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'

TODAY
Business 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 Realised

Revenue Potential

Terms: RevPar Hurdle Rate

Floor Rate Ceiling Rate
Discount Allocations
Capacity Management
Duration Control
RevPOR/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