I recently met with the CEO of a major global hotel chain who, not surprisingly, was concerned about the months ahead. His biggest worry? The race to capture demand as people start to travel again.
Ready for ready, set, go?
This CEO is not alone. The travel leaders I meet with across sectors are laser focused on attracting travelers in the new demand landscape.
Some players are offering large discounts and offers both on their own channels and through third-party channels, which is happening despite high commission costs.
Others are sticking to traditional channels to open up inventory without any special offers. They are betting on the people with money burning a hole in their pockets from a year without travel to plan trips without skimping on expenses.
While these approaches have their advantages, neither fully positions travel companies for a sustainable recovery and return to growth. What’s needed is a more considered approach that combines these strategies with the key capabilities of all commercial functions including Marketing, Sales and Revenue Management. It’s an approach that hinges on data.
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New demand, new data
The pandemic has made historical data collected over the years essentially obsolete. At the same time, it’s underscored the importance of capturing data from new external sources.
This is possible through what we call Intelligent Revenue Growth, which combines data and advanced intelligence to maximize revenues. It’s especially critical in two key areas: identifying demand and setting the right price.
1. Using data to identify demand
There are potential customers who need what travel companies are offering but have zero awareness of what’s available to them. This is a loss for both sides. And it’s a liability for travel companies considering that our project experience suggests that most generate 80 to 85% of their revenues from new, non-repeat customers.
Travel players can move past this lose-lose situation without massive investments. After all, customers have prominent digital footprints that tell a lot about themselves. Tools that scan the internet—including search engines, social media and other specialized digital networks—make it possible to identify prospects in new ways. It’s about more than finding people who have demonstrated clear intent to plan a trip. It’s also about finding those whose interests—in culture, gastronomic experiences, anything really—could influence a trip.
Capturing people’s intents and positioning to act on them is key to being a front runner. The meetings and events business is a great example of how this can play out. Although recovery is expected to be slower here, demand is bubbling up now. Having the right set up to monitor interest and capture the potential demand in specialized networks and portals will generate important leads for hospitality players.
Aviation companies can apply a similar concept, targeting participants of these events with tailor-made flight offers and potentially winning over these new, relevant business traveler segments.
2. Using data to optimize pricing
Identifying demand is only half the story. It is also important to have a clear view of pricing to maximize revenues without losing the lead.
For years, travel companies’ revenue management systems have relied on historical price information to set winning prices. The systems learned from past decisions and continuously optimized yields. But the pandemic broke this link as collapsing demand made historical data unreliable. Revenue management analysts have essentially had to ignore the proposals of their once-trusted systems and go with their gut to make pricing decisions.
But in our new world, pricing decisions reflect so many elements and influences that revenue management analysts never dreamed they would have to consider two years ago. These include things like infection and vaccinations rates, government restrictions, new virus variants and their potential impact, and border controls. The days when it was enough to monitor average price, competitors’ reactions and major sports and business events are long gone.
To manage through all of these variables, revenue management teams need something more systematic and scalable. Why not capture this data in a structured way to equip revenue management teams with the insights they need to make the best pricing decision? This is key to support revenue management actions and help commercial teams collaborate better to optimize the price of every hotel room and airline seat.
Remember: It's humans who win the race
Travel companies have tools, technology and data available to understand demand and optimize pricing in new ways.
To make the most of these possibilities, travel companies cannot forget people. The reality is that the pandemic has taken its toll on everyone—including travel industry employees. Keeping this in mind and taking care of talent will help travel players stay ahead of the competition. After all, it’s people who interpret data, build algorithms for today’s market dynamics, and ultimately make the right decisions to drive growth and competitiveness.
So if you want to win the race to capture travel demand, combine data, advanced intelligence and technology tools, and human ingenuity to cross the finish line first. Ready, set, go!