Revenue Management Case Study

1079 Words 5 Pages
Revenue Management has been applied across number of service industries, including airline (B.C. Smith, Leimkuhler, & Darrow, 1992), hotel (Hanks, Robert & Noland, 1992; etc. The goal of Revenue Management is to maximize revenue using demand based pricing and duration controls (Kimes & Chase, 1998). Revenue Management is basically the application of information systems and pricing strategies to allocate the right product to right customer at the right time at the right price and at the right channel. Revenue Management is basically setting the prices according to predicted demand levels. The Revenue Management is most effective when applied to operations that have fixed capacity, perishable inventory, a high fixed cost, demand is variable …show more content…
Revenue Management forecasting include Demand Forecasting, capacity forecasting and price forecasting (SAS, 2012).Three Components of effective demand forecast are future data, historical data and current data (Hayes, Miller, 2011). All these three data can create good forecasting. An accurate revenue forecast allows hotel departments managers to efficiently schedule the departmental staff needed to serve guest it also helps the departments like Sales, Food and Beverages and Housekeeping to make correct purchase quantities and one foremost benefit of accurate forecasting is it helps the managers and owners to estimate the future profitability of their properties and cash flows (Hayes, Miller, 2011). In short we can say that with forecasting all the departments are inter related and even the owners. Group room pace reports which summarize future demand for group rooms is the key aspect of Current forecasting ( Hayes, Miller, 2011) group room pace report is basically a summary report of describing the amount of future demand and the rate that has been given to the group.With the wide application of Revenue Management Systems, hotels have started gathering a huge amount of data (Chiang, Chen,Xu, 2007). Now all big calculations can be easily done through latest versions of RM Software’s, Revenue Managers can do forecasting easily now. The three basic forecast types are Occupancy Forecast which is helpful in produce daily and weekly occupancy percentage helps improving employee forecasting and show guest arrival and departure pattern, Demand Forecast which identifies periods of very low demand which is also helpful in establish room rate selling strategies and Revenue Forecast which helps in estimating RevPAR, helps in making budgets and forecast (Hayes, Miller, 2011). The Revenue Management decisions such as pricing, capacity control and overbooking depends on accurate

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