• Revenue management & it’s application in the hotel industry • Revenue Management • Revenue: Money that hotel collects from the sale of rooms or from the sales of product & services • Revenue Management: The process of examining & factoring in consumer behavior to achieve the max. amount of profit from a perishable good. • Revenue Manager: Individual responsible for decision making necessary to maximize the property’s long term RevPar. • What is Revenue Management?? • It is an umbrella term for a set of strategies that enable capacity constrained service industries to realize optimum revenue from operations. • Making the very best use of product is yield management. • Therefore, yield management is the management in the terms of maximizing revenue generation and also called as Revenue Management or Revenue Enhancing Technique. • “The hotel’s aim should be high profit business rather than high volume business”. • Objectives of Revenue Management • Role of Revenue Manager • Yield Management Team • Benefits of Yield Management • Measuring Yield • Revenue Management Tools • Revenue Management Software • Software should be much faster and more accurate. • System should be able to monitor & mange risk automatically. • Identify the dates when demand is low/high & revenue is low/high. • Software should be able to guide about the provision about the special events/festivals etc. • At last a repot to be printed suggesting about the amendments in terms of rates, occupancy, revenue etc, for maximum benefit of organization. • Conclusion Revenue management is system that attempts to understand, anticipate and then react to consumer behavior in order to maximize profit. Therefore, a revenue manger should be able to decide a room should be sold on rack rate for a day or two would be more profitable for the same room sold at discounted rate for a longer time which is the main objective of revenue management. Thus a yield management team should predict the demand of the rooms, allocate the right number of rooms to various market segments by using revenue management tools in order to maximize the occupancy so as to maximize and optimize profit.

1. Revenue management & it’s application in the
hotel industry
Made By:
Mudit Grover

2. Revenue Management
• Revenue: Money that hotel collects from the sale of rooms or
from the sales of product & services
• Revenue Management: The process of examining & factoring
in consumer behavior to achieve the max. amount of profit
from a perishable good.
• Revenue Manager: Individual responsible for decision
making necessary to maximize the property’s long term
RevPar.

3. What is Revenue Management??
• It is an umbrella term for a set of strategies that enable
capacity constrained service industries to realize optimum
revenue from operations.
• Making the very best use of product is yield management.
• Therefore, yield management is the management in the terms
of maximizing revenue generation and also called as Revenue
Management or Revenue Enhancing Technique.
• “The hotel’s aim should be high profit business rather
than high volume business”.

4. Objectives of Revenue Management
> Demand of rooms can be divided into clear market
segments.
• Each of these segments are prepared to pay different amounts for
the rooms.
> Physically identical product can be sold to different
market segments for different booking condition.
• Marginal cost of selling an additional room is low.
> Demand for the room fluctuates and can’t be
predicted with a high degree of uncertainty.

5. Role of Revenue Manager
Implements revenue
management strategies in
order to maximize and
optimize the revenue.
Focuses on multiple
tasking during his daily
work extended to weekly
task.
Train property mangers
in pricing strategies.
Guides sales and
marketing teams in most
effective positioning for
selling strategies.
Analyze the data to
identify trends and
making a decision of the
hotel rates.

6. Yield Management Team
Role of Team
# To predict the demand of rooms.
# To assess whether to take transients/groups.
# To decide the level of rates to open or close.
# Feedback sessions helps as a guide for future improvement
Sales
Manager
R.D.M./F.O.
Manager
Reservation
Manager
Factors such as
Historical Data,
Expected Walk-ins,
Business Volume at
Different Rates, etc
are also considered.
Opportunist
Selling

7. Benefits of Yield Management
Identification of market segment demand &
Identification of new market.
Improved seasonal
pricing & Inventory
decisions.
Establishment of a
value-based rate
structure.
Increased coordination b/w Front Office &
Sales department.
Determination of
discounting
activities.
Improved
forecasting

8. Measuring YieldActual
Revenue
Potential
Revenue
= (Total no. of rooms) *
(Rack Rate)
Revenue which
could be generated
if all the rooms
were sold on rack
rate.
=(Rev PAR) * (Total
Rooms)
Revenue
generated by sale
on discounted
rate.
Note:
Rev PAR = (Occupancy%) *
(Avg. Daily Rate)
OR
Rev PAR =
Total Room Revenue
Total Rooms
Potential Revenue - A tricky thing
Case 1: Presuming all rooms are
sold on double occupancy & at the
rack rate.
Case 2: Presuming some rooms are
sold on single occupancy and some
at double occupancy.
Yield = Actual Revenue
Potential Revenue

9. Revenue Management Tools
Room Sales
Mix
Projection
• A future forecast of the rooms sale mix.
• Controlling & limiting the room supply.
Discount
Fixation
• Allowing discount on room rates for a specific period.
• Serves 2 purpose:
• Protecting the rooms at a higher rate.
• Encourages upselling
Control of
Reservation
Period
• Reservation department refuses the request of reservation made
by a guest for one night and accepts other reservation of multiple
nights(for higher level of revenue)

10. Revenue Management Software
• Software should be much faster and more accurate.
• System should be able to monitor & mange risk automatically.
• Identify the dates when demand is low/high & revenue is low/high.
• Software should be able to guide about the provision about the special events/festivals etc.
• At last a repot to be printed suggesting about the amendments in terms of rates, occupancy, revenue
etc, for maximum benefit of organization.
PMS Database Data Collection
Collected Data
Screened
Screened Info.
Checked &
Verified
ANALYSIS
Info. Analysis &
used for Deriving
Patterns
DECISION
MAKING
Forecast &
Opportunity Cost
produced
UPDATE &
MONITORING
Reports Produced
Revenue Mgmt. Module of Fidelio software system

11. Conclusion
Revenue management is system that attempts to understand, anticipate
and then react to consumer behavior in order to maximize profit. Therefore,
a revenue manger should be able to decide a room should be sold on rack
rate for a day or two would be more profitable for the same room sold at
discounted rate for a longer time which is the main objective of revenue
management.
Thus a yield management team should predict the demand of the rooms,
allocate the right number of rooms to various market segments by using
revenue management tools in order to maximize the occupancy so as
to maximize and optimize profit.