The Spa Industry (NAICS number 713940) has had a fast growth over the past twenty years, establishing nowadays a new contemporary culture, both as a social healthcare movement and as a capital marketing trend; moving out of young phase into a mature phase. The worldwide spa industry is estimated to generate nearly US$40 billion per year (Haden 2007). In 2005,
the spa industry generated $11 billion in revenue in Canada and the United States. The average annual growth rate is 18 percent in North America, while the growth rate in the Asia-Pacific region is nearly 200 percent. Not surprisingly, spas are considered the fastest-growing sector in the tourism industry (Haden 2007). Spa visits in the United States alone reached more than 130 million per year in 2006, with an annual growth rate of 9 percent (International Spa Association [ISPA] 2006). Even
though Spas have been focusing on the pampering and beauty side of the experience, they have always been providing some way of relaxation, harmony and proactive medicine. However, nowadays the industry is facing the growing consumer preferences for new experiences encouraging the creation of different spa concepts; the most important types of spas are: destination, day and hotel spas, they are managed and operated very differently and many of them have been established in the past twenty
years. High fixed costs, perishable products and somehow predicted demand are the perfect characteristics to apply revenue management strategies. Similar to hotels, spas are able to calculate the revenue per available treatment room (Rev PATH), which related the price for a treatment and also the duration of it. However, it is important to see that the spa services require more interaction with the guest than hotels or restaurant, for example; therefore, it is
important to manage all the variables to establish revenue management strategies, price and duration without affecting customers satisfaction. The following link provides examples of RevPATH published in Spa STAR reports. Spas can define its spaces explicitly, available treatment rooms. There are several types of rooms depending on the type of spa, however, the most common are singles and doubles. They are managed
in a way that allow the spa to provide a good experience for their guests and at the same time to get the best our of every available room. Several times spas see the necessity to utilize double treatment rooms for singles to avoid revenue loss. However, spas do not sell treatment rooms, but spa treatments. Treatment rooms are not the only consideration to make a spa space profitable, it is necessary to add the staffing factor. There different kind of therapists with different
skills, the number of therapists and their specialization need to be manage alone with space to generate the most out of every treatment room.
Additional Revenue Generator Space http://www.banyantreespa.com/outlet_details.php?oid=1&cid=49
Time ManagementSpas sell time explicitly, treatments are generally 60 minutes but they can vary according to the treatments. It is at the same time a sensible point for spa users since they are usually making sure to receive the fair amount of time to the price paid. To maximize revenue and apply revenue management in the spa, it is necessary to control the duration of the treatment, reduce the uncertainty of the arrivals, and the time between treatments. Reservations in spa are made proximate to the treatment time and a good percentage of customers are usually walk ins. Spa occupation rates are more difficult to control than in hotels; however, spa have implemented several tactics to reduce the uncertainty of the spa time such as: overbooking, rescheduling, deposits and credit card guarantees to control no shows, late arrivals and customer dissatisfaction. Explicit Time
http://www.santa-teresa-hotel.com/images/media/pacotes/menuspa2012.pdf As LeSpa the majority of spas sell their treatment by hour or minutes since the beginning of the treatment until the end of the experience.
http://www.banyantree.com/en/phuket_spa_sanctuary/experience_the_resort
http://mirbeau.com/the-spa/day-spa-packages
http://www.banyantree.com/en/phuket_spa_sanctuary/ Implicit Time
http://www.canyonranch.com/
http://www.shanedietresorts.com/
http://www.crystalmountain.com/about/amenities PriceSpas price treatments more than spaces, however, according to the type of spa and location rates can vary. Also, spas have stablished non-physical rate fences to be able to control occupation rates, arrivals and maximize revenue. Physical Rate Fences
http://www.affinia.com/bells-and-whistles.aspx?page=spaffinia
http://www.delamargreenwich.com/greenwich-ct-spas.ph
http://www.redmountainresort.com/ Non-Physical Rate Fences
Dance Theater Industry Overview The dance industry typically consists of disciplined and self-motivated artists who enter the industry because of their passion for dance. Dancers train extensively for years before they are qualified to dance professionally. Even once dancers master the skills and style necessary to enter the industry, they may not be able to secure a job because the field is so subjective and job demand generally greater than the opportunities available. Given this, many or most dance companies function as non-profit organizations. Depending on the dancer’s experience, training, and the conditions of their contract, dancers may make from $10,000 to over $100,000/year. Regardless of each dancer’s salary, dance companies should aim to maximize revenue for both the company and the theatre or facility. For this post, I will assume the company owns the facility where they host performances and access how revenue management can be applied to the facility and to the company’s operations. Specifically, I will discuss the dance theater’s definition of space, time, and price, and how the industry can be optimally control these strategic levers. For a more detailed overview of the dance industry, please visit: http://industrydancemagazine.com/2012/02/career-in-dance-an-overview/ For an overview of financial information related to the dance industry, please visit: ttp://www.anythingresearch.com/industry/Performing-Arts-Companies.htm Space Do dance theaters typically define space explicitly or implicitly? Dance theaters typically define and sell space implicitly. Theaters configure the space into an inventory type—seats. This enables the company to meet the customers’ needs while they view the dance performance. The size of the seats varies based on characteristics such as the size of the theater, the performance venue, and the genre of performances typically at the theater. Regardless of the size, theaters split the seats, or units of inventory, into sections to facilitate flow throughout the theater and adhere to mandated fire codes. Because dance theaters define their space by choosing the configuration and size of their seats, theaters have increased control during the selling process. Further, dance theaters can design their space based on demand and target market segment characteristics; they can differentiate themselves and maximize their revenue based on space design. Examples of different ways that companies within your industry divide their space up: Multi-purpose division of space: Soka Performing Arts Centre This theatre is a great example of a company’s effort and use of space to accommodate a wide variety of performing arts needs. Soka University hired Auerbach Pollock Friedlander, a reputable architect, to design and divide the space to enable symphony performances, theatre, dance, pop concerts and convocations to occur in a single room. To support a wide variety of seating configurations, the theatre has an integrated system of stage lifts and seat wagons that provide a feeling of intimacy, ease of circulation, optimal sightlines, and meet ADA regulations. The theater’s lift and seat wagon systems enables an efficient change of seat arrangements for different events. In sum, the Soka theatre is multi-purpose industry example where the division of space is adjusted based on the specific event. Distinctive rehearsal and performance space divisions: Some dance performance venues in the industry divide their space to accommodate either rehearsal or performances, but not both. While this practice doesn’t optimize revenue, it provides a more customized space and often increases the satisfaction of artists or performers. The Alvin Ailey American Dance Theater is a great example of this practice. The company provides the Ailey Studios—12 climate-controlled studios suitable for auditions and rehearsals, as well as the Ailey Citigroup Theater—a state-of-the-art performance space that seats up to 275 people. The company, therefore, clearly divides rehearsal and performance space. Front-of-house and back-of-house division of space: The Stevie Eller Dance Theatre in Phoenix, Arizona is a great example of an innovative design that accommodates both the customers and artists need during performances. The space provides a green room, for example, to eliminate noise while dancers wait to enter the stage in addition to strategically lit dressing rooms. Further, the front of house theater space is designed to facilitate guest flow. Non-traditional space conversions: The Dallas Black Dance Theatre in Dallas, Texas is an example of non-traditional space division because the building was transformed from a historic building in Dallas’ Arts District to a dance theatre. Because the dance theatre industry is minimal profit-industry, dance companies often adapt non-traditional space divisions and transform space to accommodate the company’s needs. Colorado State University Dance Theatre: This Northern Colorado dance performance venue contains 4,900 square feet of performance space as well as state-of-the art lighting and audio-visual systems. However, more innovative than their modern equipment is their method of increasing generated revenue. The theatre features motorized lower seating which when retracted, provides increased space for dance classes, master classes, workshops, and guest artist events. This flexibility and use of space enables the theatre to maximize revenue by meeting the customer demand of specific events. Loree Dance Theater: Situated on the Rutgers University campus, the Loree Dance Theater provides 220 square feet of dance space for students and guests. Although the venue is one of Rutger’s smaller dance spaces, the theater uses it space to maximize revenue. During the day, the theater acts serves as a classroom space for Rutger’s theater department—obtaining revenue from enrolled students. At night, the Loree is used as a space for dance performances. The space contains features needed for both departments such as a sprung dance floor and a fully equipped studio theater. Clarice Smith Performing Arts Centre: This dance theatre seats 207 and is located on the University of Maryland’s campus. The theatre contains large windows at the top of the seating area which provide the option for significant natural light during dance and theatre performances. The unique feature attracts artists and increases revenue. Further, the space is frequently used for special event such as dinners with a seated dinner capacity for up to 250 guests. Lastly, the space was created to accommodate both rehearsals and performances; for example, the room’s mirrors have curtains to hide them during performances. Joyce SOHO: This space, located in Soho in New York City, is operated by the Joyce Theater Foundations and uses its space to meet the needs of independent choreographers, non-for-profit companies, and the dance community at large by providing studios used for dance rehearsals as well as performances. By providing flexible dance spaces, the Joyce Theater maximizes its revenue by attracting busy New York artists who value the option to use the space for both rehearsals and small performances. Further, the convertible space generates additional revenue by expanding the theater’s target market. Time The dance theater industry sells time implicitly because they lack control over how long customers use their space. Dance companies and dance theaters sell tickets to events, but they don’t typically control how long the customers use their space. Although dance theaters sell time implicitly, companies can maximize their revenue by finding ways to sell time explicitly. Control the duration of performances:Edgeworks Dance Theatre in Washington D.C. controls and anticipates the duration of theater performances by both owning the facility and operating the dance company that performs in the facility. Edgeworks can therefore evaluate and adjust show durations to maximize revenue. Dance theaters can control time explicitly by improved communication with the performing dance company regarding their show’s duration and anticipated variation. Provide pre-function space and monitor when guests enter the theatre:The Dallas Black Dance Theater contains both rehearsal and performance spaces complimented by a community room and a pre-function lounge. The theater’s pre-function space is spacious, warm and inviting, and consistent with the theatre’s historic flare. The space enables the Dallas Black Dance Theater to control time explicitly by providing a comfortable and welcoming place for guests to wait before they are permitted to enter the theater. Provide multiple exits and ushers to direct guests when performances are over: Boston University’s Dance Theatre and Rehearsal Space, a 223 state of the art studio/theatre space contains one main entrance as well as several side entrances to the space. The facility also boasts about their attentive ushering service composed of student volunteers as well as access for customers with disabilities. While fire codes mandate multiple exits for theaters, theaters can optimize their revenue by strategically placing more exits in popular seating areas. Further, dance theaters should employ methods to facilitate efficient exit flow from the venue. Price What sorts of physical rate fences do companies within your industry use? heater packages: Dance theaters may provide package offering which include amenities such as food, beverage, and valet services with the purchase of a ticket. This typically provides a profit for the theater because guests might not use the amenities offered and the increased cost of the ticket exceeds the added cost for the theater. Such packages are available for purchase either at the theater’s homepage or on sites such as Ticketmaster. Different prices for different sections: Dance theaters tend to charge different prices based on the location of the guest’s seat. More ideally located seats cost more for a guest than a seat with an inferior view. Depending on the theater, seats may range from premium box-seats to seats which require binoculars to view the show. Some dance theaters even offer standing space for highly price-conscious guests. For example, Chicago, a dance broadway show, sells orchestra tickets for $110, upper-level tickets for $60, and standing room space for $10. Season tickets: Dance companies often offer season tickets in which customers pay a price for a particular seat for the entire season. This is a physical rate sense because the theatre sets aside seats for season ticket purchasers at the beginning of the season and non-season ticket holders cannot occupy these seats. An example is the New York City Ballet which successfully sells seasons tickets at the beginning of every season. Prices based on featured performer: If the featured performer becomes ill or injured, dance theaters may sell tickets at a lower price or offer refunds to dissatisfied guests. Although understudies typically do an exceptional job considering it’s their first time in the role, an understudy or substitute performer may cause a reduction in ticket price. What sorts of non-physical rate fences do companies within your industry use? Special or discount prices: Dance theaters typically offer lower priced or discounted tickets for both senior citizens and young children. Further, theaters offer discounted tickets when a group purchases a large quantity of tickets for a specific performance. The price per ticket depends on the size of the group and is typically negotiated with the event planner. Priced based on the date customer purchased ticket: While ticket prices are typically consistent throughout the duration of the sale, dance theaters may offer lower prices on the day of the performance or several hours before the show to avoid unoccupied seats and an empty audience. Price based on time of day of the performance: Dance theaters typically offer lower priced tickets for shows that occur earlier in the day; evening shows charge a higher price. Further, weekend shows are typically more expensive than weekday shows. Price based on season: Similar to many leisure industries, the dance theatre industry experiences on-peak and off-peak time periods. Tickets during high demand periods are higher priced than tickets during lower demand periods. For example, tickets to see the Radio City Rockettes are less expensive after Christmas than they are before the holiday. Industry Definition An art gallery or art museum is a building or space for the exhibition of art, usually visual art. “Like universities, art museums are intellectual enterprises. They provide an array of cultural programs and services, including the care, preservation, and conservation of collections, scholarship and library services, youth and adult education, publication, exhibition, public programming and other arts-related activities.” http://www.aamd.org/papers/documents/RevenueGeneration_000.pdf http://en.wikipedia.org/wiki/Art_museum Revenues in Art Museums Traditionally, as public institutions, art museums depended heavily on contributed revenue, including government subsidies and grants, grant aid, endowments, sponsorship and donations. The idea of running art museums as businesses and charging admission fees was not popular among the public or art museum board members. But financial stability has become increasingly challenging for art museums as government austerity measures force funding cuts and philanthropy patterns change. Consequently, many art museums have been trying to focus on increasing self-generated revenue, with the purpose of continually delivering quality educational and cultural service to local communities and the greater public. In general, art museum revenues are constituted through contributed revenues as mentioned above, as well as through self-generated revenues. Different channels for self-generate revenues include membership fees, admission fees, space rentals for special events and performances, publication and media, catering, and other commercial activities such as selling tour packages for the city the art museum is located in, and educational activities such as art courses and workshops. Some of these revenue streams can be evaluated in the context of Revenue Management: • Art museums have limited space, so the capacity is relatively fixed; With the Revenue Management lens, the below table is how the three strategic levers of space, time, and price interplay in certain operational activities in art museums.
Space As shown above, space in art museums can be implicit or explicit. To simplify the analysis, I will use exhibition and gallery space as an example. Exhibition space is sold implicitly. The configuration of exhibition space is normally decided by curators according to a specific theme, academic subject, or storyline. The configuration includes the utilization of both walls and floor space for artwork, with floor space used for installations and sculptures. Additional Revenues Generated from Space Additional revenue could come from space rentals for events and performances, book stores, and restaurants and cafés. Below are a few examples. Restaurants: inside Guggenheim Bilbao, there is a one Michelin star haute cuisine restaurant which provides a unique culinary experience to visitors from all over the world. Private Events: in Guggenheim Venice, one of the museum’s biggest exhibition rooms can be rented out for events and functions. Public spaces such as Roof Terrace, the Nasher Sculpture Garden, and the Museum Café are available for private catering events in evening hours. Function Rooms: Shanghai Museum of Contemporary Art provides multi-function rooms to fulfill business and social needs of customers. Store: stores at MoMA in New York City feature a broad selection of books, prints, accessories, and design products. Time For exhibitions in the art museums, time is sold implicitly since museums have little control over how long each visitor will spend. Given the limited space to cater to visitors at any given time, it is important for art museums to exert better control over the time each visitor will spend in the space. The exception of time implication will be some special programs, such as experimental dance and site-specific interventions, in which artists perform live and engage the audience. In other operation areas in art museums, time could be sold explicitly. For instance, the rental of function and meeting space has time implications. Some museums offer educational courses in the evening in which prices will be quoted per section or per hour. Increase the Productive Use of Space One way of increasing productive use of space is extending the time the space is used. Many museums open early in the morning and close in the afternoon. In order to make use of the idle time before and after the opening hours to generate more revenue, MoMA offers “early viewing hours” to its members and their guests one hour before the museum opens to the public. Guggenheim Bilbao collaborates with the local night club Fever to host a night of music and art one Friday a month from 10pm to 1am in the Museum Atrium. Another productivity boosting strategy is offering multiple uses of the space. Art museums also develop multiple usage of their space, which not only increases the revenue, but also better involves the communities. For example, MoMA offer art courses to the public in MoMA galleries and classrooms with leading art specialists, charging different fees according to the length of the programs.
Price Art museums have different admission fees for different exhibitions and for different types of visitors. Physical and non-physical rate fences are applied to justify the price variance. Physical rate fences The number of exhibitions or accessible areas: In Pompidou Center in Paris, visitors can choose a ticket “vue de Paris” at 3 euros, which offers unique access to its 6th floor for a panorama view of the city. Visitors can also choose “ticket of museum and exhibitions” at 13 euros which includes access to different exhibitions in addition to the 6th floor panorama view. This allows the museum to secure revenue from tourists who have interest only in the scenery of Paris, but not in the art exhibitions. The quality of exhibits, the collections being exhibited, and the market value of the artist(s) featured: The Guggenheim Bilbao website features “today’s admission price”. During installation and deinstallation periods when some galleries are closed, visitors will receive a discounted admission fee. Different amenities/services provided: Art museums normally offer guided or audio tours to enhance visitors’ educational and cultural experiences in the exhibitions. Visitors pay different prices depending on what kind of service they choose. At MoMA New York, tours guided by art historians cost $34/adult, while a normal tour costs $20/adult. Non-physical rate fences Age: Different rates are applied to people in different age groups, such as senior, student, kids at certain age ranges, and adults. Below is the current basic admission fee sample from MOMA New York: Membership benefits: At MoMA New York, members enjoy free admission to MoMA and members can also purchase up to five $5 guest passes on the day of visit. Special pass for regular customers: For example, Pompidou Center in Paris offer Laissez-Passer with 12 months unlimited access to the MoMA and temporary exhibitions as well as other benefits such as special access to the exhibitions without queuing and 5% discount in the bookstore. Time of Usage: in Guggenheim New York, there is a program called “Pay What You Wish”. This special deal is offered on Saturdays from 5:45 pm to 7:45 pm (last ticket issued at 7:15 pm). Conclusion Many art museums, especially those bigger ones, have been innovative in applying revenue management techniques in generating more revenues by diversifying and maximizing the usage of space, better utilizing and extending the time of operation, and offering more flexible pricing structures. However comparing to the airline, hotel and restaurant industries, art museums still have a lot to learn. Art museums may also have to juggle between how to maximize the revenues and how to carefully manage public’s perception that art museums are public institutions and they shouldn’t be commercialized. References: The Manual of Museum Management, Barry Lord, Gail Dexter Lord http://www.guggenheim.org/ http://www.moma.org/ http://www.mocashanghai.org/ http://www.centrepompidou.fr/ Scandinavia Country Club Industry Overview The development condition of the golf industry around the world varies significantly by location. However, since it serves as an amenity, a strong social bond, and driving force for economic and real estate development, the golf industry continues being important throughout the world. Still, in many countries, the golf industry is growing, and golf courses’ development and discovering golfers are in full force. The US golf industry is one of the biggest in the world and has developed golf facilities. Recently, the growth rate is slower due to the high cost included in the game and present economic conditions. However, golf apparel and accessories segment is getting popular because of rising per capita disposable income in US. The European golf industry is benefiting from increasing golf participation in UK and revenues produced from golf tours. Golf equipment demand comes from Western part of Europe, and there is rising interest of the population in golf in Eastern Europe. Golf industry in Asia is growing rapidly with increasing income and rising golf tourists. The number of golfers in Asia is growing rapidly, and there are rising demand to serve those members. For example, India provides huge chance for the golf industry with a large population and lure foreign tourist’s arrival. Golf industry sells both space and time implicitly and applies physical rate fences and non-physical rate fences to pricing. Successful revenue management measure is by Revenue per available tee-time (RevPATT). http://www.hvs.com/Services/GolfServices/IndustryOutlook.aspx http://www.researchandmarkets.com/research/2a526d/global_golf_indust Space The Golf industry typically sells space implicitly, in which golf courses can manage that the space is sold because it can define its space. Golf courses usually have the number of holes as an inventory type.
In addition, there are executive course, Par-3 course, and approach course. Executive course might be 18 holes or 9 holes, and it is to allow golfers to end their rounds in less time. Par- 3 courses are all par-3 holes, which is shorter than executive course and faster to play. Approach course is even shorter than par-3, which is for experienced golfers to allow them practice.
http://www.burswoodparkgolfcourse.com.au/category/golf_course/33
http://www.golfsd.com/sd_exec-courses.html
http://bellevuepgc.com/par3.php Golf courses can generate revenues from club house, golf lesson, and food and beverage. Other revenue stream could be from facilities such as a shopping mall, spa, dining, banquet and activities.
http://en.shilingaoerfu.com/
http://www.thegrove.co.uk/
http://www.waltersgolf.com/las-vegas-weddings.asp Kohler experience: Activities http://www.americanclubresort.com/activities/activities_landing.html Time The majority golf industry sells time implicitly because customers exert more control over the service experience’s length. For the golf business, it is better able to sell time explicitly. However, revenue management strategy for controlling time in the golf industry should be approached carefully since it can be linked to guest service satisfaction directly. There are some exceptional examples in the golf industry which sell time explicitly to control over time that customers use space.
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Http://www.golfcourseindustry.com/gci0213-golf-course-innovations-2013.aspx> There is a couple of approaches to increase productive use of the space and time: (1) to reduce the amount of idle time between customers, (2) to extend time the space is used, (3) to provide multiple use, and (4) to offload non-revenue production. In order to minimize the amount of idle time between customers, a country club put efforts to shorten the tee-time interval, which causes increasing capacity and revenue. Traditionally, golf courses’ tee-time interval is a 10 minute, but this can be reduced by 1 or 2minutes. Assume that a golf course is open for 12 hours. If there are 10 minutes tee-time interval, its maximum number of parties is 72. If it drops down to 9 minutes, its maximum number of parties becomes 80. Again, if it goes down to 8 minutes, the maximum number of parties is up to 90. To extend time the space is spent, a country club can offer locker, shopping arcades, or food and beverage at the club house. Extending time might not be a good option that depends on customers to generate more revenue; because if it is peak time, a golf course wants players to move faster, while if it is a slow business time, the golf course will like to have customers using the services. In order to provide multiple use, a golf course can host a golf tournament or plan different types of events in the golf course. For example, Chardonnay Golf Club in Napa Valley, CA opens wine tasting or private dinner party to maximize a golf course’s space usage till the evening. http://chardonnaygolfclub.com/other_events/ In order to offload non-revenue production, an administrative golf office space does not have to be in the same location with the golf club. This will help the country club have more space to operation and generate revenue. Price Physical rate fences
http://www.hawksviewgolfclub.com/seasonal-golf-programs.php
http://www.waltersgolf.com/las-vegas-golf-packages.asp
http://www.blueone.com/golf/yongin/public_rev_info.jsp
http://www.waltersgolf.com/las-vegas-golf-packages.asp Non-physical rate fences
http://www.hawksviewgolfclub.com/seasonal-golf-programs.php
http://www.golfsamsung.com/mobile/Event_List.html
http://www.shanghaicountryclub.com.cn/english/index_3.html Revenue Management for Rooftop Bars Rooftop bars are great examples of revenue management practices since they have emerged as a means to generate more revenue from underutilized hotel spaces. Earlier in the day, these rooftops were used as storage units where the heaters and other mechanical items were kept. In an attempt to utilize the non used space and differentiate themselves from the major players in the industry, independent hotels came up with the concept which then became very successful especially in urban locations such as New York city. At an interview with Cnbc Chekitan Dev, professor at Cornell University School of Hotel Administration, mentioned that; “The idea of moving the party outdoors, weather permitting, or even with heating lamps when it’s cold, creates buzz and buzz usually leads to sales “ As this relatively new trend is peeking, the major chains started entering the game by using any space available and turning it into rooftop bars with luxurious decors where highly priced drinks can be sold. Even though the idea was created to generate more profit for the hotel, over time the rooftops themselves became a destination separated from the property. Many companies started renting out these unused spaces and manage them as a separate entity. Hotelnews state that twelve percent of total room supply of New York City hotels has a rooftop bar. Although the majority consists of independent boutique hotels, one third of these are the international hotel chains. Moreover, half of these spaces are built on pre-war buildings and the conversions of flat roofs are becoming more and more popular since these locations are substantial profit centers, with a high return on investment. Links: http://www.hotelnewsnow.com/Articles.aspx/7169/5-things-to-know-20-December-2011 http://www.cnbc.com/id/48165012 Space: Space along with time and price is one of the strategic levers for a company to implement successful revenue management. This strategic tool helps companies increase customer and employee satisfaction as well as serving as a revenue generator by differentiation. Looking at some of the practices in rooftops, it can be said that space is a crucial factor since well designed spaces allow for multiple uses and diversified sources of revenue.(Jones Lang LaSalle, 2011) The performance of these rooftop bars mostly depend on the design and atmosphere of the space. Jones Lang LaSalle identifies the necessary conditions for a successful rooftop bar as; • Space constrained urban environment • High rising buildings with preferably flat roofs • Permitting climate • Breathtaking views As most of these conditions as well as the decoration and design depend on the decisions of the hotel/managing company, it is clear that the space for this industry is implicit. Everything on the rooftop is configured by the company to meet customer needs in the market. This is an advantage for the industry since it allows firms to have total control over the space to do everything that will help them generate more revenue. The rooftop bar concept may define space in many different ways. Below are some examples; Lounge Bar: The lounge bar concept is one of the most commonly used styles. The decoration consists of comfortable chairs, dim lightning and relaxing areas with lounge or jazz music in the background. Typically, lounge bars include a bar area in the middle section – in order not to block the view- with lounge couches and chairs around the rooftop. In order to build an ambiance that creates with arousal, dominance and pleasure in its guests, rooftops include modern decoration items that match the layout and furnishings as seen in the picture above. An example of this type of division would be The Rooftop Lounge in Laguna Beach. *** Club Bar: The space design of Club bars usually are very different compared to lounge bars. They have a limited seating area in order to accommodate more people at the dancing area. This type of division usually consists of several VIP tables with limited access that create a sense of exclusivity as well as some stand tables for smaller parties that want bottle service. The idea of these stand tables is a clever way to add additional revenue as they do not take up much space, include no chairs and still require guests to buy bottles. An example of this type of space division is Catch rooftop in New York City. *** Rooftop Restaurant: There are many ways that rooftop restaurants could divide up their spaces but due to the rectangular structure of the rooftops, it usually consists of similar shaped square or rectangular tables in order to fit in more tables. This type of space allocation is very different from the previous two types for many reasons. First the revenue is generated mostly from food instead of alcoholic drinks. Second, it can only accommodate a limited amount of people at once since every guest is seated. Last, the ambiance and service is a lot more formal. Some examples include Coq D’argent in London or Vogue Restaurant in Istanbul. *** Mixed Use Rooftops: The most common usage of space division among rooftops is the combination of the first two examples. In order to appeal to many customers and expand the target market, companies build a mixed use rooftop which consists of two parts. One part is exactly identical to the rooftop clubs but is usually in a covered area – so that is can be used all around the year – and the other part usually surrounds this middle club section and has lounge chairs and special areas where guests could enjoy the external area. Some examples of this use are the Drai’s of W Hotel in Los Angeles (as seen in the pictures) or the Gansevoort Hotel in New York City. Generating Additional Revenue Since most of the rooftops are used during the night time, the industry have developed several ways to make use of these locations during the day to generate additional profits. One way to do this is by renting the space out to different companies during the day for multiple purposes. The most common ones for now are the photo shoots or taping for TV episodes/movies. As the trend is growing rapidly, people want to see these locations on the media. This is a great advantage for the rooftops since it generates free advertising – if given credit – and is additional revenue from renting out the space. *** Another way is by making use of the night club/bar pool during the day to outside guests. This might cause problems if the rooftop is operated by the hotel since hotel guests might complain. Although, the issue might be solved by increasing the entrance fee and only limiting access to selected people. The rooftop bars that are operated by management companies and that have a pool as a part of the ambiance of the club/bar, could open it up to public during the day up to a certain hour and charge high rates for usage. *** Other ways to increase value for the property would be by offering after parties to special guests after closure or opening the place up on closed days – such as Sundays or Mondays – for private events. This would mean the space would be rented out to anyone for any purpose just to generate more revenue. The example in the picture shows the engagement of two Hollywood celebrities being hosted at a rooftop bar. Time: Rooftop business is very seasonal since many of them close during the winter time due to weather conditions. Even though some of them have interior spaces that are open during the low season and others put heaters outside, most rooftop business activity is reduced during these periods. No matter what the seasons is, the industry uses time implicitly because they cannot know how long the guests will stay. This is a disadvantage for the industry because they have no control over the duration of space usage by the customers. The average duration is usually longer than in a restaurant but the spending is higher due to high prices and the product sold -alcoholic beverages. In order to have more control over time and try to move to selling time explicitly, rooftops could try to gather enough information so that they reduce the uncertainty of arrival, duration and the amount of time between customers. However, this is very hard for this business since the the high number cancellations without penalties are very common and this approach of decreasing the amount of time between customers will cause customer satisfaction to drop immensely. On the other hand, there are some examples of ways the time is sold explicitly. The time could be sold explicitly every time the area is rented out. The daily rental contracts state that the other party could have access to the rooftop between certain hours. Examples of these would include photo shoots, private events, bachelor parties, baby showers, weddings or graduation parties. These are ways that rooftop bars could move to an area where successful revenue management is practiced by having a fixed price and a predictable duration. Since this business has a perishable inventory, the time is crucial. When it is not used, it loses potential revenue. Although the high demand for the business is not pushing companies to implement strict policies against cancellations, more and more firms enter in the business and people have a lot more options to choose from. This threat could be diminished by simply collecting data and overbooking the club/bar tables accordingly instead of having to rely on walk-ins. Price: Managing price by having an optimal mix and knowing how to charge each customer differently is essential for every business that uses revenue management. This is why rooftop bars should start analyzing price sensitivity of its customers to determine what their acceptable price ranges are. This is already being practiced at many high end rooftops in popular locations by changing bottle prices depending on the day of the week or the season. Another research done by Jones Lang LaSalle show that rooftops are proving to be highly profitable venues using the space that is typically non-revenue producing. Revenues from these venues reach up to US $120 per square foot/month in high season (monthly average of approximately $65 per square foot) and with departmental profit potential of up to 50%. Link: http://97.74.60.108/PDF/FocusOn%20Manhattan%20Rooftop%20Bars%20FINAL.pdf As an industry that is highly profitable, rooftop bars use many rate fences. The physical rate fences include; – VIP areas that have a limited access with comfortable couches and chairs. Reserving a table at the VIP area at a popular city such as New York City requires bottle service which starts up from an average of five hundred dollars for the minimum amount of people at the table. – Access to the pool area that is attached to the rooftop club requires customers to pay an additional amount to have access to. – Location of the table also affects the price the customer pays. Since people want to see and to be seen, they are willing to pay more for tables that are more central as opposed to corner ones. In addition, there are many non physical rate hurdles that rooftop bars use. Some examples are; – Rate hurdles at entrance based on current occupancy of the bar or number of parties trying to enter. For instance many rooftops either ask for a bar tab minimum or require parties for purchase one bottle minimum for up to four people and two bottles for up to eight. – Members only policy after a certain hour. Many hotels open up their rooftops to public up until a certain hour (i.e: 11p.m.) then become an exclusive venue for its members. For example the Standard Highline’s “Top of the Standard” practices this hurdle in order to maintain the exclusive image. This strategy has been working so far as the company is rated as one of the best rooftops. – No cancellation or change fees. Unfortunately many companies in this industry are not practicing cancellation or change penalties the reason for which is probably due to high demand. – Free entrance during low season and weekdays. This practice is done in order to attract customers even on the slower periods and shift the demand to equal out the fluctuations. Conclusion: Rooftop industry’s success has been proven by popularity and the high revenues they generate. However, it is clear that they are not using all the potential available to generate additional revenue. Simply by respecting the three levers of revenue management and by marketing every available minute of the space, they can fully reach this potential. Asli Gursel
Cruising has become a major part of the tourism industry, accounting for U.S.$29.4 billion with over 19 million passengers carried worldwide in 2011. Here are some big cruise companies’ websites: http://www.carnival.com/ http://www.royalcaribbean.com/home.do Cruise companies normally sell their cabins like rooms in hotel. But the stay nights of each cabin will be same which is just how long the voyage will last.
Casino — Only open when the ship is at sea to avoid conflict with local laws Spa Fitness center Shops — Only open when ship is at sea to avoid merchandising licensing and local taxes Library Theatre with Broadway style shows Cinema Indoor and/or outdoor swimming pool Hot tub Buffet restaurant Lounges Gym Clubs
They provide different price according to how big and how beautiful the view the staterooms are and which route.
The beach club industry is a segment of the hospitality industry found across the world in a variety of markets. From South East Asia to North America to the Mediterranean there are a variety of hospitality operations that have a beach aspect to their operations. For this blog we will define the ‘Beach club Industry’ as any ocean or seaside hospitality business which provides guests with the opportunity to relax in some sort of chair, lounge chair, cabana or alternate seating arrangement either on the beach or around a pool located at the beach. Examples used in this blog extend from exclusive private beach with restaurant and event space typical of Beirut, Lebanon to the beach area of a large Resort in Miami, Florida. Regardless of the aesthetic or cultural differences to be found among the different models, all of them face similar challenges in managing their space, time and pricing. The key challenges as well as a brief description of this industry can be found in an article written by Ali V. Kasikci in the Cornell Hotel and Restaurant Admin. Quarterly in 2006 (http://cqx.sagepub.com/content/47/1/81.full.pdf). Essentially however, the industry, whether it is represented by a private beach club or large resort, at its base, rents out chairs of varying sizes and comfort for guest to use during their time at the beach or in some instances, pool. The unifying characteristic around which all ancillary revenues are centered, means that the primary metric used to measure revenue is REVPAC (Revenue per available chair) or REVPAU (Revenue per available Unit). Unit can be substituted for chair as certain businesses extend their offering to beach cabana or bungalows. As will be identified through examples, pricing is done in terms of both time and space. Certain clubs offer very little differentiation in space and therefore simply charge flat rates for a certain amount of time (the day) whereas others take advantage of implicitly selling space by pricing differently for different units or chairs. There is very little consistency however internationally, which is compounded by the fact that certain destinations do not publish pricing, as it is seen as impolite (Beirut) SPACE: Space in this industry is typically defined implicitly. The majority of beach front resorts and clubs offer a variety of inventory types and ambiances for guests to select and differentiate their experiences by. I have identified four businesses in particular that take full advantage of implicitly selling their space. The Riviera Beach Lounge, Beirut Lebanon: The Riviera is a four star hotel located seaside in downtown Beirut, which offers a beach resort outlet that is also open to the public for a fee and includes different levels of chair type and ambiance. Essentially however, the space is organized into a Pool bar area and the Riviera Privé VIP area. The Pool Bar: The Pool Bar allows guests to purchase a certain type of lounge chair for the day centered around an ocean-side pool with a pool bar. This space is available during the day to both hotel guests and the public. Riviera Privé: This area is configured quite differently and is located in the center of the Riviera Beach Lounge area on a built up island. Guests actually walk through the pool bar area to a bridge-way which leads them to the island which is the private area. In the photo to the bottom right, several different seating configurations are available. This pace is defined by increased luxury and live DJ music. By organizing their space into public and private, and offering a variety of seating arrangement, The Riviera Beach Club is able to command a multitude of different rates and makes good use of the space provided. The presence of bars in both areas as well as a limited Lebanese ‘messe’ menu available to both areas allows The Riviera to take full advantage of earning ancillary revenues from guests who spend their day beach-side. The Breakers – Palm Beach, Florida The Breakers has taken advantage of its space by incorporating the use of poolside bungalows. The resort offers a large beach front with three pools which they have divided by ambiance into Active (guests over the age of 12), Relaxation (adults) and Family (adults with children under 12). This can be seen in the photo below: This provides The Breakers with opportunities to fence certain rates and target specific markets better. Additionally The breakers makes another great use of their space by having a bungalow unit available for rent per day. These units, centered on each of the pools, provide for varying levels of privacy and luxury and create great opportunities for ancillary revenue generation by allowing guests to order meals from any of the hotels restaurants or even have spa treatments in the bungalows. Below are two examples of bungalows available: The Bungalows located around the relaxation pool offer more intimacy and privacy The bungalows around the family pool offer more of an open concept conducive to interaction with neighbors. Lazy B – Jiyeh, Lebanon This beach and restaurant located south of Beirut has taken advantage of its space by offering three completely different beach experiences within one area. As can be seen below, they allow guests to guests can choose to be directly on a sand beach, by a more sophisticated poolside or in a tropical café/restaurant/lounge atmosphere. Although there is not much difference in seating options within each area, they focus on the ambiance to differentiate each area. All three can be seen below: The beach is more family and child friendly offering guests a real Lebanese beach experience. The pool offers a more sophisticated adult experience with full Food and Beverage offerings. The tropical themed cafe/restaurant offers all segments a relaxing and wonderful view of the Mediterranean. The varying experiences and distance of the beach from Beirut also encourages guests to come for the day and consume at least one meal and several drinks throughout their stay. Time In the beach club industry, time is sold explicitly, that is to say for the day. Clubs charge a general entrance fee for the day and leave seating open or will charge for a specific unit per day. Many of the private clubs or resorts that offer club membership do offer annual membership with discounted unit rentals. There were actually no examples that I could identify where time was broken down differently than by a whole day of use. Le Saint-George Yacht Club and Marina A very typical example of company, le Saint-George sells its time by the day or by the year as is identified by the rate sheet below. We see at the bottom that all rates are for 9am to 10pm daily. The Breakers – Palm Beach, Florida Similar to the previous example, the Breakers also sells its time explicitly by the day. In this case however the hours of the day differ. In this case the rentals begin at 9am and go until 6pm. This information while not available online was given after a call was made to the hotel. Cyan – Kaslik, Lebanon A private beach-club and restaurant with three pools and a beach front, rates are charged daily from 9am to 6pm. (http://www.timeoutbeirut.com/clubs-pubs/article/5861/beach-clubs.html) Palapas Beach – Tarbja, Lebabnon This smaller beachside family resort is charges by the day for access to the beach and pool area from 10am to 7pm (http://www.timeoutbeirut.com/clubs-pubs/article/5861/beach-clubs.html) All of these companies, whether in Lebanon or the United States, have their daily opening hours, which differ based on local custom or regulation but sell time in exactly the same explicit way, by the day. There are no examples of the implicit selling of time. Pricing It is here where companies differentiate significantly. Certain companies will only fence by adults and children, while others have very complex and diverse pricing, differentiating not only along demographic and psycho-graphic lines, but also between member and non-member. The Breakers – Palm Beach Florida The Breakers initially divide rates for its bungalows between its annual golf club membership and hotel guests. Within this it fences between the three pools around which the bungalows are centered and by week of the year. Club member rates 2012 (Data retrieved directly from Breakers hotel) Hotel guest rates 2012(Data retrieved directly from Breakers hotel) By fencing along so many lines, The Breakers is able to optimize their revenue to a much greater extent, especially during busier periods. Le Saint-George Yacht Club and Marina – Beirut, Lebanon The private beach club offers rate fencing initially between annual members who pay 1 fee per year and then day use guests. Fencing here is done along demographic lines (adult, child) as well as by day of the week (weekday v. weekend & holiday). It also fences by group and transient, offering discounts for groups over four. (http://stgeorges-yachtclub.com/pool.php) Palapas Beach – Tarbja, Lebanon Although there was no pricing information available on the company website, an event site for Beirut beach clubs (http://www.timeoutbeirut.com/clubs-pubs/article/5861/beach-clubs.html) identifies that entrance fees are fenced, by weekday and weekend as well as by adults and kids: 09 856655) Tabarja. Daily 10m-7pm. Mon-Fri LL17,000; kids LL8,000. Sat-Sun LL25,000; kids: LL10,000. There is however the addition of daily rentals available: http://www.palapasbeach.net/rentals.html While the rates are not posted online for cultural reasons, these do offer some additional fencing by making certain areas of the club accessible only to those willing to pay the difference. The Riviera Beach Lounge, Beirut Lebanon: According to Time Out Beirut (http://www.timeoutbeirut.com/clubs-pubs/article/5861/beach-clubs.html) The entrance rates for The beach lounge are fenced by adult and children as well and weekday and weekend: 01 373210 ext: 0) Corniche Al-Manara. Daily 9am-6pm. Mon-Fri LL30,000; kids LL20,000. Sat-Sun LL40,000; kids LL25,000. However, having visited this beach myself in the last 3 years, I can confirm that there is an additional charge fro access to the Riviera Privé area as well as fencing base don the type of chair one would like. Unfortunately, there is no reference to these options online or prices. The Fencing is there based on space however. In conclusion, Beach clubs that make more of an effort to leverage their implicit selling of space by pricing accordingly,will be more successful in optimizing their revenue. Providing a variety of products within the available space to entice guests to spend more is key. As we have seen with the examples in this blog, the application of these concepts varies.
Musical theatre is a form of theatre that combines songs, spoken dialogue, acting, and dance. The story and emotional content of the piece – humor, pathos, love, anger – are communicated through words, music, movement, and technical aspects of the entertainment as an integrated whole. The U.S. and Britain were the most active sources of musicals from the 19th century through much of the 20th century. Broadway contains 40 professional theatres with 500 or more seats in the Theater District in New York City. Most Broadway producers and theatre owners who are members of The Broadway League—a trade organization that promotes Broadway—negotiates contracts with the various theatrical unions and agreements with the guilds, and service organizations. Below is one of the most famous and largest theaters “The Majestic Theatre”, located in midtown Manhattan, with 1,645 seats, which traditionally has been used as a venue for major productions. It has housed The Phantom of the Opera since 1988. With a record-breaking 10,210 performances to date, Phantom is currently the longest-running production in Broadway history. http://www.thephantomoftheopera.com/ The majority of these theaters are owned or managed by organizations that sell tickets by using variety of direct and agent-based channels. Direct sales —may be through theater ticket centers, and theater websites. Agent-based, sales may be through agents—discount ticket centers, discount online sites, hotel or tourist information centers, and travel agents. Prices are defined by types of seats in each theater, and time slots of each performance. As a result, the prices are higher for better seats, peak-seasons, and peak-times. Thus, the theaters which offer popular performances can set higher prices and earn greater profits. On the other hand, during the off-season, they offer discounts and reduce the show times in order to avoid losses. Space Musical theater companies define space explicitly. Here is the category of seats that Majestic theatre sells at the ticket center. They mainly divide the space into six categories which differs depending on the locations: (1) premium seats that are in the best location near the stage, (2) zone A—located second- closest to the stage on the 1st floor, (3) zone B—located a little beyond zone A on the 1st floor and also including box seats on the 2nd floor, closest to the stage, (4) zone C— located in the front mezzanine, (5) zone D—located in the front half of the rear mezzanine, and (6) zone E—the farthest area from the stage, the back half of the rear mezzanine. Moreover, the prices may vary within each category if a seat is closer to stage or nearer the center. Also, there are spaces accessible to wheelchairs, as well as additional standing room in case all of the seats are occupied. http://www.shubertorganization.com/theatres/majestic.asp http://www.shubertorganization.com/theatres/majestic.asp To generate additional revenue, the remaining space is opened for sales of beverages, and musical-related goods such as leaflets, posters, books, and CDs, and pay-phones. Also, some theaters make arrangements for special rates to be charged at nearby parking lots. Because there are no alternatives, they charge higher price than the neighboring businesses. For instance, in the Majestic Theatre, while they charge more than $10 per beer, neighbor café or restaurants sold much less (e.g. $6-6.5 per beer in Augus café next to theater).
Musical theaters companies organize schedule in order to maximize revenue. They define time implicitly, but sell time per performance explicitly. They sell tickets for specific time slots as below. What they can control is the length of the run, the date of the week, times per day, and the opening time. First, regarding the length of the run, theaters which offer popular plays such as The Phantom of the Opera, Mamma Mia, and Lion King, performs the same plays for a long period during similar time slots. However, most theaters change plays more often. Second, the day and time slots are varied per show. For instance, The Phantom of the Opera’s performance time in the Majestic theatre is 2.5 hours including 15 minutes’ intermission. It is the same as the Her Majesty Theatre in London, whereas their opening time and the number of performances per day are different. These differences may be caused by several factors including customer trends, the schedule of performers and staff members, etc. They can also manage intermission, which is normally defined as 15 minutes, and the duration from the time the door open to the performance, which is normally 30 minutes. Although these durations are regarded as the appropriate length, they may be able to manage this duration in order to increase revenue. If they extend the intermission from 15 minutes to 20minutes, customers may consume this additional time by purchasing drink or gifts.
April Schedule Majesty Theatre in NY April Schedule Her Majesty’s Theatre, Haymarket, London, UK
Physical rate fence Theaters can manage their prices based on seat locations, timeslots of shows, and ancillary services such as beverages, musical-related goods, and parking. They raise ticket fares for seats in the better locations and, at peak-times, and offer additional services at higher prices than normal. Moreover, there are theaters which offer meal or tea packages, or hotel and travel complimentary packages. The majesty theatre in London, for example, has exclusive meal package collaborating with neighboring hotel, which includes top- price seats with lunch or dinner at the stylish Bar & Restaurant at the Hotel, for just £65 per person. By packaging tickets this way, they can better manage prices and increase sales. http://www.celebrateinlondon.co.uk/ Non-physical rate fence Theaters handle ticket prices per timing of purchase. Third parties including discount ticket centers, online and offline agents offer discounted tickets for advance or last minute sales. For example, both at the center of Times Square in NY and West end in London, TKTS sell day-of-the performance tickets with the deep discount, up to 50%, every day. Because these tickets are the ones that could not be sold out in advance sale, the seats location are limited, especially for peak time slots. http://www.theatrepeople.com/ Other fences are student, silver tickets, and group- discounted tickets that some agents offer. There are agents or organizations which haves special discounts or vouchers for reward members. For instance, in Japan, the most famous musical organization, Shiki, which has five theaters in Japan which constantly offer performance in the whole year have a membership program that offers variety of benefits of its members who pay annual commission. http://www.studentbeans.com/student-discounts/studentbeans.eolts.co.uk.html Revenue Management at Ski Resort in South Korea Industry Overview In South Korea, the first ski resort opened in 1975, and currently, 19 ski resorts are in operation. Most ski resorts are large leisure complexes that have swimming pools or water parks, golf courses, and ski slopes, so those ski resorts generate revenue from various sources. This analysis focuses on ski-related slaes only. Vivaldi Park resort (http://www.daemyungresort.com/asp/language/english/) In 2012, about 7 million skiers visited ski resorts in Korea, and they generated approximately 300,000,000,000 Korean Won ($270 million) from accommodations and food and beverage during the ski season and ski-related sales. Even though those 19 resorts stay open all year round and offer activities appropriate for all four seasons, that ski business is the main revenue stream for most of them. 16 resorts out of 19 are concentrated in Gyonggi-do and Gangwon-do provinces, so the competition is very fierce. Therefore, most ski resorts try to attract customers with various strategies managing price, space, and time. Here are the links to web pages that give a general overview:
In Korea, the space related to ski sales means the skiable area and the ski house. The skiable area means the ski slopes and the ski base. Also, every resort has one ski house that has a ticket office, ski rental shop, locker room, cafeteria, information center, and so on. On average, a ski resort has 14 slopes and 7 lifts, and the total size of skiable area is 1,773,069 m². The biggest ski resort has 33 slopes and 14 lifts, and its total size of skiable area is 4,037,600 m². All resorts configure the physical space into different types of slopes, ski base, and ski house, and they sell the right to enjoy ski in the skiable area during allotted time and provide related service in ski house. Also, they generally divide operation hours into different time periods and price lift tickets and season passes based on duration of using the space (Revenue per square food of available skiable area and hour). Basically, all resorts sell various types of lift tickets and season passes even though the types of lift tickets and season passes are different resort by resort. I will explain how those resorts manage space, time, and price in detail. Space All ski resorts in Korea define space implicitly. They configure the physical space into various types of slopes and ski bases and ski houses. The types of slopes are generally divided into beginner, intermediate, and advanced course. Some resorts offer the “extreme slope” that includes half-pipe, rail-jam, and big air to reflect increasing demand of extreme skiing and snowboarding. 1. Phoenix Park Ski Slopes (http://www.pp.co.kr/global/english/skiworld/slopemap.aspx) 2. “Extreme Slope” at Phoenix Park(www.extremepark.co.kr/) 3. Ski Base at Yongpyong resort (http://www.yongpyong.co.kr/eng/index.asp) 4. Ski House at Phoenix Park (http://www.pp.co.kr/global/english/skiworld/slopemap.aspx) One ski resort, Phoenix Park, even has a membership only slope. The membership holder can enjoy skiing in the slope that is not crowded during the peak time. In addition, they have the privilege to have one-on-one lessons and to use the lounge. Except the membership slope, lift ticket holders can ski on all of the slopes at a given hour, and season pass holders can use all of the slopes any time they want during the season. 5. Masters Slope at Phoenix Park, Membership Slope(http://www.pp.co.kr/global/english/skiworld/slopemap.aspx) Ski houses usually have a ticket office, restaurants, a rental shops, ski lockers, and so on. Additional Revenues Apart from lift ticket and season pass sale, ski resorts have various sources to generate revenue. They utilize their space to generate additional revenue. First of all, all ski resorts have a ski rental shop.Customers who do not have their own ski equipment can buy or rent equipment including skis, gloves, and goggles. Usually, ski rental shops are located in the ski house. 1. Ski Rental Shop at Muju resort
(http://www.mdysresort.com/) Secondly, ski resorts generally offer some snack bars in the ski base. 2.Snack Bars at Wellihilli resort (http://www.wellihillipark.com/) Third, all ski resorts have ski lockers in the ski base. Customers can use lockers with additional payment. 3. Ski Lockers at Yangji Pine resort (http://www.pineresort.com/yangji_eng/index.html) Fourth, many ski resorts have a cozy cafeteria on top of the slop and the ski house. Those who want formal dining during skiing can have a meal in the cafeteria. 4. Cafeteria on Top of the Slope at Yongpyong resort (http://www.yongpyong.co.kr/eng/index.asp) Finally, some resorts offer other attractions such as sledge and ice sculptures. Customers can try those attractions with additional payment. 5. Sledge at Phoenix Park(http://www.pp.co.kr/global/english/skiworld/slopemap.aspx) Snow Village at Phoenix Park (http://www.pp.co.kr/global/english/skiworld/slopemap.aspx) Time Ski resorts in Korea sell time both implicitly and explicitly. All ski resorts sell season passes implicitly and lift tickets explicitly. Season Passes Season pases are the way to sell time implicitly. Those who hold a season pass can use slopes anytime they want during the season. It is hard for ski resorts to forecast when those season pass holders come and to control over how long they use the slopes. Nevertheless, ski resorts still rely on season pass sales because it is one of the major revenue sourcces and the way to secure a certain level of revenue. In addition, those who purchase a season pass show a relatively high level of loyalty to the company. Most resorts offer more than one type of season pass. Those types of season passes include regular single season pass, couple season pass, family season pass, season pass for repeat purchasers, season pass only for night time, and so on. Some resorts price the same season pass differently depending on time of purchase. Here are pictures and links of different types of season passes. 1. Regular Single Season Pass & Family Season Pass at Yongpyong resort (http://www.yongpyong.co.kr/eng/ski/rates01.asp) 2. Regular Single -Adult and Child Season Pass & Couple Season Pass at Phoenix Park(http://green-study.tistory.com/327) 3. Single Season Pass for Repeat Customers at Wellihilli resort (http://green-study.tistory.com/327) 4. Season Pass for Daytime, Evening+Night, and Night Time at Oak Valley resort(http://blog.naver.com/aiba56?Redirect=Log&logNo=90153111797) 5. Season Passes Purchased in Advance at Wellihilli resort(http://blog.naver.com/aiba56?Redirect=Log&logNo=90153111797) Lift Ticket Lift tickets are the way to sell time explicitly. Those who purchase lift tickets can use slopes at a given time, so resorts can better control how long those customers use the slopes. Most resorts sell more than one type of lift ticket based on duration of lift usage. For example, one resort sells ten different lift tickets -Morning, Afternoon, Daytime, Evening, Night time, All Day, and so on. Another resort sells five different lift tickets – 2 hours, 3 hours, 4 hours, 6 hours, and 8 hours. Ski resorts generally carefully forecast the demand on differnt times and make and price lift tickets based on the forecast. Careful forecast on the demand and relatively better control over duration of lift ticket users help resorts manage its space capacity. However, it is still difficult for resorts to control space capacity due to season pass holders and some external conditions such as weather. Here are pictures and links of different types of lift tickets. * Some resorts sell mobile lift ticket. This type of lift ticket is not the way to sell time explicitly because it is hard for those resorts to forecast and control when the ticket holders come. 1. Lift Ticket at Gonjiam resort (By hour) (http://blog.naver.com/wawa444?Redirect=Log&logNo=120174980527) 2. Lift ticket at Starhill resort (7 different time period) (Each period has specific duration) (http://blog.naver.com/wawa444?Redirect=Log&logNo=120174980527) 3. Lift ticket at Vivaldi Park resort (12 different time period)(http://blog.naver.com/wawa444?Redirect=Log&logNo=120174980527) 4. Lift Ticket at Oak Valley (7 different time period) (http://blog.naver.com/wawa444?Redirect=Log&logNo=120174980527) Price Most resorts use both physical and non-physical rate fences. Physical Rate Fences As I mentioned above, Phoenix Park ski resort sells the membership slope. Those who purchased the slope can use all slopes including the membership slope, but those who are not a member cannot use the membership slope. The members can also have the privilege to have one-on-one lessons and to use a member lounge and free locker for the whole season. Also, they can rent a snow mobile for free. The membership is more than ten times as expensive as a regular season pass holder. 1. Masters Membership Price (Phoenix Park Membership Slope)(http://blog.naver.com/ilfi0re?Redirect=Log&logNo=110073770515) Secondly, Yongpyong resort offers regular season passes and season passes with free shuttle bus usage. Customers who purchase the latter pay more for a season pass, but they are entitled to use the round-trip shuttle bus for free. 2. Season pass vs. Season pass with shuttle bus at Yongpyong resort (http://green-study.tistory.com/327) Third, many resorts offer lift ticket and ski rental packages. This type of ticket is more expensive than regular lift ticket, but customers can rent ski equipment at a discounted price. 3. Lift + Rental Package at Eden Valley resort (http://blog.naver.com/wawa444?Redirect=Log&logNo=120174980527 Fourth, many ski resorts offer package deal that include lift ticket and any facility usage including accommodations and the water park. This package deal is more expensive than the regular lift ticket, but customers can enjoy additional facilities at a discounted rate. 4. Ski+Breakfast+Room Package at Phoenix Park resort (http://blog.naver.com/ilfi0re?Redirect=Log&logNo=110075183352) Finally, Yongpong resort offer a season pass for the beginner. This season pass is much cheaper than the regular season pass, but this season pass holder can use only beginner courses. Because the beginners may not use intermediate or advanced courses, this season pass is definitely a good deal for them. 5. Beginner Season Pass at Yongpyon resort (http://green-study.tistory.com/327) Non-Physical Rate Fences Many resorts provide discounts for those who purchase a season pass in advance. For example, Jisan resort started to sell 12/13 season passes in May. Those who purchased season passes from May to September got the cheapest rate. This resort usually opens the slopes in December, and the price of season passes is increasing as the grand opening is approaching. This resort also offers discounts for those who purchase season passes after grand opening. 1. Different Price of Season Pass Depending on Time of Purchase (Jisan resort) (http://blog.naver.com/aiba56?Redirect=Log&logNo=90153111797) Secondly, most resorts charge higher rates for season passes and lift tickets during the day time and charge less during the night time. They carefully forecast the demand depending on the time period, and then they charge differently for the different time period to shift demand to slower periods and to maximize revenue. For example, Ellysian resort divide operation hours into three different period for season pass and charges different rates for each period based on the demand of each period. 2. Season Pass for Different Period at Ellysian resort (http://blog.naver.com/aiba56?Redirect=Log&logNo=90153111797) Third, many resorts offer discounts for their repeat customers. For example, Phoenix Park resort offer one season pass for their repeat customers at a discounted rate. Those who have purchased any type of season pass in the past can purchase this type of season pass. 3. Season Pass for Repeat Customers at (Phoenix Park) (http://green-study.tistory.com/327) Fourth, some resorts sell mobile lift tickets via their PC webpage and mobile webpage at a discounted rate. For example, Phoenix Park resort introduced mobile lift ticket through its PC webpage in 2007, and they have been using both PC and mobile webpage for this sale since 2010. Phoenix Park offer 30% discount for the ticket. Those who purchase the mobile lift ticket or get the ticket from somebody else as a gift would get the barcode ticket through SMS, and they can use the ticket any time they want in the season. (Even though this ticket is lift ticket, it is not the way to sell time explicitly) Even though the resort worried about cannibalization and difficulty in forecasting when those purchasers would come, the resort enjoyed highly increased revenue from this ticket sale. Many resorts want to sell this type of ticket because it can generate revenue even before customers come and secure a certain level of revenue. 4. Mobile Lift Ticket at Phoenix Park (http://www.pp.co.kr/) Finally, most ski resorts offer huge discount for condominium or timeshare owners. Accommodation in most ski resorts in Korea are condominum or timeshare. Those owners can purchase most type of season passes and any type of lift ticket at discount rates. For example, Bearstown resort offers 50% discount on any type of lift ticket to those owners. 5. Lift Ticket for Condominium Owner at Bearstown resort (http://blog.naver.com/wawa444?Redirect=Log&logNo=120174980527) Industry Overview A sport stadium is a venue for sports, concerts, or other events and consists of a field or stage either partly or completely surrounded by a structure designed to allow spectators to stand or sit and view the event. Beijing National Stadium, also known as the Bird’s Nest Here some useful links:
As revenue management is defined as selling physical space for a given length of time for a variety of prices, sport stadium revenue management is in its core about selling seats (the physical space) per game (a proxy of time). The goal is to maximize the revenue per available seat-game. To be able to do so, it is important to control both space and time in order to effectively manage customer demand. Stadiums do have control over their space as they can divide space for instance in different seat categories. However, it is difficult for them to control time as time is sold per event such as games rather than per hour. Additionally, depending on the functionality of the stadium and the frequency of games, those events are held on different weekdays with frequencies ranging from once a week to once a year. Baseball games for example take place 81 times a year leading of a utilization rate of only 22%. Therefore it is crucial for successful sport stadium revenue management to learn how to gain more control over time. Controlling both space and time enables to define different space and time combinations which target different market segments and are priced differently. Apart from revenues generated through ticket sales, revenue managers should also focus on ancillary revenues from food and beverages, the use of function space (if available), the sale of sporting goods, and advertising in the stadium. In short, even though sport stadiums use some of the strategic levers of revenue management, there is still ample room for improvement to move towards dynamic demand-based pricing as it is the case for example in the airline industry. The biggest area of opportunity for stadiums lies in defining time as explicit as possible as this leads to greater control over customer demand which is an integral condition for successful revenue management. _______________________________________________ MANAGING SPACE Selling space implicitly Sport stadiums sell their space implicitly. The most common configurations are seats, areas for standing and club suites. Taking this approach one step further, a stadium can use additional space configurations outside the seating and standing area for example by defining it as retail, function or F&B space. As space is defines implicitly, the stadium can control the way in which space is sold by designing different types of space with different characteristics that hence appeal to different market segments and can be priced differently. For example, boxes offer more privacy and better view on the field and offer include additional services such as butler service. This package hence comes also at a different price point. Inventory types a. Sport stadium as space unit Space in sport arenas can be discussed regarding the shape and size of the stadium itself. Open, oval and horseshoe shaped stadiums are common especially for American football stadiums, whereas rectangular stadiums are more common in Europe for football. Another aspect of space covers the flexibility of its use. Certain stadiums are primarily designed for one specific sport such as baseball or American football while others are designed to be easily used my multiple types of sports and events. The most common multi-use designs consist of a football pitch with a running track and can also be used for other events such as a live music venue for concerts. An advantage of this design is to reduce costs by sharing infrastructure and real estate and by reducing idle time as the arena can be rented for different events. Disadvantages of this design stem from the need of satisfying the requirements for different sports such as the distance of the stands from the field or the different sizes and shapes of the playing fields. However, the importance of multi-use stadiums is decreasing since the 1970s towards single-purpose stadiums. Building two stadiums next to each other to share amenities such as parking lots compensate at least partially for the limited use. b. Inventory type as space unit An “all-seater” stadium has seats for all spectators while other stadiums are designed that all or some spectators stand to view the event. Most of the stadiums offer boxes or club luxury suites at high prices which can accommodate a limited number of spectators. During special events such as Super Bowl, those boxes can cost hundreds of thousands of dollars When planning a new stadium, the definition of those different inventory units can be used to define the optimal mix of categories depending on demand and space and time requirements of each space type. The optimal supply mix in terms of number, facilities and supply mix flexibility is the foundation of successful revenue management. In stadiums, the space configuration can also be analyzed under the view point of how flexible space can be used. The majority of inventory units are not flexible, such as permanently installed seats, club suites or facilities such as meeting space, retail or F&B. Some elements, however, allow certain flexibility through retractable seats or even modular arenas. A modular stadium is a permanent sports facility that is constructed of modular components that allow enlarging or downsizing. This type of arenas as well as the use of retractable seats allow additional flexibility to cater towards different types of events depending on the popularity of different events and leads to different opportunities of revenue management. Seat categories by customer group Seat category by level Club suites Additional standing category during a concert Generating additional revenues The development of ancillary revenue sources is apt for stadiums as they can sell other services and products that customers can buy while they are using the space or to take them with them after they completed the service experience. Common examples are:
Meeting space Restaurants and bars Rental for events Retail space, here for Manchester United To define which products and services should be offered and how they should be offered it is important to analyze the needs of the customer. These additional services can also have an impact on when customers arrive to an event and how long they stay after an event. There are four ways to increases the productive use of space:
One other element to increase revenues is by creating an environment that entices customer to spend more. For sport stadiums such space ambience elements can be used primarily for the ancillary revenue generating areas such as the retail and F&B area by using adequate ambient, design and social elements such as light or music. And lastly, a substantial revenue generating area in sport arenas stems from advertisement. This category sells both time and space explicitly meaning that the stadium has control over how long a certain ad space is used but does not give the control over how space is defined. Especially during games that are televised, this results in tremendous revenue generating opportunities. _______________________________________________ MANAGING TIME Selling time implicitly Stadium operators sell time implicitly as they sell service experiences in the form of events such as a baseball game or a concert rather than time by the minute or by the hour. As the length of such an event is mostly determined by external forces such as the duration of a game, they have less control over how long customers use their space. This might limit the revenue potential of the sports arena. Examples to sell time explicitly However, there are certain ways where sport stadiums can also explicitly selling time such as by the minutes, the hour or the day. This has the advantage that the company can better control its capacity because they know how long customers will use the space. Stadium operators have different options to sell time explicitly.
Advertising cost for 30 sec during Super Bowl _______________________________________________ MANAGING PRICE One revenue management strategy to manage time is using rate fences. They give companies a logical rationale to justify price discrimination. Physical rate fences Physical rate fences are characterized through tangible features such as:
Different pricing depending on customer group, seat category, time of booking and family price Different prices depending on seat category Non-physical rate fences Non-physical rate fences can help to shift demand to slower periods, reward regular customers or reward reliable customers. Here some examples of non-physical rate-fences:
Different pricing depending on number of tickets purchased |
In the context of a hotel industry, which one of these is not an example of non-physical rate fence:
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