Revenue managment

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• Hotel yield management practices across multiple electronic distribution channels

In the hospitality industry yield management is use to supply a balance between perishable room nights against demand by manipulating price and time of consumption. In order to that they must choose which distribution channels to use.

Economic theory says that the rateoffered to the customer will be higher in periods when demand is high and lower, in the form of discounted rates, when demand is low. The reality is much more complex. Consumers consider the rate offered, the optimal booking time, whether the booking is guaranteed, and how long to continue to search for a better deal. Electronic distribution has changed how people reserve hotel rooms and more thingslike airplane tickets.

The number of available channels has increased over the past years, and each channel has different revenue characteristics, costs, and levels of control. Understanding how to manipulate this channels over which customers can book is important. Those whom successfully manage the electronic distribution channel may add value, develop their brand, and build customerloyalty.

European hotels apply three yield management techniques: varying room rates in response to market demand, opening/closing intermediary channels based on market demand, and charging higher prices on intermediary channel based on market demand.

Using the internet as a tool to let the clients make reservations there are two options the direct channels such as the web site of the hotel (thedirect channel’s lower cost of distribution) or indirect channels like,,, and As demand increases, managers should close indirect channels, hoping to sell remaining rooms through less costly direct channels.

Hotels can increase allocations in slow periods, but allocations are difficult to reduce when business is good.In contrast, supplier friendly intermediaries permit allocation changes in both directions, helping explain their greater use to manage yield.

• Integrating Customer Relationship Management (CRM) and Revenue Management (RV)

Inherent in the relationship management process is the management of revenue steams from customers. These two concepts can not be seen as different strategies becausethey have the same purpose give the best room to the best client at the best price.

The goal of CRM is to align business processes and customers strategies for long- term customer loyalty and profitability by knowing the preferences and specific needs of the customer. This data collection and maintenance is a critical component of CRM. Some hotels do a previous research about the customer theirlikes and dislikes, such as Rosewood and Radisson.

The RV application is for transient customers in that rate and inventory availability is dictated by forecasted demand in the market. While this approach maximizes the room revenue generated from a single transaction, it may not lead to optimal long- terms gains.

The tradition of hospitality is to value every customer and deliver outstandingservice to all, but in practice it simply is not possible. The bulk of the investment should be in the customers that generate the greatest return on investment, measured in terms of profit.

Customer loyalty is generally defined in either behavior or attitudinal terms or some combination of the two. The lifetime value of a client is the most frequently used measure to quantify the vale of thecustomer loyalty and is calculated in current dollars. There are 4 types for lifetime value clients:

There are 4 types of RV:
o Traditional RV: using rooms rate and length of stay controls to balance supply and demand.
o LTV- Based Pricing: based on a lifetime vale of a customer.
o Availability Guarantees: Protect against the loss of customers patronage due to lack of...
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