Your business offers private sailboat charters off the coast during the warm weather months, and you love to take your clients out on breathtaking sailing adventures. The problem is, your tours only book up during the summer months, leaving you with empty spaces and lost revenue throughout the low travel season.
You don’t have to settle for a struggling business just because you operate in a destination with a short travel season. Instead, become a yield management expert.
Yield management is a business practice that encourages managers to implement a variable pricing strategy. The pricing strategy would anticipate the behaviors of consumers during different time periods of the year, in hopes of maximizing revenue during the peak season and increasing revenue during the slow season.
For instance, tour and activity operators should avoid creating a set price for all of their tours that remains consistent throughout the year. When demand is higher in the summer, the price of the tours should increase. A sailboat charter during the busiest week of the summer should cost more than a charter during the slowest week of the peak season. When your products are in demand, consumers will pay more for them. This allows you to boost your profits while you have plenty of customers around to book your products.
Conversely, during the slow season, you can use yield management strategies to reduce your prices in order to drive additional business. You can offer steep discounts during the low season that allows you to book your sailing charters when they would not otherwise have been booked. By increasing your bookings during the slow season, you will increase your profits during a time when you expect business to be down.