Catégorie : Distribution networks

Catégories
Distribution networks Products and activities

The challenges of the online tours and activities market

reservation_activites_en_ligne

Nowadays, tourists reserve flights and hotel rooms online without a second thought. However, a trip involves much more than these two elements, as it also includes everything you do once you reach your destination. The market for tours and activities is huge: according to studies cited by business intelligence platform Skift, overall spending on such activities reaches somewhere between US$100 and $200 billion. In terms of online penetration, however, the share of tours and activities booked online is much smaller than that of hotels and flights.

The primary reasons behind this low online sales volume are the following:

  • The huge tours and activities market is fragmented.
  • Few tours and activities providers have adopted technology.
  • Major players in the distribution network have, until now, paid little attention to the sector.

Changing times

Things are starting to change. TripAdvisor bought Viator—the largest player in this market—in 2014, Kayak and Expedia now offer online reservations for tours and activities, and Airbnb is getting into the act by offering the option of purchasing activities provided by individuals. Booking is also starting to offer the service. At the same time, sites that encourage tours and activities businesses to upload their inventory and the use of geolocation enable travellers to find nearby activities without a middleman. Startups are appearing; numerous sites and applications offer to digitally connect consumers and suppliers of activities. In addition, some tour operators are now promoting their products to both tourists and locals. In other words, a small revolution is brewing. However, the realities facing most of these stakeholders bring their own set of challenges.

reservation_activites_en_ligne_airbnb

Source: Airbnb

For more information, see Activités touristiques : la distribution en ligne s’organise.

Challenge #1: A collection of heterogeneous sectors

Tours and activities do not make up a distinct industry sector. In fact, this umbrella term covers a number of different sectors. The table below summarizes this complex market.

board_activities_booked_online

Source: PhoCusWright, 2016

All the businesses supplying the activities in the preceding table have very different cultures and modes of operation. On many Websites, these sectors are randomly thrown together in a section called « Things to do. » The tours and activities market is very fragmented; TripAdvisor alone lists over 650,000 attractions and experiences.

Flights, hotel rooms and car rentals are presented in such a way that consumers can make comparisons and select products to suit their needs. This is not the case for tours and activities, as each individual product has its own special features.

Challenge #2: The disconnect between online presence and traveller behaviour

There is a very « long tail » of small suppliers: the sector has a few major companies and thousands of little ones. There is a world of difference between an amusement park and an agri-tourism business. The majority of suppliers generate modest revenues and therefore cannot afford to devote major sums to online marketing and merchandising. According to a PhoCusWright study, 82% of all reservations are made offline (by phone, email, fax). For its part, Skift estimates that four out of ten tour operators do not sell their products online and many do not even have a Website. In addition to being heterogeneous, the tours and activities sector does not have an extensive online presence, making it difficult for consumers to make comparisons and then select options.

The fact that few businesses offering tours and activities have adopted new technology poses a real challenge, given that consumers increasingly rely on mobile devices to find activities when travelling. In fact, many travellers look for things to do in the surrounding area and seek information about the day’s events (see our articles on planning and reservation behaviours). While they do some general research on tours and activities before travelling, they do not make specific plans. Decisions and purchases are primarily made at the destination, which is why it is important to have an online presence, be listed on popular sites and, ideally, offer the option of quick and simple reservations. According to Philippe Fabry, writing on the etourisme.info blog, activity organizers must start making it easy for clients to reserve tours and activities while they are travelling.

An opportunity for destination management organizations

Before it’s too late and major players take over the market, as they have for hotel bookings, destination management organizations still have an opportunity to care out a place for themselves in the online tours and activities market. This could be a profitable sphere of activity and some organizations are giving it a try. For example, the Lyon Tourist Office and Convention Bureau has added a module to its Website that enables both tourists and residents to reserve city tours and activities (explore Lyon by boat, on foot, in a double-decker bus or on a Segway) and excursions to the Beaujolais region.

reservation_visites_guidees_en_ligne_lyon

Source: Lyon Tourism and Conventions

In many cases, the process must begin by offering training to tourism businesses and providing support to help them make their products available online. Destinations that already pool tourist information about service providers are ahead of the curve.

The online sale of tours and activities is still a largely untapped market. However, its potential is so great that it will be developed, one way or another.

Image on first page: Pexels.com

 

Catégories
Distribution networks Sustainable tourism

Canadian Travel Agents and Carbon Offsets

In 2006, 26,400 metric tonnes of carbon dioxide were emitted into the atmosphere, of which tourism contributed 5% (UNWTO, 2008). Of that 5%, air travel was responsible for 40% and land travel for 36%.

The relationship between climate change and tourism is interwoven and interdependent.  Climate change has major implications for the future of tourism because weather conditions factor heavily into the business direction of tourism operators. In Canada, seasonal and outdoor tourism may be adversely impacted by abnormal or unpredictable weather patterns, and costly changes to infrastructure may be required to cope with these changes .

With the growing concern about the effects of climate change and how the tourism industry is vulnerable to these effects, the challenge is to determine the awareness of tourism stakeholders and their level of participation in mitigating such effects.

A 2008 study by L. Kole et al at Ryerson University aimed to determine the level of awareness among Canadian travel agents with regard to climate change, and their willingness to offer carbon offsetting as a mitigation strategy to their clients. The study also aimed to determine whether more information regarding environmental issues and carbon offsetting needs to be provided to travel agents to assist them in channelling this knowledge to consumers.

The study sent an e-survey to 1886 members of the Association of Canadian Travel Agents (ACTA) and 2,500 members of the Canadian Institute of Travel Counsellors (CITC). The study received a 5.9% response rate.

Findings

The study found that while travel agents consider climate change a threat, they were unaware of the tourism industry’s contribution to climate change. Their consumers, travellers, also did not make the connection between climate change and their travel habits. Most travel agents have a ‘basic’ understanding (50%) of climate change and carbon offsetting. More than 50% said their first business priority was ‘making a profit.’ However, 9% of travel agencies said their first priority was ‘spreading knowledge of climate change.’ In addition, although 46% of agents felt it was important to communicate environmental issues related to tourism, they were not encouraged to do so by their agencies.

Some 34% of Canadian travel agents believe their customers would be willing to pay up to $10 as an additional charge for carbon offsets, although they felt that the government should bear the financial costs of carbon offsets. Less than half of these agents ’sometimes’ suggest carbon offsets to their customers while customers ‘rarely’ bring up the option of carbon offsets.

The study concludes that since most travel agents have only a ‘basic’ knowledge and understanding of climate change, they are not sufficiently informed to help transfer knowledge about climate change and carbon offsets to their clients. This is also the main reason that agencies are apprehensive about presenting carbon offsetting as a viable option. Travel agents need to be well-versed in environmental issues and carbon offsetting in order to be ambassadors of environmental change.

Implications

In order to increase awareness, a combined effort needs to be initiated among governments, academic institutions and corporations to educate agents about the effects of climate change on tourism and carbon offsetting. As travel agents are representatives at the frontline of the tourism industry, they wield considerable influence when it comes to travellers’ actions and awareness of environmental issues.

There are a number of approaches for communicating climate change awareness within the tourism industry and for making climate change and carbon offsetting a fundamental part of the industry:

  1. Education Campaign for Agents – climate change and mitigation strategies should be part of travel training institutions’ curriculum.
  2. Increase client awareness through the tourism industry, in order to incorporate this issue into mainstream culture.
  3. Offer clients a flat-rate fee for carbon offsetting.

Travel agents must realize that they can help mitigate the effects of climate change. Agents can inspire action by educating consumers about how their travels contribute to climate change, and by offering them carbon offsetting options to enable them to reduce their carbon emissions.

Sources:

Kole, L., Krestell, S., Parlagreco, L. & Dodds, R. (2008). Climate Change and Carbon Offsetting. Toronto: Ryerson University. 49 pages.

United Nations World Tourism Organization (2008). Climate Change and Tourism:
Responding to Global Challenges. Retrieved from http://www.unwto.org/index.php

Catégories
Distribution networks Trends

The resurgence of traditional travel agencies

The sector of so-called traditional travel agencies has probably undergone more upheaval than any other over the past decade. And yet, despite the popularity of the internet, the events of September 11, 2001, and the advent of zero commissions, agencies have learned to adapt, reinventing themselves in the process. Though many consumers have become devotees of online reservations, many remain faithful to the travel agencies that have continued to offer true added value. Some observed trends are presented in the following report prepared by Claude Péloquin of the Tourism Intelligence Network of the ESG-UQAM Chair in Tourism (University of Quebec at Montréal):

The hard road travelled

In the 1980s, travel agencies ruled the roost in the travel sector, booking approximately 80% of all plane tickets. In the mid-1990s, the tide turned as the airlines began reducing the commissions paid to agencies, only to cut them completely in the aftermath of 9/11. At the same time, new competition appeared in the form of online travel agencies that enabled consumers to easily reserve their own airline tickets.
This proved to be a turning point as agency sales truly plummeted. The extremely dire business environment led to major restructuring in the sector and between 1996 and 2006, the number of service outlets dropped 50%. After more than a decade of decline, the profession of travel agent is now regaining its status.

Of course, the perennial question among both consumers and travel insiders is: who offers the best price, travel agents or the internet? Unfortunately, there is no simple answer and many experts have offered contradictory opinions on the subject in the past few years. That said, it would seem that travel agents usually have easy access to the best prices found on the Web, or even better. However, price is not the only way in which agents must set themselves apart.

Competing directly with the internet, agents must offer added value to the customers who make the effort to consult them. In particular, consumers are looking for someone responsible should there be any problems. Although online agencies have made some progress in this respect, they still tend to be harder to reach and offer less reassurance. The help of an expert is very valuable when purchasing more complicated products or expensive trips, particularly those involving international travel.

Customer service: the key to success

The transition to zero commissions now seems complete. Travel agencies have regained the trust of a large percentage of customers and have improved their profitability, even though some of their activities, like simple transactions, have been taken over by the internet. Airline ticket sales, which often offer little added value in the way of customer service, have dropped dramatically. Customers who deal with agencies today are looking for more than what is easily found on the internet; people increasingly recognize the value of the travel agent’s work and agree to pay for this service.

Beyond the price, customers appreciate, for example, advice on selecting the best room, restaurant suggestions, good places to visit, or even how to obtain a possible upgrade. The quality of customer service has fostered consumer loyalty to the agencies and is how the best agencies distinguish themselves from the competition. The addition of new services has also helped retain customers; many occasional customers have gradually become partners of a sort, as a relationship of trust has grown.

More to the point, agents can make good use of the internet to help their customers. Many agents have become veritable experts who, instead of focussing on particular destinations, now increasingly specialize in specific customer segments (scuba diving aficionados, religious groups, recovered alcoholics, etc.).

The habits of Quebeckers

Although online sales have boomed in the past few years, the sales figures for Quebec travel agencies are also experiencing surprising growth. According to numbers from TourismExpress.com, Quebec retail agencies posted total sales of $2.83 billion in fiscal year 2006-2007, or a 9.4% increase over the preceding year. While the sector experienced a major consolidation of activities as the number of Quebec sales outlets dropped from 1308 in 1992 to only 812 today, average sales per agency location have risen 64% since 1999.

For a tour operator like Transat, the network of agencies clearly continues to play a leading role in the sale of its travel products. According to Transat’s co-founder, Linda DeCesare, 90% of the company’s sales still come from packages sold by agencies. Many customers now use the Internet to shop around, but still prefer to conduct their transactions in person with an agency.

A closer look at the reservation habits of Quebeckers shows they are more likely to use a travel agent when purchasing international travel (Figure 1). Over 44% of vacationing Quebeckers travelling by plane in Canada have used the services of an agent, compared to 58% of those vacationing outside the country. The difference is even more apparent when it comes to hotel reservations. Only 12% of Quebec vacationers asked an agent to book their accommodations within the country, while 35% requested assistance with international accommodations.

 CP_2007-07_retour_agence_grphq1

Ontario travellers behave similarly when it comes to domestic trips. However, when it comes to international travel, Ontarians are slightly less inclined than Quebeckers to call on the services of a travel agent.

New ways of doing business

Now asked to act more as travel consultants, agents have adapted their behaviour to this new reality. For example, they pay a lot more attention to discussions with their customers. Some agencies have taken the initiative of reorganizing their offices so they can receive people in a warm, welcoming environment. They increasingly use small private lounge areas to make the most of personalized meetings with their customers. The “service counter” approach has been replaced by the sales technique of sitting around a table.

During these pleasant discussions, many salespersons now adopt the tactic of complete transparency. With online computers available during the consultation, the consumer has direct access to the same information, at the same time as the agent. This strategy of openness has the virtue of creating a relationship of trust and showing the customer that the agent is working to build the trip with the customer’s input. A recent poll by Home-Based Travel Agent shows that a number of consultants now use the internet to conduct research or make bookings for their customers (Figure 2).

CP_2007-07_retour_agence_grphq2

Agency offices are changing too

Many agency owners have jazzed up the appearance of their offices. A trend towards thematic décors has replaced the classic travel poster. Some European firms look more like art galleries than travel agencies. With this approach, design and décor are used to transport visitors to another world, before they even leave home. For example, some agencies feature large exotic trees, or appeal to the senses with scented teas, candles, perfume, etc. Sometimes, they even display imported water bottles from various countries.

Another emerging trend seems to be the sale of travel accessories. For example, the Voyageurs du Monde agencies in France present themselves not as agencies, but as experiences. They sell maps, GPS systems, books and other useful travel accessories. In Quebec, the Tourisme Jeunesse chain of agencies has adopted this approach for many years.

Some agencies have developed a cultural side to their products by organizing sales exhibitions of arts and crafts from around the world. These exhibitions attract new customers to the agency and enhance the décor. Other ways to stand out from the competition are activities like cocktail lectures and photography workshops.

After several years of major upheavals, it would seem that the distribution network is reaching a new equilibrium. The remaining traditional agencies are in a stronger position, the dizzying growth of online agency sales is rapidly slowing and suppliers like airline companies and hotel chains now attract consumers for simple transactions. However, we have learned from past experience that periods of calm never last for very long.

Sources:
– Alvarez, Leticia Suarez, Ana Maria Diaz Martin and Rodolfo Vazquez Casielles. “Relationship Marketing and Information and Communication Technologies – Analysis of Retail Travel Agencies,” Journal of Travel Research, Vol. 45, May 2007.
– Bellstrom, Kristen. “Travel Agents Are Staging a Comeback,” SmartMoney [www.smartmoney.com ], May 17, 2007.
– Charollois, Philippe. “À nouvelles agences… nouvelles méthodes,” L’Écho Touristique, March 9, 2007.
– Charollois, Philippe. “Des agences chic et choc,” L’Écho Touristique, March 9, 2007.
– Dansereau, Suzanne. “Vents favorables pour Transat,” Journal Les Affaires, June 23, 2007.
– Désiront, André. “Le chiffre d’affaires des agences de voyages,” TourismExpress.com, July 10, 2007.
– Ellin, Abby. “Happy Returns for Travel Agents,” The New York Times [www.nytimes.com ], July 3, 2007.
– Jaladis, Stéphane. “Les agences ont survécu à la commission zéro,” L’Écho touristique, March 30, 2007.
– Mielke, Randall G. “Customer Service Key to Small Travel Agency Survival,” Beacon News, [www.suburbanchicagonews.com ], July 17, 2007.
– Mills, Stasha. “How Plugged In Are You?” Home-Based Travel Agent, May 1, 2007.

Online:
Voyageurs du monde

Catégories
Distribution networks etourism and technology

Tour operators moving online

Tourism giants, particularly TUI and Thomas Cook, have long been expected to become a strong web presence. Rebuilding from some difficult years, the major European tour operators have found a way to respond to discount carriers and online agencies, whose e-commerce breakthroughs have been gradually siphoning off market share. Tour operators are now directly and effectively reaching consumers via their new reservations portal, TV campaigns and call centres.

Maintain market share

Until recently, major tour operators specializing in selling holiday packages were staying away from online distribution, essentially relying on their traditional travel-agency networks. The latest estimates suggest direct sales by European tour operators stood at just over 8%, at a time when they were also concerned about not penalizing agencies, which account for a major portion of their revenues. And according to PhoCusWright, just 9% of online vacation-package sales were recorded by operators in 2005, with online agencies accounting for the bulk of those sales.

But the winds seem to be shifting in favour of large-scale tour operators like TUI and Thomas Cook, which have begun the transition to e-commerce (see image). Their recent massive investment in developing e-commerce platforms is beginning to bear fruit, and a new dynamic is in place.

Such a move was becoming necessary to preserve market share, as more and more travellers wish to buy online. In Britain, for example, dynamic packaging (in which the consumer designs his/her own package on the internet) is expected to account for more than 34% of revenues by British tour operators in 2007 – compared to just 3.8% recently.

In addition, the short-haul vacation market has become ultra-competitive in Europe since the arrival of discount carriers. With fares for all flight segments of both scheduled and charter carriers available online, internet users can easily compare prices and seek out bargains. So traditional holiday packages face a threat, because consumers can now find out the price of each component and create their own personalized packages. Tour operators were forced to react to this very real threat of losing the traveller to online agencies or other suppliers offering the same dynamic packaging possibilities.

Tour operators target consumers directly

In 2005, TUI posted record sales due mainly to internet transactions, which reached 1.8 billion euros, an increase of 44% over the previous year. The company is a dominant presence in the German and British markets, where it has 18% and 13% of market share respectively. And this is only the beginning, as TUI’s global portal, with its many applications, was officially launched just this past December. Though known for its vacation packages, TUI is also recording significant increases in online reservations for other products such as flights and accommodations; including reservations made through call centres and sales resulting from television ads, direct sales to consumers now account for 25% of the TUI tourism division?s revenues, totalling 14 billion euros.

Tour operator Thomson, a subsidiary of TUI, is offering several innovations designed to seduce the consumer directly. For example, the firm hopes to deliver its latest offers to customers via RSS feeds to their cell phones. And since February, customers have been able to view their prospective vacation site in 3-D, thanks to Google Earth technology. In addition to numerous images, the site also has a bank of some 1,700 videos to facilitate the process for internet users as they buy various products.

Thomas Cook marketing blitz

Over at Thomas Cook, the other tourism giant, online sales in the British market now account for more than 20% of revenues. In February 2006, the British conglomerate also launched a major advertising campaign to influence consumers’ perceptions of the very nature of the company. The strategy was to position Thomas Cook as the main leader in terms of internet offers. The firm went with a message that took direct aim at its two main rivals, Expedia and Lastminute, with the objective of showing that its site is a one-stop shopping solution – a source of scheduled flights, charter flights and dynamic-packaging options as well as the usual holiday packages.

In addition to sponsoring film screenings and television programs where it offered a chance to win a trip, Thomas Cook promoted its Neckermann brand specifically in the television media. It even created a character, Supernecky (see image), that symbolizes the tour operator’s « values of proximity and accessibility, » to serve as a communications tool in relation to both the general public and the distribution network.

Commissions cut

Another key step in the tour operators’ global strategy involves changing the business model for compensation to the distribution network. In January 2006, several operators cut travel agency commissions to 7%. The move, initiated by Thomson, was very badly received by retail agencies, which worried that tour operators were accelerating their business strategy vis-à-vis direct sales to travellers. Analysts expect the money saved will be reinvested in direct marketing.

By way of protest, many travel agencies stopped selling Thomson products, but paradoxically, Thomson’s website has become one of the most-visited sites on the internet. The move seems to be paying off in spades for Thomson, and other tour operators may be inspired to follow suit. Another cut in commissions, to 5% this time, is likely to be announced soon.

Closer to home, the Transat group dominates the Canadian vacation-holiday scene. The Québec-based tour operator is still relying largely on its network of retail agencies to sell its products, but a steadily growing portion of its revenue is now coming from online sales, direct to consumers, through its Exit.ca website.

Meanwhile, wholesaler Go Travel Direct’s strong arrival on the Quebec scene had such an impact that the players already in place were forced to change their distribution methods. Go Travel Direct’s strategy is low prices that circumvent the agency network; Transat’s response came via its Nolitours banner, which offers similar products thanks to reduced commissions and direct online reservations. One thing seems certain: the race for bargains is increasingly defining business dealings between consumers and the distribution network. « Disintermediation » is proceeding apace.

Sources:
– Carroll, William J. and Peter O’Connor. « European Hotels: Managing Hospitality Distribution, » PhoCusWright, September 2005.
– Filliâtre, Pascale and Stéphane Jaladis. « Les TO passent à la télé, » L’Écho touristique, No. 2754, February 3, 2006.
– Fox, Linda. « Thomson Trials Phone Technology, » Travelmole, March 23, 2006.
– L’Écho touristique. « Thomas Cook préfère la télé, » January 16, 2006.
– Sileo, Lorraine. « PhoCusWright Assesses its 2005 Predictions, Makes New Ones for ’06, » PhoCusWright, 31 janvier 2006.
– Skidmore, Jeremy. « First Choice Set To Follow Thomson with 7% Commission, » ABTA Convention Special Report, November 25, 2006.
– Skidmore, Jeremy. « Operator Accused of « Hypocrisy » over Commission Cut, » ABTA Convention Special Report, November 25, 2006.
– Thomas Cook. « New Thomas Cook Advertising Challenges Online Travel Perceptions, » Press Releases, January 30, 2006.
– Thomas Cook. « Thomascook.hit! » Press Releases, November 2, 2005.
– Travelmole. « Thomson Holidays Gives Customers Google Earth, » February 2, 2006.
– TUI. « TUI Starts the 2005/2006 Travel Wear with Increased Bookings Turnover Growth in Key Source Markets / Online Turnover Up by 44 Per Cent, » Press Releases, March 8, 2006.

Catégories
Distribution networks Management

Make your pricing scheme work for you

Although business-people often tend to set the price of their products by looking at the cost and the desired profit margin, this is by no means the optimal approach to pricing because it does not take into account what each market segment is willing to pay. For Yves Cornu, a consultant with Capgemini, managers must change their attitudes towards pricing if they want to improve business profitability. Welcome to the world of dynamic pricing!

Blame it on the GDS

In the travel industry, the arrival of the GDS (global distribution systems) led to the first dynamic pricing strategies, also known as yield management, by enabling travel agencies to easily compare prices among competing companies. The advent of the internet has simply encouraged this comparison phenomenon. In an environment of virtually transparent pricing windows, dynamic pricing is even more important. Certain experts make a distinction between dynamic pricing and yield management; the former is a pricing strategy defined over the medium or long-term, while yield management uses this approach in the short-term.

Adopting dynamic pricing

An effective dynamic pricing strategy can help improve the profitability of a business. The traditional approach of many managers was to prioritize cost-cutting to increase profit margin. In today’s more open business environment, the idea of adopting a well-defined pricing strategy for one’s product has become a very interesting alternative. According to the firm of Simon Kucher & Partners, a pricing specialist, dynamic pricing can increase net profitability by anywhere from one to four percent.

With the help of technology, many hoteliers like Hilton and Intercontinental have recently adopted a much more dynamic approach to pricing. Jim Kilroy, vice-president of Starwood Hotels, feels traditional pricing models based on ceiling rates are a thing of the past and hotels should be more responsive to the market.

Before testing the waters of dynamic pricing, Xavier Marcé of XMO Consultants suggests that businesses follow the guidelines below to increase their chances of success:

  • Find out how your clients react to fluctuations in price. It’s also important to realize that demand is composed of several blocks and that it can fluctuate according to market segment, originating market, dates, etc. During certain high seasons, it is much less flexible.
  • Be familiar with what your competitors are offering. You must know who your prime competitor is before you can develop an effective price strategy. For example, the Montréal Science Centre recognizes that the Biodome offers more direct competition than an ordinary museum does.
  • Adapt your products and services to your customers’ expectations. When you are knowledgeable about your customers, you can adapt your products to specific segments. Ski areas, for example, attract retirees by offering special season passes that can only be used outside peak periods.
  • Identify demand for each period of the year. The travel industry is subject to major seasonal fluctuations in demand. Since this problem will always exist, detailed knowledge of the phenomenon’s extent, combined with dynamic pricing, can attenuate the effects.
  • Select the ideal distribution channels. While the internet has definitely encouraged an increase in direct sales to consumers, it has also created a greater number of sales channels. Online sales are a particularly flexible and responsive method of marketing one’s wares. Selecting your distribution channels also means selecting the partners who will act as intermediaries. For example, many hoteliers have regretted their decision to join forces with online agencies like Expedia that use the merchant model, because this has translated into a loss of control over the online sale of their rooms.
  • Set price barriers. By making certain prices conditional on specific situations, you can avoid losing some of your traditional customers who might be attracted to discounts. For example, offering an « early-bird » special can help counteract the effects of « last-minute » deals while maintaining less price-sensitive customers who will simply reserve later. You can also restrict the availability of products at certain prices. Finally, a method commonly used in the airline industry is to limit the options of changing or cancelling in the case of certain discount products.

Many advantages

Improving one’s pricing process is clearly more advantageous than trying to cut costs. First, it does not require a large financial outlay. Second, a new pricing strategy generates immediate results and can quickly enhance cash flow. Third, dynamic pricing usually creates a more substantial impact than simple cost-cutting.

It is also important to remember that one must never compromise product integrity. After all, for potential buyers, price is still closely related to quality and – above all – to perceived value. Consumers can be annoyed if prices are constantly being cut or products put on sale. Studies have shown that, even during a crisis, it is not profitable to drop one’s prices.

Although it may not be a science, dynamic pricing requires thought and deliberation on the part of managers so their organizations can adopt consistent strategies that reflect their corporate philosophies.

Sources:
– Boehmer, Jay. « Hotels Float Rate Change: Chains Attempt to Expand Dynamic Pricing to Corporate Travel, » Professional Pricing Society [www.pricingsociety.com], August 2, 2005.
– Brault, Franck and Sabrina Brouzes. « Le pricing dynamique, une formidable opportunité pour les tour-opérateurs, » Revue Espaces, No. 226, May 2005.
– Cornu, Yves. « Un produit n’a pas un coût, mais un prix! » Revue Espaces, No. 226, May 2005.
– Marcé, Xavier. « Les entreprises touristiques découvrent l’art du pricing, » Revue Espaces, No. 226, May 2005.
– Serlen, Bruce. « Hotel Rates Go Dynamic: Hilton, Intercontinental End Fixed Pricing, » Business Travel News [www.btnmag.com], October 18, 2004.
– Simon, Hermann and Kai Bandilla. « Maîtriser la chaîne des prix pour accroître ses profits, » Revue Espaces, No. 226, May 2005.