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Revenue Management Lecture 1 : - Coggle Diagram
Revenue Management Lecture 1 :
Revenue management is the technique of planning to achieve maximum room rates and most profitable guests.
most revenue
right product
right time
right channel
right customer
capacity-constrained service firms
time-perishable supply
Time-variable demand to maximise revenue
Areas of Disciplines
Economic
Market: is there a demand?
Forecast: future demand?
Cost
Scarcity: opportunity costs
Elasticity: price sensitivity
Marketing
Individual buying decisions
Group purchasing dynamics
4Ps of marketing
Psychology
Motivation for purchases
Finance
Future and current value of money
Domestic monetary supply: strength of currency
Global monetary policies: how to move forward as an organisation
Strategic management
Strategic revenue plan for the organisation
Development History of revenue management
Originated from Yield Management
yield = maximum potential of a product
rack rate of a room
= maximum the room can be sold for
= total yield
Yield Management started from Airline industry following deregulations (1970s)
which fare to offer on which flight to which market
how many seats to sell at each price for each flight
e.g. promotional rates, groups of 2 rates (SQ)
Yield Management System (American Airlines Mid 1980s)
stored data and information = competitive marketing information
analysing characteristics of each flight for each day - Business vs Leisure
assigned a value to each seat on each flight
Analyzed the booking pace/ pattern , how the reservations are coming in
Criteria for Revenue Management
Relatively fixed Capacity
Limited inventory
Time-Perishable Inventory
when night is over, product cannot be sold again on the next day
Time-varaible demand
some time periods have higher demand than others
Advance reservation
ability to see ahead and plan whether to accept reservation or not
Appropriate cost structure
correct balance of fixed and variable cost
ideal: fixed cost is high, variable is low
fixed: cost that has already been spent
variable = amount of money for every item sold
Segmentable market
different price for differerent market
Revenue Management in Hotel
active part of hotel management
new operational position emerged
reports to general manager and works closely with marketing and sales
oversees room inventory, rates offered throughout the year through various channels
identifies trends and methods to reach trends
types of revenue management operations
On-property RM
revenue manager resides on property
most logical
exposure to conversations in all areas is absolutely critical
Centralised RM
centralized/regionalized
covers cities or regions, makes revenue decision on behalf of clusters of hotels
level of responsibilities depend on:
no. of hotels
geographical location
types of hotels
may have someone on property to work with regional revenue director
Out-sourced (3rd Party) RM
not widespread
engage 3rd party provider, consultancy approach
optional fee-based service, pay for the type and amount of revenue services they require
RM location is not predetermined by hotel's location
Operates virtually and visits the hotels on predetermined schedule