What Is Meant By Revenue Management Essay

1025 Words Mar 13th, 2016 5 Pages
1. Introduction

It is foremost important to define what is meant by Revenue Management (RM). According to a definition provide by Choi and Mattila (2004), RM is a strategic business practice which aiming to trade a relatively fixed amount of inventory such as a room of the most profitable mix of customers in order to maximize profit (Mattila and Choi, 2005). Coincidentally, the core principle of RM is predicting consumers behavior and maximization of profit in order to attain the objective (Cross, 1997).

This report examines the impact of RM strategy on Holiday Inn Oxford (appendix. 1). More specifically, this report’s goal is to investigate and evaluates how the company has applied RM concepts. In addition, the report seeks to consider the import of the strategies adopted on both customers and the company and evaluate the impact of positive and negative side.

2. Market Segmentation Strategy

It must noted that RM is commonly practiced to the hotel’s management of guestroom inventories (Kimes and McGuire, 2001). Therefore, Market segmentation is one of the primary strategic elements of RM strategy. While a variety of definitions of the term market segmentation have been suggested, Wedel and Kamakura (1998) defined this theory as ‘ distributing potential consumers into homogeneous groups according to a set of variables or characteristics. Consequently, the room rate of a hotel based on the level of demand. For instance, the room rates are higher during peak demand…

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