Revenue Management
Selling the Right Room to the Right Client at the Right Moment at the Right Price On the Right Distribution Channel with the best commission efficiency.
Revenue management helps to predict consumer demand to optimize inventory and price availability in order to maximize revenue growth. The purpose of Revenue Management is not selling a room today at a low price to sell it tomorrow at a higher price. Revenue Management also means selling a room at a low price today if you do not expect higher demand.
Revenue Management challenges the resources in the importance of gathering information about the market so that you can be proactive and not reactive. Use the information to divide your market and adjust your products through distribution, to the right customer at the right time and at the right price.
Revenue Management is a concept that not only maximizes in high period demand, but it also helps stimulating demand in low periods while avoiding pricing cannibalism. Revenue Management is long term strategic, takes all revenue with its profitability into consideration, can sell low rates even in a high demand period.
What makes hotels suitable to be able to apply Revenue Management
- fixed capacity
- perishable product
- high fixed costs and low variable costs
- the product can be priced differently
- demand evolves
- the product can be sold in advance
- the market can be segmented
Revenue Management started with the Airline Industry. But today many more industries use Revenue Management:
- Hotels
- Car rental, Train companies
- Theatres, Cinema
- Now starts with Restaurants
Revenue Management is more than a technique for creating prices. It is a philosophy and a culture that must be implemented throughout the hotel.
A key question for Revenue management is:
Are you ready to say No to business? General management, Sales and Reservations need to agree on the same vision and objectives. Conflicts can happen! Weekly meetings are necessary to share. Set short, medium and long term strategy together. Decisions must be based on knowledge, not on feelings!
Knowledge on:
- Clients
- Pricing
- Events
- History
- Competition
- Distribution Systems