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Revenue Management

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Hannah Burnett

on 5 October 2011

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Transcript of Revenue Management

Revenue Management (RM) Definition History Future of RM Revenue Managers A set of strategies that enable capacity-constrained service
industries to realize optimum revenue from operations To provide the right service to the right customer at the right price Developed by the airline industry after government deregulation
in the early 1980's. Was born out of the need to fill a minimum number of seats
without selling every seat at a discount price. 4 Cs of RM Cost Capacity Clock Calendar Calendar Clock Cost Capacity Controlling when the sale or reservation is made Have a logical set of
prices that makes sense to
potential customers Need to have a good idea of when guests will arrive/depart in order to manage demand Match service timeing to customers' willingness to pay for the service Shift demand according to customers' price sensitivites Controlling the duration
of a service cycle Allows guests to be accommodated more effectively Most service firms set their prices using rate fences Rules that discriminate among price categories Analytical skills Leadership skills Communication skills Formal RM education Negotiation skills Characteristics of Becoming more strategic in nature Being applied to all revenue streams within a hotel Being supported by increasingly sophisticated technology Becoming more central to hotel operations Results of RM References http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-13622.html http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-15299.html http://www.hotelmarketingcoach.com/What the heck is Revenue Management.htm Increase revenue Improve the flow of customer demand Why Practice RM? RM is... A series of steps
that a Company goes
through to provide a
service to a customer Minimize wastage of perishable inventory Stimulate market growth by offering
discounts http://www.decisioncraft.com/dmdirect/revenue_management.htm RM Today A tacticle discipline RM is... evaluated by the performance measurement RevPAR Decentralized Aimed at maximizing rooms revenue Revenue gains of 2-8% are not uncommon Leading to profit increases of 50-100% Marriott hotels credits their RM system for additional revenues of $100 million per year! mba.tuck.dartmouth.edu/pages/.../Yield_management_note.PDF
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