‘Revenue’ the term which immediately attracts attention of any person. Every Organization likes to earn more and more Revenues in the shortest possible period, to achieve ROI and earn more profit.
‘Revenue Management’ techniques had thus arisen from above needs. The Best simplified example of Revenue Management is Airlines. I know everyone of you must have taken a flight for various reasons, be it a business or your personal trip. Have you ever inquired the air ticket price paid by the passenger sitting next to you? Try it next time, you will observe there is a significant price difference between his and your tickets. Why so? When you are boarding same flight, same class, same facilities then what’s the cause for this price difference? It’s nothing but ‘Revenue Management’ practiced by that Airline.
In my first issue, I will take you through all basic fundamentals of Revenue Management and then will elaborate each attribute separately in my next blog.
Revenue Management is also called as yield management in few sectors is basically getting the optimum Yield or Revenue in various situations by studying, analyzing given situation and then work out strategies accordingly. Let’s take an example of your Hotel Room; you know its perishable product & if you don’t sell for that day then you are lost. Selling these rooms at right price is also a challenge, to overcome both these problems new generation Revenue Manager Concept started in Hotel Industry.
Now, what’s the basic job of Revenue Manager – it’s nothing but ‘Allocating your resources right way to get optimum yield or Revenue in any given situation’.
What’s the first step in Revenue Management, what should I know?
- Product Knowledge
- Services Offered – Categories & level of satisfaction
- Market Demand Supply Ratio
- Market Competition & Market penetration
- Market Segments for your product Vs Comp set
- End Customer – his behavior & booking pattern
- Rooms – Day-wise Occupancy / ARR / RevPAR
- F&B – Venue-wise Occupancy / CTO / APC
- Hotel Inventory / Venue – allocation
- Rate Analysis – Demand Forecasting
- Cost Analysis – Operating Cost
Conclusion : Considering today’s situation, Revenue Manager’s job is not only restricted to Rooms Division or Online Revenue Distribution but going forward today expectation from him to Manage Revenue for entire Unit or hotel including F&B and Other Divisions to get best possible yield keeping Cost in control to optimize the ROI for investors.
In my next blog I will try to elaborate all above attributes and we will go deeper in Revenue Management process.
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