Revenue Management and Its Application in the Hotel Conference Industry

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Abstract

This paper explores the importance of revenue management sector in the hospitality industry. As it is a relatively young sector this study would be of great interest to the hotel managers, hospitality students and revenue management professionals. This paper highlights some of the major components of the sector and its efficacy that

looks at the basic principals or basic fundamentals which make this technique so strong and very appropriate. Along with determinants such as demand management and supply management and the different strategies that are applied by the revenue managers to optimize the revenue. This paper also specifically focuses upon the Hotel industry conference sector and explains the decision making process associated with it.

Furthermore,the discussion of this paper includes an in-depth dialogue upon the fundamentals, tools and the hotel management system with respect to revenue management. Coupled with, a discussion upon the current gaps and future trends of revenue management in the hospitality sector.



Abstractii

Introduction1

Revenue Management1

Use of Revenue Management in Different Fields3

Fundamentals of Revenue Management4

Tools for Revenue Management7

Hotel Revenue Management System9

Advantages of Revenue management application12

Disadvantages of Revenue management13

Application of Revenue management in hotel conference industry13

Measures To Take When Applying For Conference(s)15

Important Formulae in gauging revenue management in hotels17

Existing Gaps in Revenue management18

Future Trends in Revenue Management19

Conclusion20

References21

Appendices25

Appendix 125

Appendix: 226

Appendix 3:27

Revenue Management and Its Application in the Hotel Conference Industry

Introduction

According to Kamath et.al, (2008) hospitality industry is a part of the larger spectrum of travel and tourism industry, which is the oldest enterprising industry in the world. With time, the conventions and service practices have evolved where today greater emphasis is placed upon providing unparallel services to consumers while also generating revenue. This has lead to the study and new practice of Revenue Management (RM) in the hospitality industry. Thus, this paper aims to discuss different aspects associated with revenue management and hotel/hospitality industry through and in-depth discussion of the associated concepts. Likewise, the concept of revenue management is discussed as follows:

Revenue Management

Kamath et.al, (2008) comments that revenue management is a technique to optimize and prolong the revenues generated through a fixed and short-term mean(s). By short term it is meant that the resource would soon diminish after completing its shelf life. This is often considered true for various services or service oriented services. The main idea behind revenue management practice mandates selling of the right resources at the right time to the right customer, through using the basic economic principles of supply and demand to generate revenues.

According to Kimes (2000) revenue management was initially referred to as yield management in the airline industry and demand chain management in the retail industry. Though, the concept originated in the US aviation industry after de-regularization by the government in late 1970's. After this change in the industry, an airline named People's Express faced fast growth through offering its customers low airline travel fare with services with no frills, which attracted a lot of price sensitive customers (Ingold et.al, ...