1.  Introductions  Goals  Revenue Management (RM) Review  Questions and discussion  History of Electronic Distribution  Questions and discussion  Self-Assessment Activity  Break

2.  Every act of management is an act of marketing.

3.  Selling the right product to the right customer at the right time for the right price through the right channel….to optimize the inventory and maximize revenue.

4. GDS Originates in Airline Industry SABRE created by American Airlines 1960/70s – CAB sets US airline rates – Hotel, Rental Cars added Airline Deregulation Airline Deregulation Act of 1978 Increase in competition - Price wars Legacy of GDS Delivers travel products to 780K travel agents Powers many OTAs, higher ADRs despite little growth

5. Brief History of Revenue Management in US 1980s: – Hotel industry responds to 1982 and SBLA crisis 1990s – Hotel industry responds to first Gulf War and economy 2000s – Hotel industry responds to 9/11 and post millennial economic slow down 2010 and beyond – Hotel industry faces convergence of distribution and marketing: Demand Management 5

6. A secret formula A technology or computer system A specialist sitting in front of a computer, in the basement, of your hotel An isolated team at “central command” Revenue Management is NOT: 6

7. It’s about Revenue Management. AND It’s about Expense Management.

8. Revenue Management Trends Revenue Management today must focus equally on driving revenue and controlling expenses. Periodic capital investments in technology are a permanent reality. Disparate devices and new platforms proliferate. 8

9. Search engines changed the field/Review sites changed the field Online Travel Agency (OTA) balance of distribution power with branded sites Hotel chain distribution mix growth in both GDS and branded supplier sites projected* *PhoCusWright, Inc.

10. Revenue Management Trends Conversation economy – social media Growth in mobile globally – still being figured out domestically, technology yet to catch up IT and brand management culture of communication 10

11. Revenue Management (RM) = – Demand Analysis + Pricing + Restrictions Past Web 2.0 Marketing = Distribution + Channel/Internet Marketing Demand Management* = – RM + Demand Creation + Distribution Management + CRM + Internet Marketing *Adapted from Anderson and Carroll, Journal of Pricing and Revenue Management, 2007

12.  Demand creation  Sales force; single-image inventory management  Traditional brand and marketing: ▪ Advertising, Sales Promotion, PR  GDS placement, agency relations  CRM, keeping past guests coming back  Internet marketing ▪ Distribution channels AND marketing channels ▪ They ARE BOTH simultaneously

13. Demand Forecasting Involves the historical patterns and current trends to determine revenue decisions. Separate forecasts must be created for group and transient travel. Unconstrained demand: the request for rooms for given nights by prospective guests that are not affiliated with a group event or seasonality. Must be calculated by market segments to determine proper demand.

14. Inventory Control Strategies Stay Controls Leverage high demand periods by closing shorter stay patterns and eliminating low rates Overselling The practice of accepting more reservations than actual rooms. Key terms: wash factor and walk cost Stay Pattern Management Stay Pattern is the combination of arrival date and length of stay Channel Management An understanding of the complicity of channel management and the dangers associated with it

15.  Channel Management  Both marketing to and acquisition of customers  Search engines are windows to channel  Group sales and small group sales websites  Customer acquisition by channel ▪ Pay attention to the many costs ▪ Transaction fees, GDS, switch ▪ Marketing/placement fees ▪ Production and competitor analysis by channel

16.  Customer Relationship Management  It costs less to keep a customer than acquire or create a new customer.  Beyond email  Social media meets frequent traveler: Reviews  Groople.com/other group travel platforms  Mobile technologies, “App me”  Measuring success of loyalty promotions  Reducing cost of customer acquisition

17. Channel/Internet Marketing – Every distribution channel is a media channel – Search engines and the cost of finding you – Chain websites and vanity URLs – Media sharing sites – DMOs, Chambers of Commerce, Business Improvement Districts – ROI on all of them – monitor the cost as well as the revenue production – But is this the channel where my customer shops?

18. SUMMARY  Morphing and merging of many disciplines  Revenue management and demand management  Channel explosion = proliferation

19. Driving Revenue Management  Revenue is only half of the equation, managing expenses and understanding the ROI of every RM effort is essential to decision making.  All of these trends can make an impact in the face of slowing travel demand. 19

20. Today’s evolution of Revenue Management into Demand Management demonstrates the power of this statement: Every Act of Management is an Act of Marketing or Demand Management