Group Name: Winny Daud, Andrew Bonito, Allen Chang

Explicit Time-Explicit Space

Office Space

According to CB Richard Ellis (CBRE) press release in late February 2008, the overall demand for office space in Asia remains robust (click here for full report). The demand for premium office space remains strong while the vacancy for such office space is hovering around 4% is most metropolitan Asian cities. This condition causes the increased in prime office rents, for example the rental growth quarter-on-quarter (q-o-q) in Singapore and New Delhi is over 15%.

In Singapore, the office leasing market remains strong even though some MNC companies exercised caution when it comes to renewing their leases, this is due to the uncertainty in the global financial market. As per the report released by CBRE, Singapore prime office rent in central business district (CBD) is averaging at S$15 per square foot, increasing 19% q-o-q and 92.3% year-on-year(y-o-y). The main demand source for prime office spaces are MNCs and financial institutions. The growth in office rental is not limited to prime offices but office space in general.

Office space has a fixed capacity, high fixed cost, perishable inventory when not utilized and different customer segments. It seems like office space is a perfect candidate for non-traditional revenue management application!

Here are some examples:

1. CapitaLand Commercial Limited (CCL).

CCL is one of the largest office landlords in Singapore. It owns and/or manages 17 buildings ranging from Grade A (prime) offices, industrial properties with high-tech infrastructure, warehouses and car parks.

a. Time: Defined as period of tenancy. Normally, customer controls the period of tenancy but in order for CCL to gain some control over the period of tenancy, CCL imposes minimum occupancy period. This minimum occupancy period depends on the market condition, location of office space and availability, for example for an office in CBD area in a high demand market, CCL might impose a 2 year minimum occupancy period. This is similar to the LOS restriction in hotel context.

b. Space: Defined in square footage. CCL has many different sizes of office space and customers have to find the office size that best fit the company’s needs. In order to manipulate the space size and make more money, fixed office space is sometimes partitioned into several smaller spaces and rented to different tenants. From my experience, CCL also sometimes rent the lobby area as bazaar space; this is normally done in prime areas. As for industrial properties, CCL enhances the space by adding the latest technology on broadband connectivity and communications.

c. Price: CCL practices differential pricing. Rental depends on the market, location and length of tenancy. Rental price in CBD area is much higher than in industrial complexes, office space located in high floor is more expensive than low floor.

2. Regus

Regus is a company that provides an alternative to the traditional office lease; it gives flexibility to its customer. It offers furnished office spaces with IT and telecommunication infrastructure, services such as staffed reception desk, call answering, mailing and also flexible tenancy period. On top of that, Regus offers meeting room rental, videoconferencing and virtual office.

a. Time: Defined as occupancy period and controlled by customers. Unlike traditional office leases, Regus is flexible in the minimum occupancy period requirement. The minimum occupancy for traditional lease is one year while Regus only require 3 months.

b. Space

Space is defined as office functions/rooms. Regus has 7 office room options; they are fulltime office, brand office, project office, startup office, team room, hot desking, touchdown workspaces. Regus has re-defined the traditional way of using square footage to selling space as a solution to companies needs. In order to make more money, Regus provided value added services such as fully furnished office rooms, office equipment, reception area, IT support, security and cleaning service. Companies only need to identify the room that best suit their needs and they are good to go.

c. Price

Regus charges differential pricing depending on the type of office. It also applies rate fences such as length of occupancy, extra value added service, and location

3. Housing Development Board (HDB)

HDB is one of the government bodies that regulate properties in Singapore, it specializes in housing but also regulate the office and commercial site.

a. Time: Defined as tenancy period. The tenancy period is controlled by HDB and it is 3 years.

b. Space: Defined in square meters. The space is fixed and it is determined by HDB, there is no flexibility in space usage.

c. Price: Interestingly, the price is determined by a bidding system (click here to view the bidding panel). HDB provides the minimum bid price for the space and interested customer can bid up and try to outbid each other, hence the rental price is very much determined by supply-demand and also location of the space. Even though HDB does not offer much flexibility in terms of time or space, many Singaporean who own a small enterprise prefers to rent their office from HDB as it is located in a good area (not CBD but near city center) and the rental price is relatively cheaper compared to private office spaces.

4. JTC Corp (JTC)

JTC is another government body that regulates industrial commercial spaces and office space.

a. Time: Defined as tenancy period. The tenancy period if controlled by JTC and the minimum is 3 years.

b. Space: Defined in square meters. The space is fixed and it is determined by JTC but in some location the space is defined by the number of workstation that can fit into the office space. In order to make more money, JTC also offers car park space to the tenants and the car park rental is an addition to the office space rental.

c. Price: JTC offers differential pricing by using location, height and facing as rate fences.

Retail Space

The retail industry is growing steadily in Asia especially in cities like, Singapore, Hong Kong, Macau, Shanghai, Ginza and Shibuya. The y-o-y growth is around 3.9% to 39% and many retailers are growing its market share by going into these cities, especially luxury and top brand retailers. Click here for a complete report on retail industry outlook by Cushman & Wakefield.

In Singapore, the retail industry is going strong especially with government initiative of making Singapore the best destination for shopping. Government also keep driving tourist arrival, developing new retail spaces and renovating old retail spaces. In 2008, the total retail space in Singapore will reach 2.5 million sqft and it would bring a whole new level of shopping experience. Click here for a complete review on Singapore retail industry.

Retail space has a fixed capacity, high fixed cost, perishable inventory when not utilized and different customer segments. It seems like office space is a perfect candidate for non-traditional revenue management application!

Here are some examples:

1. Frasers Centrepoint Malls (FCM)

FCM owns and manages 7 malls, one mall located at Orchard road (main shopping area) and 6 malls at the suburban areas.

a. Time: defined as length of tenancy. Most tenant need to sign an agreement of no less than 2 years. This is controlled by FCM

b. Space: defined in square meters. FCM malls have different mix of retail space and to maximize revenue, FCM rents out walkway spaces to push carts (a temporary shop using movable carts). On top of that FCM malls also have basement car park levels that generate car park revenue from visitors and tenants. In order to attract more visitors, especially mothers, FCM ensures that the malls are equipped with children rooms and play rooms. FCM mall that is located in orchard road also participate in a “Saturday Late Night Shopping” event that is driven by the Singapore government. The shops on Saturdays open till 11 pm.

c. Price: offer differential pricing based on location.

2. Raffles City Shopping Centre (RC)

RC is part of the CapitaLand group. The building is a mixed use building where you have retail space, office space and two hotels.

a. Time: defined as length of tenancy. RC offers a short term leasing plan which enables a start up retailers to test and grow the business. The term is controlled by RC.

b. Space: defined in square meters and it also have different mix of space size. Recently RC went through renovation where it expanded the retail area to the basement parking level. RC also reduced the atrium size and built more retail space. RC has a huge parking space to cater to the office tenant, mall visitors and hotel guests. RC maximizes it space by accepting specialty cart leases on the mall walkway and conducts midnight shopping event. The top floor of RC is also available for event rental such as art exhibitions, fashion shows and other exhibitions.

c. Price: offer differential pricing based on location, length of lease.

3. Housing Development Board (HDB)

HDB is one of the government bodies that regulate properties in Singapore, it specializes in housing but also regulate the office and commercial site.

a. Time: Defined as tenancy period. The tenancy period is controlled by HDB and it is 3 years.

b. Space: Defined in square meters. The space is fixed and it is determined by HDB, there is no flexibility in space usage.

c. Price: Interestingly, the price is determined by a bidding system (click here to view the bidding panel). HDB provides the minimum bid price for the space and interested customer can bid up and try to outbid each other, hence the rental price is very much determined by supply-demand and also location of the space.

4. SMRT

SMRT is a company that operates the rapid train in Singapore and manages the train stations. Since the train stations are normally pretty large is size, SMRT begins to rent out the spaces inside the train stations as retail spaces.

a. Time: defined as tenancy period and it is controlled by SMRT.

b. Space: defined in square meters. SMRT has different mix of retail space and it also offers spaces for push carts and in large train stations, it even offer space for events

c. Price: offers differential pricing based on location and length of tenancy

Explicit Time-Implicit Space

SPA

Spa industry has explicit time component because the consumers have to decide what the types and the length of the services first before they make reservation. Its space factor is implicit because it needs to fulfill its customers’ space requirements, and the prices for its treatment rooms don’t really base on the sizes of the spaces. In other words, its spaces have to be designed in a way that its customers feel comfortable.

http://nymag.com/beauty/features/41280/

• Canyon Ranch at Tucson, Arizona
• Overall: This canyon ranch spa operates not only as a destination resort but also as a medical spa that offers health consultations and check-ups. It only offers all-inclusive packages to its guests with 3 types of accommodations and 3 different lengths of stay. The accommodation consists of Deluxe, Executive and 1-Bedroom Suite.
• Space: Since this is a spa destination hotel, its space is a combination of hotel room and treatment room
• Time: The length of stay consists of 4 nights, 7 nights and 10 nights.
• Price: It has two seasonal rates. For this year, the peak rate period started from September 23, 2007 to June 7, 2008 and the non-peak rate will start from June 8, 2008 to September 18 ,2008.

• Six Senses Hideaway Hua Hin, Thailand
• Overall: This spa company is known for its sustainable approach. It either builds its own spa destination hotel or partners with another hotel and manages the hotel’s spa.
• Space: Its space is the treatment rooms it has.
• Time: It offers many kinds of services with different lengths of treatment times
• Price: It offers a good selection of different services, but the prices for these services stay the same throughout the year.

• Spring City Hot Spring Spa at Taipei, Taiwan
• Overall: This resort is mainly for people to come and enjoy the hot springs. It has two kinds of spa treatments. The first kind consists of typical massage and therapy services. The second kind consists of different kinds of spa rooms with hot spring tubs.
• Space: Space is defined by number of private treatment and hot spring rooms the resort has.
• Time, Price:

Spa Type	Royal Spa	Horoscope Private Hot Spring Spa (24 hrs)
Charge unit	Charged by room	Charged by person
Timing Unit	Every 1.5 hour	Every 1 hour
Price / unit	$80 - $130	$20 per adult
Incremental Price	$30-$50 every 0.5 hour	5 minutes extra counted as 1 hour
People count / unit	2	N/A
Discount	Weekday: 20% off; Holidays: 10% off; none on weekends

• Whole Food Spa
• Overall: Whole food offers spa right in its supermarket now so that its customers not only could do grocery shopping but also could enjoy spa treatments at the same time. It has two kinds of spa right now
• Space, Time, Price:

1. Full Spa at Dallas

o The spa has 7 treatment rooms, and it offers different varieties of treatments. The spa tries to take into account that many of its customers might be busy doing their shopping and could only allocated limited amount of time for in-house spa. As the result, the spa offers services ranging from 5 minutes, 15 minutes, 25 minutes, 50 minutes to 80 minutes.

A link to its menu is right here. http://www.wholefoodsmarket.com/stores/preston/thespa/menu.html

o The spa’s website: http://www.wholefoodsmarket.com/stores/preston/thespa/index.html

2. Mini Spa at San Francisco

o The mini spa doesn’t offer as many services as the full one. Most of the services offered are facials and massages. The shorted time is 10 minutes, and the longest time is 150 minutes. It also uses the space to offer consultation services, which starts $50 for 20 minutes.

• http://www.wholefoodsmarket.com/stores/potrerohill/pth_march_spa.pdf
• http://www.wholefoodsmarket.com/pressroom/pr_09-10-07b.html

Rental Car

Revenue management has been practiced in many rental car companies to better forecast the demands of each location so that they know how to assign their fleet across the locations.

Even though the users can rent cars ranging from hourly to yearly, the time factor for the industry is usually explicit. Users have to specify the length of time they are going to rent the car for, and the rental car companies protect themselves by charging high rates for the users if they don’t return the cars at the time specified in the contract.

Typically, the number of spaces available at each rental car location is defined as the number of the combination of the varieties of cars they have. There are many different types of cars available for rent ranging from small cars to large vans and economic cars to luxurious limos. The space factor is implicit because the rental car companies don’t always rent the cars based on their sizes. They rent the cars usually based on the qualities of the cars, and the users define what type of cars they are looking for. In addition, quite often they change their car type preferences at the last minute, and they don’t return the cars at the time specified in the contract. As the result, it’s hard for the rental car companies to control the types of cars available at each location.

http://ezinearticles.com/?The-Car-Rental-Industry&id=491218

· Hertz

o Overall: As the largest car rental company, Hertz is usually the price leader in the industry. It has complicated revenue management system to look at each location differently to try to allocate the optimal amount of cars at given time. Hertz usually has the best location at airports and it has the most airport office locations than any other rental car company. For example, its researches show that there are always more people driving down from San Francisco to Los Angeles than the other way around. As the result, Hertz would try to allocate more cars in San Francisco to accommodate the needs

o Space: Hertz has more locations than any other car rental company, and usually has a good selection of different car types at each location.

o Time: Hertz rents cars daily, weekly and monthly. For monthly renters, the longer they rent, the cheaper the prices they can get.

o Price: On the average, Hertz usually has higher prices than its competitors and it justifies its prices with higher quality cars and better services. Hertz also partners with different corporate accounts and travel clubs such as AAA to offer special prices. Depending on the seasonality and demands, Hertz’s rental prices vary differently across locations. For a location’s slow period, hertz sometimes would lower its prices below its competitors to increase demands.

· Enterprise

o Overall: Enterprise starts out as an intra-city car rental company that many people use when their cars are in the car shops or when they want to go for a driving vacation. Gradually, Enterprise also targets at business travelers who work around their locations. Compared to Hertz, Enterprise has more presences at small towns.

o Space: Enterprise maintains its fleet at each location by not allowing one-way rental so that it is not too hard for it to keep track of each location’s cars.

o Time: Enterprise rents cars daily, weekly and monthly. Monthly renters do get cheaper prices overall but they have to review the contract every month.

o Price: Compared to Hertz, Enterprise usually has lower prices. Since most of its revenue come from local businesses and people, enterprise offices often partner with nearby businesses to offer special discounts. In addition, enterprise offices also offer discounts to nearby residents to lure them to rent.

· ZipCar

o Overall: The model is that the company put cars strategically around a city to make sure most of their users can access the cars easily. Members around the cars’ neighborhoods can then pick up and return the cars at the same location. The company is membership based with certain restrictions on the driving records. Through the Internet, members could find out the available spots for the cars in their neighborhood and make reservations.

o Space: Since ZipCar’s model distributes its car across a city, it doesn’t really need big locations to store its cars. It probably could control its space better than its competitors because it only offered certain types of cars at each location.

o Time: Contrary to other rental car companies, ZipCar rents the cars both hourly and daily depending on the members’ needs.

o Price: The price varies depends on the type of membership. Users can choose to pay monthly use and get lower usage fees or pay higher usage fees without monthly fees commitment.

· Luxurious Limo

o Overall: There are many limo rental companies across the nation. They offer hourly rental as well as event rentals. For example, they offer services like airport transfer, wedding, party transfer and even tours. Compare to other rental types, limo rentals usually come with drivers, and it can actually control what car that the users will get.

o Space: The space factor for the limo rental industries is based on the various sizes of the limos each company owns.

o Time: Users can rent the limos hourly or for the whole event. If it’s an event rental, the timing factor can become somewhat implicit.

o Price: Prices vary depending on whether the users pay hourly or pay a flat fee for the whole event. The amenities and qualities of the limos can also change the prices.

Implicit Time-Implicit Space

Restaurant Industry

The restaurant industry is primary governed by a sense of explicit time. That is, the time is primarily controlled by the customer. However, there are ways that restaurants can attempt to make time more implicit and under control by them. However, the industry is characterized as having a stigma attached to blatant attempts to make time implicit for the restaurant.

Space in the restaurant industry is defined by “seats.” That is, revenue is generated based on the number of seats that are being filled in a restaurant. Theoretically, the more seats that a restaurant can fill; the more revenue can be generated – other variables aside (duration, price).

http://www.libsci.sc.edu/BOB/class/clis748/Studentwebguides/fall02/Gehman%20-%20Restaurant%20Industry.html

Daisy May’s BBQ (NYC)

Daisy May’s has an interesting way of revenue managing its primary differentiating products. Daisy May’s will sell a whole or ½ pigs, large racks of lamb, or quantities of pork butt that are all taken from freshly spit roasted full animals that are cooked on premises. The revenue management occurs in that they take much of what is traditionally explicit time and implicit space and they seize control over much of this. First, there is a single seating for these items at 8:00 PM. Reservations for some items must be taken with a 2 day advance and deposits are taken to shield the restaurant from cancellations. Second, they specify the amount of people that groups can bring to dine on the products, imposing an additional cover cost of $35 for each additional person. Lastly, the base price is set for the group. Therefore, Daisy May’s attempts to gain control over price, space (seats), and time.

Joe Allen’s (NYC)

Joe Allen has an interesting market mix based on its proximity to the Theatre District. The restaurant, aside from its usual clientele, is a very popular place for the pre-theatre dinner crowd. Here, time is actually implicit in that it’s controlled by the theatre schedule. Space is defined in its usual manner, by seats. The restaurant in this case has control over its prices (which are slightly higher for the pre-theatre dinner crowd) and over the number of seats. Revenue management occurs based on filling the seats for the pre-dinner single seating and variable prices for this time sensitive market. Outside of this time period, time and space becomes explicit again, being controlled by customers.

Shake Shack (NYC)

Shake Shack is a phenomenon that is unlike most restaurant operations. This is a burger, hot dog, and shake stand in the middle of Gramercy Park in NYC. Their operation is a food cart type operation. For this set up, time is implicit, controlled by how fast the stand can create and distribute their products. Customers will wait in line for hours (literally) without deterrence just to get a burger. Therefore, customers are willing to give up their control over time in order to receive the products. Space for this operation is defined in an interesting way. They do not define space based on filling seats – most of their business is local business people who will take the food back to their offices or find other places to eat in the park. The business is not based on filling seats – although some are provided simply as an amenity to the stand. Therefore, space is defined by that which the stand has – how well the business can optimize its operational space to push product out. Revenue is generated by how many burgers a grill of a certain size can create and how quickly it can cook them – for example. This is possible primarily because there is such a constant queue of customers who are willing to give up both time and space to receive their food.

Buddakan (Philly/NYC)

Buddakan has an interesting way of revenue managing its space. For this restaurant, space is defined in the traditional “seats” manner. However, each of the properties has a communal table in the center where guests are sat next to strangers and space filled. Therefore, space, which normally is implicit and controlled by the customer (parties of three still take up four seats usually). However, here, the restaurant makes space at the communal table explicit for the restaurant – seating guests right next to each other and not wasting space on empty seats. Therefore, table mixes and unused seats are moot because the restaurant is able to seize back control – a very common practice in many Asian restaurants. However, time (duration of stay) is still explicit and controlled by the customer; however, the restaurant has found an advantage in that it has gained control over one of the variables.

Theatre

The theatre is place where performers could express their ideas and innovation in form of drama, music, dance and other form of performing arts. There are several theatres that are very famous worldwide such as Broadway in New York and Sydney Opera House in Australia. Some theatres has shows that run for a long time and some just keep changing the shows. This is to drive the audience attendance. Here’s the link to theatre news and review.

The Esplanade

Esplanade is a theatre in Singapore that was built in 2005 and it has a shape of durian (an Asian fruit). The building itself is a mixed use development where there are performing theatres, concert halls, exhibition space, retail space and F&B outlets.

1. Time: it is defined as performance time and it is controlled by the performer. Some performance does have a certain time allocated for their performance but the chances of it extending is quite likely or sometimes people do come earlier than the performance time.
2. Space: it is defined as theatre and concert hall. To make more money, Esplanade actually rent spaces outside the theatre and concert hall as exhibition space. On top of that Esplanade also provides tour of the building and training to performer-to-be. The roof top of the building is rented for events such as wedding and private parties.
3. Price: Esplanade charges differential pricing. The rate fences they use are age restrictions (senior citizens, children), status (students), corporate client or group client. The prices also differ from seats location in the concert hall and theatre. To drive more visitors, Esplanade offers free performance.

Sydney Opera House

Sydney Opera House has 8 venues: concert hall, opera theatre, drama theatre, playhouse, the studio, utzon room, forecourt and recording studio.

1. Time: defined as length of the show plus time before and after the show that customers stay around the venues.
2. Space: defined as capacity for each venue. In addition to the regular shows, the opera house utilizes the space quite extensively. At the times without performance, the opera house conducts tours to its different venues. At the times right before the productions, the opera house offers back stage tours. Some venues also cater for private parties.
3. Price: offer differential pricing based on show, time and venue,

Regal Movie Theaters

Regal Entertainment Group has theaters throughout the whole across ranging from small one screen venue to multi-screen mega movie venues.

1. Time: defined as length of each movie. Compared to other theater types, the movie theater should have explicit time factor because all the movie lengths are set. However, in terms of private screening, the time factor become implicit as patrons may stick around after the private screening is finished.
2. Space: defined as capacity for each screen. In addition to the regular movie showings, it also caters to private party and screenings.
3. Price: Offer differential pricing based on time (matinee), profession(student discount) and day (Tuesday Special)

Outdoor Theaters

Typically in summer, many cities and towns across U.S. have outdoor theater performance in the park. There is usually no regulated seating as people just sit on the lawn space.

1. Time: defined as the length of the performance. Many people do come early and stay late at the performance venues as they tend to come to social and picnic. In addition, some of these events are quite interactive, and the performers might spend more time if they enjoy the crowd. Consequently, it’s not easy to control the time for these events.
2. Space: defined as maximum capacity of the lawn place. However, space is hard to define for these venues because people can try to watch the performances from outside the designated the performance area.
3. Price: offer differential pricing based on the show and time