Luna van Helsdingen 2324D
The rm summery
Table of Contents
LU 1 INTRO REVENUE MANAGEMENT.................................................... 4
1. DEFINE WHAT RM IS:............................................................................4
2. UNDERSTAND + EXPLAIN THE MAIN CHARACTERISTICS OF RM...........................4
3. BE AWARE OF THE NEXT VARIOUS INDUSTRIES IN WHICH RM IS PRACTISED..........4
4. UNDERSTAND THE IMPORTANCE OF RM WITHIN THE HOSPITALITY INDUSTRY AND ITS
RELATIONS TOWARDS OTHER DISCIPLINES......................................................4
5. UNDERSTAND THE DIFFERENT FUNCTIONS AND TASKS RM PERFORMS.................5
LU 2 MARKET SEGMENTATION:............................................................ 5
6. UNDERSTAND WHAT MARKET SEGMENTATION IS AND APPLY THE CONCEPT TO THE
HOTEL INDUSTRY....................................................................................5
7. UNDERSTAND VARIOUS STRUCTURES AVAILABLE FOR HOTELS:..........................6
8. RECOGNISE THE SEGMENTATION OF HOTEL BRANDS WITH MARIOTT AND ACCOR....6
9. CATEGORIZE THE VARIOUS MARKET SEGMENTS USED IN HOTELS AND UNDERSTAND
THEIR DIFFERENCES AND BEHAVIOURS...........................................................7
EXTRA INFORMATION...............................................................................9
LU 3 EQUATIONS AVERAGES AND VARIANCES, MARKET SHARE, STR
REPORTS (ABOUT COMPARING OURSELVES TO THE MARKET AND
COMPETITORS):................................................................................ 11
10. USE DATA COMPARISONS TOOLS TO SHOW PATTERNS CHANGES....................11
11. CALCULATE AVERAGES (MEAN, WEIGHTED AND SIMPLE MOVING AVERAGES)......14
12. CALCULATE RATIOS AND INDEXES AND EXPLAIN THEIR DIFFERENCES...............15
13. CALCULATE VARIANCES (ABSOLUTE + RELATIVE)......................................15
14. FORMULATE EQUATIONS. MOVE X TO THE OTHER SIDE, FIND OUT WHAT X IS.. . .15
15. REVIEW THE KEY PERFORMANCE MEASUREMENTS USED IN HOSPITALITY INDUSTRY
(REVPAR, ADR, TREVPAR, GOPPAR) (INTERNAL BASICALLY).........................16
16. UNDERSTAND AND CALCULATE MARKET SHARE (SUPPLY SHARE, DEMAND SHARE,
REVENUE SHARE)..................................................................................17
17. CALCULATE THE RM INDEXES (MPI, ARI, RGI) AND ANALYZE THEIR MEANING. 17
EXTRA INFORMATION:............................................................................18
LU 4 FORECASTING........................................................................... 20
18. DEFINE FORECASTING IN THE CONTEXT OF RM..........................................20
19. UNDERSTAND HOW WE COLLECT DATA TO COMPUTE FORECASTS....................20
20. DISTINGUISH DIFFERENT TYPES OF FORECASTING......................................21
21. EXPLAIN THE DIFFERENCE BETWEEN CONSTRAINED AND UNCONSTRAINED DEMAND
.......................................................................................................22
22. UNDERSTAND THE NOTIONS OF PACE & PICKUP........................................22
23. INTERPRET BOOKING CURVE................................................................23
24. CONSTRUCT A FORECAST BASED ON HISTORICAL PICKUP.............................24
1
,Luna van Helsdingen 2324D
25. CALCULATE FORECAST ACCURACY/ ERROR...............................................24
LU 5 PRICING.................................................................................... 27
26. UNDERSTAND MICRO ECONOMIC PRINCIPLES BEHIND PRICING IN REVENUE
MANAGEMENT......................................................................................27
27. EXPLAIN THE LAWS OF DEMAND AND SUPPLY AND HOW THESE AFFECT THE PRICE
THAT A HOTEL CAN CHARGE FOR ITS SERVICES AND PRODUCTS...........................28
28. CALCULATE THE EQUATION FOR A DEMAND AND SUPPLY CURVE.....................29
29. CALCULATE AND INTERPRET THE PRICE ELASTICITY OF DEMAND FOR SPECIFIC
POINT ON THE DEMAND CURVE..................................................................29
30. DESCRIBE THE IMPACT OF PRICE ELASTICITY OF DEMAND ON THE PRICING OF
HOTEL SERVICES AND PRODUCTS...............................................................30
31. CALCULATE APPLY MARGINAL ANALYSIS IN TERMS OF A MARKET DEMAND CURVE
TO OPTIMIZE PROFITABILITY.....................................................................31
32. EXPLAIN GAME THEORY AND WHY IT IS RELEVANT TO RM...........................32
33. CALCULATE THE EFFECT ON THE PROFITABILITY OF A MARKET USING A PAYOFF-
MATRIX..............................................................................................32
34. EXPLAIN THE DIFFERENCE BETWEEN SINGLE AND MULTIPLE PRICING STRATEGIES:
.......................................................................................................33
35. CALCULATE THE CM TO REVENUE WHEN USING A MULTIPLE PRICING STRATEGY: 34
36. DESCRIBE DIFFERENT METHODS OF DISCOUNTING IN HOTEL RM....................38
37. CALCULATE THE RIGHT PRICING FOR A HOTEL USING COMPETITION-BASED PRICING:
.......................................................................................................38
EXTRA INFORMATION:............................................................................39
LU 6 BUSINESS EVALUATION............................................................. 41
38. CALCULATE CUSTOMER WORTH & SEGMENT WEB BASED ON REVENUE, ON
REVENUE, AND BASED ON PROFIT...............................................................41
39. APPLY THE METHODS OR DISPLACEMENT ANALYSIS ON VARIOUS SCENARIOS
(GROUP, SPECIAL, CORPORATE, FACILITY, CONVERSION, AIRLINE CREWS)..............42
40. APPLY THE METHOD OF DISPLACEMENT TO CALCULATE THE GROUP RATE.........42
41. BE ABLE TO EXPLAIN THE CONCEPT OF BREAK-EVEN...................................43
EXTRA INFORMATION..............................................................................44
LU 7 INVENTORY MANAGEMENT......................................................... 47
42. RATE FENCES/ THRESHOLDS................................................................47
43. STAY/ DURATION CONTROLS...............................................................47
44. PRICE QUOTING...............................................................................48
45. UNDERSTAND THE IMPORTANCE OF NO-SHOWS & CANCELATION POLICIES IN RM.
.......................................................................................................48
46. EXPLAIN THE VARIOUS IMPACTS OF OVERBOOKING AND CALCULATE THE
OVERBOOKING NEEDED TO REACH A PERFECT SELL..........................................49
47. EXPLAIN WHY RM RS OVERBOOK CERTAIN ROOM TYPE TO MAXIMIZE REVENUE. 49
EXTRA INFORMATION:............................................................................50
LU 8 DISTRIBUTION CHANNELS IN HOTELS......................................... 51
2
,Luna van Helsdingen 2324D
48. UNDERSTAND WHAT DIFFERENT CHANNELS ARE USED TO SELL A HOTEL...........51
49. UNDERSTAND THE PLACE OF OTA’S IN HOTELS SALES STRATEGIES................52
50. EXPLAIN THE DIFFERENCES BETWEEN MERCHANT MODEL AND AGENCY MODEL.. .54
51.IDENTIFY THE AVENUES AVAILABLE FOR HOTELS ONLINE MARKETING CAMPAIGNS
AND QUANTIFY THEIR IMPACTS ON DISTRIBUTION............................................55
52. UNDERSTAND HOW A BIDDING CAMPAIGN WORKS AND CALCULATE
THE NUMBER OF IMPRESSIONS PER CHANNEL.................................... 55
53. CALCULATE CHANNELS CONTRIBUTION & CHANNEL EFFICIENCY TO COMPARE
VARIOUS DISTRIBUTION MODELS AGAINST EACH OTHER.....................................55
EXTRA INFORMATION..............................................................................57
LU 9 REVENUE STRATEGY.................................................................. 58
54. READ THREE BUSINESS SCENARIOS AND WHICH ONE PRODUCES THE HIGHEST
GOP.................................................................................................58
55. COMPARE THE IMPACT OF VARIOUS ALTERNATIVE STRATEGIES (LONG-TERM &
SHORT-TERM)......................................................................................58
56 DEFINE CRITIQUE ANALYSIS AND ASSESS THEIR IMPORTANCE IN REVENUE
STRATEGIES.........................................................................................60
EXTRA INFORMATION:............................................................................61
NON EXHAUSTIVE LIST OF ACTIONS............................................................61
.......................................................................................................61
3
, Luna van Helsdingen 2324D
Lu 1 intro revenue management
1. define what rm is:
Hotel rm is a systematic business decision process, designed to maximise
revenue by selling the right product (room & space) to the right customer at
the right time & duration trough the right channels
2. Understand + explain the main characteristics of rm
the five characteristics are:
1) Fixed capacity
May make selecting the most profitable opportunities and rejecting the
less profitable necessary. You can’t sell more rooms than you have during
high demand with low demand you have unsold rooms. You are not able
to sell more rooms than what has been built in your hotel.
2) Time variable demand
The demand in the hotel demands on the seasons and the events
3) Perishable inventory:
If one day you didn’t sell your room in the hotel, and that revenue is gone.
Meaning you cannot get that back; with a hotel it is impossible to build up
inventory for high demand periods. With unsold inventory the opportunity
is lost forever to sell.
4) High fixed cost & lower variable cost:
In hospitality industry a big part of our costs are fixed, you pay them no
matter what. This part is a big percentage (rent) you pay it no matter
what.
5) Advanced reservations:
Advanced information is available about buying intentions and behaviour.
A reservation system, or forecasting is possible. You can easily get
information about future reservations; you can plan what is going to
happen next week or next month for example.
3. Be aware of the next various industries in which RM
is practised.
Hotel/ lodging industry, car rental industry, golf, entertainment/ aquatic
parks, restaurant, advertisement space rental, airlines/ transportation
industries, entertainment industry (event venues)
4. Understand the importance of RM within the
hospitality industry and its relations towards other
disciplines.
In hospitality it is used for forecasting, revenue, etc. in other industries it is
mostly used for revenue, etc.
4
The rm summery
Table of Contents
LU 1 INTRO REVENUE MANAGEMENT.................................................... 4
1. DEFINE WHAT RM IS:............................................................................4
2. UNDERSTAND + EXPLAIN THE MAIN CHARACTERISTICS OF RM...........................4
3. BE AWARE OF THE NEXT VARIOUS INDUSTRIES IN WHICH RM IS PRACTISED..........4
4. UNDERSTAND THE IMPORTANCE OF RM WITHIN THE HOSPITALITY INDUSTRY AND ITS
RELATIONS TOWARDS OTHER DISCIPLINES......................................................4
5. UNDERSTAND THE DIFFERENT FUNCTIONS AND TASKS RM PERFORMS.................5
LU 2 MARKET SEGMENTATION:............................................................ 5
6. UNDERSTAND WHAT MARKET SEGMENTATION IS AND APPLY THE CONCEPT TO THE
HOTEL INDUSTRY....................................................................................5
7. UNDERSTAND VARIOUS STRUCTURES AVAILABLE FOR HOTELS:..........................6
8. RECOGNISE THE SEGMENTATION OF HOTEL BRANDS WITH MARIOTT AND ACCOR....6
9. CATEGORIZE THE VARIOUS MARKET SEGMENTS USED IN HOTELS AND UNDERSTAND
THEIR DIFFERENCES AND BEHAVIOURS...........................................................7
EXTRA INFORMATION...............................................................................9
LU 3 EQUATIONS AVERAGES AND VARIANCES, MARKET SHARE, STR
REPORTS (ABOUT COMPARING OURSELVES TO THE MARKET AND
COMPETITORS):................................................................................ 11
10. USE DATA COMPARISONS TOOLS TO SHOW PATTERNS CHANGES....................11
11. CALCULATE AVERAGES (MEAN, WEIGHTED AND SIMPLE MOVING AVERAGES)......14
12. CALCULATE RATIOS AND INDEXES AND EXPLAIN THEIR DIFFERENCES...............15
13. CALCULATE VARIANCES (ABSOLUTE + RELATIVE)......................................15
14. FORMULATE EQUATIONS. MOVE X TO THE OTHER SIDE, FIND OUT WHAT X IS.. . .15
15. REVIEW THE KEY PERFORMANCE MEASUREMENTS USED IN HOSPITALITY INDUSTRY
(REVPAR, ADR, TREVPAR, GOPPAR) (INTERNAL BASICALLY).........................16
16. UNDERSTAND AND CALCULATE MARKET SHARE (SUPPLY SHARE, DEMAND SHARE,
REVENUE SHARE)..................................................................................17
17. CALCULATE THE RM INDEXES (MPI, ARI, RGI) AND ANALYZE THEIR MEANING. 17
EXTRA INFORMATION:............................................................................18
LU 4 FORECASTING........................................................................... 20
18. DEFINE FORECASTING IN THE CONTEXT OF RM..........................................20
19. UNDERSTAND HOW WE COLLECT DATA TO COMPUTE FORECASTS....................20
20. DISTINGUISH DIFFERENT TYPES OF FORECASTING......................................21
21. EXPLAIN THE DIFFERENCE BETWEEN CONSTRAINED AND UNCONSTRAINED DEMAND
.......................................................................................................22
22. UNDERSTAND THE NOTIONS OF PACE & PICKUP........................................22
23. INTERPRET BOOKING CURVE................................................................23
24. CONSTRUCT A FORECAST BASED ON HISTORICAL PICKUP.............................24
1
,Luna van Helsdingen 2324D
25. CALCULATE FORECAST ACCURACY/ ERROR...............................................24
LU 5 PRICING.................................................................................... 27
26. UNDERSTAND MICRO ECONOMIC PRINCIPLES BEHIND PRICING IN REVENUE
MANAGEMENT......................................................................................27
27. EXPLAIN THE LAWS OF DEMAND AND SUPPLY AND HOW THESE AFFECT THE PRICE
THAT A HOTEL CAN CHARGE FOR ITS SERVICES AND PRODUCTS...........................28
28. CALCULATE THE EQUATION FOR A DEMAND AND SUPPLY CURVE.....................29
29. CALCULATE AND INTERPRET THE PRICE ELASTICITY OF DEMAND FOR SPECIFIC
POINT ON THE DEMAND CURVE..................................................................29
30. DESCRIBE THE IMPACT OF PRICE ELASTICITY OF DEMAND ON THE PRICING OF
HOTEL SERVICES AND PRODUCTS...............................................................30
31. CALCULATE APPLY MARGINAL ANALYSIS IN TERMS OF A MARKET DEMAND CURVE
TO OPTIMIZE PROFITABILITY.....................................................................31
32. EXPLAIN GAME THEORY AND WHY IT IS RELEVANT TO RM...........................32
33. CALCULATE THE EFFECT ON THE PROFITABILITY OF A MARKET USING A PAYOFF-
MATRIX..............................................................................................32
34. EXPLAIN THE DIFFERENCE BETWEEN SINGLE AND MULTIPLE PRICING STRATEGIES:
.......................................................................................................33
35. CALCULATE THE CM TO REVENUE WHEN USING A MULTIPLE PRICING STRATEGY: 34
36. DESCRIBE DIFFERENT METHODS OF DISCOUNTING IN HOTEL RM....................38
37. CALCULATE THE RIGHT PRICING FOR A HOTEL USING COMPETITION-BASED PRICING:
.......................................................................................................38
EXTRA INFORMATION:............................................................................39
LU 6 BUSINESS EVALUATION............................................................. 41
38. CALCULATE CUSTOMER WORTH & SEGMENT WEB BASED ON REVENUE, ON
REVENUE, AND BASED ON PROFIT...............................................................41
39. APPLY THE METHODS OR DISPLACEMENT ANALYSIS ON VARIOUS SCENARIOS
(GROUP, SPECIAL, CORPORATE, FACILITY, CONVERSION, AIRLINE CREWS)..............42
40. APPLY THE METHOD OF DISPLACEMENT TO CALCULATE THE GROUP RATE.........42
41. BE ABLE TO EXPLAIN THE CONCEPT OF BREAK-EVEN...................................43
EXTRA INFORMATION..............................................................................44
LU 7 INVENTORY MANAGEMENT......................................................... 47
42. RATE FENCES/ THRESHOLDS................................................................47
43. STAY/ DURATION CONTROLS...............................................................47
44. PRICE QUOTING...............................................................................48
45. UNDERSTAND THE IMPORTANCE OF NO-SHOWS & CANCELATION POLICIES IN RM.
.......................................................................................................48
46. EXPLAIN THE VARIOUS IMPACTS OF OVERBOOKING AND CALCULATE THE
OVERBOOKING NEEDED TO REACH A PERFECT SELL..........................................49
47. EXPLAIN WHY RM RS OVERBOOK CERTAIN ROOM TYPE TO MAXIMIZE REVENUE. 49
EXTRA INFORMATION:............................................................................50
LU 8 DISTRIBUTION CHANNELS IN HOTELS......................................... 51
2
,Luna van Helsdingen 2324D
48. UNDERSTAND WHAT DIFFERENT CHANNELS ARE USED TO SELL A HOTEL...........51
49. UNDERSTAND THE PLACE OF OTA’S IN HOTELS SALES STRATEGIES................52
50. EXPLAIN THE DIFFERENCES BETWEEN MERCHANT MODEL AND AGENCY MODEL.. .54
51.IDENTIFY THE AVENUES AVAILABLE FOR HOTELS ONLINE MARKETING CAMPAIGNS
AND QUANTIFY THEIR IMPACTS ON DISTRIBUTION............................................55
52. UNDERSTAND HOW A BIDDING CAMPAIGN WORKS AND CALCULATE
THE NUMBER OF IMPRESSIONS PER CHANNEL.................................... 55
53. CALCULATE CHANNELS CONTRIBUTION & CHANNEL EFFICIENCY TO COMPARE
VARIOUS DISTRIBUTION MODELS AGAINST EACH OTHER.....................................55
EXTRA INFORMATION..............................................................................57
LU 9 REVENUE STRATEGY.................................................................. 58
54. READ THREE BUSINESS SCENARIOS AND WHICH ONE PRODUCES THE HIGHEST
GOP.................................................................................................58
55. COMPARE THE IMPACT OF VARIOUS ALTERNATIVE STRATEGIES (LONG-TERM &
SHORT-TERM)......................................................................................58
56 DEFINE CRITIQUE ANALYSIS AND ASSESS THEIR IMPORTANCE IN REVENUE
STRATEGIES.........................................................................................60
EXTRA INFORMATION:............................................................................61
NON EXHAUSTIVE LIST OF ACTIONS............................................................61
.......................................................................................................61
3
, Luna van Helsdingen 2324D
Lu 1 intro revenue management
1. define what rm is:
Hotel rm is a systematic business decision process, designed to maximise
revenue by selling the right product (room & space) to the right customer at
the right time & duration trough the right channels
2. Understand + explain the main characteristics of rm
the five characteristics are:
1) Fixed capacity
May make selecting the most profitable opportunities and rejecting the
less profitable necessary. You can’t sell more rooms than you have during
high demand with low demand you have unsold rooms. You are not able
to sell more rooms than what has been built in your hotel.
2) Time variable demand
The demand in the hotel demands on the seasons and the events
3) Perishable inventory:
If one day you didn’t sell your room in the hotel, and that revenue is gone.
Meaning you cannot get that back; with a hotel it is impossible to build up
inventory for high demand periods. With unsold inventory the opportunity
is lost forever to sell.
4) High fixed cost & lower variable cost:
In hospitality industry a big part of our costs are fixed, you pay them no
matter what. This part is a big percentage (rent) you pay it no matter
what.
5) Advanced reservations:
Advanced information is available about buying intentions and behaviour.
A reservation system, or forecasting is possible. You can easily get
information about future reservations; you can plan what is going to
happen next week or next month for example.
3. Be aware of the next various industries in which RM
is practised.
Hotel/ lodging industry, car rental industry, golf, entertainment/ aquatic
parks, restaurant, advertisement space rental, airlines/ transportation
industries, entertainment industry (event venues)
4. Understand the importance of RM within the
hospitality industry and its relations towards other
disciplines.
In hospitality it is used for forecasting, revenue, etc. in other industries it is
mostly used for revenue, etc.
4
