Revenue Management
Definition
A set of strategies and techniques ised to sell the right products, at the right customer, to the right customer, at the right time, and the right prices.
These techniques are always customer driven, not company driven
Who Uses it?
Food and Beverage Industry
Airlines
Hotels
Cruiselines
Casinos
Benefits
Increases customer satasfaction
Maximises Revenue
“Revenue management has contributed
millions to the bottom line, and it has educated
our people to manage their business more
effectively. When you focus on the bottom line,
your company grows.”
(R. G. Cross, 1997)
Improves Efficiency
Equations
RevPati
Capacity Utilization x Average Revenue Per Service Transaction
Maximize revenue per available time based inventory unit
EXAMPLES: Available airplane seat, hotel room, car rentals, etc.
ROI (return on Investment)
RevPar
ADR x Occupancy Percentage
Combines ADR and OCC into a single statistic
Greater Accuracy
Occupancy Percentage
Total Room nights sold in a period / total rooms available in that same period x 100
ADR
Total room revenue / total room nights sold
Purpose & Focus
Occupancy
How many rooms are sold
rates
When should RM's think about discounting or raising room rates
Sales Mix
Analyzing which products and services sell the most
Market Segmentation
Who is buying what product or service. At what time is this good or service at its highest demand
Distribution Channel Management
Discover where the sales are coming from and when