Revenue Management Practices for Hotels: A Detailed Analysis

This report provides an in-depth analysis of revenue management practices within the hotel industry. It begins with an introduction to the concept of hotel revenue management, emphasizing its importance in predicting customer demand and optimizing pricing strategies. The report then delves into key aspects of revenue management, including pricing strategies, with a focus on dynamic pricing models and the factors that influence pricing decisions. It also examines forecasting techniques used to predict demand and how these forecasts inform pricing and marketing activities. The report further discusses customer segmentation strategies, highlighting how hotels can categorize guests based on demographics, trip purpose, and spending habits to tailor pricing and services. References to key academic papers and industry sources support the analysis, providing a comprehensive overview of effective revenue management practices in the hospitality sector.

Running head: REVENUE MANAGEMENT
Revenue Management
Name of the Student:
Name of the University:
Authors Note:

1REVENUE MANAGEMENT
Table of Contents
Introduction......................................................................................................................................3
Discussion and Analysis..................................................................................................................3
Hotel Revenue Management........................................................................................................3
Pricing..........................................................................................................................................4
Forecasting...................................................................................................................................4
Segmentation...............................................................................................................................5
References........................................................................................................................................7

2REVENUE MANAGEMENT
Executive Summary
The assignment aims at evaluating the revenue management practices that would be well
followed by the Hotel. Revenue Management practices plays an important prospect and the same
should be well followed by various organisations so that they are at a better trade off. The
practice plays an important role as it helps decide the business course of operations along with
the customers they well expect to earn in the time period analysed. Segmentation of the various
customers also has been discussed as the hotel offers a wide and a varied range of hotel services
that would be well offered that ranges from standard to executive rooms that would be offered by
the hotel.

3REVENUE MANAGEMENT
Introduction
Hotels that are jam-packed with peoples and customers are not always the profitable one.
A hallmark of a successful hospitability business is the constant, sustainable and growing
revenue source for the hotels and organization. The management of a hotel well deploys a range
of revenue management techniques and various other strategies that help them in well increasing
the bottom line. Now comparing from industry to industry the revenue management system the
system deployed in the hotels evolve slowly. Improvement in the channel management system
and better customer satisfaction are some of the key challenges for today’s hospitality industry.
Thus, key steps like forecasting the revenue and segmenting the consumer base accordingly
based on the range of customer services could be the some of the key steps that can be involved
for the purpose of better revenue management (Abrate and Viglia 2016).
Discussion and Analysis
Hotel Revenue Management
Hotel Revenue Management is well referred to the Art and Science for well predicting
real-time customer demand at the micro-market level and then optimizing the price and well
availability of the product. Simply, revenue management well means predicting consumer
behavior for well selling the product at an optimal price on a daily basis. Revenue management
thus well refers to selling the right product that is room to the right client at the correct moment
and optimal price and at the right place for well increasing the efficiency of commissions (Kimes
2017). The term revenue management is often referred as the yield management system,
however these terms aren’t well interchangeable. The practice of revenue management is

4REVENUE MANAGEMENT
important in today’s business world as it would be allowing the hotel to well segment customers,
forecast demand, yield management and dynamic pricing in the hotel industry.
Pricing
The dynamic pricing can be the key approach which can be well adopted by the hotel that
would be allowing the retailers to charge the prices in according with the market set of demand
factors. The dynamic strategies are well built by selling properties for the best price that they can
get, with the set of customers that are available. The key factors upon which the pricing of the
hotel would be based are on the demand, supply and external as well as internal data.
Competitor’s price, booking patterns and weather can be some of the key external factors.
On the other hand internal factors such as rates, profile of customer, segmentation are some of
the key internal factors. A key table for dynamic strategic pricing can be well presented as
below:

5REVENUE MANAGEMENT
Forecasting
The forecasting for demand can be well done by taking the historical demands and
booking patterns that has been observed by the hotel from its customers. Given the historical set
of data we can well predict about the future demand patterns whether it would be increasing or
decreasing given the current set of numbers. The forecasting of demand and future set of revenue
plays an crucial role because that would be allowing the hotel to better set prices, accordingly
create promotional offers and launch other marketing activity for increasing the occupancy
(Pimentel, Aizezikali and Baker 2019).
Segmentation
Segmentation of the consumers play an important role in the marketing and pricing of the
hotel rooms as that it would be allowing a target message that needs to be well defined, while
identifying the most suitable prices for the various customer segments that it would be offering.
The guest of the hotel can be well segmented in accordance with key demographic criteria like
age, gender, marital status, trip purpose, spending habits or interest. The status of a traveller,

6REVENUE MANAGEMENT
whether the guest is a returning guest or not. Like the 180 standard rooms can be well allocated
to the economy class bookings, whereas superior room and suites can be dedicated to premium
customers looking for exclusive services (Kimes 2016). While on the other hand, junior suites
and executive set can be well dedicated as lavish experience hotel rooms. Now these
classification in turn with the given set of customer base would allow them offer products to the
right person and at the right price.

7REVENUE MANAGEMENT
References
Abrate, G. and Viglia, G., 2016. Strategic and tactical price decisions in hotel revenue
management. Tourism Management, 55, pp.123-132.
Kimes, S.E., 2016. The evolution of hotel revenue management. Journal of Revenue and Pricing
Management, 15(3-4), pp.247-251.
Kimes, S.E., 2017. The future of hotel revenue management.
Pimentel, V., Aizezikali, A. and Baker, T., 2019. Hotel revenue management: Benefits of
simultaneous overbooking and allocation problem formulation in price optimization. Computers
& Industrial Engineering, 137, p.106073.