Workshops Revenue Management
Notes
The Golden circle
Segmentation & Business Mix
(leisure, business, groups)
Differentiating
(price categories and rate Right
fencing) Right Cust
Prod
Supply & demand, Optimal balance
Maximize
Right between price & quality
revenue &
Price (Value based pricing, cost based
Optimizing
pricing)
profit
Right
Place
Right
Time
Distribution Management
(Distribution channels and PUP)
Displacement analysis & Forecasting
(Historical data, current and future
data)
Displacement Analysis:
Tool that you use to understand which type of customers is more interesting for your
business
Low season Take any kind of business
High season Very important that you chose the one that will give you more money
or more interesting
Think about long run!
Customer worth:
Can be calculated (organization’s perspective)
(room revenue and extra revenue – Acquisition cost) x number of visits
Customer value
Customer’s perspective
The higher the volume, the higher the customer worth
, Customer worth and customer value is important for a company to understand in
order to retain the right customer. The higher the value of the customer, the higher
your customer worth or business worth.
Elements to determine the price and tools
- Supply and demand, External factors, Expected demand, Positioning,
Willingness to pay, Competition
- Value based pricing, Cost based pricing, Benchmarking, SWOT, Segmentation
analysis, Satisfaction reviews
Main factors that impact elasticity of demand
- Luxury and Necessity (Most expensive or cheapest)
- Availability (competition)
- Time factor (air conditioning in summer?)
- Price relative to customer budget (big wallet vs small wallet)
Revenue managers care about price elasticity to know when they are allowed to
change prices and get the most out of their rooms: if a small change creates bid
demand do it
Always remember: RM to maximize revenues and optimize profits.
Requirements for a hotel to have a proper inventory management per channel
- Rooms and PMS
- Demand is always different, it fluctuates (fluctuation of demand) and what
is not sold today won’t be sold tomorrow (Perishable product). In addition,
there is a limited fixed capacity. Therefore, it is important to sell at the right
time and on the right channel (not too late, takes into consideration the
demands)
PUP
Pup is an approach for inventory management
- Pricing (different prices for different categories)
- Units (how many rooms do I need per segment on which channel, what
channel targets what segment? Look at business mix!)
- Purchasing rules (price fencing, stay controls, conditions and restrictions)
Price parity
= same rate, same product
!! Price parity is per system !!
If a hotel don’t adopt a price parity, the OTA’s can undercut them anytime because
of the commission (set lower prices). Also, it is bad for customer reassurance (cross-
channel behavior!)
OTA’s like price parity and it is good for the hotel because easier, but they don’t
make as much money.
I.D.S types
Internet site Type Characteristics Pro’s Con’s
Hotwire Opaque Price or To sell the last Customers
Channel product few rooms and very focus on
hidden offer luxury price, they
product at usually don’t
lower price come back
Notes
The Golden circle
Segmentation & Business Mix
(leisure, business, groups)
Differentiating
(price categories and rate Right
fencing) Right Cust
Prod
Supply & demand, Optimal balance
Maximize
Right between price & quality
revenue &
Price (Value based pricing, cost based
Optimizing
pricing)
profit
Right
Place
Right
Time
Distribution Management
(Distribution channels and PUP)
Displacement analysis & Forecasting
(Historical data, current and future
data)
Displacement Analysis:
Tool that you use to understand which type of customers is more interesting for your
business
Low season Take any kind of business
High season Very important that you chose the one that will give you more money
or more interesting
Think about long run!
Customer worth:
Can be calculated (organization’s perspective)
(room revenue and extra revenue – Acquisition cost) x number of visits
Customer value
Customer’s perspective
The higher the volume, the higher the customer worth
, Customer worth and customer value is important for a company to understand in
order to retain the right customer. The higher the value of the customer, the higher
your customer worth or business worth.
Elements to determine the price and tools
- Supply and demand, External factors, Expected demand, Positioning,
Willingness to pay, Competition
- Value based pricing, Cost based pricing, Benchmarking, SWOT, Segmentation
analysis, Satisfaction reviews
Main factors that impact elasticity of demand
- Luxury and Necessity (Most expensive or cheapest)
- Availability (competition)
- Time factor (air conditioning in summer?)
- Price relative to customer budget (big wallet vs small wallet)
Revenue managers care about price elasticity to know when they are allowed to
change prices and get the most out of their rooms: if a small change creates bid
demand do it
Always remember: RM to maximize revenues and optimize profits.
Requirements for a hotel to have a proper inventory management per channel
- Rooms and PMS
- Demand is always different, it fluctuates (fluctuation of demand) and what
is not sold today won’t be sold tomorrow (Perishable product). In addition,
there is a limited fixed capacity. Therefore, it is important to sell at the right
time and on the right channel (not too late, takes into consideration the
demands)
PUP
Pup is an approach for inventory management
- Pricing (different prices for different categories)
- Units (how many rooms do I need per segment on which channel, what
channel targets what segment? Look at business mix!)
- Purchasing rules (price fencing, stay controls, conditions and restrictions)
Price parity
= same rate, same product
!! Price parity is per system !!
If a hotel don’t adopt a price parity, the OTA’s can undercut them anytime because
of the commission (set lower prices). Also, it is bad for customer reassurance (cross-
channel behavior!)
OTA’s like price parity and it is good for the hotel because easier, but they don’t
make as much money.
I.D.S types
Internet site Type Characteristics Pro’s Con’s
Hotwire Opaque Price or To sell the last Customers
Channel product few rooms and very focus on
hidden offer luxury price, they
product at usually don’t
lower price come back
