Introduction to Hotel Revenue Management Action Plan

This document discusses the key business problems faced by hotels in terms of channel distribution costs, customer complaints, and lack of transparency. It suggests strategies like rational pricing techniques, customer segmentation, and yield management systems to overcome these problems. The document also outlines the steps involved in implementing these strategies and the timeline for the same. It provides an overview of the five modules that cover topics like revenue management, sales forecasting, controlling price, and evaluating the proposed strategies. The document concludes with references to research papers on hotel revenue management.

SHA531: Introduction to Hotel Revenue Management
Cornell University School of Hotel Administration
Introduction to Hotel Revenue Management Action Plan
Complete the grid below.
Key Business
Problem(s)
Dealing with the channel distribution costs is one of the
main challenges, which the hotels face in terms of
delivering quality services to the clients and the
customers (Hanks, Cross and Noland 2002). Delays in
responding to the complaints of the customers about
loyalty programs and booking channels compels the
hotel industry personnel to encounter instances of
customer turnover.
Along with this, there is a lack of transparency in terms of
disseminating the information regarding the ways and
means to avail the discounts in the hospitality services.
One of the striking issues in this direction is that the
customers paying more for a service lacks understanding
regarding the difference prevailing between the services
(Kimes 2002). This is against the customer ethics, which
the hotel industry personnel needs to cater to.
Strategies According to the recent business trends, rational pricing
techniques are being adopted by the hotels. Within this,
the customers, insisting for the services at lower rates
are served quality services at lower prices. In this
context, customer segmentation is an essential concept,
which enhances the individual needs, demands and
requirements of the customers (Kimes 2002). Typical
example of this lies in the non-refundable room rates,
which is not the dominant type of rates, as it depends on
the liking of the customers.
Mention can be made of yield management systems,
which have enabled the hotels to encounter
unprecedented growth in the sales revenue (Abrate and
Viglia 2016).
Steps
For implementing the yield management systems,
change management needs to be adopted in the
action plans. Along with this, debates are on regarding
making changes in the reservation policies. Masiero,
Pan and Heo (2016) is of the view that if this is
implemented, Ethical Code of Conduct needs to be
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SHA531: Introduction to Hotel Revenue Management
Cornell University School of Hotel Administration
considered for averting the racial discriminations.
Negotiations is one of the other steps, which needs to
be adopted for enhancing the stability in the
professional relationships between the hotel industry
and the other departmental units (Arenoe, van der
Rest and Kattuman 2015).
Apart from this, calculating relative fixed capacity
would be assistance in terms of generating balance
between the high fixed costs and the low variable
costs. Within this, Zheng and Forgacs (2017) opines
that variations in demand and supply needs to be
considered for delivering quality products to the
customers according to their requirements. For this,
the personnel needs to calculate the price sensitivity,
which would be crucial for valuing the purchasing
power of the customers (Erdem and Jiang 2016).
Timeline 1. What will you (or your team) do in the next
month? I and my team members would indulge in
meeting with the trade union members for gaining
an insight into the latest tax obligations on the
rooms and other services. Along with this, I would
conduct meetings with the finance admins for
disseminating the financial information, which
would be beneficial for developing budgets.
2. What will you have completed over the next
quarter? By the next quarter, we would be able to
implement the yield management systems. This
would be crucial in terms of managing and
controlling the demand, supply and their
variations. This, in turn, would be assistance in
terms of estimating the direction in which the
operations would head to.
eMeasurement/Results Adopting performance management systems can be
effective in controlling the operations. These systems
need to be according to the latest upgradations in the
technological field (El Haddad 2015). In terms of the
yield management, four C strategy would be effective
for enhancing the standards and quality of the
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SHA531: Introduction to Hotel Revenue Management
Cornell University School of Hotel Administration
operations. These C’s are: calendar, clock, capacity,
cost and customers.
Calendar relates to the calculation of the demand
forecasting, which is assistance for calculating the
supplies, which needs to be made. Clock would be the
stage, where the hotel industry personnel would match
the service time with that of the customers’ willingness
to pay (Noone 2016). Calculating the capability and
resources to complete the service cycle would be
essential for the personnel for gaining trust, loyalty and
dependence from the clients and the customers. Cost
is one of the other factors, which needs to be
controlled for aligning the operations with the demands
and its variations (El Haddads 2015).
Notes
Module 1 Module 1 enhances the awareness of the readers about the basic concepts related to
management of revenues in hotels. As a matter of specification, the topics covered in this
module are selling the rights rooms to the customers at right price. The typical components
in this aspect is that of time duration between launch of the service and the time when the
service is availed. This module exposes the issues related to revenue management. Within
this, mention can be made of the issues of strategies, price and duration of the services.
This module acts as a layout for the action plan, which would be undertaken for
implementing the changes in terms of increasing the sales revenue (Erdem and Jiang
2016). Sensitivity of the customers is a crucial aspect, which the hoteliers need to cater for
respecting the purchasing power and the decision of the customers. Variation in the
services helps in luring the customers towards the brand image. This module projects the
importance of necessary conditions for revenue management, which are time based
inventory unit, RevPATI. Relatively fixed capacity is also considered for for calculating the
revenue to be generated.
Module 2 This module instructs the readers to measure success with RevPAR. The initial stage in
this is speculating the revenue, which is generated with the available resource and
capabilities. The peak and lean seasons are considered for calculating the hot, warm and
cold RevPAR. This module also consists of the reflection on duration in the action plan.
This duration consist of the comparison between the time of launching the services and the
customers’ willingness to avail the services. This time needs to be accurate for estimating
the sales direction. This estimation, in turn, would be effective for delivering the services to
the customers according to their demands (Zheng and Forgacs 2017).
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SHA531: Introduction to Hotel Revenue Management
Cornell University School of Hotel Administration
Module 3 This module is aimed at reflecting on managing duration, where the initial stages consists
of speculating the reduction, which has been done on the duration of the services in terms
of launching and availing. Sales forecasting is needed for managing the demand and
supply. Action plan is assistance in terms of systematizing the activities for achieving
positive outcomes. Surveys are important in terms of gaining an insight into the specific
needs, demands and requirements of the customers. This insight is assistance for
introducing special services for gaining trust, loyalty and dependence of the customers for
generating higher revenue and profit margin (Arenoe, van der Rest and Kattuman 2015).
Module 4 This module consists of information regarding controlling price. For this, variable pricing
conditions are needed in terms of catering to the individual needs of the customers. One of
an important aspect in this context is gaining an insight into the spending power of the
customers towards the levied services. One of the important aspect in this module is the
disseminating the information regarding the best available rates. Leveraging reasonable
pricing and reflecting it in the action plans is effective in terms of delivering quality
accommodation services to the clients and the customers. This module prepares the base
for preparing reflection on the implementing the developed strategies on the action plans.
In this, strategic planning is needed for the hotel industry personnel in terms of achieving
successful outcomes. Meetings and audits are needed in terms of conducting journey
mapping for the implemented services and their utility value on the clients and the
customers. Collecting feedbacks from the customers helps in ensuring whether the plans
align with their specific needs, demands and requirements (Masiero, Pan and Heo 2016).
Module 5 This final module acts as an evaluation for the proposed strategies in terms of its flexibility
to increase the sales revenue of the hotels. This is through the means of implementing
revenue management in an efficient and effective manner. Component parts of the
implementation is analytics, which helps in analyzing the impacts of the revenue generated
on the overall operations. Apart from this, mention can be made of skills needed by the
revenue managers, which is needed for estimating the direction in which the sales would
head to. The action plan needed in this case is beneficial for adopting the implementing
the developed plans in altering the scenario of the workplace. Data is considered for
enhancing the awareness about the demand, supply and the distribution channels for
levying the services to the customers. Meetings and audits serve as a platform for the
personnel to discuss on the steps to be taken for resolving the issues related to price
mechanisms and accommodation services (Abrate and Viglia 2016).
Social media can be one of the ways in which the supply chain network can be enhanced.
As a matter of specification, social media would be effective for increasing the trafficking of
audience towards the brand image. Uploading the information related to revenue per
rooms on the websites and social networking sites would reduce the concerns and worries
regarding availing the services.
Installing privacy cookies and policies on the websites would add flexibility to the security
systems (Kimes 2002). This step would be a planned action and reasoned behavior
towards preserving the confidential data of the clients and the customers.
Modern software can be adopted for sharing data with the clients and the customers in a
safe and secured manner.
References
Abrate, G. and Viglia, G., 2016. Strategic and tactical price decisions in hotel revenue management.
Tourism Management, 55, pp.123-132.
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SHA531: Introduction to Hotel Revenue Management
Cornell University School of Hotel Administration
Arenoe, B., van der Rest, J.P.I. and Kattuman, P., 2015. Game theoretic pricing models in hotel revenue
management: An equilibrium choice-based conjoint analysis approach. Tourism Management, 51, pp.96-
102.
El Haddad, R., 2015. Exploration of revenue management practices–case of an upscale budget hotel chain.
International Journal of Contemporary Hospitality Management, 27(8), pp.1791-1813.
Erdem, M. and Jiang, L., 2016. An overview of hotel revenue management research and emerging key
patterns in the third millennium. Journal of Hospitality and Tourism Technology, 7(3), pp.300-312.
Hanks, R.D., Cross, R.G. and Noland, R.P., 2002. Discounting in the hotel industry: A new approach.
Cornell hotel and restaurant administration quarterly, 43(4), pp.94-103.
Kimes, S.E., 2002. A retrospective commentary on “Discounting in the hotel industry: A new approach”.
Kimes, S.E., 2002. Perceived fairness of yield management. Cornell hotel and restaurant Administration
Quarterly, 43(1), pp.21-30.
Masiero, L., Pan, B. and Heo, C.Y., 2016. Asymmetric preference in hotel room choice and implications on
revenue management. International journal of hospitality management, 56, pp.18-27.
Noone, B.M., 2016. Pricing for hotel revenue management: Evolution in an era of price transparency.
Journal of Revenue and Pricing Management, 15(3-4), pp.264-269.
Zheng, C. and Forgacs, G., 2017. The emerging trend of hotel total revenue management. Journal of
Revenue and Pricing Management, 16(3), pp.238-245.
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