We’ve put together this 5-part series on the key factors and capabilities of a revenue management engine for the tours and attractions space. We have curated the best practices to weave this way of thinking into the DNA of your own tour or attraction.
At its core, Revenue Management is a grouping of methods and best practices to maximize profit.
This is done by properly managing your inventory of products and service capacity through the peaks and troughs of your daily, monthly, and annual sales cycles.
Only now the tools and systems are finally catching up to meet the business requirements of tour and attraction operators.
"Before RocketRez, I was actually manually dynamic pricing. Every time we wanted to increase the price for a specific day or a specific cruise, I was going into the system. It was a full-time job.” – Jacquelyn Ketner, Operations Manager
Imagine the life of a Tours and Attractions business in three stages.
The exciting phase where you’ve shown your vision to the world and are racing to spread the word. You figure out what marketing channels and tactics are going to work for you.
You begin to build some predictable traffic and get a feel for your busy and slow seasons. You get a sense of your operational needs and form a team you trust to execute.
Once your basic model has been figured out, you look for ways to expand. You may open another location, or two. Gift shops, retail items, food and beverage options, private events, memberships and a photo booth are all transforming your revenue growth.
You expand your reach through partnering with local resellers or Online Travel Agencies. You now have a successful and predictable business, and a brand reputation.
You are now fine-tuning a robust revenue engine that includes multiple products, multiple locations and an ever-growing list of ground level employees and managerial stakeholders.
Congratulations, you are now a mature business – with a host of important questions to answer:
- Am I operating efficiently?
- How do I know where to change course if I’m not?
- Am I using all available sales channels to drive revenue?
- Which channels are lagging in ROI?
- Am I taking advantage of cross-selling opportunities?
- What is my Average Order Value?
- Am I pricing for peak profitability?
- How does the market react to different price points?
- What are my leaky buckets?
- Am I managing inventory to maximize profit with my current demand?
- How can I adjust my pricing to optimize my capacity and profitability?
Put simply, how do you continue to grow in an industry that is more competitive than ever before? Where do you go from here? How do you grow a business that has finite resources and firm capacity limits?
Years ago, the airline industry figured out that they could only sell so many flight tickets, because a plane only has so many seats, but there was a wide variation in the prices customers would pay based on location, timing and availability.
Airline operators set out to develop systems to understand their demand cycles, manage their available ticket inventory and respond to their customers’ demand and competitors’ pricing in real time. Now those same tactics are becoming available and employed by all kinds of businesses in the tours and attractions industry.
One of the biggest challenges in properly managing revenue across your sales channels is getting a single view of how you’re performing.
This is why all-in-one platforms have grown to dominate the industry’s operations software. It’s next to impossible to optimize your pricing when each channel has a different inventory, different demand, and different margins.
All-in-one, cloud-based technology has made collecting data from across your whole organization, and acting on the insights provided, easier than ever before.
Like airlines and hotels managing inventory, honing sales channels and using dynamic pricing for peak profitability will be the core capability of managers at the forefront of this industry.
An effective tour or attraction business will leverage business intelligence tools to determine where, when and how their customers are spending money. This allows them to anticipate demand, and to market, bundle and price their offers more effectively.