Revenue management has become a common practice in the travel industry, especially for airlines and hotels. For example, Skift Research published an extensive report in early 2024 detailing decades of evolution in revenue management for the aviation sector. AI has supercharged the practice in hospitality as well. By adopting intelligent revenue management strategies, travel companies have been able to optimize profitability while balancing competitive pricing and customer satisfaction.
Meanwhile, the application of revenue management for intercity ground transportation, including bus travel, is still in its infancy despite the sector being a well-established and practical means of travel for millions worldwide. Ground transportation operators traditionally rely on static pricing or step-pricing — changing prices based on rules such as how many days before departure, tickets sold, etc. — and they’ve also been slow to adopt the dynamic, data-driven revenue management models that airlines have deployed so successfully. But that is changing.
Of course, intercity ground transportation differs in one critical facet from aviation: most flights are point-to-point, whereas bus schedules are frequently multi-stop. While flights are often booked several months in advance, bus travelers often book on the day of departure. What’s more, bus companies face huge fluctuations in passenger demand. It’s also a very price-sensitive market.
Accounting for those nuanced differences, ground transportation may still apply revenue management rules to increase sales and operational efficiency.
In May 2024, Busbud, a global ground travel booking platform, announced the acquisition of Ratality, a provider of revenue management optimization software for ground travel operators. Together, they will offer game-changing features in ground transportation revenue management, including demand forecasting, dynamic pricing, fleet management, and driver management.
“There is an awakening in the bus industry, and granular control over route pricing is replacing the one-size-fits-all approach,” said Corne de Waal, Ratality’s co-founder. “In the past, there was one strategy for all departures, but there’s a need to treat each departure differently.”
Forecasting for Fluctuating Demand
One of the biggest challenges for bus revenue management is fluctuation in demand. Booking trends are often last-minute, with changes made right up until departure. This makes building an accurate forecast very difficult.
“We often hear of bus operators using intuition and on-the-ground knowledge to try and estimate at scale, which is very challenging for a single person to do,” said Mike Gradek, co-founder and CTO, Busbud. “With Busbud, these business leaders now have something that can help them do their job much more effectively. They can really start leaning into that data to create much more competitive pricing.”
Once operators have a demand forecast, they can proactively manage prices, no matter how many trips are scheduled or how far into the future they will occur.
“We’ve observed significant revenue increases, especially for future departures,” said de Waal. “Typically, bus operators focus on departures within the next two to three weeks. By the time they assess high-demand departures further out, often 50 percent or more are already sold out — often on low rates — leaving them unable to maximize revenues on those departures. Integrating revenue management with demand forecasting helps prevent such situations, as all future departures will be automatically optimized daily.”
The Role of AI in Bus Revenue Management
No operator wants to drive an empty bus. But oftentimes, somewhere along a route, demand may change, and suddenly, the bus will be sold out. Because each segment of the journey represents a perishable inventory, manually forecasting and pricing for each segment is daunting, complex, and practically impossible. This is where AI comes in, capturing, calculating, and analyzing thousands of potential segments in real time.
Utilizing specialized AI algorithms that consider historical and current booking trends, along with real-time demand, Busbud delivers AI-powered forecasting to predict future demand for each departure.
This real-time data analysis enables quick, automated responses to demand fluctuations and market shifts, identifying high-demand periods and unusual spikes, monitoring competitors, and converting all this data into automated pricing actions.
“It’s important to target outliers,” said de Waal. “If you’re looking at 2,000 departures per day, you need a system to show you the most important ones. AI identifies those outliers. Bus operators don’t want to spend hours making $1 or $2 or $3 more per departure, although it adds up. They want to spend their time where it matters most. That’s the power of revenue management.”
These types of changes resonate with consumers as well, since they are already used to dealing with online travel agents (OTAs) for flights and hotels. Booking a bus online is a natural step. Giving them the ability to do so has led to a shift in booking habits, as passengers will book earlier to secure the best rates. A better view of availability before their journey means that price-sensitive passengers are opting for off-peak periods, helping operators ease peak-time congestion and optimize trip revenues.
This also enables ground transportation operators to deliver a better customer experience, as passenger load factors are managed, leading to fewer empty seats and targeted offerings.
“The whole idea of booking early resonated with the market. Operators started to catch new market segments that they were not capturing earlier,” de Waal explained.
To learn more about Busbud, click here. Or email us at [email protected].
This content was created collaboratively by Busbud and Skift’s branded content studio, SkiftX.
