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Overview: Dynamic Pricing’s Future in the Attractions Industry

Overview: Dynamic Pricing’s Future in the Attractions Industry. IAAPA Expo 2012 Martin Lewison , Ph.D. Asst. Professor, School of Business Farmingdale State College. Revenue Management. Dynamic Pricing is one aspect of a complete revenue management program

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Overview: Dynamic Pricing’s Future in the Attractions Industry

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  1. Overview: Dynamic Pricing’s Future in the Attractions Industry IAAPA Expo 2012 Martin Lewison, Ph.D. Asst. Professor, School of Business Farmingdale State College

  2. Revenue Management • Dynamic Pricing is one aspect of a complete revenue management program • Revenue Management is selling the right experience to the right guest at the right time • Example: Discounted pre-season annual pass sales • Example: Premium add-ons (queue products, water park privileges, hard ticket special events)

  3. Revenue Management • The object is to sell your perishable “inventory” for maximum revenue; Easier if you recognize that different guests are more or less price sensitive • It is possible to cater to both types, giving discounts to price-sensitive guests and charging premiums to less price-sensitive guests • Of course, guests differ in more ways than just price sensitivity, so it makes sense to segment the market on multiple variables (Price-sensitive + heavy user = Season Pass)

  4. Dynamic Pricing • Dynamic Pricing is pricing based on demand and timing • High demand, higher pricing, & vice versa. • Consumers today are more comfortable with the notion that prices can rise or fall with demand, or can depend on peak or off-peak periods. Dynamic pricing can be found: • Tickets for sporting events, shows, concerts • Parking meters and electricity consumption • Online shopping • Industries where dynamic pricing has long been the standard: Airlines, hotels, auto rental

  5. The Attractions Industry Already Uses Dynamic Pricing on a Limited Basis • Season Pass/Annual Pass • Twilight or Evening Discount Pricing • Weekday/Weekend Pricing • High/Low Season Pricing • Online Pricing • Special Event Pricing • Birthday Pricing

  6. Dynamic Pricing Study • We looked at websites for 74 parks/FECs in Asia, 183 in Europe, 117 in North America • Annual or seasonal pass pricing common in U.S. and Europe (68% sample in North America, 69% Europe, 33% Asia) • Online Advance Purchase Discount Less Common (36% sample North America, 35% Europe, 7% Asia) • Day of the Week Pricing Uncommon (15% sample North America, 5% Europe, 7% Asia)

  7. Guest Attitudes Toward Pricing • We collected 476 online surveys from several global theme park forums (53% North America, 33% Europe, 14% Asia+other) • 32-43% (North American respondents) expressed willingness to pay higher admission on busier/busiest days, higher for Europe and Asia (95% confidence interval) • 83-91% (NA respondents) expressed willingness to adjust day of visit to capture a discount, lower for Europe and Asia (95% confidence interval)

  8. The Future: Know Your Guest • Understanding your guests’ experience preferences (thrills, shows, landscaping, games), F&B preferences, merchandise preferences, etc., along with their sensitivities with regard to changes in priceopens the door to mass customization of the amusement park experience • More parks/FECs are starting to collect more guest information through interactive marketing on social media

  9. The Future: Know Your Guest • There is no perfect amusement park for all guests, but there are variations in the marketing mix that are perfect for different segments of guest. • Survey and test to find out what your guests want • Invest in research and analytics and mine your data • Develop loyalty programs -beyond the season pass model- that form long term relationships.

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