producer: The consumer is now directly involved in some part of the production process.
Examples given include consumers helping to create their own salad or customizing features
of a mattress. By participating in these production activities, the consumer takes on a
producer function

Ví dụ: Bạn đặt phòng cho đám cưới, bạn yêu cầu setup theo mong muốn của bạn. Đó chính là bạn
đang góp phần tạo nên sản phẩm

 Part consumer: At the same time, the individual is still fulfilling their traditional consumer
role by ultimately purchasing and using the good or service, even if they had a hand in its
production. They have input but are still buying and consuming the final offering

Ví dụ: như ví dụ trên consumer là chính bạn là cô dâu/ khách hàng

4. EMERGENCE OF THE PROSUMER

 Biref trend of the questioning branding in late 90s/ early 2000s

 Younger consumers less brand loyal
 Return of strong brading initalves in hospitality industry

6. CUSTOMER – CENTRIC APPROACH

KET CHARACTERISTICS OF A CUSTOMER-CENTRIC APPROACH

 Making customer satisfaction and loyaity the top goals

 Aligning marketing, sales, product development service and other functions to customer
insights
 Making it easler for customers to do business with the company on their own terms
 Continuously innovating based on customer feedback to stay relevant
THE PRICE/VALUE RELATIONSHIP AND CONSUMER
PURCHASING BEHAVIOR
1.PRIECE/VALUE RELATIONSHIP

Consumers calculate value as perceived value - total acquisition cost

This refers to the subjective opinion of the benefit or worth of a

Perceived value: product/service in the consumer's mind. It includes tangible and
intangible factors
This means more than just the monetary price. It encompasses all the
Total acquisition cost:
costs involved in obtaining and owning the product/service
Perceived value - total Consumers see the value as the perceived benefits minus all the costs
acquisition cost: (price plus any other efforts) required to acquire and use the item.

Material value: The tanginle worth derived from plain functionaly and specificational of the
products/ service

Benefits: The additional advantage and outcome gained beyond basic performance, like time saving,
status, pleasure,etc

Esteem: Refers to the self-image and social perceptions associated with ownership, such as perceived
popularity, prestige, success

2.TOTAL ACQUISITION COSTS

Total Acquisition Costs: the overall expenditure required to obtain and maintain ownership of a
product/service

More than just monetary, it includes additional non-monetary costs Time, effort, learning curve are
also costs:

 Time spent researching, travel/commute to purchase, set up/installation

 Effort of understanding the item, troubleshooting any issues
 Learning how to effectively use the new product/service

3 ACHIENING CONSUMER SATISFACTION

Value and costs are weighed against each other from the consumer's point of view

For satisfaction, value must be perceived as higher than or equal to costs

If value appears greater, satisfaction with the choice is more probable

The evolution of E- commerce

1. IMPACT OF E-COMMERCE
 Rise of online research and comparison shopping:
 consumers increasingly using the internet to research products/services and compare options
prior to making purchases. This pre-purchase online research allows easier access to information,
reviews, pricing from multiple retailers.

 Changed consumer behavior: .

They can now optimize their choices based on comprehensive research in a way that wasn't
possible before the rise of e-commerce/online shopping

2. BRICK AND CLICKS PURCHASING

 Some purchases made in physical stores after initial online research

the phenomenon of consumers doing preliminary online research on products/prices, but still
choosing to make the final purchase at a brick-and-mortar retail location. The online research informs
but does not replace the in-store buying.

 Others made entirely online from click-based retailers

different purchasing pattern where consumers both research and complete the transaction entirely
through online/e-commerce retailers without stepping foot in a physical store.

 E-commerce enabled two distinct purchasing models to develop-some consumers blend

online/offline activities while others switch to fully digital purchases
3. COMMERCE MODELS

 Business to Business, sales between companles

 A hotel chain purchases linens and amenities directly from suppliers
online.
B2B  An online travel agency books blocks of hotel rooms from property
management systems for resale to customers

 Business to Consumer, companies selling direct to customers

 Individual consumers book hotel rooms, flights, tours directly through
company websites like Expedia, Hotels.com, Airlines.com.
B2C  A restaurant group sells gift cards directly to customers on thelr website for
future in-person spending.

 Consumer to Consumer, Individual customers selling to each other

 Individuals sell timeshares to other private buyers online through sites like
RedWeek.
 People rent out privately owned vacation homes/condos to others on sites
C2C: like Airbnb, VRBO for short stays.
 Tour guides or local experts sell private experience packages and actlvitles
to trave ers they meet online

4. HOSPITALITY ONLINE POTENTIAL

 Online channels give consumers ease and options in purchasing hospitality
 Travel, accommodations and experience products are well suited to e-commerce
BUDLING, DYNAMIC, PACKAGINGM AND BRANDING
1. BUNDLING DEFINITION

Bundling is offering multiple products/services together as one package

 "Offering multiple products/services" refers to combining two or more individual items into a
single bundled offering. HOTEL
 "Together as one package" indicates that the various components are now functionally one
consolidated product from the consumer's point of view.
 The individual elements are bundled for sale jointly rather than separately
2. DYNAMIC PACKAGING
 -Dynamic packaging allows bundles to be customized per customer

provides flexibility for bundles to be adapted according to individual consumer preferences.

 -Consumers select specific bundle components that meet their needs

customers can pick and choose the particular product/service elements within a bundle that best suit
their unique needs/wants

3. BRANDING DEFINITION
 Branding is the name/label that builds perceptions about a company
 Strong brands shape positive expectations of quality, value, experience

Total customer value

1. DEFINE TOTAL CUSTOMER VALUE

Total customer value is a metric that quantifies the overall monetary value a customer
represents to a business over the length of their relationship/lifetime as a customer.

Lifetime revenue the projected total income the customer will generate for the
business from all purchases and repeat business over multiple
years/interactions as a customer.
This includes both initial and repeat transactions
Total cost of serving the includes the expenses associated with attracting the customer
customer initially (such as marketing and acquisition costs) as well as ongoing
operational and retention costs needed to maintain the customer
relationship long-term (things like customer support, fulfilling
requests, rewards programs, etc.).

2. CALCULATING TOTAL CUSTOMER VALUE

Lifetime Revenue Total Cost of Total

from Customer

- Serving that
Customer = Customer
Value

3. INTERNAL SOURCES OF MARKETING INTELLIGENCE

 Guest profiles/purchase histories from loyalty programs
  Occupancy/demand reports from property management systems
 Customer satisfaction surveys and feedback forms
 Website traffic and online booking analytics

MARKETING INTELLIGENCE RESOURCES AVAILABLE

1. EXTERNAL SOURCES OF MARKETING INTELLIGENCE
 Industry association reports on trends, consumer behavior
 Competitor intelligence on pricing, promotions from monitoring sites
 Market research from consulting firms on destination performance
 Social media mentions and reviews of similar operations
2. PRIMARY VS SECONDARY RESEARCH
 Primary research gathers original data (surveys, interviews, focus groups)
 Secondary research analyzes existing data sources (reports, articles, statistics)
 A mix provides comprehensive insights into customers and market conditions

MARKET SEGMENTATION
1. MARKET SEGMENTATION

How organizations divide large markets into smaller, more defined groups

Market Segmentation refers to the practice of dividing a large overall market into smaller,
more specific segments.

This allows organizations to better understand customer behaviors and purchasing patterns.

 The simplest initial segmentation: business travelers versus leisure travelers.

 Additional segmentation can be done based on demographic factors: age, income, gender,
location ete psychographic factors: benefits sought, lifestyles, personality types
 Segmentation also commonly involves separating individual customers from group business
since their urchase behaviors differ greatly.

2. WHY DO MARKET SEGMENTATION?

 Understand customer needs and behaviors better

 Develop targeted products and services
 Improve marketing and sales strategies

3. Common Market Segments for hospitality

 Bussiness vs Leisure

Business travels are classified as”corporate transient” and would make up one segment

Leisure travelers like those on vacation would be classified as the “leisure transient” segment

 Individual vs Groups

Individual travelers whether business or leisure would fall under transient categories

Groups, defined as requiring a contract with 2+ people, would comprise distinct segments

 Transient vs Contracts
Transient: individual leisure or business travelers who book accommodation on a short-term, one off
basis. Transient guests typically only stay for a night or two

Contracts segment: customers who book multiple room nights through negotiated corporate/group
contracts or membership programs

4.1 SEGMENTATION APPROACHES

Demographic Dividos the market based on demographic factors like age, gender, income, etc
Segmentation:
Psychographic Groups customers according to personality traits, lifestyles, values, opinions.
Segmentation:
Behavioral Looks at how and why customers behave in certain ways, their brand perceptions
Segmentation :
Geographic
Categorizes based on areas like country, region, climate population density
Segmentation
Technographic
Groups by technical skills and how tech is used, for example early tech adopters
Segmentation

4.2 EXAMPLES OF SUBSEGMENTS

Business segment:

- Industry (corporate, government, association)

- Account type (contracts, negotiated rates

Leisure segment:

- Purpose of trip (vacation, visiting friends/relatives, events)

- Additional qualifiers mentioned include:

- Demographic factors like age, income, location

- Types of businesses (e.g. SMEs vs large corporations)

- Membership status (clubs, loyalty programs)

More details on some examples:

Corporate business could subsegment by industry sectors

Government segment includes military as well

-Leisure covers reasons beyond just vacation like VFR (visiting friends/relatives

5. ENVIRONMENTAL SCANNING

Environmental scanning refers to constantly monitoring external factors that impact customer
behavior and the business landscape.

It involves assessing changes and emerging trends in the surrounding environment

PESTEL (Xem thêm slide)

6. Examples of external Factors

  Economic

-If the economy is strong or weak, it impacts consumer spending levels

-Gas prices - High gas prices can reduce discretionary income for shopping/travel

-Inflation - Rising prices of necessities leaves less money for non-essentials

 Social/ Cultural

-Trends- Emerging societal preferences like health/wellness influence demand -Values- Shifting
societal viewpoints like sustainability drive behavior changes

 Political

Regulations - New laws/rules can create barriers or opportunities for industries -Policies - Changes in
tax codes, spending plans redistribute budgets of citizens

 Technological

Advances - New technologies continuously reshape customer experiences and needs

7 TREND ANALYSIS

Trend analysis involvescontinuously tracking patterns and preferences over time to identify evolving
behaviors

- It helps organizations spot emerging tendencies rather than just snapshots in time.
- By monitoring trends, companies can predict future demand rather than only
understanding the present/past.
- -The content highlights how important it is for hospitality providers to not just
understand current customer behavior but also project potential future behavior through
trend spotting.
- This facilitates strategic planning and product development before new preferences fully
materialize versus reacting after the fact.
- Ongoing trend evaluation aids revising market segmentation assumptions as customer
profiles change dynamically over the long run

8. Generational targetting in trend

GENERATIONAL

Silent generation (born pre -1946)

Baby Boomers (1946-1964)
Gen X (1965-1980)
Gen Y/Millennials (1981-1996)
Gen Z (1996-2010)
Gen Alpha
 Focusing on specifically on different age groups/generations as they each exhibit unique
characteristics and preferences.
 Generational targeting segments the population based on birth year cohorts, recognizing
purchasing habits evolve with life stage.
 Analyzing trends through a generational lens provides insight into evolving behaviors as
populations age.
 Each generation imprints during formative years, impacting their ongoing outlooks.
  Knowing generational mindsets supports anticipating transition points as younger demos
replace older.

9 COMMON GENERATIONAL SEGMENTS (đọc thêm hình ảnh)

 Silent generation (born pre -1946)

 Baby Boomers (1946-1964)
 Gen X (1965-1980)
 Gen Y/Millennials (1981-1996)
 Gen Z (1996-2010)
 Gen Alpha

10. Emerging Trends Hospitality

 Millennials prioritizing experiences over material goods

 Growing interest in wellness retreats and spa vacations
 Demand for Instagrammable hotels and attractions
 Boomer fueling growth in experiential travel
 Livestream travel experiences gaining popularity
 Micro- vacations and short breaks replacing full week trips