Earlier this week Peter and I were in the “audience” during a presentation given by two Cornell University students who are getting their Masters of Management in Hospitality (MMH). They had chosen the topic of revenue management in the spa industry and used the two of us as resources. The students’ primary and secondary research showed that:
1) Very few spas are using revenue management as a tool
2) Doing so would likely increase their bottom line
We were impressed with their insights. Revenue management seems perfect for the spa industry.
But what exactly is it? I checked some definitions and liked this one from PROS:
“Revenue management is the application of science to maximize revenues and profits. Aspects can include forecasting demand, optimizing the allocation of inventory, providing dynamic packaging, and offering dynamic pricing.”
One of the most familiar examples is airlines raising ticket prices during the holidays, lowering them during the week, offering cheaper rates for advance bookings than for last-minute bookings, etc.
In the spa industry, revenue management will likely translate into lower prices for treatments during slower times (mornings and early in the week) and higher rates at peak periods (Saturdays). And that will just be the beginning, as product, hotel room, special service prices, etc. could also be adjusted to rise and fall according to demand. Value-add, packaging, and dynamic pricing will also be part of the mix.
Am I happy about this? Well, yes, if I like my massages on Monday morning.
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