Revenue Management

A business strategy that involves applying the rational to business behaviour = operational decisions are taken on the basis of envisaged goals or targets.

What do we want?

Efficency

Cost Reduction (of course!)

PLUS

Customer Service

Choice

Quality

Flexibility

PAST DILEMMA

Management strategy was rare - most management was 'fire fighting'

TODAYBusiness Strategy = an all encompassing corporate philosophy

The Customer

The Organisation The Employees

The Rational and Irrational in Business

The Organization

But business success is not always a rational process.

Success = a product of chance, location, time, demand, free thought …..

But also

Information flows, financial monitoring, people management, marketing…..

SO

The IDEAL strategy links all the above but not in a mechanical way, but as a decision making support system.

'What can we use data for next?'(Paul Dermody DeVere Hotels)

Example Tactics

Control Guest Mix Track Room Inventory Set Restrictions/Be Flexible(Save product for the right guest, min. rates, packages, upgrades, discounts etc….)

BUT

This cannot be done without Information

YIELD = Revenue RealisedRevenue Potential

Terms: RevPar Hurdle RateFloor Rate Ceiling RateDiscount AllocationsCapacity ManagementDuration ControlRevPOR/RevContPAR

So let’s make some decisions

1. Small Case Studies

(Qualitative Information)

2. Displacement Exercises

(Quantitative Information)

INFORMATION REQUIRED BY YIELD MANAGEMENT SYSTEMS:

Booking Patterns

Demand Patterns

Overbooking Policy

Price Changes and Effects

Customer Information - integration with PMS, CRS/GDS

(Property Management System)(Customer Reservation System)(Global Distribution System)

Guest/Hotel Relationship

Other Revenue Departments Involvement

Types of Forecasting