Total Hotel Revenue Management: A Strategic Profit Perspective

Hospitality firms are expanding traditional revenue management (RM) practice to focus on customer value and strategic profit management. Participants in series of semi-structured interviews suggested that revenue management is moving away from a sole focus on top-line rooms revenue toward a bottom-line orientation focused on the customer. Thus, RM will expand to multiple revenue sources and encompass a multi-channel demand management approach. The interviews with sixteen senior hotel leaders, RM vendors, and solution providers highlighted the importance of profit, rather than just revenue, given rising distribution and variable costs. Despite the attraction of other revenue and profit sources, such as F&B, spas, and function space, the participants noted that expanding RM to those areas involves complexities not found in the rooms division. Ideally, hoteliers seek to assess the value of each customer’s patronage and develop a specific relationship with each customer. With changes envisioned by these hotel leaders, the practice of revenue management will evolve into the more accurate and expansive notion of strategic profit management.