ipl-logo

Revenue Management In Hotel Industry

1603 Words7 Pages

Revenue Management refers to the ability to envisage concurrent customers’ demands, and then optimize the prices and availability of goods and services. It is mainly concerned about the decision about management of the customer’s demand and the revenue of the organisation. Mauri (2012) defines it as all about predicting, comprehending and influencing behavior of clients in an attempt to maximize a company’s returns.
Revenue Management can be applied in is different sectors. One of the major sectors is the tourism. It is important in this sector because people keep travelling from one place to another. Every time they visit a place, they have to make choices of where to dine, sleep and also what to purchase at what price. Conversely, the hoteliers …show more content…

The hoteliers must decide how much they want from their products and services. Pricing correctly is vital in the hotel industry because the seller must mind about his business as well as potential clients. He must not aggravate the prospective buyers, but in doing so, he doesn’t desire to lose probable profits too.
Shy (2008) states that Pricing and Price Alteration theories help organisations develop sustainable competitive advantage. Pricing involves price discrimination, lower price guarantee, and dynamic pricing (Carvell and Quan 2008).
Through price discrimination theory, the hoteliers charge business travelers more than their leisure counterparts. Dynamic pricing enables the hotels to optimize yields and revenue by charging fees that incorporate their present level of demand and occupancy (Abrate, Fraquelli, and Viglia 2012). Afterwards, they modify the rates as per impending changes. It is a drawback to the customers if they find out because it makes them pay different fees for the same booking. On the other hand, it grants a potential to organisation to make more profit. It’s sensible to communicate all the details to clients (Tranter et al. …show more content…

This is beneficial to the customers because they can pick products or services that fit within their needs and budgets (Ivanon 2014). They can opt for better quality products/services at higher prices or they can choose lower priced products. For example, the customers might opt for a room with sea view, pool view, or street view and pay more for it. It also assists the organisations retain the demand because the clients can get all they need in different packages, thus they generate large revenues and profits. At the same time, they offer superior quality products and services to clients; hence the clients enjoy utmost service levels for higher fees they

Show More
Related

  • Groupon Inc. And Revenue Recognition Issues

    1640 Words  | 7 Pages

    For example, a spa may offer a service worth $80 for $40, and once the customer pays Groupon $40, they are able to go to the merchant to receive the service worth $80. When a deal is purchased by a subscriber, the gross profit is split between Groupon and the respective merchant: Groupon will keep $20 of what the customer has paid, and the remaining balance goes to the merchant. Striving to “become an essential part of everyday local commerce for consumers and merchants,” the company has made efforts to continue growing their subscriber base, their number of merchant clientele, the number and variety of products, as well as their acquisitions and business development

    Read More

  • Business Analysis: Outrigger Hotels And Resorts

    961 Words  | 4 Pages

    1 What is Outrigger Hotels and Resorts’ strategic position? What are the firm’s Critical Success Factors (CSF)? Outrigger Hotels and Resorts are currently using geographical and product diversification strategy. The firm expend their firm around Pacific Ocean and diversify its product portfolio by adding condominiums resorts and OHANA hotels.

    Read More

  • Amazon's Core Value Strategy

    1781 Words  | 8 Pages

    The core value propositions for Amazon’s internet book buyers were price, customer service, selection and convenience. Bezos (2000) claimed. Amazon to be “Earth’s most customer centric”, which meant they needed to listen, be innovative and personalise. Amazon’s personalization efforts were summarised by the CEO of Amazon, Jeff Bezos, by stating “If we have seventeen million customers, we should have seventeen million stores.” (Bezos, 2000).

    Read More

  • Pros And Cons Of Dynamic Revenue Management

    2457 Words  | 10 Pages

    For instance, if a firm faces a high level of demand, it has an incentive to increase the price to reserve some products for later customers who may be willing to

    Read More

  • Advantages Of Oligopolistic Market

    721 Words  | 3 Pages

    Furthermore, customers may find lower prices or higher discounts with a small number of firms in the oligopolistic market. The others will also cut prices to prevent losing their market share when a business started to cut down its price. Firms might have to sacrifice some profits in order to keep customers or reduce the rivals while lower prices to benefit consumers. For example, customers can find discounted air fares which allow them to enjoy the best flight deals with Air Asia.

    Read More

  • Holiday Inn: Porter's Five Forces Of Industry

    1384 Words  | 6 Pages

    The Five Competitive Forces of Industry will influence prices, costs and investment (Porter, 1980). The potential retaining of customers, profitability of a holiday inn can be determined by being aware of the strengths and weaknesses of the hotel industry. (Figure 2.2: Porter’s Five Forces Model (Source: Adapted after Porter,2008) Porter’s 5 model helps in success of Holiday inn between suppliers and buyers. Giving customers the service they are looking for, acquire customers, retain customers and looking externally how the competitors are doing is very important. To ignore the power of customer relationship is not an option.

    Read More

  • Price Discrimination In Hotel Industry

    777 Words  | 4 Pages

    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.

    Read More

  • Value Proposition Of Fitbit

    1808 Words  | 8 Pages

    The pricing strategy or pricing policy is one of the most important managers make for a product as it affects the profitable outcome and competitiveness that a product may make. (Toni, 2017). A business can use a variety of pricing strategies when selling a product or service. The price can be set to maximize profitability for each unit sold or from the market overall. It can also be used to defend an existing market from new entrants, to increase market share within a market or to enter a new market by dropping the price or offering more benefits with the device such as packages.

    Read More

  • Role Of Stakeholders In Aviation

    963 Words  | 4 Pages

    A company 's customers are entitled to fair trading practices but they are not entitled to the same consideration as the company 's employees. Stakeholders around the hotel: 3.1. Local governmentThe decisions of government, inevitably affect different groups within society. Increasingly, the government are

    Read More

  • Marketing: Marketing Mix In The Ice Cream Industry

    1497 Words  | 6 Pages

    6.1.2 Price Price is the value or amount that customer pays to buy a product. For instance, for our Star Lab ice cream shop, we need to consider the cost of production of our ice cream, price of our main competitor and our potential customers demographics in order to succeed this competitive market. (C. Breidert, 2007, p.9) 6.1.2.1 Pricing Strategy Pricing strategy that can be used by our company such as penetration pricing, cost-plus pricing, value based pricing and more. But we think that market penetration pricing is the best pricing strategy to be used by our business.

    Read More

  • Company Overview Of Conrad Hilton's Hotel Management System

    806 Words  | 4 Pages

    OnQ system’s work is to summarize and classify booking’s information and then seeding it to various departments such as the number of guests,

    Read More

  • Amazon Marketing Strategy

    1532 Words  | 7 Pages

    1. Primary Target-Market — main consuming group/Secondary Target-Market —additional sales potential Amazon’s target customers are people who have access to the internet and have financial paying tools such as credit card, debit card, paypal etc. futher, the firm’s clients do not stay within the united states only. Amazon has reached its hand to online customers in other continents. Further the company’s prime program seems to appeal more to older shoppers than the younger ones since data shows that individuals whose age 40 or more are more loyal to the service than people whose age is less than 40.

    Read More

  • Relationship Between Hospitality And Tourism Industry

    1572 Words  | 7 Pages

    The relationship between Hospitality and Tourism, Tourism and hospitality help each other, the hospitality industry offer services like accommodation, transportation, food and beverage, recreation and leisure. Tourism is the activity by the tourists where they engage in travelling to destinations where they want to experience recreational and leisure activities and most of the time avails of accommodation, food and beverage. The hospitality industry is the supplier of the services for tourism. The meaning of hospitality is providing a safe and enjoyable environment for patrons. The inter-relationship between Hospitality and Tourism industry is

    Read More

  • Hotel Variability

    702 Words  | 3 Pages

    One of the characteristic of service like variability services are highly variable due to service quality depends on who provides, where and when they are provided. Variability is opposite meaning of consistently which mean no fixed pattern and hard to change or control. Variability is a negative attribute for a hotel because it can be defined as risk and uncertainty. To avoid any barriers to hotel’s operation, it is important to identify types of customer variability and then create strategies to manage variability Four Seasons Hotel uses reduction strategy to deal with arrival variability by offering room reservation services. It requires guest to make room appointments or reservation first due to people will not want the service at the same

    Read More

  • The Importance Of Film Tourism

    2631 Words  | 11 Pages

    What do you think about the reasons behind the decrease number of visitors? 5.) How can your management team deal with the situation (decrease in number of visitors)? 6.) Any marketing methods can recommend to maintain the profitability of the destination?

    Read More

More about Revenue Management In Hotel Industry

Open Document