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In the fast-paced and ever-evolving world of sports and events, Revenue Management (RM), or Yield Management, can play a crucial role in driving profits, maximizing revenue, and boosting occupancy rates. But what exactly is RM and how can it be applied to the unique challenges and opportunities of the sports and events industries?
In this article, we will take a closer look at the benefits of Revenue Management for sports clubs and event organizers, the technology and tools available to implement RM strategies, and the potential impact of emerging technologies such as AI (Artificial Intelligence) and Machine Learning on the future of RM in the sports and events industries.
Revenue management is a business strategy that aims to optimize revenue by adjusting prices and inventory availability in response to market demand. It is a well-established practice in various industries, such as transportation, including passenger aviation, railway, and bus transit.
Revenue Management is generally based on forecasting demand, taking into account the customer profile and product type, to develop pricing strategies and adjust prices over time to meet commercial goals. In the airline industry, Revenue Management Solutions (RMS) are used to manage flight capacity and optimize revenue by adjusting ticket prices in response to demand, taking into account various variables such as peak travel times, previous year's booking history, distance, travel time, and competitive pricing.
Wiremind, a global leader in Revenue Management, has been developing cutting-edge solutions since 2014, including its product for the transportation industry, CAYZN. This system is comprised of several key modules:
For many years, Wiremind has been providing its CAYZN system to major international transportation companies, including SNCF (France), VR (Finland), SJ (Sweden), MTRX (Sweden), DSB (Denmark), OUIGO (Franceà, BlaBlaCar (France), and many others, enabling them to optimize their commercial performance with revenue gains of 5-15%.
How is this increase in revenue achieved? The role of RM is to play with the price elasticity of demand. In some cases, where demand is very high and price sensitivity is low, the goal of RM will be to increase prices to secure the expected revenue. In other scenarios, for example on trains that tend to be poorly filled, price elasticity may be more important. In this case, RM will be more likely to offer lower prices, to play on volume, with the virtuous effect of obtaining higher revenue, by having brought more passengers on board.
Wiremind's solution, CAYZN, offers advanced configuration options that allow an organization to define its commercial strategy with great precision. Specifically, if a company prioritizes revenue growth based on a volume strategy and therefore low prices for the end customer, or, on the contrary, if it prioritizes rationalizing its transport offer while maintaining its revenue, CAYZN easily enables the desired goal to be achieved.
Such practices and solutions have already proven themselves in the aforementioned industries. How could an equivalent Revenue Management solution like CAYZN help sports clubs and event organizers optimize their revenues and filling of their stadiums and halls?
It's crucial to highlight that there are numerous similarities between the transportation industry and the sports and events sector. Both involve optimizing a finite capacity, equivalent to a set number of seats. Just as with transportation, there may be multiple classes or categories of seating, although, in practice, a sporting venue or performance hall may have more categories than a plane, train, or bus. And similar to transportation, there are multiple products with specific features and sale conditions.
Given this, there is no reason to believe that RM cannot bring significant gains to the sports and events sector, whether it is to increase revenue or occupancy rates of a sporting venue or performance hall, much like what the transportation industry has experienced over several decades. Hence, Revenue Management presents a unique opportunity, especially since the revenue generated from ticket sales and matchday is a significant part of their overall income.
Of course, the industry has its own unique complexities. Ticket demand can vary greatly based on factors such as the popularity of the team or event, recent performance, time of year, and weather conditions. In some cases, tickets are sold last minute, making it difficult to predict demand and adjust the pricing accordingly.
Ticket sales can fluctuate based on team performance, making it challenging for clubs to predict demand and set pricing, leading to potential revenue loss. Concerts or festivals also come with their own set of challenges, with tickets being sold far in advance, potentially increasing closer to the event, complicating inventory and pricing optimization.
Furthermore, the diversity of events, their nature, and their location also have a significant impact on sales. An international artist's concert in a large stadium will have a different demand than a small-capacity theater play. Similarly, a major football match in a large stadium will have different demands compared to a local football match. In this context, it is difficult to define pricing strategies that take into consideration all these factors.
To address these challenges, relying on advanced Revenue Management is a major advantage in helping clubs and event organizers optimally manage their ticketing revenue. By leveraging a robust product that operates in real-time with performant visualization and architecture compatible with cutting-edge Machine Learning and Artificial Intelligence prediction models, event capacity can be spectacularly optimized.
As previously noted, the demand for RMS has seen a significant rise among sports clubs and event organizers. However, choosing a Revenue Management System for your organization can be challenging as the available options are limited, and it can be difficult to identify the best fit in terms of technology and tools.
Let's take a look at the key features of these solutions and how they can benefit your organization:
With a track record of success in the transportation industry, thanks to its unique expertise in Product Design and Artificial Intelligence, and its unparalleled positioning at the intersection of the transportation industry and the sports and events sectors since its collaboration with Paris Saint-Germain in 2019, Wiremind introduces EVENTORI, its latest offering in 2022.
EVENTORI is a ticketing solution featuring an integrated native Revenue Management system, equipped with industry-proven knowledge from its historical roots and tailored to the specificities of the sports and events industry, allowing players in this industry to finally benefit from proven techniques.
Wiremind's solution offers numerous benefits for sports clubs and event organizers. By using EVENTORI, it is possible to optimize revenue and capacity, but more broadly it is a streamlined and optimized ticketing solution in all aspects. In particular:
Wiremind's EVENTORI is already proving to be one of the most advanced optimization and distribution systems currently available on the market. As a comprehensive solution for sports clubs of all sizes and event organizers seeking to implement RM strategies, EVENTORI offers a wide range of features to help improve performance and maximize revenue and occupancy rates.
It's worth noting that implementing Revenue Management solutions can also present challenges and obstacles, which EVENTORI has the advantage of overcoming.
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