Revenue Management In The Hotel Industry

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The hotel industry is an intense competition industry. That requires the manager to drive their company with higher revenue, margins and profitability to survive and develop sustainable. Revenue management, the most important strategies must be concentrated, is an evaluative tool that allows the front office manager to compare potential revenue with actual revenue for maximum revenue. This study is to explain the concept of revenue management and the methods used for revenue management. Revenue Management Overview
The concept of revenue management originated in the airline industry and populated to other industries by its successful. Revenue management (RM) in hospitality can be defined as “selling the right room to the right client at the
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It is to maximize business profit by managing room inventory, pricing, sales volumes, and operating margins. The benefits of revenue management are to improve the forecasting, seasonal pricing and inventory decisions then the development of short-term and long-term business plan. It also not only identifies of new market segment and its demand but also enhance the coordination between front office and sale division. Revenue management brings benefit of establishment of value-based rate, thus increasing the business and profits. Implementing revenue management helps hotel to save the labor costs and other operating…show more content…
The application of stay control means that instead of offering rooms on a first-come-first-served basis the hotel attaches conditions to its room offers. Duration rules and restrictions may apply to arrival dates, departure dates, and minimum length of stay. A minimum length of stay is often used to accept only stays over certain duration. In as to enforce optimal duration control, the hotels need to forecast the demand level at different time periods. For example, a hotel with lower demand on Wednesday and higher demand for Tuesday and Thursday could require a customer who arrives on Tuesday to stay for at least two days and deny those are willing to stay for one night only. Moreover, the hotels need to consider the rooms available in the future when controlling the customers’ duration. The computer system may suggest declining a reservation for one day or four days on a certain day’s arrival and accepting those for two days, three days and five days based on a complicated calculation combing the number of customers with stays of various duration with the corresponding number of available rooms. The objective is to take full advantage of limited capacity while shortening the time for which a room is

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