Thompson to cut costs with price optimisation software

Thomson Holidays aims to shave up to 4% off the cost of operating package holidays with a new system designed to improve the use...

Thomson Holidays aims to shave up to 4% off the cost of operating package holidays with a new system designed to improve the use of pricing and revenue data.

Price and revenue optimisation (PRO) software will process huge amounts of sales data to calculate the price which is most likely be realised for a product at any given time. The technique is well established in the airline and hotel industries, where pricing needs to be varied dynamically to ensure that the most is made of capacity.

Thomson will be the first company in the UK holiday sector to apply it to determining the best price for combinations of flights, hotel accommodation and associated products such as excursions.

The roll-out of Manugistics software will link flight and accommodation data, allowing travel agents to give a holiday price at the point of sale, which is a difficult task with the current system.

Jim Mann, Thompson's CIO, said, "At present we use a manual system using printouts. People are good at spotting big things that need price changes, but there is a lot of hidden detail. The system will help us find such things as difficult-to-sell beds and flights and match them."

Analyst Simon Bragg of Arc Consulting said, "Price setting has been a neglected area of business in the past and has depended largely upon gut feeling. It is a well-proven technology in air travel and hotels and it is difficult to think of where this technology could not be profitably applied."

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