Revenue Management in Hotel Industry Essay

1005 Words 5 Pages
Today the use of revenue management is dramatically changed for the past few decades. As revenue management shows its importance in the industry, revenue managers now have more strategic roles than just analyzing and applying opening and closing rates and forecasting them for the next weeks and months. They are now responsible for controlling revenue from other income generating assets at the hotel. They also became closely associated with marketing colleagues and interact with competitors as well as predicting the actions of competitors. Taking all these changes RM evolves much faster as the role.
What is revenue management?
“Revenue management or RM is the process or quinces of actions that allows you to sell the right
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“Date of inception of revenue management considered date of January 17, 1985 when American Airlines launched their Ultimate Super Saver fares in an effort to compete with the low cost carrier PeopleExpress.“( Salerno, 2014)
The idea of revenue management of that time was to fill a minimum amount of airplane seats without selling them at discount prices; The main goal was to sell enough seats to cover fixed operating expenses (plain crew salary, gas, amortization, etc.).
At the moment when fixed operating expenses were covered and air plain has few remaining seats to sell, the company than could sell those seats with the higher rate to maximize revenue and profits. (Salerno, 2014)

Revenue management tendencies
“Comparing with other industries, there are only three main conditions apply in revenue management:
1. There are fixed amount of resources, which are available for sale.
2. All resources are perishable. In other words there is a time limit to selling the resources, after which they stop to be value.
3. Different customers are willing to pay a different price for using the same amount of resources. “(Solerno, 2014)
Operating all this fact and under influence of fast changing and growing industry there are new tendencies and methods to maximize hotel revenue.
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