Revenue management, also known as yield management, is related to economic supply and economic demand. It is a profitability technique used to manipulate rates to the right customers who are willing to pay and use same resources at different times (Ivanov 7). There are various goals of revenue management in organizations one of these being to offer competitive rates and pricing. With revenue management, organizations set different rates, particularly when it comes to pricing and promotion. In the hotel industry, various groups or companies often block five to ten percent of sufficient space for their customers. Group rates ensures that the companies or groups that block a number of rooms after a given period of time are discounted as identified by business already in books. Moreover, the cycle of annual meetings or travelling sees companies in the hotel industry adopt promotional rates that increase the probability that customers will return.
Another goal of revenue management is to help in the identification of the price change based on timing (Shy 23). In seasonal pricing, the rates are expected to fluctuate depending on the season being experienced. It is at this point that booking paces plays a crucial role. The historical booking pace ensures that an organization effectively prices its rooms per month depending on the season. Besides, during public holidays, organization ought to increase their prices as customers already have the perception that the prices rise on such days.
Moreover, revenue management often aims at the maximization of revenue for organizations in the hotel industry (Ivanov and Zhechev 178). Hotels often focus on capitalizing on every available opportunity, and this is the reason why customers often spend more when they have to book facilities prior through online booking. Through online platforms, a few packages maybe be added to entice the customers translating to increased revenue generation. Besides, referrals are encouraged in online booking as they increase revenues for organizations although the organizations have to offer incentives to those who refer their families or friends.
Works Cited
Ivanov, Stanislav, and Vladimir Zhechev. “Hotel revenue management–a critical literature review.” Turizam: međunarodni znanstveno-stručni časopis 60.2 (2012): 175-197., https://poseidon01.ssrn.com/delivery.php?ID=066097067102104088088002001097017124061045066084038066109098006011092116104121070093002050032125061099054064103118026119123071053081007021045112095105068088027030035002052114071024124107117072066002082109083092100016122091069118096112118013083007114&EXT=pdf
Ivanov, Stanislav. Hotel revenue management: From theory to practice. Zangador, 2014., https://books.google.co.ke/books?hl=en&lr=&id=ZSrJAwAAQBAJ&oi=fnd&pg=PA7&dq=related:M4bmQSNr-dMOfM:scholar.google.com/&ots=4M6uU8xjaA&sig=n_3FFwYdKlbbf7PVhbSHFJUhA44&redir_esc=y#v=onepage&q&f=false
Shy, Oz. How to price: a guide to pricing techniques and yield management. New York: Cambridge University Press, 2008., https://books.google.co.ke/books?id=Ee6NCSKU8kEC&printsec=frontcover&dq=Revenue+Management+101+for+small+accommodation+providers&hl=en&sa=X&ved=0ahUKEwjA-tuh9MDaAhWBchQKHQ0eCtEQ6AEILTAB#v=onepage&q&f=false