Hotel Revenue Management Introduction

This video posted by Hotel Revenue Management

Revenue management looks to drive higher revenues, margins and profitability for the entire company. Companies within the hospitality industry that implement revenue management typically experience a three to six percent increase in revenues. When these successfully integrate revenue management procedures throughout the whole organization, they can experience double-digit revenue growth.

The primary purpose behind revenue management and its rise in usage since the 1980’s is the maximization of revenue and profits. Many attributes in the hospitality industry, including perishable products, high fixed costs, low variable costs and fixed capacity, help drive increases in margins and profits as the result of revenue management. These include hotels and other lodging providers, rental car companies, vacation package and tour providers, restaurants and cruise lines.

Revenue management primarily benefits companies by allowing them to leverage price discrimination through market segmentation. Different customer segments have different needs and wants. For example, middle-class leisure travelers tend to be price sensitive, travel on weekends and focus on cost. Meanwhile, business travelers tend to be value convenience, travel during the week and focus on service levels. Others groups are somewhere between the two. For example, retirees or seniors may be price sensitive but able to travel mid-week.