Revenue Management Complete Solution Latest 2023

Revenue Management Complete Solution Latest 2023 Revenue management is - Selling the right product at the right time to the right customer at the right place at the right price Revenue management techniques - Differentiation, market segmentation, optimal balance between price and quality, influence availablity, choosing the right distribution channel Right product: - Differentiation (differentiate your product from competitors) Right customer: - Market segmentation (finding the right market segment to serve) Right price: - Optimal balance between price and quality Right time: - Influence availability (of the product on the market. ex: stake controls) Right place: - Choosing the right distribution channels (IDS&GDS) Perishable inventory - For example a seat in a restaurant. If it isn't sold at one moment in time the opportunity to sell it again in that moment is gone. Fixed inventory - Hotels have a fixed amount of rooms, they cannot make this more/increase the capacity Provide two examples of a stay control application - Minimum length: Restriction of stay time on arrival. (ex: one needs to stay a minimum of two nights) Max length: Restriction on arrival. (ex: one can only stay a maximum of two nights) Restrictions to arrival and departure: one cannot arrive for example on a monday or thursday Displacement analysis function - it is applied to maximize profit/revenye by selecting the most profitable guests. Also used for rate allocation, to decide what rate to use on what day to what customer (ex: in room nights stayed) Give on example to illustrate why this analysis is an important tool for revenue managers - -walks/no shows -propensity: depicts the groups potential over a longer period of time Customer worth - Describs the total value of the customer to the organization from the organizations perspectives Market segments - A group of customers which can be identified by one or more common characteristics Optimal business mix - A company's product mix determines the proportionate amount of each product it offers to its customers. (ex: 20% to leisure, 50% to business, 30% to groups. In rooms sold) What is the relationship between optimal business mix and willingness to pay - The relationship is that an organisation will attempt to allocate more of its product to the market segment that is willing to pay (more). (Ex: During a business event in Leeuwarden, the business market segment will be willing to pay more for rooms because they need it.) GDS - Global distribution system: A distribution system that offers the possibility to an organisation to store and sell their products globally. (Hilton can place their rooms in a GDS which means other organisations(IDS's) can access the product and allocate/sell it for them) IDS - Internet distribution system: A distribution system that is accessible for everyone, companies as well as customers. Explain the difference between GDS and IDS. - IDS is accessible for everyone, GDS is only available for companies. Example of GDS - Amadeus/Galileo/Sabre Example of IDS - Auction: Referral/meta-search: TripAdvisor Merchant: E Opaque: H (either the price or the product is visible. Only one of them.) Why is it important to implement inventory management per channel? - Inventory management: Maximizing profit by allocating your product to different the channels that deliver the greatest total customer worth. Answer: It is important because it means maximizing revenue by selecting different distribution channels at different moments in time that deliver the greatest total customer worth. Describe three possible options hotel organisations have, to manage their inventory per channel. Divide these options in pricing, unit availability and pricing rules & conditions (PUP). - Pricing: Dividing their product prices over different catagories/segments Unit availability: Allocating the amount of product over the different catagories Pricing rules & conditions: Rate fencing (Setting maximum and minimum rates for the product and applying cancellation fees.) or stay controls. What is the term used to describe the practice of maintaining consistent prices across all channels of distribution - Price/rate parity (which means the price for your product is the same over all channels) What is the primary reason for forecasting future room demand? - To increase your revenue by adjusting price to demand. (Rate management) Carol has 100 hotel rooms to sell. Next weekend demand for her rooms will exceed hotels fixed capacity with 25 rooms so she will be refusing 25 requests for rooms. Is this an example of unconstrained or constrained demand - It is constrained demand because demand is held back by availability. (The hotel is fully booked.) Unconstrained demand - No restrictions, naturally occurring demand in absence of restrictions (This occurs when the hotel is not fully booked.) Which two revenue management tactics would you advise carol to use to optimize the revenue of a company to manage next weekend's demands. - -Rate management (Increase room price to fit the demand) - Implementing stay-controls What is the function of a room revenue budget - Answer: Budget is a financial target of what you want to achieve. Budgeting - where you want to go Forecasting - where you are going Key performance indicators (KPI's) - Average occupancy, average daily rate, RevPAR, Yield, business mix, rooms department income Average occupancy - rooms sold/total rooms x100 Average daily rate - room revenue/no. of rooms sold RevPAR - total room revenue (rooms soldxADR)/rooms available