What is the meaning / definition of Revenue Management Strategy in the industry?

Although at all hotels Revenue Management is essential, that doesn’t mean it is easy! An individual or team responsible for managing revenue at a hotel, or maybe even across several hotels that are part of an international chain, will find relief in having a Revenue Management Strategy to refer to when dealing with problems and tackling unexpected issues, and of course when seeking to maximise profits through achieving full occupancy at the highest possible rate all year round (every manager’s dream).

So, how should a Revenue Management Strategy be organised and what should it include? Well, the best way to look at it is as a revenue management toolbox: one that includes a set of tools and techniques that can effectively apply the concept of revenue management, where sometimes enormous data sets need to be analysed and evaluated.

To start with, here are 10 suggested tools revenue management teams can utilise:

  • Demand Calendar
  • Market Segmentation
  • Forecasting
  • Booking Curves
  •  Controls
  • Rate Fences
  • Benchmarking
  • Displacement Calculations
  • Unconstrained Demand

With these tools always at hand, revenue managers and teams should then consider basic factors that influence current revenue levels and also forecasted ones:

  • Past occupancy rates
  • General sales
  • target groups
  • Customer segmentation
  • Market(share) information
  • Customer satisfaction

External influences can also shape a revenue management strategy, factors such as:

  • Past weather conditions
  • Holiday and event information
  • Closure of nearby hotels
  • Competitor price information
  • Similar circumstances that are likely to affect a  business

By considering all these tools and factors, it is obvious that all revenue management strategies need to be flexible, to cope with anticipated and unexpected changes in both  Sector trends and inevitable shifts in common consumer behaviour.

See Also:

  • Distribution strategy


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