Revenue management summary
Lecture 1: basics of revenue management
Key topics lecture 1:
Customer centric approach, price elasticities, price fencing, segmentation, dynamic pricing and open
pricing, pricing conditions, inventory management per channel, capacity management
differentiation, value based pricing, cost based pricing, willingness to pay, forecasting, displacement
analysis.
What you already should know……
- What is the history of revenue management?
- How to calculate yield%? What rate categories can you think of?
- What is the revenue per available room?
- What are the conditions for implementing revenue management?
- What are market segments, can you identify?
- On what revenue management techniques can you apply in a period of low demand?
- How to make the best decision in order to maximize profit?
Conditions for effective revenue management:
Perishable goods
High fixed cost
Low variable cost
Limited and fixed capacity/inventory
Time critical – large fluctuation in demand
Highly segmented
The average profit margin in the hospitality industry is 0% – 10%.
Revenue management is about selling:
At the right price:
- What is an optimal price?
- The price and demand relation
- Multiple prices lead to an increase of
revenue
- Price elasticities
- Cost and value based pricing
, The price and demand relation:
Multiple prices lead to an increase of revenue:
Price elasticity of demand:
Price elasticity of demand shows how much the demand is influenced by the change in price.
Lecture 1: basics of revenue management
Key topics lecture 1:
Customer centric approach, price elasticities, price fencing, segmentation, dynamic pricing and open
pricing, pricing conditions, inventory management per channel, capacity management
differentiation, value based pricing, cost based pricing, willingness to pay, forecasting, displacement
analysis.
What you already should know……
- What is the history of revenue management?
- How to calculate yield%? What rate categories can you think of?
- What is the revenue per available room?
- What are the conditions for implementing revenue management?
- What are market segments, can you identify?
- On what revenue management techniques can you apply in a period of low demand?
- How to make the best decision in order to maximize profit?
Conditions for effective revenue management:
Perishable goods
High fixed cost
Low variable cost
Limited and fixed capacity/inventory
Time critical – large fluctuation in demand
Highly segmented
The average profit margin in the hospitality industry is 0% – 10%.
Revenue management is about selling:
At the right price:
- What is an optimal price?
- The price and demand relation
- Multiple prices lead to an increase of
revenue
- Price elasticities
- Cost and value based pricing
, The price and demand relation:
Multiple prices lead to an increase of revenue:
Price elasticity of demand:
Price elasticity of demand shows how much the demand is influenced by the change in price.
