Loading...
HomeMy WebLinkAbout2000-04-04 Support Documentation Town Council Work Session ( m ow opt . VVTCB CENTRAL RESERVATIONS ANALYSIS Current State: 1. On an annual basis, VVTCB Central Res accounts for 2.4% of lodging sales in Vail, Avon, and Beaver Creek, and VBCR (Vail Resorts Tour Company), accounts for 4.4%, a combined total of 6.8% or $11.6 million dollars in lodging sales. 2. Winter lodging sales volume for the combined systems exceeds summer lodging sales dollar volume by almost 10:1 because of the significant disparity in rates between summer and winter, and the substantially higher demand for winter vacations. 3. VBCR has typically controlled 70% of the winter combined sales volume of the two systems (approximately 7.5% of the total lodging booked for the winter season), due to their significant winter marketing expenditures featuring their Tour Company as the call to action. 4. VVTCB has typically controlled 62% of the summer combined sales volume of the two systems (approximately 3.5% of the total lodging booked for the summer season) and has recently committed to provide reservations services for destination and front range programs funded by the Local Marketing District. 5. VVTCB currently answers 90-95% of its inbound calls on a year round basis. 6. The cost per call of operating Central Res in the summer has averaged $11.86 compared to an average commission income per call of $3.95. 7. Due to substantially reduced winter demand for the past two winters and increasing erosion of winter call volume, the VVTCB Central Res department has seen its "profitability" (after all allocated costs are deducted) shrink from a $200,000+ plus position annually to a loss of $82,650 following the winter of 98-99. 8. Central Reservations commissions represent just over 20% of the total income stream to the VVTCB...as a business proposition, VVTCB Central Reservations is similar to most businesses in the area in that offering services in the "non-ski" months is a cash drain, and if winter revenues are reduced, it becomes difficult to continue operation to serve our spring, surmner, and fall prospective visitors. Situation Analysis: The VVTCB has for the past 25 years or so been engaged off and on in discussions with Vail Associates and now Vail Resorts about how best to handle the fulfillment of marketing and advertising programs. Tour operators and reservations services are simply the last step in a long and costly process of convincing the customer to buy our product instead of someone else's and are only as effective as the marketing and promotional programs that get the customer interested enough to call. With the advent of the internet as both a research tool and a vehicle to actually purchase products, the traditional call center business models demand rethinking and perhaps "reinventing" and the Board of the VVTCB, together with Vail Resorts, is engaging in that process now, so that we create the best possible fulfillment systems FROM THE CUSTOMER'S STANDPOINT to enhance our marketing efforts for now and the future. Future Direction: The path that the Board has adopted is outlined below: 1. Focus on improving service levels and offering what the potential guest wants. 2. Thoroughly analyze costs/benefits of operating a reservations system. Thoroughly understand the financial ramifications of changing the business model, including allocated expenses and intangible effects on other programs. 3. Determine the best ways to complement the Tour Operation business of VRI. A. Service low cominission reservations they don't want to handle. B. Evaluate sharing inventory to snake it simpler for lodging community. C. Work together on web-based lodging information and booking procedures. 4. Explore ways to simplify our process to eliminate costs, and provide the information and service the guest desires. 5. Continue efforts to work together on marketing programs and not simply compete for phone calls. 6. Explore re-formatting our business model in light of Local Marketing District funding mechanism. Though we are really dealing with a small percentage of the overall lodging business in the community, it is clear that developing a simple means of "purchasing" a Vail vacation, particularly for those who are unfamiliar with our resort, is a critical step for future growth.