The way that people buy Cruise, Hospitality, Tour, Passenger Rail and other Travel products is changing. Demand is evolving and your customers are rate shopping with sophisticated new Internet tools.
We live with increasing price transparency, increasingly commoditized travel options, and downward pressure on profitability. JDA Software Group’s solution to these challenges is Price Sensitive Revenue Management (PSRM).
Traditional RM produces forecasts, based on historical demand and current booking trends, but assumes that prices are more or less constant. In the last few years JDA has re-thought the approach to forecasting so that rather than assuming that “demand is what it is” we use price sensitive forecasting to estimate how price will impact demand. In this way Price Sensitive Revenue Management (PSRM) can actually answer the fundamental question: “At what price will we make the best return?”
While traditional revenue management (RM) methodology works particularly well in conditions where demand outstrips supply – recommending availability controls that eliminate the least profitable segments of the business – it does little to address the occasions when capacity exceeds demand. These conditions require a different type of solution that enables operators to understand and identify the pricing action that will be most profitable.
PSRM helps operators to make more money through using price as a far more effective means of stealing share from your local competitor set. In a competitive environment, there is often little to differentiate one supplier from another. Customers are equipped with sophisticated price-shopping capabilities and are becoming better at getting deals. Price is a substantial factor, particularly the positioning of your prices relative to your competitors. If you can optimize that, you can outperform your competitor set.
PSRM is an exciting new approach that is becoming widespread in many of the industries that we work with. Learn more about some of the industries we work with at:
