Revenue Management Future : it Really Should be Called Profit Management

17th Jul 2004

Book Discription

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

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 industry has come a long way in recognizing the importance and the needs of revenue management in order to be successful. This elevation and recognition means 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