The Importance And Effectiveness Of Revenue Management In The Airline Industry

The following essay is based on the importance and effectiveness of revenue management and how it is helpful to the institution, its customers and the hotel employees. Every aspect has its own advantages and disadvantages and all of this shall be discussed in this essay. It talks about the Evolution of Revenue Management and how it has helped various industries prosper. (Bardi, 2003). Revenue management was a concept which started around 1970s by the airline industry. This concept was then adapted by other hospitality industries as it seemed to do really well for the airline industry. .(Hayes and Miller, 2011)The airline industry started revenue management to cover their operational costs as an airline seat is a perishable product and once the day is over the revenue for that day cannot be gained again the next day. It’s been told that revenue management is one of the most successful applications for the operations. . (YounesKett, 2003)
Revenue management is highly important as it is a strategy which revolves around pricing and only based on this the hotel makes a profit. With the help of revenue management hotel rooms are priced and discounts and seasonal offers are given. (Christie, 2007) Revenue management basically is about selling the …show more content…
There has always been a misconception that if the occupancy rate is high then the hotel is having good business but the reality is that the only way the occupancy is high is if various discounts are given. Revenue management allows the employees to look at everything in a analytical way.Since revenue management helps increase an organisation’s revenue it will later on lead to employees getting better benefits through bonus and incentives. But on the negative hand, if revenue management is not done properly then revenue is lost and the hotel would loose out on a lot of business. A slight glitch in the revenue management would have a major impact on the company