Travel Reference
In-Depth Information
Figure 26.1
Price discrimination.
and Milner 2007) otherwise confusion and dissatisfaction could reduce the benefi ts of using the
technique. The travel and tourism industry has adopted yield management approaches because
of their easy application to the fi xed availability of inventory: there are only so many seats on a
plane and only so many beds or rooms in a hotel, and demand may easily outstrip supply during
certain periods, while at others, for seasonal or other reasons, demand may need to be stimulated
by promotions. If we consider, for instance, what can happen at the time of mega-events such as
the World Cup in soccer or the Olympic Games, and during the periods immediately before and
after such events, when demand is relatively inelastic for the event but much more elastic in the
peripheral period, we can see how valuable a yield management system can be.
Sector-based examples
Package tours
The issue for package tourism companies is how transparent or opaque their bundling is to be,
given that it is now possible for consumers to check the price of comparable independent
bookings by means of the Internet. By selecting and reserving their accommodation and
transport in advance and in some cases using their own planes and hotels, tour operators
(package providers) can ensure that their offer is unique in the market, so that comparable
independently booked holidays will generally be more expensive because they cannot take
advantage of economies of scale as the package providers can. In addition, the package providers
can add value in various ways to ensure that their offer is still more attractive to the cost-
conscious purchaser, by providing airport to hotel shuttles, childcare facilities, meal deals or all-
inclusive packages (see Aguiló
et al
. 2003). If they had not been able to, or had been unwilling to
build in the added value, the package providers might not have weathered the economic
downturn as effectively as some of them have. Dynamic packaging (which gives the appearance
to customers of providing unique combinations of travel and accommodation options) is just
another way of ensuring that prices are kept low to the customer and also opaque - it is diffi cult
for the customer to identify the economies of scale in operation. For a hedonic pricing approach
to the topic, see Thrane (2005).
