Overview: Dynamic Pricings Future in the Attractions Industry IAAPA Expo 2012 Martin Lewison, Ph.D. Asst. Professor, School of Business Farmingdale State.

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Presentation transcript:

Overview: Dynamic Pricings Future in the Attractions Industry IAAPA Expo 2012 Martin Lewison, Ph.D. Asst. Professor, School of Business Farmingdale State College

Revenue Management Dynamic Pricing is one aspect of a complete revenue management program Revenue Management is selling the right experience to the right guest at the right time – Example: Discounted pre-season annual pass sales – Example: Premium add-ons (queue products, water park privileges, hard ticket special events)

Revenue Management The object is to sell your perishable inventory for maximum revenue; Easier if you recognize that different guests are more or less price sensitive It is possible to cater to both types, giving discounts to price-sensitive guests and charging premiums to less price-sensitive guests Of course, guests differ in more ways than just price sensitivity, so it makes sense to segment the market on multiple variables (Price-sensitive + heavy user = Season Pass)

Dynamic Pricing Dynamic Pricing is pricing based on demand and timing High demand, higher pricing, & vice versa. Consumers today are more comfortable with the notion that prices can rise or fall with demand, or can depend on peak or off-peak periods. Dynamic pricing can be found: – Tickets for sporting events, shows, concerts – Parking meters and electricity consumption – Online shopping – Industries where dynamic pricing has long been the standard: Airlines, hotels, auto rental

The Attractions Industry Already Uses Dynamic Pricing on a Limited Basis Season Pass/Annual Pass Twilight or Evening Discount Pricing Weekday/Weekend Pricing High/Low Season Pricing Online Pricing Special Event Pricing Birthday Pricing

Dynamic Pricing Study We looked at websites for 74 parks/FECs in Asia, 183 in Europe, 117 in North America Annual or seasonal pass pricing common in U.S. and Europe (68% sample in North America, 69% Europe, 33% Asia) Online Advance Purchase Discount Less Common (36% sample North America, 35% Europe, 7% Asia) Day of the Week Pricing Uncommon (15% sample North America, 5% Europe, 7% Asia)

Guest Attitudes Toward Pricing We collected 476 online surveys from several global theme park forums (53% North America, 33% Europe, 14% Asia+other) 32-43% (North American respondents) expressed willingness to pay higher admission on busier/busiest days, higher for Europe and Asia (95% confidence interval) 83-91% (NA respondents) expressed willingness to adjust day of visit to capture a discount, lower for Europe and Asia (95% confidence interval)

The Future: Know Your Guest Understanding your guests experience preferences (thrills, shows, landscaping, games), F&B preferences, merchandise preferences, etc., along with their sensitivities with regard to changes in price opens the door to mass customization of the amusement park experience More parks/FECs are starting to collect more guest information through interactive marketing on social media

The Future: Know Your Guest There is no perfect amusement park for all guests, but there are variations in the marketing mix that are perfect for different segments of guest. Survey and test to find out what your guests want Invest in research and analytics and mine your data Develop loyalty programs -beyond the season pass model- that form long term relationships.