JavaScript is disabled for your browser. Some features of this site may not work without it.
Revenue Management for Enhance Profitability: An Introduction for Hotel Owners and Asset Managers

Author
Kimes, Sheryl; Anderson, Chris K.
Abstract
[Excerpt] Most hotel managers are familiar with the term revenue management (RM), but RM for the hotel industry has evolved considerably from the original practice, which was developed two decades ago by American Airlines. As that company stated in its 1987 Annual Report, RM's goal is to maximize revenues by selling the right seat (or room, in the case of the hotel business) to the right customers and at the right time. While that definition states the essence of RM, as we discuss in this chapter, the hotel industry has refined the concepts of what is the right room, who is the right customer, and when is the right time. At its most basic level, RM is about a hotel's ability to segment its consumers and price and control room inventory differently across these segments—in essence practicing some form of price discrimination. In. many instances, RM used in the hotel industry has been shown to increase revenue by 2 to 5 percent. The high fixed cost and low variable cost typically associated with the hotel industry means that a large portion of this revenue increase flows directly to the bottom line. As an owner or manager, it is important that you understand what RM is, how it works, how it is typically organized, and how you measure its success. In addition, it is essential that you know the right questions to ask to help ensure that your property reaches its revenue potential. In this chapter, we will highlight the ever-changing face of RM and what an owner needs to know about RM. The purpose of this chapter is to provide a broad overview of RM, enabling the reader to be knowledgeable enough to understand the underpinnings of today's RM systems.
Date Issued
2011-01-01Subject
Cornell University School of Hotel Administration; hospitality management; hospitality industry; revenue management; asset management; profitability
Related DOI:
https://doi.org/10.1002/9781119200901.ch14Rights
Required Publisher Statement: © Wiley. Final version published as: Kimes, S., & Anderson, C. K. (2011). Revenue management for enhanced profitability: An introduction for hotel owners and asset managers. In M. C. Sturman, J. B. Corgel, & R. Verma (Eds.), The Cornell School of Hotel Administration on hospitality: Cutting edge thinking and practice (pp. 192-206). Hoboken, NJ: Wiley. Reprinted with permission. All rights reserved.
Type
article
Related items
Showing items related by title, author, creator and subject.
-
What are the Most Important Capabilities/Competencies for Managers Who Lead People?
Nazim, Javeria; Fredrich, Brian (2017-10-01)With the advancement in technology and the rapid increase of globalization, there is now an increased need for managers to engage in better communication, coordination, improved performance, team monitoring, and interdependency ... -
MULTINATIONAL CORPORATIONS IN CHINA: INSTITUTIONAL AND STRATEGIC PERSPECTIVES ON HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS
Kim, Sunghoon (2008-07-30)The dissertation is composed of three separate essays. The first essay critically reviews the current status of strategic human resource management (SHRM) research. I argue that the research to date in this field is built ... -
How are Companies Taking an Innovative Approach to Succession Planning?
Tsui, Amelia; Proctor, Jesse (2017-10-01)[Excerpt] Proper succession planning is the process of building the right quantity and quality of candidates to fill future vacancies. To do this, the organization must have a firm understanding of the knowledge, skills, ...