Talk to sales
Revenue Management in bus companies

Revenue Management, the way to boost the growth of bus companies

April 16, 2024

Written by Marisol Morelos

At Reservamos SaaS, we have developed specialized technology focused on maximizing the revenue of each partner company and increasing the demand for digital tickets, with the help of our Revenue Management system.

The main objectives for any company are to increase revenue, reduce costs, and maximize profitability. This happens regardless of the sector, as in the ground passenger transportation industry. 

But is it possible to create a perfect strategy to achieve this goal within bus companies? With that goal in mind, at Reservamos SaaS we developed a solution that would give companies all the information, visibility, and operational capabilities needed to achieve business success. 

In our day-to-day work with bus companies, we noticed a lack of specialized Revenue Management tools for this sector. That is why we decided to create BrainPROS, a Revenue Management system that gives precise and agile answers to the questions that companies have about their markets, helping to strengthen their performance and the automation of processes and operations.

Mitl García Martínez, Revenue Management Consultant for Reservamos SaaS, comments in an interview that revenue management is applied in various industries, but is best known in the aviation and hotel sectors, which are pioneers in starting to move their prices according to demand, supply, and seasons.

For example, when you buy a flight you are not aware of the full price. Today you see one price, tomorrow another, and so on. In buses, it is always very clear what the full price is, and from there the discount. In the case of buses, it is very normal for the traveler to look at the discount percentage and how much money is saved. It is a different customer. The airline customer is looking for the cheapest price, and from there, he generates his travel dates. When you travel by bus, you already have the date and you only consult schedules, to choose the cheapest within that day.  –Mitl García Martínez, Revenue Management Consultant for Reservamos SaaS. 

But first let’s look at the implementation of Revenue Management in the bus sector, as well as its main benefits and challenges, to understand what good revenue management looks like and how we boost it through Reservamos SaaS technology.

What is Revenue Management?

Revenue Management, also known as revenue management or demand management, is a business strategy that focuses on maximizing revenue from the sale of products or services. This discipline is commonly used in industries such as hotels, aviation, transportation, hospitality, and entertainment.

Simply put, Revenue Management involves adjusting the pricing, availability, and distribution of a company’s products or services to maximize revenue. It involves understanding market demand, forecasting buying behavior, and making strategic decisions about available supply and pricing at different times and in different sales channels.

Revenue Management uses data analysis, statistical modeling, and optimization techniques to help companies make informed decisions about pricing and capacity management. The goal is to sell the right amount of products or services, at the right price, at the right time, to maximize revenue and profitability.

In the bus sector, Mitl exemplifies that for a single bus, there can be different types of travelers, for example, people traveling for work with expenses covered by their companies, and therefore, price is not important to them. Some need to travel due to an unforeseen circumstance and price is not so important either. However, travelers going on vacation, who plan their trip and care about saving money.

There may be many different factors in which the customer has a different need to spend or not to spend. This is where this part of Revenue Management comes in, which means trying to give them the price they need. -Mitl García Martínez, Revenue Management Consultant for Reservamos SaaS. 

If a bus company, according to Mitl, offers 1,000, 800, 600, and one or two 500 Mexican pesos tickets, it’s going to bring in 20 or 25 passengers. It’s probably not going to generate double the revenue, but it’s going to achieve 10% or 15% more revenue than it would have brought in with a flat strategy where all tickets were set at the same high price. Mitl believes it is important to understand the types of passengers that exist, to know what incentive to give to each one, as well as to take advantage of those who are willing to pay full price in the face of high demand.

How Reservamos SaaS drives Revenue Management?

At Reservamos SaaS we developed BrainPROS, a Revenue Management system, with data science, for the bus sector. This system has 5 modules that provide: monitoring and analysis information on market behavior; intelligent alerts on variations in market supply; indicators to measure the performance of your strategies; and intelligent pricing recommendations to optimize revenue. 

For Mitl, one of the great advantages of BrainPROS is that companies do not require their Revenue Management team to adopt it. BrainPROS is easy to use and the team behind the solution adapts to each company; to provide full support in the development of strategies, as well as consulting for those who have more robust revenue management teams. 

In Reservamos SaaS, the main intention is, on the one hand, to increase the revenue of our partners and, on the other, to maximize demand, so that when you lower the price of some tickets, this does not affect the profitability of the bus. -Mitl García Martínez, Revenue Management Consultant for Reservamos SaaS. 

The Reservamos SaaS ally that has had the greatest impact, according to Mitl, is Roll&Bits, a 100% digital ground transportation company that has focused on digital travelers since 2009. Last year alone it managed to maximize its revenue and achieve a 41% increase in total revenue.

It is very important to constantly monitor the indicators to know if the strategies are working or not. The average ticket is often not enough. You have to look at other factors such as the number of trips, tickets, and outflows; and from there, you get a metric and a clear answer as to whether it is working or not. You have to weigh different metrics and give them the weight that corresponds to each one to take action. With Roll&Bits this part has been very easy. They have had between 2022 and 2023 an 80% year-over-year growth. -Mitl García Martínez, Revenue Management Consultant for Reservamos SaaS. 

Challenges to implementing a Revenue Management Strategy

One of the main challenges for bus companies to adopt Revenue Management strategies, according to Mitl, is to change the idea that offering discounts is synonymous with giving away free bus trips. On the contrary, understand that lowering the price of a bus ticket is a smarter way to sell by knowing how to give the right price to travelers. 

Giving the right price implies understanding peak seasons or days of excessive demand, and establishing a strategy based on that. Some days are blackout days and we know that the whole bus will be full. On those days we try to minimize discounts, whether they are at 0 or a maximum of 15% on two or three tickets, to incentivize passengers who anticipate their trip. -Mitl García Martínez, Revenue Management Consultant for Reservamos SaaS.

Mitl, according to her experience, shares that the companies that dare to do something different and give more aggressive discounts are the ones that are doing better. Such is the case of Roll&Bits, which is growing in a favorable way, where Revenue Management is not the only factor, but it does play a very important role in the company’s growth. 

There are many companies in many industries that do Revenue Management. Movie theaters have been doing it for many years. Any seasonal sale in department stores also includes Revenue Management, because you are playing with an inventory that you have there with which you can generate demand from customers who would not usually buy it. That kind of strategy is also Pricing and it is Revenue Management. You’re not going to know if it works until you test it. 

For Mitl, the best incentive for bus companies that have not yet tried this type of strategy is to invite them to take a calculated risk so that they can perceive the difference between selling flat and selling smart through historical information. In addition to reminding them that this type of strategy is accompanied by analysis and trends, advice, and a smart solution that minimizes these risks. 

Taking risks is important, but always take calculated risks and not just risks for the sake of it. For example, with partner companies that are still discovering and learning about Revenue Management, we have been able to test dynamic pricing strategies on routes with low demand, knowing that we can stop them at any time if they do not work. This flexibility of BrainPROS allows us to transmit security to the companies. The idea is to accompany them in this ‘risk’, to test and show them that they have a huge opportunity for growth. -Mitl García Martínez, Revenue Management Consultant for Reservamos SaaS.

You May Also Like…