Strategic Pricing through Revenue Management
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Kimes, Sheryl E.
[Excerpt] Revenue management (RM) has been practiced in the airline (Smith, Leimkuhler,& Darrow, 1992),hotel (Hanks, Noland, & Cross, 1992),and car rental industries (Carroll & Grimes, 1995; Geraghty & Johnson, 1997) for over 15 years, and has more recently attracted attention in other industries, including broadcasting, golf (Kimes, 2000), health care (Born et al., 2004), and restaurants (Kimes, Chase, Choi, Ngonzi, & Lee, 1998). RM is applicable to any business that has a relatively fixed capacity of perishable inventory (i.e., seats, rooms, tee times), that inventories demand (either through reservations or wait lists), that has a high fixed cost and low variable costs, and that has varying customer price sensitivity. Industries using RM typically report revenue increases of 2% to 5% (Hanks et al., 1992; Smith et al, 1992).
hospitality management; hospitality industry; revenue management; pricing; finance management
Required Publisher Statement: © SAGE. Final version published as: Kimes, S. E. (2010). Strategic pricing through revenue management. In C. Enz (Ed.), The Cornell School of Hotel Administration handbook of applied hospitality strategy (pp. 502-513). Los Angeles, CA: SAGE. Reprinted with permission. All rights reserved.