Introduction to Revenue Management


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A basic introduction to Hotel Revenue Management

Published in: Education, Travel, Business

Introduction to Revenue Management

  1. 1. Introduction to Revenue Management by Bijoy-Gaurav Sengupta bijjoy_sen@yahoo.com29/05/12 1
  2. 2. Have you ever sold any of your belongings?29/05/12 2
  3. 3. 29/05/12 3
  4. 4. How did you feel?29/05/12 4
  5. 5. What if you had a ‘friend’ who could advise you about:• Who is looking?• How many people are looking?• Where are they located?• How badly are people looking?• How much can they pay?• What should be the price?• Should you wait now and sell later?• Should you sell now rather than waiting?29/05/12 5
  6. 6. Common DefinitionsSelling the right product,to the right customer,at the right time,at the right price.The art of turning away business…29/05/12 6
  7. 7. History of Revenue Management Mid 1970s – Deregulation of airlines. Early 1980s – American Airlines and Delta start early bird. Late 1980s – Creation of Pricing levels and hurdles. 1990s – Advent of Low cost carrier business models. 1990s – Car rentals and hotels copy the Revenue Management model. 1990s – Investment in Revenue Management Systems. Mid 1990s – Hotels start hiring Revenue Managers (US & Europe). Late 1990s – Hotel Revenue Management concept adopted by Asian Hotels. 2000s – Hotel chains start investing in customized RM tools. Current decade – Function Space, spa, restaurants.29/05/12 7
  8. 8. Revenue Management is not Finance!Revenue Management is not Reservations! It is about -Taking decisions which shape the business mix of a hotel with the intention of maximizing revenue. It is about getting the best business mix.29/05/12 8
  9. 9. Business Mix Rs. 10,000 Rs. 7,000 Rs. 6,000 Rs. 5,000Rate Rs. 4,500 Transient Rs. 4,000 Negotiated Corporate Groups Discount Wholesalers Crew/Long Stay 10% 5% 5% 35% 25% 20% Rooms 29/05/12 9
  10. 10. Who uses Revenue Management?29/05/12 10
  11. 11. Studies have shown that a hotel with a Revenue Manager can make 4% more revenue than a hotel without one. Total Room Revenue = 40,00,00,000 4% = 1,60,00,00029/05/12 11
  12. 12. Does it now make sense to hire a Revenue Manager?29/05/12 12
  13. 13. Thank YouFor Revenue Manager on Hire, Call +91 9830282228