Revenue Management as a Multi-Disciplinary Business Process

Abstract

ABSTRACT In today's volatile markets, with consumer buying behavior evolving rapidly, rudimentary revenue management practices are no longer sufficient. Given the complexity of demand patterns in today's markets, optimal demand management is achieved only with a totally holistic approach. This means that revenue management must be treated as a highly structured multi-disciplinary business process, including a fully synergistic approach to the relationship between marketing, sales, and operations. Key components of a comprehensive revenue management program include: (1) aligning product to customer demand, (2) taking a structured approach to competitive benchmarking, (3) creating a strategic pricing framework, (4) forecasting unconstrained demand, (5) using business mix as a primary strategy, and (6) managing distribution effectively and efficiently. In all of these areas, existing best practices enable hotels to optimize demand and to approach markets in a balanced manner, securing higher room rates when possible and higher volume when needed. This article explores elements of product alignment, competitive benchmarking, and strategic pricing.