2. OUTLINE OF
PRESENTATION
INTRODUCTION
DEFINITION
PRE-CONDITIONS OF REVENUE
MANAGEMENT
GOALS OF REVENUE MANAGEMENT
SECTORS WHERE THE CONCEPT IS APPLIED
REVENUE MANGEMENT LEVERS
CRITICAL FACTORS IN REVENUE
MANGEMENT
REVENUE MANGEMENT CYCLE/PROCESS
BENEFITS OF REVENUE MANAGEMENT
CONCLUSION
3. INTRODUCTION
The concept of R.M originated in the airline
industry(America).
R.M is based on demand and supply factor.
The prices tend to rise when demand exceeds
supply.
The hotel industry’s focus is shifting from high
volume booking to high profit booking.
4. DEFINITION OF R.M/Y.M
It is a technique used to maximize room
revenue.
R.M is selling the right product to the
right customer at the right time for the
right price.
In other words it is a process of
examining and factoring consumer
behavior to achieve max. amount of
profit from perishable inventories(rooms).
5. PRE-CONDITIONS OF R.M:
Product is perishable
Can be sold in advance
Capacity is limited
Market can be segmented
Variable cost are low
Demand varies
6. HOTEL INDUSTRY
APPLICATIONS
The commodity that the hotel sells is time in a
given space, and if it is unsold, revenue is lost
forever.
R.M is composed of a set of demand
forecasting techniques used to determine
whether room rates should be raised or
lowered, and whether a reservation should be
accepted or rejected in order to maximize
revenue.
7. GOALS OF R.M:
The proper goal of a revenue management program is
not to increase average room rates. Neither is it to
increase average occupancy rates.
Revenue management programs must focus on
maximizing the product of the two,
Called as revPAR
9. SECTORS WHERE R.M IS
APPLIED:
Lodging
Car rentals
Cruise liners
Railways
Theatres
Airlines
Food and Beverages outlets
Tourism industry
10.
11. THE R.M LEVERS:
PRICING-pricing should always be profit
oriented and as per the demands and needs
of guests, pricing may vary as per the
segment. Price fencing may also be used.
INVENTORY- as rooms are perishable in
nature therefore different techniques should
be used to sell inventories such as discounted
rates, seasonal rates , overbooking etc. to
gain the revenue at right time.
12.
13. CRITICAL FACTORS IN R.M:
1-CAPACITY MANAGEMENT:
Helps in controlling and limiting supply.
Balancing the risk of overselling.
Determining how many walk-ins to accept during
the day of arrival.
2-DISCOUNT ALLOCATION:
Involves restricting the time period and product
mix available at discounted rates.
Limiting discounts by room type through
encouraging upselling.
Focus on maximizing revenue in lean season.
14. 3- DURATION CONTROL:
Places time barrier on accepting reservations
in order to protect sufficient space for multi-
day request.
Using closed to arrival technique to restrict
and encouraging early checkouts for transient
guests.
16. 1-FORECASTING DEMAND
It is done through collection of data called as
forecasting data which includes:
Historical data
Booking pattern and pace
Length of stay pattern
Cancellations and No-shows pattern
Estimation of unconstrained demand
List of special events, MICE etc.
17. 2- OPTIMIZING DEMAND
The optimization of demand is the brain of
any revenue management system, automated
or manual.
This is the place where all of the information
is assimilated and analyzed in order to decide
which bookings to accept and which bookings
to reject.
18. 3-CONTROLLING DEMAND
It means controlling the demand with respect to
capacity of hotel.
To control demand length-of-stay may be
reduced and price may be increased.
4- MONITORING DEMAND
o It helps in comparison actual v/s estimated
demand.
o Judging the accuracy of forecast data.
19. BENEFITS OF R.M:
Improved forecasting.
Improved pricing and decision making
Coordination between front office and sales
division increases.
Identification of market segment.
Determination of discounting activities.
Establishment of value -based rate structure.