Science of Revenue Management for Golf Environment
The Science of Revenue Management:
Revenue Management -- RM is the appropriate application of information systems and pricing strategies to assign the precise capacity to the befitting customer at the right location and at the right time. Its use has spanned a wide range of industries and is routinely applied to the airline and hotel industry. Its use is currently being extended to golf courses as the ultimate objective of RM is ensuring that the enterprise generates the maximum possible profits taking into account the present customer demand and price sensitivities. Application of RM techniques would ensure that certain businesses equipped with sales force are able to augment revenue and profitability as it offers an innovative procedure to calculate marketing performance in a fresh and creative manner. The technique also gives a baseline for measuring the specific asset value of Sales Executive's time. Besides, it also offers a roadmap for increasing the success of the enterprise through better appreciation of the costs and benefits the sales force experiences while dealing with customers. (Siguawa; Kimesb; Gassenheimerc, 2003)
Application of RM Within the Golf Industry:
An in-depth analysis of the mechanics of the game of golf reveals that the two important strategic levers are 'round duration' control and 'demand-based pricing' which can be deployed in a RM programme. Prior to gearing up for a RM programme, golf courses must in the first place define their capacity. In golf, the most controllable factor of capacity is the tee-time interval. Reducing the interval among parties will result in an increase in revenue. Across the industry, RM is generally used for measuring performance by estimating their revenue or contribution per available time-based inventory unit. For instance, the Mobile telephone industry calculates Average Revenue Per User -- ARPU. Similarly, airlines have their revenue calculation as revenue per Available Seat-Mile. Taking a cue from the above, the golf industry should calculate their revenue per available tee-time -- RevPATT, however the definition of availability cannot be as accurate as in other industries. The total number of available tee times is impacted by controllable as well as uncontrollable factors. Controllable factors cover the length of a round of golf, the dispatching rule employed, maintenance and the 'tee time' interval. (Kimes; Schruben, 2002)
There are also a lot of uncontrollable factors like the number of hours of daylight and the weather. It is here that the golf operators must have a transparent definition of their capacity, in the absence of which they will be unable to measure the performance of their RM systems. The tee-time interval is the most easily controllable factor impacting the overall course capacity in the game of Golf. Development of a suitable model can be used to make a quantification regarding the trade-offs in arriving a suitable 'tee time' interval. A judicious reduction of the time interval among the parties may result in throughput and revenue, nevertheless reduction in 'tee time' interval might intensify the effects of the variations in the speed of progress of the game and outcome in a lowered RevPATT. (Kimes; Schruben, 2002)
Choosing An Appropriate RM Strategy:
It is important to note that the features which render a business appropriate for Revenue Management are also common to the Golf industry. The time period of golf tee times being a perishable inventory, the game can be a good candidate for RM. Golf courses have limited capacity and are booked through reservations. Different times and golf courses have differential pricing structures. As the cost implication is negligible for booking an additional tee time, unit pricing can have a marked effect on the overall revenue. Among the three constituents of RM, the discount allocation is most applicable to the golf environment. Diverse rates and availability can apply based on the reservation advance time, season of the year, special events, size of the player party, location to calculate the optimum and the most profitable mix of reservation on the tee sheet. (Acemicrotech, n. d.)
Open Tee is an emerging solution launched by OpenCourse Solutions a San Diego-based provider of systems automation to the Golf and report industries. Under OpenTee, all tee functions are automated which is then integrated into the tee sheet with other business systems and includes RM tools into the mix. This apart, Discount Allocation -- a vital component under RM is available by permitting management to control authorisation of low-price availability that is performed at two levels viz 'Management level...
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