A basic introduction to Hotel Revenue Management

1. Introduction to Revenue Management
by
Bijoy-Gaurav Sengupta
bijjoy_sen@yahoo.com
29/05/12 1

2. Have you
ever sold any
of your
belongings?
29/05/12 2

3. 29/05/12 3

4. How did you feel?
29/05/12 4

5. What if you had a ‘friend’ who could advise you about:
• Who is looking?
• How many people are looking?
• Where are they located?
• How badly are people looking?
• How much can they pay?
• What should be the price?
• Should you wait now and sell later?
• Should you sell now rather than waiting?
29/05/12 5

6. Common Definitions
Selling the right product,
to the right customer,
at the right time,
at the right price.
The art of turning away business…
29/05/12 6

7. History of Revenue Management
Mid 1970s – Deregulation of airlines.
Early 1980s – American Airlines and Delta start early bird.
Late 1980s – Creation of Pricing levels and hurdles.
1990s – Advent of Low cost carrier business models.
1990s – Car rentals and hotels copy the Revenue Management model.
1990s – Investment in Revenue Management Systems.
Mid 1990s – Hotels start hiring Revenue Managers (US & Europe).
Late 1990s – Hotel Revenue Management concept adopted by Asian Hotels.
2000s – Hotel chains start investing in customized RM tools.
Current decade – Function Space, spa, restaurants.
29/05/12 7

8. Revenue Management is not Finance!
Revenue Management is not Reservations!
It is about -
Taking decisions which shape the business
mix of a hotel with the intention of
maximizing revenue.
It is about getting the best business mix.
29/05/12 8

9. Business Mix
Rs. 10,000
Rs. 7,000
Rs. 6,000
Rs. 5,000
Rate Rs. 4,500 Transient
Rs. 4,000
Negotiated
Corporate
Groups
Discount
Wholesalers
Crew/Long Stay
10% 5% 5% 35% 25% 20%
Rooms
29/05/12 9

10. Who uses Revenue Management?
29/05/12 10

11. Studies have shown that a hotel with a Revenue
Manager can make 4% more revenue than a hotel
without one.
Total Room Revenue = 40,00,00,000
4% = 1,60,00,000
29/05/12 11

12. Does it now make sense to hire a Revenue Manager?
29/05/12 12

13. Thank You
For Revenue Manager on Hire, Call +91 9830282228