JDA(r) Software Group has announced the commercial release of a new revenue management system for tour operators called Tour Revenue Optimizer (TRO). Following the implementation of the tour operator and solution capable of calculating price based on demand for both beds and seats on millions of package holidays sold worldwide, Aaron Sugarman , General Manager, Operational Research at Thomson Holidays, estimates that the system is on track to achieve the promised benefits.

"TUI processes between 50,000 to 100,000 price-change recommendations every day, 90 percent of which are automatically accepted without human intervention," said Sugarman . "The JDA application is capable of adjusting the prices of holidays to ensure that it uses all available flight and hotel capacity and takes the demand forecast, available capacity and incremental costs of sale (including hotel contracts) to adjust the price for maximum profit. Controls on reservation system availability allow low-margin holidays to be changed from a special sale price to a regular price. Simply put, we are now automated to increase prices where there is high demand, or drop prices where there is low demand."

With so many complex pricing variables, TUI and other tour operators need to be able to achieve one view of demand to maximise profit. Each vacation package is made up of various holiday products, many for different durations, and sold both directly and through third-party channels.

 

According to JDA's Group Vice President of Revenue Management, Andy Archer, JDA has been singularly successful in developing a price optimisation and revenue management solution capable of handling the millions of holiday package scenarios, whether a holiday is sold as a package, or as a flight only.

"Other systems maximise profit across beds or across seats, but JDA's TRO allows us to maximise profit across beds and seats simultaneously and account for the relationship between the two," says Sugarman . "TRO gives us the ability to evaluate the profitability of millions of package-departures overnight while simultaneously accounting for the bigger picture in terms of the general availability of beds and seats and differences in demand, supply and margins at the lowest levels. This could not possibly be done with human resources."

According to Sugarman, sophisticated revenue management is key to enabling TUI to profitably respond to the changing market place.

"The travel industry has undergone enormous changes over the past five years," he said. "The Internet and the low-cost airlines have combined to alter travel and booking patterns. In order to be at the forefront of this change, Thomson Holidays has changed both its customer proposition and internal processes. On the customer side, our Thomson shops now offer a mix of 'all in' holidays, flight-only and accommodation-only deals, all with increased flexibility. Thomson now sells almost 40 percent of its volume online, meaning it is one of the most visited sites in the industry with over one million visitors a week. However, changing the customer proposition alone does not make a profitable business. In such a dynamic, price-sensitive environment, the need for sophisticated and responsive yield-management technology to maximise profitability is more important than ever before."

Thomson Holidays went live with TRO in 2007, upgrading to JDA's new release of TRO 3.3, with extra accommodation-only capabilities, at the end of the year.