One hour session on how DFW Airport is paving the way in the USA with its variable pricing strategy. Delivered to 100 + Industry Leaders on June 4, 2018.
1. Pricing, Promoting and Yield Management
David Wilson CAPP, Snr. Business Manager
June 4, 2018
Marcus Hayle, Snr. Manager Yield Management
DFW Airport
dwilson@dfwairport.com; mhayle@dfwairport.com
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Track: Creating Success
2. LEARNING OBJECTIVES
• Analyze rate structure, competiveness and elasticity
• Analyze and evaluate opportunities to leverage marketing, promotions,
traditional media, and social media to increase revenue
• Gain knowledge of Yield Management strategies
3. Agenda
1) DFW Airport Parking Environment
2) Yield Management Objectives
3) Business Model
4) Right Pricing
5) Promotions
6) Yield Management
4. DFW Airport Parking
FY2017:
66M Passengers
• 15M Originating
42.5K Parking Spaces
• 2.6K Valet
• 26.6K Garage
• 3.3K Covered Surface
• 10K Uncovered Surface
14.9M Public Transactions Processed (FY 2017)
• 2.5M greater than 2.0 hour stay
• 12.4M less than 2.0 hour stay
4 Miles from North Entrance to South Entrance
5. Yield Management Objectives
Maximize revenue through optimal
utilization of assets
Tactics
• Right Pricing
• Promotions
• Travel Industry Partnerships
• Prepaid Parking
• Discount under utilized facilities/time
frames
• Upsell Opportunities
• Direct Target Marketing
• Search Engine Optimization
• Social Media
• Product Bundling
• Food & Beverage, Retail, etc.
6. Yield Management Business Model
Yield Management
Marketing
Sales
Technology
Product
Awareness
Analytics
Drive
Customer
Behavior
Operations
7. Right Pricing
Are we charging enough?
Are we charging too much?
Competitive Review:
• Peer sets
• National
• State/Regional
• Local competition
Price Elasticity
Customer Alternatives
11. Pricing - Elasticity
If we change prices, how many customers will we gain/lose?
Calculate Price Elasticity Demand :
Apply PED to forecasted transactions and proposed rate increase to determine
resulting incremental revenue
12. Pricing - Alternatives
Non-parking options may impact:
• Facility use
• Pricing plans/structure
• Accuracy of elasticity measures
• (Mix “art” with science)
Alternatives:
• Transportation Network Companies
• Taxi, Limo, Bus, Shared ride
• Public Transportation
• Multiple ridership
13. Promotions - Approach
Holistic partnership with Internal
Stakeholders
Pre-Analysis
• Determine optimal offer
• Promotion Creative
• Social Media/Press
• Search Engine Marketing
• Advertising
Analyze historical data
Optimize occupancy
opportunities
Thanksgiving Day 2017 Analysis
Date: Thursday, November 23, 2017
Evaluation Range: November 17, 2017 – November 27, 2017
Average Length of Stay:
• Terminal: 2.95
• Express Covered: 4.58
• Express Uncovered: 4.40
Thanksgiving 2017 (FY17) Occupancy:
Location Peak Low Average
Terminal A: 47%-F-11/17 27%-Su-11/26 35%
Terminal B: 39%-F-11/17 23%- Su-11/26 30%
Terminal C: 60%-F-11/17 37%-Su-11/26 47%
Terminal D: 51%-F-11/17 32%-Su-11/26 43%
Terminal E: 37%-F-11/24 23%-M-11/20 28%
Total Terminal: 45%-F-11/18 29%-Su-11/27 37%
Remote South: 100%-W- 11/22& Th-11/23 49%-M-11/27 81%
Remote North: 100%-TH-11/23 47%-M-11/27 73%
Express Uncovered: 72%-F-11/24 34%-M-11/20 49%
Express Covered: 77%-F-11/24 41%-Su-11/27 55%
0%
20%
40%
60%
80%
100%
Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon
Remote South
2017 2016 2015
0%
20%
40%
60%
80%
100%
Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon
Terminal A
in Current Capacity
2017 2016 2015
15. Promotions - Results
Measure:
• Redemptions
• Incremental Revenue
• Future lifecycle loyalty
• Spend by customer prior to
and after Promotion
• Estimated free media value
• TV features
• Print articles and mentions
• Social Media
• e-newsletters
• Partnerships created
18. What is Yield Management (YM)?
1
8
YM is a variable pricing strategy based off
customer segmentation (multiple pricepoints for
the same product).
There are 3 essential conditions for yield
management to be applicable:
• Fixed amount of resources for sale
• Resources sold are perishable
• Different customers willing to pay a
different price for the same resource
The goal is to maximize revenue by selling to
the right customer at the right time for the
right price
19. Yield Management Objective
DFW Airport also experienced material shifts in the
way passengers are accessing the Airport.
Yield Management continues to leverage market
analysis and this new Prepaid Parking tool.
Objective:
• Optimize occupancy
• Maximize revenue
• Deliver a better customer experience
20. Optimize occupancy, maximize revenue and
deliver a better customer experience by
• Reclaiming market share
• Capturing New customers/Returning customers with
competitive, variable pricing
• Building a database of customers
• Influence purchases for themselves
• Recommend purchases for others
Pricing Strategy
• Capture more volume in parking products that have
lower occupancy during both peak and off-peak
times
Intro to Video
21. Prepaid Parking - How it Works
View here https://www.youtube.com/watch?v=wVwAz7x9cZY
22. System Benefits
Source: ADVAM Booking report Dec 22, 2017 through Jan 3, 2018
The benefits of the system:
• Variable Pricing
• Increased revenue opportunities
• Better forecasting ability
• Improved capacity controls
• Faster time to market
• Customer data
• Customer Retention/Loyalty
• Improved customer experience
23. Yield Management Toolbox
Demand-Based Pricing Products
• Earlybird – discounts for purchasing 21+ days before arrival
• Long Weekender – 4 day weekend product
• Short stay Weekender – 2 day weekend product to stimulate Fri-Sat Terminal stays
• Maximum/Minimum Stay Products -special pricing for minimum stays of 6 days or
longer
• Day of Week products – Weekday or Weekend pricing
• Time of Day products – Higher/lower rates for arrivals/departures during certain times
• Competitive matches – products to match offers by a competitor
• Promo codes – percentage or fixed amount off
Promotions
• Targeted digital messaging to draw customers to the website to purchase available
products
24. Collaboration is Key
Regardless of how good DFW parking products
and price points are, if the consumer knows
nothing about them, they will not be sold
2018 goal is three major advertising efforts
during the remainder of the FY which include:
1. Spring Break
2. Full advertising launch
3. Summer promotion
*For the other time periods, YM needs a
consistent “digital voice” throughout the year
Marketing
Corporate
Communications
(PR)
Yield
Management
Parking
Operations
25. Launch Messaging: The Painted Line
Before the painted line, people used to park just about anywhere. Gardens. Front
lawns. The occasional swimming pool. But someone grabbed a paintbrush and finally
set our world straight. With New Prepaid Parking at DFW International Airport, we
have found the next great innovation in parking. We’ve drawn the line at inconvenient
parking and made it so much better.
27. Prepaid Parking Results
• Majority are new DFW parking
customers!
• Weekend traffic has grown
significantly
• Terminal parking is preferred for short
trips (1-3 days) by customers
• Parking webpage views increase
+13% during holiday periods
• Increased advertising & competitive
prices have led to increased
conversion rates
• Customers are staying for longer
periods of time compared to
standard parkers
Returning
Customers
New
Customers
Customer Breakdown
(since launch)
Terminal
Valet
Express
Remote
Dropoff/Meete
r Greeter
Transaction History of Returning
Customers
(1 year history)
Source: Advam Bookings Report launch- Mar 24, 2018, SkiData Vehicle Tracking Data
Google Analytics Report – March 2017
29. What Goes into Pricing Decisions?
Source: ADVAM Booking report Dec 22, 2017 through Jan 3, 2018
Historical
occupancy
by day/week/period
(by product)
Shifts in holiday
periods
Capacity
changes/concerns
(construction, projects, etc)
Average length
of stay
(by product)
Peak/off-peak
periods
Digital traffic trends
(conversion rates, clicks per
page etc)
Customer
segments
(Leisure or Business)
Competitor
pricing
Marketing survey
data
(validate customer
needs/desires)
Customer
feedback
(why they chose DFW and
price points they are
comfortable with)
Psychological
considerations
•Ease of messaging $99.87
vs $100
•Charging $10.40 vs $10
Implement and
test
(technology +
customer)
Additional considerations
30. Sample of Marketing Research Data
Customer mode of Access
(during Spring Break)
Dropped-off
Rental Car
Taxi
DFW Remote
DFW Terminal
Uber
Hotel Shuttle
Millenials
18 - 34 years old
Gen X
35 - 50 years old
Baby Boomers
51 - 69 year olds
Times used Uber past 12 months
(YE Jun 2017)
Other
Off-airport Parking
Public Transit
DFW Remote
DFW Terminal
Drop-off
Taxi
If TNCs did not exist, what would you
have done?
Trip 4 days or longer Trip 1 - 3 days
Source: 2017 Uber Study. June 2017.
31. Analysis of Prior Years’ Data
3
1
Terminal Express Remote
Average Length of Stay
(days)Spring Break Travel dates: Fri March 2 – Mon March 19, 2018
Potential Product Idea
Pay $XXX for XX days
*Terms & conditions
Potential Product Idea
Pay $XXX for XX-XX days
*Terms & conditions
Terminal Express Remote
Avg % Occupancy by Product
Fri Sat Sun Mon Tues Wed Thur Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon
Percentage Occupancy by Day
(All Terminals)
2016 2017
Average:
2016- 88%
2017- 87%
32. Post Analysis
32
Average Occupancy Variance by
Terminal:
• Terminal A: up +28%
• Terminal B: up +14%
• Terminal C: up +25%
• Terminal D: up +12%
• Terminal E: down -11%
Fri
3/2
Sat
3/3
Sun
3/4
Mon
3/5
Tue
3/6
Wed
3/7
Thu
3/8
Fri
3/9
Sat
3/10
Sun
3/11
Mon
3/12
Tue
3/13
Wed
3/14
Thu
3/15
Fri
3/16
Sat
3/17
Sun
3/18
2018 Spring Break % Terminal Occupancy
Terminal A Terminal B Terminal C Terminal D Terminal E
terminal express remote
2018-2017 Spring Break
Average Transaction Values
2018 2017
terminal express remote
2018-2017 Spring Break
Average Length of Stay
2018 2017
33. Cities with Highest Concentration of Customers
Source: Advam Bookings Report
Mapping by Tableau
3
DFW
DFW
Majority of customers are from city XYZ however higher revenue came from city ABC due to
longer stays
34. Key Components for Success
• Data
• Historical occupancy
• Length of stay
• Market research data
• Defined peak/off-peak periods
• Technology
• Parking control system
• Reservation platform
• Data storage capability
• Collaboration
• Buy in from internal & external stakeholders
• Cross departmental project team
• Effective messaging
