In the spectrum of travel agencies, both the small and the large have started to understand — or already comprehend — the importance of optimizing revenue. With thin margins and fierce competition, the need to maximize the influx of income from every booking has become fundamental.
Worth the investment
Despite that awareness, some agencies hesitate to devote their time and resources toward revenue optimization efforts. Shifting budgets, allocating employee time or hiring new talent to focus on revenue optimization might seem like an unaffordable luxury on the surface. However, the payoff of a concerted revenue optimization approach should exceed those upfront investments, which makes adopting such an approach an opportunity you actually can’t afford to miss.
In fact, the return on investment from acquiring and implementing the tools and technologies needed to successfully optimize revenue can be as high as 1,000 percent.
The first step an agency should take toward revenue optimization is to identify how it makes money today. A standard back-office system will reveal the portion of revenue derived from commissions, mark-ups or fees. Analyze those numbers and formulate the next move based on that insight.
For example, a report on the quantity of business conducted with individual airlines might confirm that your agency delivers significant traffic to Delta, American or United. You could leverage that insight to seek commissions or mark-ups from the carrier, who would presumably prefer to keep your agency’s business away from competitors.
No matter too small
When embarking on that first step, no agency should dismiss the idea that a carrier would be interested in talking to them. Volume is not the only thing that matters: if an agency consistently books international travel or first-class seats in a qualifying market, a carrier might be receptive, even determined, to work together to expand its own presence in that geographical area. You can prove your value to carriers just by knowing your niche.
Small steps should also be encouraged, no matter the agency size. Once an agency walks the path toward revenue optimization, it will come across endless avenues to success. It is imperative to be selective, especially in the beginning. Avoid the common pitfall of “too much, too soon.” Instead, adopt an iterative process: Tackle one thing and get good at it first, then allow your agency to grow organically through that cycle.
Practice makes perfect
Revenue optimization is a practice that will routinely return your investment when the step-by-step process is regularly followed. The first step, we’ve mentioned, is evaluating your insights and choosing the best one wisely. If you’re struggling to pick one, go for the low-hanging fruit. The second step is seizing opportunities — through tools and technology — to turn that insight into increased revenue. After this optimization two-step, collect data on your efforts and repeat, constantly seeking to transform your best available insights into revenue-generating action.
The ability to continually transform insights into action requires the capability to collect information. Whether it’s to accommodate variables such as changing market conditions or your agency’s financial standing, remember that what worked a year ago may not work today.
Of course, without the resources, time and talent in place to handle these tasks, revenue optimization efforts will never get out of the starting blocks. In this case, with the revenue upside so high, it’s not only worth doing and worth doing right, but worth starting as soon as possible.
Discover your own ROI potential by building a revenue optimization strategy.