Introduction to Revenue Management

• is one of the aspect that should be taken care of professionally as it affects organizational performance and sustainability.

  Revenue Management
• represents the result of business operation and measure of its performance is a financial resource that should be utilized efficiently.

  Revenue
• Number of units sold × Unit price = Revenue


  Revenue Formula
• defined as the total amount of sales achieved in a specified time period.

  Revenue
• effective managers of an organization’s revenues simply must do three

  things:

  • Understand the importance of revenue management;
  • Understand the many complex factors that influence revenue management strategy and tactics; and
  • Become better at making revenue management decision than their competitors.
• as the net value achieved by a seller and a buyer in a business transaction

  Profit
• as an acceptable medium of exchange used as the measure of the

  value of goods and services.

  Money
• “The purpose of business is to create and keep a customer”. Businesses do so by ensuring that each customer transaction results in an increase in wealth for the customer.

  Peter Drucker
• Profits are the result of two tasks:

  Generating Revenue and Controlling Expenses
• The purpose of a successful hospitality business is to provide profits to its customers (not itself), and as a result, increase those customers’ wealth (not the wealth of the business’s owners).
• Businesses that effectively service their customers’ needs will prosper, achieving high levels of their own operating profits and producing attractive ROIs for the owners of the business.
• “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”

  Henry Ford
• “If you work just for money, you’ll never make it; but if you love what you’re doing and you always put the customer first, success will be yours.”

  Ray Kroc
• Founder of McDonald's

  Ray Kroc
• is a restriction on product availability that, in the short run, cannot be remedied at any price

  Hard supply constraints
• can at some cost allow for additional product availability.

  Soft supply constraints
• Establish one fixed price, then sell to customers on a first come-first served basis until they have exhausted their supply of products.
• Allocate the limited supply to selected customers who meet established criteria (i.e., they are volume buyers, repeat buyers, or they hold other favored buyer status).
• Raise their prices until demand is reduced sufficiently to equal the available supply.
• foodservice supply formula

  Number of seats available × Hours of seat availability

  = Total available seat supply
• R.A. 10667

  Philippine Competition Act (PCA).
• Consumers are entitled to a reasonable price; Businesses are entitled to a reasonable profit.

  Dual Entitlement Theory
• • Step 1: Establish Prices Step 2: Forecast Demand Step 3: Manage Inventory Step 4: Manage Distribution Step 5 : Evaluating and Results 


  The Revenue Manager Position
• is to optimize the hotel’s revenues by working closely with the GM, DOSM, and FOM and implementing strategies agreed upon by this team.

  Revenue Manger
• Optimize RevPAR by analyzing and forecasting demand

  and establishing effective selling strategies.

  Revenue Manager
• Work with the director of sales and marketing and hotel team to establish strategies to increase room revenue.

  Revenue Manager
• Manage and update current selling strategies and product information in all available internal and external distribution channels and reservation sources.

  Revenue Manager
• Facilitate weekly revenue strategy meetings.

  Revenue Manger
• Conduct ongoing competitor price analysis to ensure proper rate positioning relative to the competition.

  Revenue Manager
• Generate and distribute daily, weekly, and monthly revenue management reports.

  Revenue Manager
• Maintain historical data from all distribution channels in all market segments.

  Revenue Manager
• Continually monitor all pertinent travel related web sites to ensure competitiveness in both availability and price.

  Revenue Manager
• Prefer previous revenue management experience

  Revenue Manager
• Strong analytical skills

  Revenue Manager
• Ability to identify relevant data and use it to draw inferences with reference to impact on hotels revenues

  Revenue Manager
• Excellent communication skills and interpersonal skills

  Revenue Manager
• Ability to use PMS/reservation/revenue management systems to forecast, implement, and evaluate optimization strategies

  Revenue Manager
• your own role in the revenue management team will likely be one of planning, organizing, directing, and evaluating your team’s revenue manager activities.

  Revenue Manager
• Business owners, corporate or property level managers, and department heads all will have input into your revenue management decision making.

  Organization Administrators
• Pricing and revenue management activities are closely related to sales and marketing activities.

  Sales and marketing staff