This application claims the benefit under 35 U.S.C. §120 of prior U.S. Provisional Patent Application Ser. No. 60/151,659 filed Aug. 31, 1999, entitled SYSTEM AND METHOD FOR FACILITATING THE SALE OF A TRAVEL PRODUCT.
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Currently, many airlines employ revenue management systems (RMS), such as the Talus™ AirRMS, in an attempt to allocate inventory more effectively to appropriate fare classes. By periodically adjusting the inventory available in a given fare class, an airline can more nearly optimize the revenue generated through the sale of inventory. As the flight date approaches, more inventory tends to be allocated to the more expensive fare classes. As such, airlines are able to ensure that they are charging the least price-sensitive segment of their customer base a near optimal price. The price-bias of such a system is designed to target different population segments in which customers fall.
One way to measure the effects of the price-bias or restrictive-bias associated with a given flight is to measure the load factor associated with a given flight. A load factor is defined as a percentage of tickets currently booked for a given flight as compared to the total number of tickets available for the flight. For example, a 95% load factor associated with a given flight indicates that 95% of the tickets that are available for the flight have been booked, with 5% remaining unbooked. Typically a small load factor indicates that tickets were too expensively priced or that there were too many restrictions imposed for the given flight, thereby discouraging customers from purchasing them. Conversely, large load factors typically indicate that prices were not expensive enough or that the imposed restrictions were not strict enough. In such cases an airline may have traded higher margins for a larger volume of ticket sales that may result in a dilutionary effect on over-all sales in the long run.
By under-booking a flight (e.g., allocating a relatively greater amount of inventory to more expensive fare classes so as to purposefully not sell all available inventory), an airline is able to insure that tickets are not sold at too inexpensive a price. By over-booking a flight (i.e., purposefully booking too many tickets) the airline is able to account for “no-shows”, or customers who purchase a ticket but fail to arrive at the appropriate airport gate in time for departure. Using known revenue management techniques, airlines can estimate how much to under-book or over-book a given flight based on such factors as the historical and current demand for the given flight. Both under-booking and over-booking levels are measured by load factors. For example, an airline may determine that the appropriate booking level for a given flight may be 105% (e.g., on a 100 seat flight, 105 tickets should be booked). Similarly, an airline may determine that the appropriate booking level for a given flight may be 75% (e.g., on a 100 seat flight, only 75 tickets should be booked).
Airline customers generally may be categorized as either business travelers or leisure travelers. Business travelers are typically less price-sensitive than leisure travelers, but are also less flexible in their travel arrangements. Accordingly, by associating certain travel restrictions with discounted fare classes, airlines can successfully “fence out” business travelers from purchasing discount tickets. This is done because business travelers typically have the resources to afford more expensive fares. Imposing such restrictions creates a restrictive-bias designed to separate an airline's customer base into different groups, each group having different price sensitivity and travel flexibility.
For many travelers, especially leisure travelers, the inconvenience associated with making slight alterations to a given set of travel plans is relatively low. Leisure travelers typically make their travel arrangements well in advance and are receptive to changing those arrangements, especially if a benefit of some sort is offered to them. The advantage an airline can gain from such changes in travel plans is relatively high. For example, an airline will often overbook a given flight and subsequently offer benefits to customers who agree to travel on a different flight. The increased revenue in ticket sales from overbooking gained by the airline typically exceeds the cost associated with moving overbooked passengers from one flight to another. Leisure travelers who agree to be “bumped” from one flight to another typically perceive the benefit gained to be greater than the inconvenience of switching flights. By increasing their ability to bump customers, and thereby more efficiently control the demand for various itineraries, airlines could substantially increase their revenue.
For the foregoing reasons, there is a need for a system and method of facilitating the sale of travel products while maintaining both a price bias and a product bias.
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The present method and system is directed to a system and method that satisfies this need by proactively marketing alternative travel products, the sale of which are economically more beneficial to the seller than the sale of the requested travel product.
The method and system disclosed herein enables merchants of travel products, such as airlines, to more effectively sell their inventory by more evenly distributing customer demand across available inventory. Generally, the present method and system enables merchants of travel products to shape customer demand to more accurately correspond to available inventory by proactively marketing certain travel products over others on a per transaction basis. In addition, the presently disclosed method and system can reduce the amount of overbooking that is necessary for a given flight, thereby reducing the that may result from prior overbooking methods.
One embodiment of the present method and system provides for (1) receiving a travel inquiry from a requester, (2) retrieving a requested travel product and at least one alternate travel product based on the travel inquiry, (3) determining whether the alternate travel product has greater value to the seller than the preferred travel product, (4) transmitting an offer to sell an alternative travel product having a greater value to the seller if sold than the preferred travel product and (5) receiving an acceptance to purchase the alternate travel product.
According to further aspects of the method and system, in determining whether the sale of the alternate travel product has a greater value to the seller than the sale of the preferred travel product, the merchant server may consider the inventory, profit margin, current load factor, potential load factor and/or the load factor discrepancy between the preferred travel product and the alternate travel product.
In accordance with other aspects of the method and system, a benefit is offered in conjunction with the alternate travel product. The benefit is selected based on a benefit rating associated with the alternate travel products. The larger the difference between the preferred travel product and the alternate travel product the greater the benefit rating associated with the alternate travel product. The benefit may include additional frequent flier miles, a price discount, a traveling class upgrade and/or a package deal including other travel products.
These embodiments of the method and system provides travel product providers, such as airlines, hotels and car rental agencies, with a system and, method for maximizing revenues by directing travelers to travel products that are economically more beneficial to the seller. For example, an airline may benefit by directing potential travelers from an almost fully booked flight to a less booked flight or may direct travelers away from an under booked flight so that the under booked flight may be cancelled. Similarly, a hotel may direct travelers away from rooms during an anticipated busy holiday weekend or convention to a less busy time. In this way the hotel will fill the rooms during busy periods with more product sensitive travelers while steering less product sensitive travelers to off-peak times.
BRIEF DESCRIPTION OF THE DRAWINGS
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These and other features, aspects and advantages of the present method and system will become better understood with regard to the following description, appended claims and accompanying drawings where:
FIG. 1 is a block diagram depicting an overview of the inventive system.
FIG. 2 is a block diagram depicting a merchant server of FIG. 1.
FIG. 3 is a block diagram depicting a RMS of FIG. 1.
FIG. 4 is a tabular representation of an itinerary database maintained by a merchant server depicted in FIG. 2.
FIGS. 5A and 5B are tabular representations of an inventory database maintained by a RMS shown in FIG. 3.
FIG. 6 is a tabular representation of a benefit rating database used by a merchant server shown in FIG. 2.
FIG. 7 is a tabular representation of a benefit database used by a merchant server shown in FIG. 2.
FIG. 8 is a tabular representation of a requester database used by a merchant server shown in FIG. 2.
FIG. 9 is a flow chart illustrating a method for processing the sale of an airline ticket performed by a merchant server shown in FIG. 2.
FIG. 10 is a flow chart illustrating a subroutine of the method performed in FIG. 8 for determining an alternate itinerary based on profit margin.
FIG. 11 is a flow chart illustrating a subroutine of the method performed in FIG. 8 for determining an alternate itinerary based on load factors.
FIG. 12 is a flow chart illustrating a subroutine of the method performed in FIG. 8 for determining an alternate itinerary based on the class of the preferred itinerary.
FIG. 13 is a flow chart illustrating a method for selecting a benefit to associate with a travel product.