Question 2:

According to Hayes & Miller (2011), a revenue manager will be responsible for working
closely with the GM, DOSM and FOM in order to implement strategies agreed upon this
team and optimize the revenue of the hotels. Hence, a revenue manger should be able to
recognize and utilize the relevant information to draw conclusion related to the effect on hotel
revenue. Besides, he or she should also be able to apply existing revenue management system
to forecast, implement and evaluate optimization strategies. Last but not least, a person in this
position should possess strong analytical skills as well as excellent communication and
interpersonal skills. If we go through the website HCareers, we can see a lot of job
description of revenue managers with similar requirements as mentioned above.

As mentioned in the early of this case, the Executive Committee has collaborated in the
setting of room rates and Alice is considering bringing in a Revenue Manager. It can be
understood that the initial purpose of recruiting a revenue manager is to establish the room
rates. Hence, the first person RM should report to is David - Room Manager. In this case, the
RM supports the front office in establishing room rates, controlling reservations, and
managing the relationship with various third parties and distribution channels. Depends on
the objective of business employing the RM, the reporting relationships of RM will vary. If
besides supporting setting the room pricings, Alice, expects the RM to forecast demands and
play main roles in the selling process, so the RM also should report to Mike – Director of
Sales and Marketing.

Question 3:

As revenue managers, it is essential to obey all of the regulations that have direct impact on
theirs decision making; however, ethics might have more influence on the decisions made
about prices and selling. Of course, RMs should make their prices and the ways those prices
are managed is fair. The difficulty often comes from the determination of what makes of a
fair price. Ivanov & Zhechev (2011) pointed out some acceptable and unacceptable revenue
management practices perceived by customers, one of them is the perception of consumers
regarding different prices for products like weekend and weekday price. Hence, the hotel can
have a higher price during weekend. However, they have to make sure that the change in
price is fairly and well perceived and accepted by the customers. Hayes & Miller (2011) has
mentioned six price concepts the revenue managers should put in mind include the following:
Price should be presented fairly (no hidden cost or after-purchase charge); Rewards are more
preferable than punishments; Discounts are viewed more favorably than surcharge; Price
increased justified only by supply shortage or increase in customer are likely to be views
unfavorably; Lower prices are available for all buyers and A seller’s pricing offer must be
easily explained and understood. Therefore, if we considered about these concepts, it can be
said that customers are likely to view this change in price due to increased customer demand
as unfavorably and tends to reject the product. Hence, if the hotel want to change the price,
their pricing must be presented carefully and fully to consumers and be explained to their
buyers so that the buyers will accept the change and consider it as fair.
Question 4:

If we choose the OTA, our profit can be estimated as below:

Revenue from selling room: £195 x 85 = £16,575

Income from bar: (£5 x 85 x30% x 2) + (£5 x 85 x 70%) = £552.5

Total Income: £ 16,575 + £ 552.5 = £ 17,127.5

The Revenue from Group Sales can be estimated as: £270 x 90 = £24,300

In this case, we can see that Group Sales will be more beneficial as the revenue generation
from Group Sales is higher from OTA named Bayou.

There are several benefits and challenges of working with OTA in the view of hotel revenue
management. According to Caliskan et al., (2013), OTA can reduce various costs related to
business operations since it can deal with a lot of presale activities that would be traditionally
performed by hotel themselves. Moreover, since customers have more chances to compare
and make comprehensive decision, there has been a steady increase in the number of
consumers from OTA. Another existing major contribution of OTA is the creation of selling
channel and value-added in the existing revenues as well as the increase in market power,
customer satisfaction and loyalty of a hotel when being a part of online travel network.
However, using OTA might bring a lot of disadvantages. According to Barthel & Perret
(2015), the hotel have to pay very high cost, the commissions are often from 10-20% for
branded hotels and 15%-25% for independent hotels. The hotel also holds only intermediary
control of information if using OTA and using OTA as booking method might create “online
price transparency” which lead to the competition in price and reduce the loyalty of
consumers toward hotels.

Question 6:

Revenue Management has taken great strides since its early and simplistic days of applying
yield management to maximize the revenues by varying prices in response to consumers
demand. In hotel industry, revenue management must manage both hard and soft supply
constraints and understanding of the implications inherent in managing these constraints
makes the revenue management in hospitality a unique job. According to a research in UK
essay (2018), there are three essential conditions for revenue management to be applicable.
First, hotel has a fixed amount of resources available for sales (rooms, other services).
Second, this resource is unstable. And last, customers are willing to pay different price for
using the same resource. These conditions has also been confirmed Ivanov (2014) and hotel
industry satisfied all these conditions. Revenue management problems can be categorized
into several different, but related, areas: pricing, capacity control (or inventory control),
overbooking, forecasting and distribution channel. The revenue management needs to collect
data related to those problems to create an optimization strategy to maximize the profit and
ensure the operation of the business. For hospitality industry, data related to these problems is
huge and complicated. There needs to be various methods to gather all data, calculate and
have appropriate solutions for each problem.

Question 7:

The future of RM practices has been predicted in the research of Kimes (2011). In this
research, Kimes had conducted a survey with 400 RM professionals and the results have
pointed out the future application of RM in three areas: Food and Beverage, Facilities
(functional spaces, spa, golf, parking) and Restaurants, event, outlet and banquet services. In
traditional food service pricing method, the menu prices are designed based on the basis of
one of the following principles: product cost percentage, product cost: plus and contribution
margin. These methods remain their focus on what the food service operators pay for
ingredients used to make menu items, which create some drawbacks as with cost-based
strategy, customers do not think that they have to ensure the profit of any manufacturers and
business. With RM, we can apply different pricing strategy in food services. Moreover,
revenue managers can analyze their source of income by revenue center, day part, services
style. RMs can use various methods to have accurate measurement and assessment of the
change in revenue generation as well as evaluation of their efficiency in revenue generation.
Revenue Management can be used to manage time in restaurant, including two types:
uncertainty of arrival and uncertainty of duration of visit. For pricing, RM can be applied to
determine some tangible price fences (party size, menu types, value-added promotions) as
well as intangible ones like group affiliation. In the banquets area, RM is used for physical
rate fences like room size and shape or non-physical like estimation the preferential rate of
guest room bookers. Moreover, RM can be application for the development of revenue in
banquets and events such as estimation and management of food and beverage (themed
events, supplier relation, etc.) or ancillary revenue from partnership with photographers or
entertainment agencies. In the research of Kimes & McGuire (2001), they had developed a
revenue-management program for the Raffles City Convention Center in Singapore including
5 steps: establish the baseline of performance, understand the drivers, develop revenue
management strategy, implement and monitor the outcomes of the strategy. We can also refer
to these steps in our future events.
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Caliskan, Semra & Kutlu, Birgul & Kimiloglu, Hande. (2013). The Contribution of Online
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Essays, UK. (November 2013). Current Issues Facing Revenue Management. Retrieved from
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Hayes, D. K., & Miller, A. A. (2011). Revenue management for the hospitality industry.
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HCareers Website: https://www.hcareers.com/

Ivanov, Stanislav & Zhechev, Vladimir. (2011). Hotel Revenue Management – A Critical
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Ivanov, Stanislav. (2014). Hotel Revenue Management: From Theory to Practice.

10.13140/RG.2.1.2714.8960.

Kimes, S. E., & McGuire, K. A. (2001). Function-space revenue management: A case study
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Kimes, S. E. (2011). The future of hotel revenue management. Journal of Revenue and
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