Max Tennyson is a small business owner, specializing in renting vacation cottage
ID: 328763 • Letter: M
Question
Max Tennyson is a small business owner, specializing in renting vacation cottages in Europe and Africa. Up to now, his business, Tennyson’s Travel, has been manageable with spreadsheets and manual records. All business has been conducted in the travel office or on the phone. TT has been experiencing phenomenal growth, at a rate of 25% a year. Max has only 3 employees currently but is now looking to expand the operations, up to 10 employees. He knows that he needs to automate the records and is unsure where to start. He also believes that he needs to create a website. Keep in mind that both the travel agents and customers would like to search the inventory using criteria, such as price, location, property type, number of bedrooms and how many people total can sleep in property.
Max hires you to analyze his business/industry and come up with a plan to automate his small business.
Research current travel systems and costs. Write a memo of best features. Isolate the features that MUST be in the new system and which features are optional features. Keep in mind scalability. Currently, Tennyson Travel is grossing $500,000 per year and experiencing 25% growth annually. (Word – SYSTEM REQUIREMENTS)
Explanation / Answer
In idustries like Hospitality, aviation, entertainment etc the most critical constraint is the low shelf life of the inventory. Inventory is perishable in max one day. Inventory cannot be stored. For example, in a hotel with 100 rooms, if occupancy on a day is 60 rooms, the unused inventory of 40 rooms does not carry forward to the next day. Hence operational efficiency and effective pricing is key to success of these types of industries. In order to achieve this, it is exremely important to automate the operations as much as possible to provide seamless service to the customers.
My plan for automation consists of following parts :
1. Use of adaptive pricing algorithm : Adaptive pricing algorithm is used by most aviation & hospitality companies in order to maximise their occupancy factor. It uses complex market conditions like availability in other hotels, airlines, traffic of customers, holiday season etc. and changes the price of the property accordingly.
2. Tie up with existing aggregators : There are various property aggregators available which work on a fixed revenue model in exchange of a %age of rooms booked for them. For example an aggregator can pay you a fixed amount for 20% of the rooms in your property and in turn given them to customers at their own rates. This way you are guaranteed for 20% occupancy without worrying about marketing efforts or offering tariff discounts.
3. Create an Android & iOS App : Accessibility is key for service sector to thrive. It is critical to have a mobile app. All information regarding the properties like Location, rooms, tariff, photos, accessibility etc should be available on the app. There should be an option to book the property also on the app using a payment gateway. Many properties are offering to book without any advance payment and zero cancellation charges.
4. Automation of backend operations : It is very important tp automate the backend operations as well in order to improve quality of service and also ensure uniformity. This can be done by using an enterprise resource planning software like SAP, ORACLE or can be custom made from any IT service provider.
I hope this helps.