Revenue Management : it Should be Called Profit Management

17th Jul 2004

Book Discription

NB. This is an Whitepaper written By:  Mark Haley & Jon Inge 

Revenue Management Future: It Really Should Be Called Profit Management

Over the past several years, revenue management has evolved to include a focus on progression, strategies, forward thinking, and profitability. Today, most hoteliers strive to hire revenue directors that encompass strong leadership and solid communication skills. Revenue directors are now involved in strategy setting for all areas of the hotel and are a vital part of the overall hotel’s success and profitability.

Hotel executives have realized the importance of this position and the need to hire someone who has the ability to bring the hotel to the next level and truly focus on strategies and long-term gain versus data collection and short-term gain. There has been a significant shift in the approach to revenue management. It is now more about looking into the future and staying focused on strategy and optimizing profitability. Today’s focus includes revenue optimization for the entire hotel and all revenue streams versus a singular focus on rooms.

The Changing Role of Revenue Directors

The role of revenue directors has transformed from being solely responsible for managing room rates to becoming key decision-makers in driving overall hotel profitability. They are now expected to:

  • Collaborate with various departments such as sales, marketing, and operations to develop integrated strategies that maximize revenue opportunities.
  • Utilize advanced analytics tools to forecast demand patterns accurately and make data-driven pricing decisions.
  • Implement dynamic pricing strategies that adjust room rates based on real-time market conditions.
  • Identify new revenue streams and upselling opportunities within the hotel.
  • Monitor competitor pricing strategies and market trends to stay competitive.

The Impact of Revenue Management in Different Industries

While revenue management is commonly associated with the hospitality industry, its principles can be applied across various sectors. Here are some examples of how revenue management is used in different industries:

  1. Airlines: Airlines use revenue management techniques to optimize seat inventory and pricing based on factors such as flight demand, seasonality, and competitor pricing.
  2. Retail: Retailers employ revenue management strategies during sales promotions or clearance events to optimize pricing and inventory levels.
  3. Car Rental: Car rental companies adjust their pricing dynamically based on factors like demand, location, and rental duration.
  4. Telecommunications: Telecom companies offer different pricing plans and discounts based on customer usage patterns and contract terms.

The Importance of Revenue Management Technology

This elevation and recognition mean that the discipline has become even more complicated and requires sophistication in its resources such as revenue management technology and automation. In an industry such as hospitality where perishable goods and services are involved, revenue management often provides a significant competitive advantage to companies that practice it effectively.

Revenue management is a discipline that is used in many industries, but the application and implementation can vary greatly from sector to sector.


This publication will provide hoteliers with a guide they can use to develop and implement a revenue management foundation specific to their unique needs. Hotel owners, operators, and mid-level management will benefit the most from this document. There are many versions to the definition of revenue management. One of the definitions is a more technical one and is very broad in scope: Revenue management is the art and science of predicting real-time customer demand at the micro market level and optimizing the price and availability of products to match that demand. Another definition that is more specific and simple: Revenue management is offering room rates and inventory controls that are most appropriate for the anticipated demand.