Th e stages of RM process have been identifi ed as goal setting, collection of data and information, data analysis, forecasting, decision making, implementation and monitoring. Th e elements of the hotel RM system discussed in the paper include hotel RM centres (room division, F&B, function rooms, spa & fi tness facilities, golf courses, casino and gambling facilities, and other additional services), data and information, the pricing (price discrimination, dynamic pricing, lowest price guarantee) and non-pricing (overbookings, length of stay control, room availability guarantee) RM tools, the RM software, and the RM team. Th e article emphasises on the diff erent directions of hotel RM research and is structured around the elements of the hotel RM system and the stages of RM process. Turner Broadcasting Corporation has increased its target audience by 27% and decrease its cost per impression by 20% (Reported in 2018).Th e paper presents a literature review of the main concepts of hotel revenue management (RM) and current state-of-the-art of its theoretical research.Eurpcar integrated forecasting simulation and optimization to increase its fleet utilization by 3% and revenue by 1 to 10% in different countries of Europe (Reported in 2018).Ingram Micro, the world's largest distributor of technology products has increased its profit by 42 miliion and revenue by 1.3 billion.Carlson Rezidor Hotel group and JDA has created next generation Revenue Optimisation Tool that is being used in more than 183 hotels and made 2 to 4% revenue improvement at pilot stage. Retail price optimisation of more than 2,000 hotels of Intercontinental Hotel group has led to 2.7% increase in revenue in 2009. Recent Applications of Revenue Management It may be worth mentioning that application of management science models improved the contribution to profit of Tata Steel by $73 million in 1986-87 and gave a cumulative impact of hundreds of millions of dollars in later years.Texas Children's Hospitals use revenue management as competitive advantage.German Railways is using revenue management. French National Railway has increased its revenue by 110 million francs/year.Today more dynamic vision is used by Uber and Ola Cab. National Car Rental has increased its revenue by $56 million/year.Surge pricing in taxi cab rental is well known in India and abroad.
American Airlines, one of the pioneers, increased its yearly revenue by $500 million as a result.
#Dynamic pricing and revenue management software
Software companies that specialise in revenue management software solutions are visible and vibrant in India.Revenue management concept has already been demonstrated by use of dynamic pricing by airlines, hotels, different tariffs by power generation and distribution companies, and different rates service by the Indian Railways.One Indian Hotel Company made 63% increase in revenue by applying RMDP.
More than 10000 hotels internationally are using revenue management system.There are numerous demonstrations of the impact of RMDP in various industries. Studies by a leading consulting company have shown that for the average S&P 1500 company, a price increase of 1% would generate an increase in profits of 8-12%, i.e., an impact 50% greater than a 1% cut in variable costs and 300% greater than a 1% increase in volumes.Ĭoined as the “number one emerging business strategy” by the Wall Street Journal, revenue management is the art and science of price-driven profit maximisation. The general principles of revenue management are widely applicable although each particular application needs to carefully address the requirements of a specific industry. Revenue Management and Dynamic Pricing (RMDP) is the scientific and proven method of dynamically managing prices, inventories, and capacities of perishable products and services to maximise revenue when demand is uncertain. Some examples of perishable service providers are broadcasters and telecommunication companies. Airline seats, hotel rooms, and rental cars are some of the examples of perishable services. A perishable service is one that cannot be used after a certain time.
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