Pricing’s Role in Constrained Operations

As we see resorts and attractions start to reopen in other parts of the world, we should start thinking about how to best prepare ourselves for reopening in North America. What we’ve seen mentioned so far are a variety of tactics to ensure the highest level of guest safety and experience such as limiting daily capacity, and increased cleaning protocols. 

For example, in Taiwan, the Ministry of Transportation said it was considering setting a maximum safety density of visitors for popular amusement parks to 50% capacity1. At China’s Wet ‘n Wild Haikou, there are new policies in place that include body temperature checks and increased water-quality monitoring2.

Running businesses within restricted operations means that it is important, now more than ever, to use pricing to influence consumer buying behavior. While typically at a resort or attraction, pricing is used to create a sense of urgency in an environment where effectively tickets can’t “sell out”, capacity restrictions from COVID-19 have altered the theory we rely on for pricing inventory sets that don’t sell out. Now, we can more revenue manage a smaller inventory set with a higher likelihood of selling out in advance. 

Rather than sell daily tickets, where guests come and go freely and unpredictably throughout the day, resorts and attractions should consider selling time slots within their day to help control crowds and maximize revenue. Just as days with differing demand can be priced at their own rates, time slots throughout a given day can also be priced according to demand. A 10am, 2 hour time-slot for water park entry may be most popular and should be priced higher than the 3pm slot before closing. By booking guests into specific time slots, you can control crowds throughout the day as well as maximize bookings for each day.

With a limited number of tickets available any day for a resort or attraction operating under capacity constraints, operators should expect to see an increase in pre-sold tickets online as guests secure their tickets in advance. 

In a recent article in the Orlando Sentinel, Curtis Parks, managing partner at Icon Attractions, stated that “there should be fewer admission sales at the attractions themselves” in the move to a “no touch” environment. There is a unique opportunity to gain additional advanced commitment while simultaneously managing yield for a limited inventory set.

As this is an unprecedented situation, there are likely to be many real-time adjustments to pricing strategy and inventory availability as we see what consumers’ appetites are for getting back into public spaces and how that affects purchasing behavior.  How price-sensitive will customers be? How quickly will guests look to relieve their “quarantine-fever” and get back to fun family outings? We don’t have historical data on which to base every pricing decision in times like these, so we’ll be learning and questioning the results we see and responding as needed.

As capacity is constrained and bookings are pushed online, operators should think about how to accommodate an increase in online order redemptions vs. day-of ticket sales. Designating multiple ticket windows to handle online redemption, with markers for adequate social distancing, will ensure a smooth experience upon arrival. 

A combination of changes to pricing strategy as well as physical operations will yield the best results possible in this new world. 

2 IAAPA News Daily

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