Introduction to yield / revenue management and True North's cloud-based suite, Jair

1. Jair: Yield Management
Suite
An overview
5th August 2010

2. Yield Management
Yield Management Yield Management (also known as Revenue or Inventory Management) is a technique
Introduction to Jair used to maximise the revenue a supplier brings in.
Features
Using Jair It is used in industries where there is a shelf-life on the stock, or inventory, that the
Technical supplier provides – where once a date has passed the inventory has a greatly reduced or
zero value. This is known as “distressed” inventory.
An example of this is an empty airline seat, where once the plane has flown the seat can’t
be sold again.
The use of Yield Management was pioneered by American Airlines in the 1980s who
credited it with a revenue increase of $500 million a year (in 1998) and is also heavily used
in the hotel and other travel industries (e.g. rail travel with National Express and SNCF
being examples of Yield Management users).
Yield Management techniques usually rely on inventory that can be sold a different prices
to different segments of the market (think of a fully-flexible versus a budget airline ticket)
and it relies on the control and release of inventory based on the expected demand.
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3. An Example: Hotel Booking
Yield Management As an example imagine a medium-sized hotel in
Introduction to Jair with 100 rooms. The hotel segments its
Features customers and offers different rates aimed at
business customers (£100 per night) versus
Using Jair leisure (£80 per night) with more flexible terms
Technical and conditions for the more expensive rate.
The challenge for the hotel revenue manager is
to protect enough higher revenue business
bookings whilst ensuring that as few as possible
of the rooms are left empty. This is done by
limiting the availability of the leisure rate based
on the forecasted demand.
If the limit is set too high then more leisure
customers may take up rooms that could have
been sold at a higher rate. If the limit is set too
low then there may not be the demand from
business customers and the rooms will go empty.
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4. An Example: Hotel Booking
Yield Management This balancing act leads to two “big questions” for
revenue managers:
Introduction to Jair
Features “The hotel isn’t full and it’s close to the arrival date.
Will I be able to fill spare capacity?”
Using Jair
Technical “The hotel is full, but did I sell too quickly and miss
selling at a better rate?”
All experienced revenue managers will have an
intuitive understanding of how bookings come in,
and will have a “feel-factor” of when they should
open or close their rooms for sale. However, with
less experience or less time this intuitive
understanding may not yield the best results.
Luckily, if the right data is available there is a way to
harness this understanding of demand and calculate
how to maximise revenue. The experience of the
revenue manager is channelled in to the more
difficult skill of forecasting demand.
We’ll see how Jair provides this insight and has tools
that help answer the big questions.
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5. What is Jair?
Yield Management Jair is a suite of applications aimed at making it easier for Yield Managers to maximise
Introduction to Jair revenue by providing guided insights and both manual and automated controls of the
price and availability of inventory.
Features
Using Jair Jair contains tools and algorithms that make it easier for the Yield Manager to:
Technical - Forecast demand based on historical information and growth factors
- Control pricing and availability of inventory
- Identify and maximise revenue opportunities from special events
- Be proactively informed of unusual booking patterns and opportunities
Jair is centred around three key concepts:
1. Understand – Provide insight in to
past performance enabling accurate
forecasting.
2. Optimise – Jair is built around
algorithms that suggest price and
availability controls that will optimise
revenue
3. Automate – Pro-active alerts
delivered to the Yield Manager when
there is unusual booking activity and
opportunities to increase revenue
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6. 1. Understand: Provide Insight
Yield Management Jair’s strength is presenting complex and large datasets in an understandable and
Introduction to Jair actionable way. This enables Yield Managers to quickly grasp the current situation and
make the right decisions in order to maximise revenue. Some examples of graphs and
Features table are shown below.
Using Jair
Historical Demand Curves show how the
Technical
bookings arrived for a particular segment on a
day, month, or season. They drive the
forecasting algorithms and enable Yield
Managers to maximise high yielding bookings
by setting the booking limit accordingly.
Booking Pace Charts enable Yield Managers to
see the current state of the bookings for a
particular segment. They help answer the “big
question” as to whether a particular segment
is likely to fill to its capacity by comparing
current bookings with similar historical
periods.
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7. 2. Optimise: Price and rate control
Yield Management Jair uses pluggable algorithms to help the Yield Manager make
decisions on price and availability of their inventory.
Introduction to Jair
Features Pluggable algorithms mean greater flexibility and allow Jair to
use different strategies depending on the industry, size of
Using Jair business, and company goals.
Technical
Jair integrates with the booking system converting booking
activity in to a standardised format for fast processing even
over very large data volumes.
Forecast and price optimisers compare the booking activity
against similar time periods factoring in special events and
growth / decline to produce a picture of the booking pace and
recommendations for action.
The Yield Manager maintains full control and is able to institute
or override the recommendations as she sees fit. These price
or availability changes are then published to the distribution
channels to help control the bookings and maximise revenue.
A full audit trail of both manual and machine
recommendations is maintained. This means that Jair can
measure the efficacy of a particular strategy and make
recommendations for the future.
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8. 3. Automate: Business alerts
Yield Management Data insight and smart algorithmic rules are important, but it is
often the exceptional circumstances where money can be
Introduction to Jair made or saved – for example a special event where bookings
Features arrive at a faster rate; or a particular date range where demand
is dropping off,.
Using Jair
Technical In these situations, the faster a Yield Managers can assimilate
and react to the exceptional demand by altering price or
availability, the greater the opportunity to either increase
revenue, or limit the effect of falling demand.
Jair uses a set of pre-built and customisable rules to alert Yield
Managers of these exceptional situations, and once identified
allow them to actively monitor bookings on this date.
As well as being notified via the web suite, Jair supports
notification through email and commonly-used social
networking tools – for example a dedicated and private Twitter
feed highlighting business alerts, or automated messages from
Jair’s robots on Instant Messaging services.
This enables both Yield Managers and General Managers to be
kept informed on potential opportunities to increase revenue
without the need to be tied to their computer.
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9. Jair: Key features and roadmap
Feature Description When
Yield Management
Introduction to Jair
Activity Data Loader Extracts booking activity from the reservations system, converts to a 1.0
Features standardised format and loads in to Jair
Using Jair Dashboard The portal to Jair bringing together the latest reports and alerts 1.0
Technical
Historical Demand Curves Drillable and navigable graphs giving insight in to the shape and rate of 1.0
demand over various time periods.
Booking Pace Analyser Gives an up-to-date picture of the booking s that have come in and how 1.0
this relates to bookings over a similar historical time period (e.g. versus last
year)
Price Optimiser Recommendations for price and availability changes based on pluggable 2.0
and flexible algorithms
Price and availability Integration with website and other distribution channels to publish new 2.0
distribution prices.
Alerting Business rules and pro-active alerts to multiple channels (email, IM, 2.0
Twitter, etc) enabling rapid response to revenue opportunities
Competitor Intelligence Data feeds and web intelligence with competitor pricing, allowing more 3.0
sophisticated revenue strategies.
Customer intelligence Integration with web analytics solutions allowing more sophisticated 3.0
marketing and revenue strategies.
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10. Use Jair
Yield Management The timeline below shows the planned releases of Jair
Introduction to Jair We welcome the opportunity to work with clients early in the process as it
Features means we can make a better product.
Using Jair There are also benefits for our clients who are early adopters:
Technical • Involved in prioritising features
• Enjoy features of Jair at a discounted rate
• Become part of the Jair Steering Group and have a fast track in to
requesting and suggesting new features
If you would like to be an early adopter contact either Sid, Mark, or Yannick on:
• sid@truenorth.gb.com
• mark@truenorth.gb.com
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11. How does Jair work?
Yield Management Jair is designed with speed, usability, security and
reliability at its heart.
Introduction to Jair
Features It runs “in the cloud” – i.e. over the internet – on
enterprise-strength infrastructure provided by
Using Jair Amazon Web Services.
Technical
Your data is secure – only your staff and people you
grant access can see your data.
Your data is safe – we back up your data for disaster
recovery at no extra charge.
Your data is instantly accessible – Amazon’s
infrastructure and our usability design mean that data
can be retrieved quickly and displayed in an intuitive
and accessible way giving instant business insight.
Your data is available – Because Jair is accessed over
the internet, you can look at your data when you
want, not just when you are at your office computer.
No installation headaches – we host Jair to make sure
that you can get instant access to the tools and data
without having to buy servers or install software.
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12. Thank you
Sid Haniff
sid@truenorth.gb.com | 07968 277 116
Mark Thomsit
mark@truenorth.gb.com | 07801 480 820
http://www.truenorth.gb.com
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