I am sure that you are already doing “Revenue Management” (RM) within your business, even if you haven’t realized it yet! If you are curious about the subject, I would be glad to explain its basic concepts and see with you how to adapt it to your business in order to boost your turnover. Revenue Management means to me:
1. Knowing well the specificity of your market
What are your different clients’ segments and their distinctive features? Which are the alternative offers available for them in the market?
2. And playing accordingly with the different variables
that your business has in order to push up occupancy and average daily rate (ADR) by adjusting a dynamic rates strategy and yielding when possible, managing inventories meticulously, and choosing your distribution channels.
Too often people think that Revenue Management comes down only to decrease or increase of prices (=yield management), but it’s more complex than that.
“Revenue Management is selling the right room to the right client at the right moment at the right price and through the right distribution channel with the best commission efficiency.”summarises Patrick Landman, CEO of the Xotels team.
Xotels is an innovative company offering independent hotels its expertise to outperform their local competitors. Externalisation of revenue management’s strategies and daily operations is their core business, and they perform very well. If you want to learn about the subject, I strongly recommend you go through their blog. They publish a free e-book which is very complete and comprehensive: www.xotels.com.
The first industry to develop and implement revenue management was the airlines one. If you are curious to know more about how it all began, here is the “one” book that you should read: “Revenue Management: Hard core tactics for market domination” by Robert G. Cross. More than the story of the beginning, it’s a perfect guide to understand the whole reasoning behind yielding and revenue management concepts.