CHAPTER 6:

REVENUE
MANAGEMENT
 CHAPTER 6:

REVENUE MANAGEMENT
 REVENUE
MANAGEMENT
 REVENUE MANAGEMENT
Revenue Management is a popular concept within the hotel industry, and is
used to optimize a hotel or resort’s financial results by maximizing revenue.
The accepted definition is :

selling the to the for the via the with the

right hotel at the right
right right best cost
room right time price
customer channel efficiency

Typically, it requires businesses to make effective use of

performance data and analytics to predict demand,
establish a dynamic pricing model and maximize the
amount of revenue that the company brings in.
Importance of
Revenue
Management
IMPORTANCE OF REVENUE MANAGEMENT
Revenue management has
always been the least
understood part of an
independent property’s
operations – hotel owners do
accept that proper revenue
management strategies can
boost occupancy, but they don’t
consider it something crucial to
a hotel’s success.
 Revenue
Management
Strategies
REVENUE MANAGEMENT
STRATEGIES
9 Revenue Management Strategies that can help
hotel businesses grow.

• Understand Your Market

• Segmentation and Price Optimization
• Work Closely With Other Departments
• Forecasting Strategies
• Embrace Search Engine Optimization
• Choose the Right Pricing Strategy
• Incentives for Direct Bookings
• Focus on Mobile Optimization
• Work with a Freelance Revenue Manager
REVENUE MANAGEMENT STRATEGIES
 Understand Your Market

In order to implement a successful revenue

management strategy, it is imperative that
you have a clear understanding of your
market, where demand comes from and
the various different local factors that
might affect seasonal demand.

Moreover, you need to understand the

competition that exist within the market
and make strategic decisions regarding
price, discounts and advertising with this
competition in mind.
REVENUE MANAGEMENT STRATEGIES
 Segmentation and Price
Optimization
The concept of selling the right room to
the right person at the right price
requires you to appropriately segment
your customer base.

When this is carried out, it allows you to

optimize prices for those different
segments. One of the key advantages of
this is that once prices optimized for a
particular segment, price changes can be
minimized.
REVENUE MANAGEMENT STRATEGIES
 Work Closely with Other
Departments
Next, it is important to achieve close
collaboration between the various
different hotel departments, such as
marketing, in order to ensure that your
revenue management strategies and their
individual departmental strategies are in
alignment with one another, and so that
you can address challenges collectively.
You should identify key departmental
decision-makers and bring them on
board.
REVENUE MANAGEMENT STRATEGIES
 FORECASTING STRATEGIES

One of the most important aspects of

revenue management is forecasting,
which allows you to anticipate future
demand and revenue, enabling
necessary adjustments to be made.
Within the hospitality industry, high-
quality forecasting relies on accurate
records being kept, including
occupancy, room rates and revenue.
REVENUE MANAGEMENT STRATEGIES
 Embrace Search Engine
Optimization

Search engines offer one of the single

biggest opportunities for those
operating in the hotel industry to
attract customers, which makes search
engine optimization an important part
of a robust revenue management
strategy. Through SEO, hotel owners
can improve the visibility of their
website on search engine result pages .
REVENUE MANAGEMENT STRATEGIES
 Choose the Right Pricing
Strategy

A competitive pricing strategy,

where prices are set based on other
hotel prices, puts your business in
direct competition and is good when
your hotel has more to offer than
your rivals do. Yet, in slow seasons,
a discount strategy might be best,
because a low paying customer is
better than an empty room.
REVENUE MANAGEMENT STRATEGIES
 Incentives for Direct
Bookings

It is also sensible to try to

maximize the number of direct
bookings that are made. The
primary reason for this is because
direct bookings do not require the
commission to be paid to third
parties, which means they are
ideal for maximizing revenue.
REVENUE MANAGEMENT STRATEGIES
 Focus on Mobile
Optimization
In the hotel industry, mobile has
become one of the single most
important revenue streams. As
result, any hotel or resort that is
operating without having
prioritized mobile optimization is
already operating at a distinct
disadvantage compared to their
competitors.
REVENUE MANAGEMENT STRATEGIES
 Work with a Freelance
Revenue Manager
It can be beneficial to enlist the
help of a freelance revenue
manager, who will be able to
bring knowledge, expertise and
experience into your organization.
Freelancers are used to coming
into hotels and getting to work
quickly, and can work as and
when you need them.
REVENUE MANAGEMENT STRATEGIES

CONCEPT :
Selling the To the For the Via the
At the right
right hotel right right price right
moment
room customer channel
REVENUE MANAGEMENT STRATEGIES
Revenue Management plays a major role in supply chain and
has a share of credit in the profitability of supply chain when one or
more of the following conditions exist :

• The product value differs in different market segments.

• The product is highly perishable or product tends to be defective.
• Demand has seasonal and other peaks.
• The product is sold both in bulk and the spot market.

The strategy of revenue management has been successfully applied

in many streams that we often tend to use but it is never noticed.
Hotel Pricing
Strategies
 HOTEL PRICING STRATEGIES
Pricing is a factor that gears up profits in supply chain
through a appropriate match of supply and demand.
Revenue management can be define as the application of
pricing to increase the profit produced from a limited
supply of supply chain assets. Ideas from revenue
management recommend that a company should first
use pricing to maintain balance between the supply and
demand and should of further investing or eliminating
assets only after the balance is maintained.
 HOTEL PRICING STRATEGY
There are number of questions that should surround
your pricing strategies:

• What do your guest want?

• Which strategy will complement the business mix?
• How will different strategies affect connected
channels and distribution partners?
• How does your strategy integrate with your channels?
• Who are the experts that can help determine the right
strategy?
 HOTEL PRICING STRATEGY
The first priority of pricing should be
forecasting. This way you can predict
demand so you can get travelers to book early.
Then you can raise rates later as availability
drops and demands increases. This is an ideal
pricing structure known as the “ascending
model” whereby pricing increases closer to an
arrival day.
MOST COMMON AND EFFECTIVE HOTEL PRICING STRATEGIES

DYNAMIC PRICING
Dynamic pricing involves
changing room rates daily or even
within the day based real-time
market data. Taking supply and
demand into account, prices
should fluctuate regularly if you
want to maximize revenue. This
pricing option is well suited in
today’s market and is one many
hoteliers opt to use.
MOST COMMON AND EFFECTIVE HOTEL PRICING STRATEGIES

OPEN PRICING
Open pricing defines the
flexibility hotels around the globe
have to set their prices at different
levels depending on the various
target markets and distribution
channels they deal with. This
luxury of choice allows hotels to
forecast more accurately.
MOST COMMON AND EFFECTIVE HOTEL PRICING STRATEGIES

OTHER HOTEL PRICING STRATEGIES

There are numerous pricing strategies

you can use at your hotel as part of your
broader revenue management strategy,
many of them in conjunction. Here’s a
list of the most common pricing
strategies your hotel might find useful:
OTHER HOTEL PRICING STRATEGIES

Value-added Pricing

You can set your room rates

higher than the local
competition while also offering
more extras in the basic
package. This gives the illusion
that the hotel offers a premium
experience that focuses on value
rather than just low rates.
OTHER HOTEL PRICING STRATEGIES

Discount Pricing

Used in low seasons to boost

occupancy by dropping base
rates. Revenue can be made up
through other services in the
hotel.
OTHER HOTEL PRICING STRATEGIES

Price per segment

Offering the same product at

different prices to different
types of customers.

E.g “family rate”

OTHER HOTEL PRICING STRATEGIES

Length of Stay

When demand outweighs

supply, it can help to implement
a rule where guest are
“obligated” to stay a minimuim
number of days. In such cases,
lower rates may not be
necessary.
OTHER HOTEL PRICING STRATEGIES

Positional Pricing

Basing your rates off

brand strength and
reputation.
OTHER HOTEL PRICING STRATEGIES

Penetration Pricing

Positioning yourself as the

cheapest in the market. Be
mindful of how travellers will
perceive your hotel- you need
to retain the opportunity to sell
at higher rates.
OTHER HOTEL PRICING STRATEGIES

Skimming
Positioning your hotel among
the most expensive. Price
leaders often achieve among
the highest profitability
, however the consumers need
to clearly understand the
reasons that they would pay
more for staying at your hotel.
 THANK YOU FOR
LISTENING !!!
GROUP 5
Roxanne Yvette Robles
Lai Ann Sumagui
Rochelle May Doromal
Louise Andrea De Castro
Aeron Rodriguez
Aldrei Caguindagan