Kennards July eKourier

FEATURE FEATURE

ON THE RIGHT PATH

It has been almost two years since Revenue Management (RM) started in our company, and although it's already quite established, I keep getting questions (good ones) about our pricing strategy and the dynamics of our Revenue Management System. Albeit it may take more than a few paragraphs to unveil Revenue Management, but I thought I would share some ideas. evenue Management (RM) started in d, I keep getting questions (good one venue M nagement Syste . Albeit it anagement, but I thought I would sha H

7 Kennards Kourier July 2021 ality, trends, demographics, tures, days on market, length competitive data, and many that a single person (or even an cal portion but a great deal of tanding our customers and rket, trial and error, heaps of y, adaptability, daily judgment nstantly taking controlled risks. jective of Revenue Manage- not to increase occupancy, to push rates. It i finding the alance between the two of them mise revenues. Yes, maximise es! a complex game that requires g several variables, like histor- mand, elasticities, prices, S trongly linked to Marketing, Sales and Operations, Revenue Management is a core area of the business. Aiming to make the most of the available inventory and potential demand by offering the right product, to the right customer, at the right time, at the right price, through the right channel. Benefiting not only the business but also anticipating and adapting to our customer’s needs. Revenue Management started in the U.S. in the airline industry (late 70's), but has expanded to many others such as hotel, cruise, utilities, FMCG, cinema, real estate, and car rental, among others, given its proven capability to increase revenue and substantially improve profitability. While some consider Revenue Management an exact science (lots of maths, algorithms, and data analysis involved), I consider it more like crafts- manship: a combination of science, business knowledge and commer- cial acumen. There is a significant numerical portion but a great deal of understanding our customers and the market, trial and error, heaps of flexibility, adaptability, daily judgment and constantly taking controlled risks. The objective of Revenue Manage- ment is not to increase occupancy, neither to push rates. It is finding the right balance between the two of them to maximise revenues. Yes, maximise revenues! This is a complex game that requires juggling several variables, like histor- ical demand, elasticities, prices, seasonality, trends, demographics, unit features, days on market, length of stay, competitive data, and many others that a single person (or even an army of analyst) simply cannot handle. Here is where science, analytics, and machine learning are critical, and where our powerful software that forecasts demand, optimises inventory and keeps learning every single day, shines.

As a result, every day we update the price of more than 6,000 unit types, anticipating future demand and reacting to competitors and any relevant change in the market. We also come up with rent increases to existing customers to support our business growth and maintain profitability. The results so far are encouraging, achieving historical occupancy levels, strong rates and more importantly, record income. At the same time, freeing up more time to look after our customers and centring on the value of our premium product. This is an exciting and never-ending journey. There will always be new things to test, parameters to adjust, changes to react to and opportunities to explore, and your constant feedback is not only appreciated but fundamental. So, stay tuned for more to come and please reach out if you have any valuable insight.

Javier Perez Revenue Manager The results s achieving his strong rates income. At th more time to and centring product. This is an ex journey. The to test, param As a result, e price of more anticipating f to competito in the marke rent increase to support o maintain pro