Revenue management is a long-term strategy that optimizes hotel income during periods of high and low demand. It involves segmenting the market and adapting services to customer needs in terms of time, price, and distribution. The six steps that define revenue management are: (1) data collection, (2) interpretation of information, (3) preparation of the hotel forecast, (4) pricing and distribution strategy, (5) implementation, and (6) results analysis. Revenue management is based on collecting data on customers and their purchasing habits to inform price and distribution strategies aimed at maximizing profits.

1. HOTEL
REVENUE
MANAGEMENT

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3. Revenue Management
is . ..
“Selling the right
product
to the rightcustomer
at the righttime
for the right price.”
Robert G. Cross Aeronomics

4. Revenue Management
is also . . .
A COMBINATION OF
PEOPLE
&
SYSTEM
S
all working toward completion of the
revenue cycle

5. Revenue Cycle

6. Revenue Cycle

7. Maximizing Revenue throughPricing
Hotel GM
Maximize
Revenue
How do we price ourproduct?
Using:
Rational Pricing
Total Hotel Pricing Process

8. A Logical Reason exists for everyrate
Customers can be segmentedaccording to
their needs, buying behavior and
willingness to pay
We define variable, market-basedpricing
designed to maximize revenue and profits
What is RationalPricing?

9. OCCUPANCY FORMULA

10. ARR FORMULA

11. REVPAR FORMULA

14. Revenue management is a long-term management strategy with immediate
results that optimise the income of a hotel establishment during periods of
high and low demand.
As such, revenue management could be defined as a demand behaviour
prediction technique, the aim of which is to increase a hotel’s income. More
specifically, revenue management can be considered a formula that enables
a room to be sold today at a specific price, with the certainty demand at
higher prices does not exist.
In this regard, revenue management enables us to segment the market,
adapting our service to the needs of the client in terms of time, price and
distribution.

15. (1) Data collection
Correct revenue management should be based on the collection of a series of data that enables
decision making, which translates into price and distribution strategies. Consequently, all the
information obtained related to clients and their purchasing habits becomes essential for any
revenue manager.
Booking dates, rates, available rooms, no-shows, cancellations, room types, etc. are some of this
essential data. This means a good booking integrated with the hotel’s property management system
(PMS) and channel manager can be the difference between optimising income long term and
surviving in the short term without future guarantees.
Revenue management is founded on six steps defined
below:

16. Revenue management is founded on six steps defined
below:
(2) Interpretation of information
Interpreting the data collected is the basis for the production of the sales
forecast as well as pricing and distribution strategies.
A revenue manager has a complicated task and must focus on the
segmentation of the market, or focus on the creation of homogeneous
groups of clients that are, within each group, heterogeneous. The client
is equal to demand.

17. Revenue management is founded on six steps defined
below:
(3) Preparation of the hotel forecast
When preparing the sales or hotel forecast, precision is decisive in
obtaining a measurement of demand, which includes periods of
peaks and troughs in activity. This forecast enables you to react when
faced with periods of low demand, design different rate levels, and
choose the optimal distribution channels for the management of
bookings.

18. Revenue management is founded on six steps defined
below:
(4) Pricing and distribution strategy
Defining your pricing and optimal distribution channels
strategy is the step prior to fully engaging in revenue
management. As such, you must consider concepts such
as parity and value, given that positioning a price is not
simple.

19. Revenue management is founded on six steps defined
below:
(5) Implementation
Putting the designed strategy into practise will also require time and planning in particular. Two essential
issues are raised:
(5.1.) Technological development and solutions. Currently, new technologies offer solutions that enable us
to easily implement our revenue strategy. These developments gather data from the PMS and, depending
on your needs, offer the chance to perform different analyses that facilitate the decision making process.
Revenue Management Systems (RMSs) are an option. However, when trying to set prices in accordance
with competitors, distribution channels, pick up or booking pace and, in addition, you are the one who sets
your own business rules, there are other solutions that better adapt to your hotel’s needs.
This is the case with a Distribution Manager System (DMS), a new revenue management solution that
Paraty Tech will present at FITUR.
(5.2.) Training of employees. Revenue management must involve every staff member at the hotel, which is
why training becomes a powerful ally.

20. Revenue management is founded on six steps defined
below:
(6) Results analysis
Monitoring results through completing periodic reports that enable
comparisons to be made is another key point in revenue management.
Without an exhaustive analysis of results, it is impossible to establish
corrective measures that allow you to optimise revenue management.

21. Room Rate
Structure
• The combination of all the rates offered at a hotel is called the rate structure.
• Hotel room rates are both quantifiable and qualifiable.
• Average Daily Rate (ADR) is a term used in different ways. In this analysis, it is used to
determine a starting point in establishing a hotel’s rate structure

22. Place your screenshot here
22
Cost
Level of
services
Location
Target
market
Competition
Factors Affecting Room Rate

23. The Hubbart Formula
Roy Hubbart developed a method to calculate a hotel room rate based
on the costs incurred in operating the hotel and a reasonable return on
investment for the investors
The Hubbart Formula incorporates three schedules. I looks at specific
financial calculations, II looks at the rates per occupied room, and III
incorporates square footage into the analysis.

24. QUIZ
Question :
Name the six steps that define Revenue management
Please answer the questions above and email to:
dinoleonandri@stptrisakti.ac.id
by email no later than 1 week ahead.
In the email subject, write the name of the campus, course and class
example :
1. Poltekpar Plb/DIK 6A/Hospitality Business
2. STPT/Class AJ/Revenue Management
3. Poltek Intl Jkt/AJ/Hotel Management

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