Revenue Management in Hotel Industry

1015 Words3 Pages
bulb-icon

Recommended: Influence of social media on business profitability

Introduction
Today the use of revenue management is dramatically changed for the past few decades. As revenue management shows its importance in the industry, revenue managers now have more strategic roles than just analyzing and applying opening and closing rates and forecasting them for the next weeks and months. They are now responsible for controlling revenue from other income generating assets at the hotel. They also became closely associated with marketing colleagues and interact with competitors as well as predicting the actions of competitors. Taking all these changes RM evolves much faster as the role.
What is revenue management?
“Revenue management or RM is the process or quinces of actions that allows you to sell the right product to the right customer at the right time for the right price thereby maximizing revenue from a company's products.” (Cross, 1998).
In other words RM is an essential instrument for matching supply and demand by dividing customers into different segments based on their purchase ability and allocating capacity to the different segments in a way that maximizes a particular firm’s revenues (Ivanov, 2012)
Today all the hotel chains and small privately owned hotels have their own revenue plan for a year, 5 years and, in some cases, up to 20 years. Hospitality industry is one of the fastest changing industries; as it’s always have to match the requirements of each client and industry standards. Revenue managers have to deal with new standards of costumer service and high level of competition.

History of revenue management
Revenue management is relatively young discipline. It’s history starting in early 80’s when airline industry start to use revenue management practice after government deregulation...

... middle of paper ...

...
Ivanov, S., & Zhechev, V. (2012). Hotel revenue management - a critical literature review.
Kaplan, A.M and Haenlein, M. (2010) Users of the world, unite! The challenges and opportunities of social media Business Horizons 53 (1) 59-63.
Mahmoud, A. Revenue Management: The Creative Strategies and Additional Sources of Revenue. Retrieved from http://hotelexecutive.com/business_review/ 3191/revenue-management-the-creative-strategies-and-additional-sources-of-revenue
McGuire, K. PhD (2012) Revenue Management Meets Social Media. Retrieved from http://hotelexecutive.com/business_review/2814/revenue-management-meets-social-media-taking-advantage-of-social-data-and-channels
Salerno, N. (2014) A Hotel Marketer’s Guide to Revenue Management. Retrieved from http://www.hotelmarketingcoach.com/ i-Rates About (2014). Retrieved March 21, 2014, from http://www.i-rates.com/about.php

Show More
Related

  • Managing Healthcare Costs and Revenues

    2273 Words  | 5 Pages

    Buchbinder, S. B., & Shanks, N. A. (2007). Managing Costs and Revenues. In (Ed.), Introduction to Healthcare Management ( ed., p. pp. -). : . []. doi: Retrieved from

    Read More

  • Premier Inn Case Study

    1047 Words  | 3 Pages

    This study will make inferences by content analysis in line with “Analyzing the Use of an Advance Booking Curve in Forecasting Hotel Reservations” “Hotel reservation methods--a discriminant analysis of practices in English Hotels” “A comparison of forecasting methods for hotel revenue Management”. As well company information from annual reports (2014 and 2015) will be analyzed with regard to occurred reservation system failures to conclude recommendation for how capacity utilization and demand management can be enhanced by updating current reservation system with better forecasting capabilities.

    Read More

  • Case Analysis Of Qantas Airlines

    1804 Words  | 4 Pages

    A pricing policy that benefits the company is one that does not lead to losses, or low profits that cannot sustain the organization. It is important to note that in a s much as cost leadership strategy, is one of the most efficient strategies that can lead to profitability of the organization, the company must provide high quality services, to be guaranteed of customers. This is because customers are prepared to pay a significant amount of money for a quality service. Furthermore, the BlueJet must know the demand elasticity of the different market segments, as this is an important factor that determines the pricing policy of airline

    Read More

  • Management Analysis of Hilton Hotels

    1797 Words  | 4 Pages

    Hilton Worldwide carries out business through three segments: (1) management and franchise; (2) ownership; and (3) time-share. These business segments enable management to capitalize on strengths like brand recognition and economies of scale. The company focuses primarily on the management and franchise segment which consist of 3,918 hotels with 610,413 rooms. Managing the properties, rather than owning them, allows the company t...

    Read More

  • Casino Marketing Campaign Essay

    1186 Words  | 3 Pages

    Many organizations, including casinos are facing a challenge about how to acquire, enhance, store and manage marketing and operational data. How to collect these data isn’t a problem anymore; it’s converting data into some useful information that finally determines marketing success.

    Read More

  • Fontana Case Study: The Happy Guest Relationship Management System

    1548 Words  | 4 Pages

    The hotel industry performs within a saturated market, driven by customer loyalty and competitive pricing to stand-out. This competitive nature makes it extremely important to capitalise on strengths while improving on

    Read More

  • History of The Ritz-Carlton

    3900 Words  | 8 Pages

    The Ritz-Carlton manages properties for hotel owners (Sucher & McManus, 2001). They charged management fees that were typically 3% of the gross revenues, supplementing their income with revenues from land rent, resort timesharing, franchise fees, management incentives, and profit sharing (Sucher & ...

    Read More

  • Analysis and Description of Yield Management

    1329 Words  | 3 Pages

    Yield management is a technique used in reservations, in a recent analysis by Donaghy et al(2008) the definition of yield management states that ‘Yield management is a revenue maximisation technique which aims to increase net yield through the predicted allocation of available bedroom capacity to predetermined market segments at optimum price’. This practice, used in almost all hotels, can be affected by many issues that can have a detrimental effect on profits, image and productivity.

    Read More

  • Exciting Career of Hotel Managment

    1029 Words  | 3 Pages

    Hotel Management can be described as running or managing a hotel. Hotel managers are in charge of everything from housekeeping and reservations to catering and concierge services. The Hotel industry as a whole benefits from increased travel. It comprises of businesses that provide services, primary accommodations, food and beverages.

    Read More

  • Mandarin Oriental Case Study

    1242 Words  | 3 Pages

    Who is the hotel’s target market and what services do they use to attract and satisfy this market?

    Read More

  • McDonalds Entering the Hotel Market

    1178 Words  | 3 Pages

    The external environment of the hotel industry in is very competitive and already well established. Trends in the market include promotional campaigns to customers using the "more bang for your buck," method. There are several different segments of the hotel industry including: luxury, upscale, mid-market with food and beverage, mid-market without food and beverage, economy, and budget. Each different segment offers certain amenities to appeal to consumers depending on what they are looking for in an over night stay away from home. As McDonald's looks at entering the hotel industry they have looked at several important issues dealing with an entry into this market. McDonald's would like to enter the market in the state of Illinois where the company's headquarters is. Illinois leads all other states in money spent on tourism totaling $61.1 million in the year 2000. Illinois also ranked fourth in the nation for leisure person trips in 2000. Hotel industry has several important barriers to entry including cost of entry, ability to differentiate from other hotels, and competition in every hotel segment.

    Read More

  • Risk Management in Hotel Business

    1325 Words  | 3 Pages

    There are two types of tactical risks impacts upon the Group. One is the risk of losing franchise and management agreements. This is an inherent risk for hotel industry and the Group’s light-asset business model. The intensive competition within the hotel industry may reduce the number of suitable business opportunities offered to the Group and may increase the bargaining position of property owners seeking to become a franchisee or manager.

    Read More

  • Bargaining Power Of Buyers In The Hotel Industry Case Study

    774 Words  | 2 Pages

    Thanks to these factors, pricing becomes one of the primary uses with which hotels attract customers. However, due to customers’ independent nature, there influence over industry players is limited. In the high-end segment of hotels, price influence becomes even less as hotels find it easier to differentiate themselves from the competition and customers become less price sensitive coming to expect higher prices as a symbolism of superior quality and services. Lastly, corporate business and tour operators can exert more influence due to their large purchases but this affect is of a limited nature and does not extend across the whole

    Read More

  • Analysis of Hilton Hotels

    870 Words  | 2 Pages

    The Hotel industry has become very important in the past years due to immense traveling and growth of international business. Hotel industry not only plays an important role in the life of people but as well as the economy of the country. Development and advancement in the Hotel industry have rapidly been taking place and especially since the rapid change in technology, it is very important for hotels to be promptly keeping up to date. When the hotel industry is spoken of, there are many famous hotels but one hotel company that has been outstanding in growth and other aspects of business, like in Leadership, Teamwork (Employee turnover), Motivation (Customer retention and satisfaction, Goals and objectives, (changing the way hotel business has worked), and Change within the company; structurally inside and physically outside, adding elements, like entertainment, gaming, and outdoor activities, is the Hilton Hotel Company.

    Read More

  • Case Study Of Dinner Bell Hotel

    2655 Words  | 6 Pages

    However the cash surplus generated during peak period that is July to November is typically enough to meet the short fall. But this year the hotel requires major renovations in order to be continually be able to attract guests. They estimated that the renovations will cost $250000 but now it appears that $300000 of work is necessary. Also their long term group also manager has also left unexpectedly and her replacement is not as effective in obtaining business from the regional business and organization. Furthermore their revenues have also declined by 15% for January and February and advance booking are also down. Thus a cash flow forecast is made to estimate the

    Read More

More about Revenue Management in Hotel Industry

Open Document