Demand Based Pricing Update
A lot of you have asked for the 2 documents I referenced in my portion of the “Using the Internet to Improve your Business” seminar on October 12th. The first one is from a article written in 2000 by Sheryl Kimes. Her article is titled “Applying yield management to the golf-course industry. I am having a tough time finding the article where you don’t have to pay for it, so please be patient and I will have a link posted soon.
The second is an article from the NY Times titled “Airlines Coax Travelers to Their Own Sites.” This article talks about how Southwest became successful by utilizing advance rates, and how many of the major airlines have followed suit. This article gives good examples that golf course operators can use when determining whether they want to adopt this type of strategy to increase revenue. Click here to read the article.
An interesting point to make about demand based pricing and its sister term yield management is that these strategies have been indispensable tools for increasing profits within the highly competitive airline industry for almost 30 years. The techniques have steadily gained acceptance in other industries that have similar business processes. Although making a golf tee time resembles making an airline reservation in many respects, yield management is rarely practiced in the golf industry. Well to be honest a homogenized version of yield management is used that claims to use certain aspects, but in reality falls well short of what the airline and hotel industries have used for years.
In recent years, new revenue management technologies are emerging that are specifically designed for golf operations. These technologies could have a positive financial impact on the golf industry during the current economic downturn, and potentially represent a new trend in golf course management. One of these such technologies is my company W5golf. We offer a real time booking engine that can incorporate rate periods or fences, (which is the term the airlines use) an advance rate program, (like Southwest Airlines) and can allow you to post different rates like seniors and walking rates right next to a rate with a cart fee for example. We also offer a call center service, but I will save the explanation of how that works for another post.
But with whatever technology you might want to persue, the most important point is to determine if using these strategies are right for your operation. My goal of this post about demand based pricing, and future posts will be to provide information for you to be able to make informed decisions on how to implement a demand based pricing type program but even more importantly how to utilize basic yield management principles to help courses drive rounds and revenue.
Please leave any comments or ask me any questions and I will be glad to get back to you quickly.