Revenue Management

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Revenue Management 2012/2013
(FTRD 9001)

In an economic downturn, the task of the Revenue Manager is a challenging one, with a fall in overall demand and ensuing lower prices in the Market Place. Discuss strategies and tactics that may be used to best manage revenue in the current environment.

TABLE OF CONTENTS
Summary......................................................................................................................3 1. Introduction ................................................………………………………................ 4

2. Benefits of Revenue Management...............................................................................4

3. Implementation of Revenue Management in the Hotel Industry.................................5

4. Revenue management Tactics in Economic Downturn............................................... 8

5. Conclusion................................................................................................................... 12
6. Recommendation......................................................................................................... 12

Reference ................................................................................................................................ 13 Appendices...............................................................................................................................14
Summary

Revenue management typically involves offering the right price and promotions to achieve desired profits by correctly identifying the customer groups that the company has to serve, establishing the right (quantity of) products and services as well as setting up the prices to be offered to these customers. Therefore, this paper attempts to explain the implementation and tactics necessary to undertake Revenue Management in Economic downturn. The following questions were formulated in order to identify how Revenue Management can be implemented : 1. What are Revenue Management and benefits to the industry? 2. What are the important steps to implement in Revenue Management? 3. What are the tactics of Revenue Management in the economic downturn?

This paper answers all the questions based on the analysis, tactics, and techniques that are important for the implementation of an effective Revenue Management system in Economic downturn.

Key words: Revenue Management, Economic Downturn, RevPAR

1. Introduction: Revenue Management

The purpose of this study was to find out what are Revenue management(RM) tactics and strategies which are used in the hospitality industry in Economic downturn with the overall fall in demand and pricing is the main concern for survival and maintain profit.

From its origin in the airline industry nearly six decades ago RM has expanded to the hospitality industry in the past two decades and been very successful in North America and Europe are adapting and applying its principles (Kimes 2008; Xie Xiaoqing 2010).

So when defined RM is to manage customer behavior at the individual level via price and availability of constrained resources to maximize profits (K. Anderson Chris and Xie Xiaoqing , 2010).

Jones (1999) defines RM as “A system for hotel owners to maximize profitability through their senior management in hotels identifying the profitability of market segments, establishing value, setting prices, creating discount and displacement rules for application to the advanced reservation process, and monitoring the effectiveness of these rules and their implementation”.

In simpler terms, RM has been defined as selling the right product to the right customer at the right time for the right price(Cross, 1997). We can summarize RM as the process of understanding, anticipating and reacting to consumer behavior in order to maximize revenue or profits (Raimondo, revenuemanager.eu).

2. Benefits of...
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