Improving Revenue Management in An Economic Downturn

Regardless of your brand position, your revenue management strategies must take into account the conditions in today’s marketplace. Employing forward-looking rate strategies will position your organization for success in spite of today’s challenging fiscal climate. Consider focusing on the following activities to maximize your results.

Align Booking Trends and Policies
When evaluating your revenue strategies and policies, examine booking trends to identify growth opportunities. What booking channels or demand segments are performing well? What does this imply about current pricing and revenue targets?

Now more than ever is the time to determine which marketing programs are generating your bookings. Focus on those channels. Assumptions regarding profit margin for different demand types or pricing products need to be revisited. This ensures that the pricing is right and that rentals from the most profitable customer segments are maximized.

The review of your booking segments should challenge prior decisions made under different economic conditions. Reconsider your booking policies. Perhaps a very restrictive policy for bookings was appropriate when higher demand existed, but today these policies may be decreasing your utilization.

Are you requiring a credit card to book on certain channels when your competitors do not? Are your incremental costs (i.e., underage or additional driver fees) higher than your competitors’? Today’s cost-conscious customers research the marketplace and make their booking decisions based on total rental cost. If you are not priced in line with your market, you will lose reservations to your competition.

Plan Fleet Mix in Accordance with Market Demand
By monitoring your bookings by car class, your demand statistics will give you the necessary information to develop an effective fleet strategy. Is demand primarily in the standard car class sizes, or is there a significant demand for specialty or high-end vehicles?

Consider your client segments. If you’re in a value-oriented market, you need to set your fleet mix to a larger-than-usual percentage of economy, compact and midsize vehicles. If you have a high volume of corporate accounts that desire specialty or high-end vehicles, you will need to fleet up to accommodate the demand—or risk losing accounts.

Focus on Your Advance Build
Focusing on overall advance build is key to successful rate management. It starts with an understanding of market pricing trends, your position in the marketplace and required demand to attain your utilization and revenue goals. Consider the following advance build goals and objectives:

  • What are my utilization goals?
  • What advance build do I need to attain my desired utilization?
  • What are my booking goals “first to last,” at zero to seven days out, eight to 14 days and 15 to 30?


You’ll also need to know your expected no-show factor. Incorporate a procedure to confirm reservations before day of arrival. This procedure will ensure that you have done everything possible to lessen your no-show factor and save you on your overall reservation expense. Once you have determined these factors, you can begin to plan accordingly.

CONTINUED:  Improving Revenue Management in An Economic Downturn
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