We’ve all witnessed the rapid erosion of our economy and the impact it has had on the car rental industry. Total industry bookings were down 1.9 percent last year over 2007. The majors have all made deep cuts in their workforces in recent months. Consumers are choosing less expensive ways to spend their vacation time. The continued credit crunch is having an adverse effect on corporate business as companies reconsider their travel decisions. With bookings down, competition for reservations has become more and more fierce.
In this economic climate, there is even more of a need to focus on driving top-line revenue dollars and to minimize costs. However, focusing too much on cost-cutting often results in “penny wise and pound foolish” decisions. Driving additional revenue can have a more significant impact on the bottom line.
Proper revenue management strategies can result in increased revenue, even in a tough economy—the issue is how to achieve it. Simply put, how do you “get all the juice from the orange?”
Here are some key principles that are integral to effective revenue management strategies:
Know Your Place
The initial task is to ask the questions that will determine your pricing strategy. Who are your potential customers? What contributes to their decision to rent? What are the seasonal trends? Is the reservation decision based on value, convenience or prestige? Considering today’s economy, more often than not it is value.
Regardless, you need to decide which of your competitors you need to compete against in order to get the reservation.
Key principle: Know your customers and competitors.