Revenue Management for the Hospitality
Industry
Summary Minor Revenue Management, HMSM
,Contents
Chapter 1, Introduction to revenue management......................................................2
Chapter 2, strategic pricing........................................................................................ 5
Chapter 3, Value......................................................................................................... 9
Chapter 4, differential pricing................................................................................... 12
Chapter 5, the revenue management role...............................................................15
Chapter 6, forecasting demand................................................................................ 17
Chapter 7, inventory and price management...........................................................21
Chapter 8, distribution channel management..........................................................28
Chapter 9, Evaluation of revenue management efforts in lodging...........................33
Chapter 10, Revenue management for food and beverages services......................36
Chapter 11, Evaluation of revenue management efforts in F&B services.................38
Chapter 12, specialized operations of Revenue Management..................................42
Chapter 13, Building better business.......................................................................44
Summary Minor Revenue Management, HMSM
, Chapter 1, Introduction to revenue management
Chapter highlights:
- Explanation of why an excessive internal focus on profits or owner’s return on
investment is detrimental to the long-term success of a hospitality business.
- Explanation of why businesses exist to create wealth for their customers and
how effective RM helps them do that
- Overview of the RM-related information contains in the remaining chapters of
the book
§1.1Introduction
Revenue = total amount of sales achieved (number of units sold x unit price)
An organization needs to do the following:
1. Understand the importance of RM
2. Understand the complex factors that influence RM strategy and tactics
3. Become better at making RM decisions than their competitors
§1.2 The purpose of business
One that runs a hospitality business does that for one of those two reasons:
1. Profit fallacy
2. Return on investment fallacy
A manager wants to achieve profit and the highest return on investments (ROI)
ROI = Owners investment return / owners investment
Accounts on profit formula:
Sales = costs + profit
Profit = revenue – expenses
Profit Buyers’ acceptance
Trade nine €1 bills for a €10 €1 to seller Zero
bill
Trade ten €1 bills for a €10 €0 to seller and buyer Possible, but unlikely
bill
Trade eleven €1 bills for a €1 to buyer High likely
€10 bill
One can achieve profit through:
- Generating revenue
- Controlling expenses
Barter system – a trading system in which goods and services are exchanged
without the use of money
§1.3 The purpose of revenue management
Revenue manager (RM) – the individual or team responsible for ensuring that a
company’s prices match a customers’ willingness to pay.
Summary Minor Revenue Management, HMSM
Industry
Summary Minor Revenue Management, HMSM
,Contents
Chapter 1, Introduction to revenue management......................................................2
Chapter 2, strategic pricing........................................................................................ 5
Chapter 3, Value......................................................................................................... 9
Chapter 4, differential pricing................................................................................... 12
Chapter 5, the revenue management role...............................................................15
Chapter 6, forecasting demand................................................................................ 17
Chapter 7, inventory and price management...........................................................21
Chapter 8, distribution channel management..........................................................28
Chapter 9, Evaluation of revenue management efforts in lodging...........................33
Chapter 10, Revenue management for food and beverages services......................36
Chapter 11, Evaluation of revenue management efforts in F&B services.................38
Chapter 12, specialized operations of Revenue Management..................................42
Chapter 13, Building better business.......................................................................44
Summary Minor Revenue Management, HMSM
, Chapter 1, Introduction to revenue management
Chapter highlights:
- Explanation of why an excessive internal focus on profits or owner’s return on
investment is detrimental to the long-term success of a hospitality business.
- Explanation of why businesses exist to create wealth for their customers and
how effective RM helps them do that
- Overview of the RM-related information contains in the remaining chapters of
the book
§1.1Introduction
Revenue = total amount of sales achieved (number of units sold x unit price)
An organization needs to do the following:
1. Understand the importance of RM
2. Understand the complex factors that influence RM strategy and tactics
3. Become better at making RM decisions than their competitors
§1.2 The purpose of business
One that runs a hospitality business does that for one of those two reasons:
1. Profit fallacy
2. Return on investment fallacy
A manager wants to achieve profit and the highest return on investments (ROI)
ROI = Owners investment return / owners investment
Accounts on profit formula:
Sales = costs + profit
Profit = revenue – expenses
Profit Buyers’ acceptance
Trade nine €1 bills for a €10 €1 to seller Zero
bill
Trade ten €1 bills for a €10 €0 to seller and buyer Possible, but unlikely
bill
Trade eleven €1 bills for a €1 to buyer High likely
€10 bill
One can achieve profit through:
- Generating revenue
- Controlling expenses
Barter system – a trading system in which goods and services are exchanged
without the use of money
§1.3 The purpose of revenue management
Revenue manager (RM) – the individual or team responsible for ensuring that a
company’s prices match a customers’ willingness to pay.
Summary Minor Revenue Management, HMSM
