Revenue Management's Renaissance

Abstract

The era has ended when revenue management can stand alone as a tactical approach to room management. With technological and management support, revenue management must be and is being integrated into all aspects of hotel management marketing and operating strategies. Going beyond its role of managing room inventory, revenue management will consider total revenue contributions, including group business and its ancillary revenues. Because prices are essentially transparent, hotels will need to consider customer price elasticity and not simply match competitors' prices, with a goal of optimizing prices. Beyond that, revenue management can be used to manage all of the hotel's revenue streams, in part by considering the interaction of room sales and food and beverage sales. While revenue per available room (RevPAR) has been a good measure of performance, a revenue generation index, which compares competitors' RevPARs, is even more useful. Even more sophisticated is a revenue opportunity model, which monitors the effectiveness of inventory controls and analyzes the effects of revenue management decisions. Perhaps most promising is a customer-focused approach that tracks customers' purchases and targets promotions based on an understanding of customers' responses to prior offers.

To explore the software applications in revenue management and the impact of these pplications: based on a case study of upscale hotels in Bogotá

“…Another of the conclusions that this research reached was to validate the trend of rm as customer centric, mentioned by previous research (Cross, Higbie & Cross, 2009;noone, mCguire & roHFs, 2011) This research concludes and confirmed previous research that mentioned the strategy role of rm in the hotels (rannou anD melli, D., 2003;Cross, Higbie & Cross, 2009;kimes, s., 2010).…”

“…This research corroborates and validates the new skills required for Revenue Manager that earlier author mentioned (maC viCar anD roDger, 1996;kimes, s., 2008piCColi, 2008;brotHertHon anD mooney, 1992;Cross, Higbie & Cross, 2009;emeksiz, gursoy & iCoz 2006;griFFin, 1997). Where these skills were more focused on analytical skills than in operational skills such as rooms background .…”

“…Nevertheless this research would advise hotels to implement the rm applications because that creates a competitive advantage for the hotels (Cross, Higbie & Cross, 2009;kimes, s., 2010) and the sooner they install the rm applications, they will have an advantage over competition. This research found that the hotels that have rm applications do not have all of the features available in the market for rm applications so this research recommends upscale hotels in Bogota to look for rm application that have more of the features requires to manage rm.…”

The relationships among supply chain partnerships, customer orientation, and operational performance: the effect of flexibility

“…Previous research on literature stated that firms increase revenue through strategic orientation and the rate of innovation in the food service industry (Cross et al 2009;Dolores López-Gamero et al 2011;Rahman 2010). However, few studies have systematically investigated the relationship between integrated customer view and operational performance for food service companies.…”

Revisiting the relevance of economic theory to hotel revenue management education and practice in the era of Big Data

“…The concern around Big Data is that managers might rely too much on the increased automation of data collection and turn their backs on intuition and instinct. Although price and revenue management decisions made in hotels are increasingly automated, particularly within major global brands such as Intercontinental Hotel Group (Koushik et al, 2012), the need for managers to understand the driving economic forces influencing the market and pricing are still necessary as a sense-check for the decisions made by automated revenue management systems, as part of the blend of art and science of revenue management (Cross et al, 2009). Some academics would argue that relying on Big Data in decisionmaking actually removes ambiguity and leads to more accurate decision-making (Davenport & Harris, 2007;Liberatore & Luo, 2010), but possibly in hospitality where human interactions are so central to the process, experience, intuition and instinct can still play a vital part in helping managers and employees make sense of and interpret data.…”