Management Issues Related to Revenue Management
According to Robert Cross, the pioneer of airline revenue management (RM), “Revenue Management ensures that companies will sell the right product to the right customer at the right time for the right price”.
Revenue Management executes the fundamental standards of supply and demand economics in a strategic manner to produce incremental incomes. There are three vital conditions for income administration to be material:
• Fixed amount of inventory available to be sold.
• Inventory is perishable in nature. There is time limit to sell the inventory.
• Those diverse customers are ready to pay a different price for utilizing the same room. Hotel implement distinct profit managing processes to attain
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Traditional business hotels could have three primary distribution channels: hotel direct, central reservation systems and travel agents. A distribution channel is defined as mechanism that provide “sufficient information to the right people at right time in the right place to allow purchase decision to be made and also allow the consumer to make a reservation and to pay for the required product”
Distribution has become a crucial part for the marketing mix. Cornell University (2010) identified in their research that approximately 40% of bookings come from brand.com website, 30% from Global Distribution Systems (GDSs) used by travel agents and online agents, and the rest 30% from a mix of other sources. The importance of effective GDS channel distribution management is crucial, however “it is often the least one management knows about and fails to maximize revenues through this channel.” (Raven et al.,
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These costs can not quite the same as offering it specifically through the online channel, the hotel site or hotel front desk. According to Green (2006) distribution costs can sometimes be as high as 25% of hotel revenues. The capacity to oversee and specifically utilize a large number of channels is the new focus of hotel managers who now focus on the most proficient method to best select and work with outsider delegates and channels as opposed to endeavouring to kill them. Mostly revenue managers utilize high cost channels as a part of request to accomplish high occupancy, so they must be extremely cautious about the quantity of high cost channels they choose. For instance, if hotel has normal occupancy rate of in excess of 90%, the revenue manager would likely not to utilize high cost channels to fill the hotel’s rooms; they would rather spare rooms for a last minute walk-ins when they find themselves able to charge a premium for the
DATE: September 23, 2015 TO: Professor Stevens FROM: Briana Nguyen SUBJECT: Groupon, Inc., and Revenue Recognition Issues PURPOSE This report will explore the accounting treatment employed by Groupon, Inc. (“Groupon”) in its revenue recognition for fiscal years 2008 through 2010 as well as the first six months of 2011. Specifically, we will review the following in regard to its initial public offering (IPO) in accordance with FASB’s Accounting Standards Codification (ASC): • Revenue recognition as a primary obligor • Revenue recognition as a principal or an agent • Revision of revenue recognition on gross basis to net basis and effect on revenue and net income BACKGROUND In November of 2008, Andrew Mason, Eric Leftkofsky, and Bradley Keywell
What is a Certified Revenue Integrity Professional? A Certified Revenue Integrity Professional is a health care administration professional who has obtained industry standard certification through the American Association of Healthcare Administrative Management (AAHAM). http://www.aaham.org/ Who is the the AAHAM?
I, Roark, et al., Bedford/St. Martin, New York, NY, 2011.
Authors of the report include Shelli B. Rossman, Michael Rempel, John K. Roman, Janine M. Zweig, Christine H.
The Toast, 01 Oct. 2015. Web. 11 Dec. 2015. Kaplan, Janice. "
Their strategic position is to provide a leisure experience for people who came to our hotel and enjoy the holiday. The firm’s CSF are strengthening electronic relationships with distributors, improving its trademark hospitality and customer service, better managing inventory yield, and better integrating its international properties were crucial stepping stones to the firm’s continued success. (Outrigger case 103&117) 2 How well are the current IS resource serving the needs of Outrigger Hotels and Resorts?
They offers only five star and four star room and the company is able to charge its customers at premium level. Place The goods and services provided by the hotel made available to the customers at a place where they can conveniently make purchase. It refers to the channel or the route through which goods and services move from the source to the final user. Place could be the intermediaries, distributors, wholesalers and
In today world of intense competitive marketing decisions often become vital distinguishing factors between industry leaders and other market players. The strategic marketing decision is taken based on their marketing mix i.e. 4 P'S of marketing. Controlling these parameters, companies may consider various internal and external marketing challenges. The marketing mix of the firm in a large part is the product of evolution that comes from day to day marketing, the mix represents the program that a management evolved in the ever challenging market (Bordern, 1994). This paper will study the world -known and reputable airline company, Delta Airlines to approach the context of marketing of the U.S Airline Industry.
Solution : Introduction: A budget is an estimation of particular commodity, quantity etc. It can be prepared for any number of days but generally it is prepared wither for a year or quarter... A budget may or may not become the actual outcome.
( Bigelow,1994;Onosko and Jorgensen ,1998;Lewis and Batts
Holiday inn uses switching costs by offering differentiated services like stay connected with free high-speed internet access, fax, photocopy services, extras like fitness centres, sport lounge, etc without going out of the
In the case of hotels, suppliers create different consumer segments, we can relate to them as lower-end consumers, and higher-end consumers. Obviously, hotels cannot set the price that higher-end consumers are willing to pay, because all lower-end consumers will not be able to afford the good. Inversely, if hotels set the price that lower-end consumers are willing to pay, higher-end consumers gain huge consumer surplus, thus lowering the profit for the suppliers. In order to take the consumer surplus, hotels keep lower prices for some rooms in order to target lower-end consumers and offer some higher quality rooms (for example presidential suits) to target higher-end consumers. The difference in revenues providing different rooms and the same ones is seen below.
For instance, with the global financial crisis and later the Eurozone crisis, the number of travellers has significantly reduced due to economic hardships. This has affected the profit levels of the airline as well as slowed down its growth prospects. The airline also faces intense competition from other low cost airlines forcing it to extensively invest in product differentiation to counter the competition. This is an expensive
Intercontinental Hotels is using the market differentiation strategy in segmenting its market into appropriate market divisions based on characteristics of the varying needs and characteristics of the target markets. The company has more than 3500 hotels in over 100 countries with around 535000 guest rooms. It has established a substantial customer base with over 120million customers whose preferences vary based on price and quality expectations. The Intercontinental group is made up of many brands such as the Intercontinental Hotels and Resorts, Holiday Inn Garden Court, Crown Plaza Hotels & Resorts, SunSpree, Holiday Inn, Staybridge Suites, Holiday Inn Family Suites Resort, Holiday Inn Express, Holiday Inn Select, Holiday Inn, and Candlewood