Improving Hospitality Industry Sales: Twenty-Five Years of Revenue Management [Summary]

This study has been conducted to examine the many Revenue Management (RM) -related papers published in the Quarterly, with an eye to future developments in RM over the years. RM indicates properties’ need to focus on the following four key areas: forecasting, systems and procedures, strategy and tactical plans, and feedback systems. RM starts with estimates or forecasts of future demand combined with a set of automated systems for rate control. The effectiveness of these systems requires a formalized strategy and tactical plan for employees to implement these recommendations, with a feedback loop that allows employees and managers the opportunity to assess the impact of their decisions. The paper mainly tried to contrast between different sectors, like airlines, travel agents and hotels and focused on the conceptual development and application of Revenue Management. RM research within the Quarterly has largely focused on the extension of existing science into additional hospitality venues. Early research was devoted to the adoption of airline RM at the hotel property level. More recent examples include overviews of how RM principles can be applied across other facets of hospitality. Firms need to improve their ability to segment customers, then use non-posted-price methods to reach price-sensitive customers. This would allow firms to continue to have higher posted prices for those who are less price-sensitive. These non-posted-price methods include targeted email offers, linked offers advertised through search-engine campaigns, campaigns through travel deal providers similar to Travelzoo.com, opaque pricing and packaging. In a surplus capacity, environment RM also needs to pay more attention to price, being more responsive to price as market share shifts quickly. Hotel RM also needs to do a better job of integrating data sources beyond reservations into pricing decisions. The new framework for RM is demand management, both making reservations, and increasing revenues.