JDA Software’s 2010 Pulse on Pricing and Revenue Management Survey Reveals Revenue Growth in Travel, Transportation and Hospitality
JDA Software Survey Shows Companies Using Pricing and Revenue Management Technology are Experiencing Rapid ROI and Strong Incremental Revenue Gains as Much as 3%
According to a recent survey “2010 Pulse on Pricing and Revenue Management” conducted by JDA® Software Group, Inc. (NASDAQ: JDAS), companies in the travel, transportation and hospitality industries are achieving strong revenue increases up to 3 percent using advanced pricing and revenue management technology.
JDA polled 120 travel company executives at its 2010 Pricing & Revenue Management Conference earlier this year to identify the business impact of using pricing and revenue management technology and provide a snapshot of the state of pricing and revenue management across a range of industries. The survey revealed that more than three quarters of the respondents made over 1 percent in additional revenue gains, while close to a third claimed as much as a 3 percent gain. A total of 96 percent reported a positive return-on-investment (ROI) within three years, while 42 percent achieved ROI in the first year.
Survey respondents were comprised of the following industries: rail (28 percent), followed by hotel and leisure (18 percent), tour operators (12 percent) and consulting (7 percent). Of those companies reporting increased profits, almost all were utilizing advanced revenue management technology.
“With the success of revenue management in the airline industry, other industries such as hospitality, passenger rail and cargo transportation have begun to adopt similar approaches to pricing and revenue management that enable accurate demand forecasting, pricing and revenue optimization,” said Andy Archer, regional vice president, Pricing and Revenue Management Group, JDA Software. “This year’s survey found that as market forces change and price transparency continues to increase, this technology will continue to grow in importance. In an era of competitive price transparency, understanding how to effectively integrate optimal pricing as part of the overall revenue management strategy simply helps companies make more money.”
Whereas price flexibility is accepted by consumers in certain industries, particularly in passenger air transport, consumers are still very sensitive to price fluctuations in passenger rail. Rail companies in the U.K., for instance, have less flexibility in making price adjustments because of government restrictions on ticket prices and conditions.
Added Archer, “Without a doubt, this survey reveals good evidence that adopting advanced pricing and revenue management technology will help passenger travel and hospitality companies worldwide to improve revenue and business performance, as well as effectively respond to their customers’ needs. While once considered a ‘nice to have,’ we believe that pricing and revenue management technology has quickly become a ‘must-have’ for companies looking to remain competitive. JDA stands committed to helping companies achieve real results illustrated in this study through our innovative Price Sensitive Revenue Management™ solutions.”
When considering technology providers, JDA recommends seeking pricing and revenue management solutions that deliver an integrated approach to balancing supply and demand through the following capabilities:
Demand Forecasting – Advanced demand forecasting analyzes the price elasticity of demand and its effect on a consumer’s willingness to pay, providing companies with the comprehensive visibility they need to shape demand.
Price Optimization – Through price optimization, companies can improve their pricing strategy and set optimal prices based on competitive rates, capacity restraints, local market demand, and economic and other company factors. A well-defined strategy will allow the company to capture maximum revenue and market share.
Revenue Management – With automated revenue management, companies can gain a competitive advantage by allocating the right amount of perishable inventory or constrained capacity to the right customer segments to achieve maximum profitability.
Asset Optimization – Optimizing asset utilization is critical to driving revenue. By using a sophisticated solution, companies have the ability to analyze and implement high-impact network decisions, improve utilization of inventory and capacity, balance supply and demand, and improve business processes and efficiencies.
To learn more about the findings and industry trends revealed in the JDA survey, please view the 2010 Pulse of Revenue Management and Pricing Study or visit www.jda.com/revenuemanagement.
