Real-Time Revenue Management

One of the things that we have been hearing a lot about lately is the ability for real-time optimization of a single departure or a group of departures.  This has many benefits for those departures that tend to get a significant number of bookings in the last few hours prior to departure – especially in the cargo and passenger rail industries.  The objectives of real-time revenue management are two-fold:

n  React with minimal latency to dynamically changing market conditions.

n  Especially useful when significant booking activity/schedule changes occur during the day and carriers cannot afford to wait for nightly file updates and processing

RTS is currently reviewing many options on how best to approach real-time revenue management.  One approach is:

n  The inventory control system senses change in booking activity and sends alerts to the revenue management application based on user defined thresholds, i.e., cancellations, bookings greater than projected demand, etc.

n  The revenue management application gets the latest booking, cancellation, schedule change data in real time from the central reservations system (inventory refresh) and automatically optimizes these departures and sends updated allocation levels back to the reservation system.

n  Two-way real time interface between the central reservation system and the revenue management application would need to be developed to facilitate dynamic data exchange between the systems.

The pros to implementing real-time revenue management consist of:

n  Boosts the bottom line by making optimal decisions based on real time information minimizing lost revenue opportunities.

n  Improves analyst productivity by reducing rework on a number of stale or invalid controls.

n  Automatically identifies departures that need to be re-optimized and eliminates the need for the analyst to continuously monitor changes in market conditions.

The downside of implementing the above is:

n  May not be worth the investment if market behavior is relatively stable and predictable

n  If thresholds are not defined accurately, it may lead to uncontrollable number of alerts being sent from the Central Reservation System to the revenue management application impacting performance.

We believe that the ultimate approach would be a combination of nightly processing and the ability for the system to send alerts so that the analyst can actively review those departures that are falling outside of the user defined threshold parameters.

RTS values your input and thoughts and the enhancements to our products.  Leave a comment and let us know your thoughts.

From all of us at RTS we want to wish you a very Merry Christmas and a Joyous New Year. 

Robert L. Harris, Jr.

Senior Solutions Consultant