Jan 22, 2015

Are Revenue Managers a kind of surfer?


I like metaphors and oxymorons, Touristologists! I can’t help it! They allow me to represent complex systems in an easier way and, as you know, I strongly believe that Tourism is a complex system.
So, I will try to go deeper into the day-to-day battlefield of a Revenue Manager with a metaphor. Are Revenue Managers a kind of surfer?
If you remember, in this post we saw this visual representation:


Here we see that we have to select the right customer based on the price that they are willing to pay, the ancillary services they might buy, the margin we get, the length of stay…. Also we have to look for new opportunities answering the following questions: To whom? With What? When? and Where?
Furthermore, The Revenue Manager has to be ready to detect the time when a specific customer, group or a segment is ready to book. This “time to book” moment is similar to the detection of the beginning of a good wave for a surfer. For customers related to a congress it can be three months in advance, for a couple looking for a romantic getaway it can be a fortnight. Of course, these data are only examples, nothing better than real data for the specific hotel that we are dealing with. Data from the Property Management System (PMS), the Customer Relationship Manager (CRM), Loyalty Program, Mobile application, WebSite, Others websites using webscraping, you-name-it!!! All these data and the tools to transform it into knowledge sometimes are called “Big Data”.
Then, we have to follow the wave and see the number of reservations that we are getting every day, every week….that is one of the definitions of “Pick-up”. We can see if the wave is growing or not. We can see if the wave of our competitors is growing or not, thanks to web-scraping techniques.
So, just like surfers, Revenue Managers study waves and decide which one to surf or not. I want to highlight a big difference. First Class Revenue Managers can try to control the movement of the waves and usually they are successful. Regular Revenue Managers are more like surfers, they just adapt to the waves. What kind of Revenue Manager do you want to be?
It is like Economists trying to control the movement of the GNP
If we move up too much we end up with inflation, if we move down too much we end up with high unemployment. Economists want to avoid that and for that reason we use monetary and fiscal policy. As Schumpeter said, it is impossible NOT to have waves (Communists with a planned economy tried it but, so far, without success). In the same way, Revenue Managers try to have a more stabilized wave. If the number of bookings is high you can have an opportunity cost problem (maybe you have to sell your services at lower prices). If the number of bookings is low you can end up NOT selling some of your services (and as you know, if it doesn’t sell today… it’s lost for ever!) So, you try to control the wavelength of each of your waves ( remember they represent a segment, a specific customer or a group). In Revenue Management literature this is usually called “the booking pace”
Let’s see the new visual representation, shall we? 

Another difference that I wish to highlight…Regular Revenue Managers are like surfers. No waves no movements, BUT first class Revenue Managers are able to create new waves! They have information about their customers and segments (the big data that we mentioned above) they have the knowledge, the attitude, the courage to try to seduce the customers. They are Touristologists with the Revenue manager’s hat on. For them, to create or customize an offer in order to seduce a specific segment using the right chain of value (Does 1,2,3 theory ring a bell for you?) is their thing! They are, definitely, the best minds working in the best sector ever!


Jan 15, 2015

It is great to be a Touristology builder!

The previous week I shared this message on twitter. The name of the Twitter account? Turistoleg!!! What else? 
23 years ago I began my career as a Touristologist builder! Today…Different faces, similar archetypes… Same passion!!!… Yes, the faces of the future Touristologists are different, but you can see archetypes, attitudes that repeat over and over… The one that finds some concepts difficult to catch but never stop asking, never stop reading, never stop believing… I am not worried about these ones! Persistence is a key ingredient for success and they are pure steel Touristologists warriors! How could I forget Patricia or Joan?!?!? 
The one that believes that the subject is very easy, that He/She understands everything… - Don’t worry Jordi. I already know all this! 
Wow, be aware, Jordi! - I, clearly, listen to Touristology voice talking to me… He/She doen’t know and when He /She realizes that … He/She will think that it’s your fault! Ooooh, what a pity! I don’t remember you… 
The one that, when I am looking for a volunteer to present a study case in front of all the class, instead of avoiding my glance, they smile and say “ I can try. I will do my best”.
Last week I saw the birth of the new Miguel Angel, the new Roman, The new Sara, The new Roger, the new Nicole, the new Miriam, The new Sergi, The new Pau, the new Esther, … The kind of Touristologist that has a kind of Master and Commander Attitude! The kind of Touristologist able to convey that a difficult study case is an easy thing! I can see them creating the new killer start-up, changing the way we enjoy, manage and define Tourism….Making me as proud as can be! 
Yes, 23 years being a Touristology builder... well, to tell the truth 20. The first three years I was learning like crazy about the Tourism sector!!! Thanks to the best Touristologists in town…
Espuña: First person that said to me “We are Touristologists!” Almodovar: Master of masters dealing with intermediaries for the tourism sector.
Urgell: Born to be an hotelier.
Iglesias: A marketing lighthouse.
Calabuig: A geographer that fell in love with Tourism.
Codinas: A psychologist genius entrepreneur and expert in travel agencies.
Martin and Peguero: The dynamic duo! The first ones that enlightened me with the Revenue Management philosophy (at that time, Yield Management).
Arcarons: An incredible lawyer… 
You were the best mentors in Touristology! 
Every year has been different! Have you been a teacher for 23 years OR have you repeated the same year 23 times? Have you been a Revenue Manager for the last 22 years OR have you repeated the same year 22 times? Have you already learnt client-side MV* and how to combine with RESTful Web Apis? Or are you still using the same technologies but now in mobile? I don’t know about you, but for me… 
Every year is different, even though archetypes remain… What about the passion? I, definitely, believe that it is increasing every year…. I love to be a Touristologist builder!!!

Jan 7, 2015

Can you apply Touristology to cruises?

Of course, Touristologists!!! At the end of the day, a cruise is a kind of Hotel/Resort with similar behavior to a transport company. We have to remember that the average length of stay in a cruise is seven days doing 3-4 stops. So, you go to places, but most of the time you are in a kind of resort with plenty of activities. Anyway, lodging or transport… clearly, it is related to Tourism, therefore, Touristology will give you the necessary tools to become AND remain competitive!
Globally, the cruise market is growing in number of passengers (21.3 million passengers in 2013 and expecting 21.7m in 2014). What about in revenues AND profits? -Ask Touristology’s voice!
It is a closed business (economist like to name it oligopoly) where three players get 80% of passengers and 72% of revenues. Those three players are:
The cruise industry is a big success in North-America, origin of 55% of all passengers. In Europe the market is also growing (even though the market experienced a backward movement after the, tragically, famous accident)
One of the tools that Touristology provides is the following matrix. Let’s see if we can use it in order to analyze and provide some advice for the cruise sector!
You can learn more about this matrix here
And here (don’t miss the video!!!)
This matrix reminds us that, in order to be and remain competitive, you can follow the Innovation path or Standarization path….
In the standardization path we have examples of successful companies: Ryanair, McDonald's, TuneHotels….. The basic strategy is to get economies of scale and then offer the lowest possible price, do promotion based on discounts…. It can provide good results BUT if you want to beat the three dominant players in the cruise sector OR one of them wants to increase their profit… then you will have to explore new segments, new channels of value… Welcome to the Innovation path!
There are different ways to follow the innovation path (some of them are not yet discovered! Are we talking about innovation, right?)
A) Selling using my POSITIONING in the market. Do you want to see some examples?
A-1) Disney. They don’t have any problems selling their cruises… People love to spend time with Disney Characters!!! If you are selling experiences, like Disney does, you are not selling cruises anymore. The cruise is just a place (a commodity as many hotels have become) where you enjoy the important thing… the feeling of being part of Disney’s world!
A-2) Virgin looking for the segment I-wanna-be-Richard-Branson aimed at younger generations.

A-3) National Geographic who, clearly is selling experience over luxury.

A-4) Scientific American. Some people believe that tourism is just searching for happiness… But Tourism can help you to achieve other important things, as well. Learn new things? Gain international contacts with experts in the cutting edge of science? To change your regular perspective?
Those examples are innovation and My own 1,2,3. They identified a segment, customized their product and distributed it through their travel agencies and their own meeting places (Shops of Disney, Disney Channel, Virgin outlets, National geographic channel and magazine!!!)
B) Other option for walking the Innovation path is to rely on Specialization (To me, the best!): What about cruises for heavy metals fans as Royal Caribbean tried through a partnership with TUI? It was a big success. If you are selling the experience of enjoying concerts of your favorite music band, together with other people that feel the same, then they feel part of a community… Then you can add value selling customized ancillary products (tattoos, Karaoke, music lessons, you-name-it…), promote direct bookings, use the long tail in order to promote and commercialize your business.
Of course, when you are selling a cruise, you are selling experiences BUT, as all Touristologists know, if you don’t use specialization power, then the price will become the most important driver to choose a cruise or a substitute product.
If you follow this advice you wouldn’t sell just a cruise anymore, you would sell the benefits of a trip where you can get what Touristology provides…
Community building, New perspectives…creativity, isolation from the usual place….
As I said here “Touristology is a science related to Tourists travelling/moving from one place to another for travel reasons or for necessities that they can better achieve through a trip: Getting and keeping international contacts; healing wounds (both physical and psychological); learning new things (specially multidisciplinary ones); giving a bust to their creativity, as Alain de Botton said “Journeys are the midwives of thought”; improving relationships (organization team building , couple, grandparents-grandson, single parents…)…”
You can read here some ideas about how to use specialization in order to transform your cruise into the place to be.
Do you think that you can improve the profits of a player in the cruise market using those matrixes? Do you think that you can help (OR BE) a new intermediary in this growing sector? 
Do you want to become a Touristologist? I will be here waiting for YOU!!!... By the way… Happy New Year!