December 15, 2020
January 13, 2021


Businessman pointing five star symbol to increase rating of company



Let’s talk about Revenue Management, what is it and its importance in the present scenario, increase in the increase of competition, increase of special offers and promotions, increase of distribution channels, increase of price transparency and decrease in time to react. These factors have a direct effect on business revenues and its resultant profits; we have all be searching for strategies to maximize the revenues of our business. This has given rise to Revenue Management.


“Revenue Management is interesting subject to be studied and more important to be implemented, my experience says once you establish it as a habit in your organization it’s more of a fun and sense of achievement as not only the business revenues grow at pace but the employees are also satisfied toward the price fetched for the quality services delivered to every guest. It’s highly motivating tool to be established in every organization.”




Well to simply put it forward Revenue Management revolves around demand management decisions based on distribution formats/mediums, price and quantity descision. While the distribution formats are the channels, time taken to implement change and other policies such as refund /cancellations, MLOS. While Price determination is setting up the price to sell appropriately with the competitive set and vacant capacity and finally the quantity allocation is basically allocating available capacity to different segments and distribution channels. Now days with the emerging technology, easy to use software’s embedded with inbuilt features of surge pricing, smart allocations and predefined distribution set ups have made it easy to implement.


DATA COLLECTION- Collect and store relevant historical data such as demand, prices, costs, cancellations or no-shows etc. The primary source of data in most RM systems is periodical transactional databases. Reservation databases are the most widely used transactional databases in the hotel and airline industry. Do not forget to record the reservation decline for high selling periods, Community events, festivals and long weekends are also to be considered as essential marks.

ESTIMATION AND FORECASTING – Estimate the parameters of the demand model, forecast the demand based on the estimated parameters, forecast the proportion of cancellations and no-shows; wedding season, inbound, large conferencing and exhibitions are essential periods of forecasting, the role of these processes is critical in every RM system. The extent to which this can be realised is investigated by Polt (1998); he estimates that a revenue management system could produce a 2% additional increase in revenue if the forecasting error is reduced by 20%. In addition to the above factors ensure the SWOT of your hotel in competitive set. In comparison to the ‘pick up method ‘additive and multiplication or tIme series /regression methodology it is advised to use COMINED weighted average of past performance and business forecast to be implemented as a process. 

OPTIMISATION – once the estimation process and modeling has been completed, the task is to determine the optimal set of controls to be applied. These controls usually deal with setting the optimal prices (markdowns, discounts, upgrades etc ) or specifying the optimal inventory allocations to each product. Let this be controlled by one authority for better results.

BOOKING CONTROL -The last component of the RM system is to implement is to control the sale of the inventory. The optimisation task can only form the basis for the design of the booking control, rather than simply being used directly in the decision making. In particular, it decides which products should be on offer and which to be closed during the booking process in such a way that revenues are maximized.

RATE PARITY , GUEST REVIEWS , SOCIAL MEDIA AUDIENCE are few common factors which highly contribute to decision making in establishing the rates and inventory control.

We need to understand, that the mindset of operational heads is to maximize the revenue potential as it is his important KRA and mindset of sales is target driven being their KRA, minor difference may arise in materialisation; these differences can be bridged with tools such as RATE PARITY and transparent approach.

There are more easy to use software’s which enables you to manage network RM, virtual nesting, network capacity control, dynamic pricing, bid pricing and optimal inventory controls.

Summarizing with last note, the hotels need to concentrate on increase in Direct bookings cause every Direct booking is minus the commissions payout and directly affect the hotel revenue by almost 15% to 20% increase and this can be modulated with enhanced reach of relationship managers, getting listed on meta search engines, showcase your online reviews, social media platforms, email marketing and collaboration with local partners are few to be listed.

For further details please write to |

Leave a Reply

Your email address will not be published. Required fields are marked *