Revenue Management for the Hospitality Industry
Chapter 1
Revenue The total amount of sales achieved in a specified time period.
number of units sold * unit price = revenue
Hospitality business An organization providing F&B, lodging, travel, or entertainment services to
people away from their homes.
Profit The net value achieved by a seller and buyer in a business transaction.
Barter system A trading system in which goods and services are exchanged without the use
of money.
Money An acceptable medium of exchange used as the measure of the value of
goods and services.
Economics The area of study concerned with the production, consumption, and transfer
of wealth.
ROI The short version of “Return on investment”. ROI is the reward to investors
for taking an investment risk.
Owner’s investment return / Owner’s original investment = ROI
Revenue manger The individual or team responsible for ensuring that a company´s prices
match a customer’s willingness to pay. In short RM.
Customer-centric A revenue management philosophy that places customer gain ahead of
revenue management short-term revenue maximization in revenue management decision making.
Channel A source of business customers. Also, a vehicle used to communicate with a
source of customers. Also known as distribution channel.
Constrained supply The condition that exists when sellers cannot readily increase the amout of
products or services available for sale when consumer demand for the
increases (e.g. hotel rooms).
Hard constraint A supply constraint that cannot be removed regardless of product demand.
E.g. hotel rooms, capacity of natural gas pipelines.
Soft constraint A supply constraint that can, with sufficient lead tiem, and/or reasonable
expense, be removed or lessened. E.g. airline and car rental, taxi´s and F&B.
Yield management A demand-based revenue management strategy, first initiated by commercial
airline companies, it seeks to maximize income via manipulation of selling
prices.
Revenue Management for the Hospitality Industry Yannick van Huissteden 1
Chapter 1
Revenue The total amount of sales achieved in a specified time period.
number of units sold * unit price = revenue
Hospitality business An organization providing F&B, lodging, travel, or entertainment services to
people away from their homes.
Profit The net value achieved by a seller and buyer in a business transaction.
Barter system A trading system in which goods and services are exchanged without the use
of money.
Money An acceptable medium of exchange used as the measure of the value of
goods and services.
Economics The area of study concerned with the production, consumption, and transfer
of wealth.
ROI The short version of “Return on investment”. ROI is the reward to investors
for taking an investment risk.
Owner’s investment return / Owner’s original investment = ROI
Revenue manger The individual or team responsible for ensuring that a company´s prices
match a customer’s willingness to pay. In short RM.
Customer-centric A revenue management philosophy that places customer gain ahead of
revenue management short-term revenue maximization in revenue management decision making.
Channel A source of business customers. Also, a vehicle used to communicate with a
source of customers. Also known as distribution channel.
Constrained supply The condition that exists when sellers cannot readily increase the amout of
products or services available for sale when consumer demand for the
increases (e.g. hotel rooms).
Hard constraint A supply constraint that cannot be removed regardless of product demand.
E.g. hotel rooms, capacity of natural gas pipelines.
Soft constraint A supply constraint that can, with sufficient lead tiem, and/or reasonable
expense, be removed or lessened. E.g. airline and car rental, taxi´s and F&B.
Yield management A demand-based revenue management strategy, first initiated by commercial
airline companies, it seeks to maximize income via manipulation of selling
prices.
Revenue Management for the Hospitality Industry Yannick van Huissteden 1
