"Don't assume that all guests have reached the same level of RM understanding and acceptance"

Travel Distribution Asia Special: By EFT Correspondent
   
Are hotels in Asia in a position to skip some of the interim steps that
markets in the US and Europe have been through and learn from their
experience?

Providing his viewpoint on what could these steps be and how can such hotels
can come up to RM levels in some other mature markets, Steve Pinchuk, corporate
vice-president - revenue management, Harrah's Entertainment, says, "RM must be
applied to the existing market. If that market has skipped some of the growth
phases other markets have gone through then there is no need to address things
that do not exist today. Carl Marx said, "A man who refuses to learn from
history is doomed to repeat it." However, in any market there are many
different levels of customer acceptance and maturity. Don't automatically
assume that all guests have reached the same level of RM understanding and
acceptance. Therefore, you might have to approach the market at several
different levels."
   
When queried what is critical in today's environment to optimise yield
management, Pinchuk, who was recently in Singapore for Travel Distribution
Summit Asia 2007, told EyeforTravel.com's Ritesh Gupta, "Commitment from top
management and a willingness to change your existing marketing to match the
segments and RM techniques that you want to apply. You also need the resources
to build the RM tools that you need to apply RM. RM takes an investment and if
there is not enough resources you can not develop the tools needed to practice
RM. Distribution channels must be an integral part of your RM strategy."
   
There are many levels of revenue management and each hotel/chain has to review
their overall company objectives, sales and marketing policies and revenue
management goals.
   
So what can ensure that the objectives are aligned to maximise the benefit
they receive from whatever pricing model they decide to adopt?
   
"The objectives need to be developed once the market is understood and the
optimal application of RM in that market is mutually agreed upon. Don't
establish objectives that you are not capable of enforcing or reviewing for
proper implementation and operations. Start simple and build on successes
instead of overstretching and starting out with failure and friction. Don't
overlook the impact that distribution will have on your strategy and
objectives. Distribution needs to be a part of your RM strategy," he said.
   
It is being said that when it comes to forecasting, the level of segmentation
available is still limited by ability of human resources to collate and analyse
large quantities of data in a timely manner.
   
On the same he said, "Forecasting is only capable of operating when market
segments are defined in a manner that the segments accept. If you segment the
market in ways that you cannot maintain "fences" between then the segmentation
will not work and the market will think your pricing is predatory. Segmentation
must be based on the natural behavior of the market and not on the behavior you
wish they had. Distribution channels are an important factor in demand
segmentation since they are a natural way of segmenting your markets. Start
simple and add segments as you better understand your market's behavior. The
best segmentation follows the natural behavior of your markets. Do not create
so many segments that the population in each segment is too small to forecast.
Forecasts require enough demand in each segment that a forecast has enough
demand to be statistically significant. If you can not forecast a segment's
demand effectively it will be very hard to properly apply RM."