Revenue Management: Forecasting, Pricing and Demand Analysis Homework

This homework assignment delves into the core concepts of revenue management within the hotel industry. The assignment begins by exploring the evolution of revenue management, contrasting its earlier focus on rate adjustments with the contemporary, more complex approach involving forecasting, optimization, and demand management. It then examines the significance of forecasting, distinguishing between constrained and unconstrained demand forecasting methods, and their applications in pricing and availability controls. The second part of the assignment focuses on hotel room pricing strategies, examining the factors that influence rate setting, such as hotel rating, location, demand, and competition. It also discusses various rate types, including rack rates and discount levels, and the importance of setting occupancy targets. The assignment concludes by highlighting the influence of hotel brand value on room rates and overall market value, referencing financial indicators and room count as predictors of market value.

Running head: REVENUE MANAGEMENT
REVENUE MANAGEMENT
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1REVENUE MANAGEMENT
Table of Contents
Question 1..................................................................................................................................2
Question 2:.................................................................................................................................2
References..................................................................................................................................4

2REVENUE MANAGEMENT
Question 1
Previously, the meaning of revenue management was opening also closing the rates
and availability but whenever online travel agents entered in the scene, this industry turned
with simple adjustments of the rates. Now a days, this field become more complex. The
managers of modern revenue who are analysed, forecasted and optimized the hotel inventory
via the availability restrictions also dynamic rates and familiar to manage the demands of
hotel (Ivanov, 2014). But as manager, it is very difficult to realize about the simple
components to manage the revenue also mandate so that anyone can provide the
knowledgeable information to the team member. For managing the revenue and the demand,
the manager essential to start a forecasting approach. When this forecasting is working, team
can start work with main three lavers which are yield, marketing and price for optimizing the
revenue. As an example it can be stated that increase the value if the claim is sufficiently high
or reduce it if this is not. Alter the restrictions also channels if manager want to block the
definite kinds of room or essential some definite section of the guests. Lastly, develop
promoting activities to effort maximum claim.
Two types of forecasting are present there, one is constrained performance forecasting
and another is unconstrained demand forecasting (Afèche, 2013). First one is normally
expected or estimated presentation and it is restricted by availability of rooms for sale.
Another kind of forecasting is generally used by revenue manager as the tool for helping to
make the availability controls also the decision of pricing. It is unconstrained demand
forecasting which tells how many rooms a guest would like for booking though there are not
much rooms available.

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Question 2:
The hotels are set the rates of rooms according to claim at a definite time period. If the
request increases also decreases the room obtainability, then lesser charges are stopped, only
greater rate present. Vending all the room at same rate produces the good average charge
rarely. There are many key rate factors are present which are hotel rating, location, demand
and competition (Lien et al., 2015). These rate determinants guide scales of rate also set
origin for creation the parameters of revenue management. Rates are look like rack rate,
discount 1 that is walk-in corporate, discount 2 that is government, deep discount 3 that is
section discounts and deep discount 4 that is promotional rate. After setting the rate for every
section, the following stage is for setting desired occupancy stages which desired to close
every discount level.
The brand of any hotel property identification is a great factor in the market value.
The financial indicators are used to govern the value of property (Chang & Ma, 2015). The
even number of rooms have confirmed to be important predictors of the market value of
hotel. If the brand value is high for any hotel, then it is obvious that the rate of the rooms is
also high. Because the market value is high for the reason of the hotel’s position, structure
and many more so the room rate is normally high.

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References
Afèche, P. (2013). Incentive-compatible revenue management in queueing systems: Optimal
strategic delay. Manufacturing & Service Operations Management, 15(3), 423-443.
Chang, H. P., & Ma, C. C. (2015). Managing the service brand value of the hotel industry in
an emerging market. International Journal of Hospitality Management, 47, 1-13.
Ivanov, S. (2014). Hotel revenue management: From theory to practice. Zangador.
Lien, C. H., Wen, M. J., Huang, L. C., & Wu, K. L. (2015). Online hotel booking: The effects
of brand image, price, trust and value on purchase intentions. Asia Pacific
Management Review, 20(4), 210-218.