Hotel Revenue Management - Research Paper Example

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Revenue Management: Introduction and The case studies Revenue management is a central part of organizational management; especially in hotel management. According to the Decision Craft Incorporated (2010), “Revenue Management is a process for capacity-constrained industries to maximize profitability by allocating the right inventory to the right customers at the right price.” It paves way for planning into the future and building general strategy for running one’s hotel (Twumasi, 2009)…
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Hotel Revenue Management
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Download file to see previous pages To this effect, a quick PEST analysis has been done below. PEST Analysis According to Competitive Intelligence (2011), “Political factors include parts such as employment laws, environmental regulations, tax policy, trade restrictions and tariffs and political constancy.” This means that political factors have to do with factors that are influenced by government. In this case study, tax charged on rooms, trade restrictions and travel policies would be factored in the political analysis whereby a relatively low tax system and free flow of people would enhance the patronage of hotels. Economic factors for the revenue management are exceptionally important for international trade and patronage. This is because according to Marketing Teacher Limited (2000), economic factors cover issues such as “Interest rates, the level of inflation Employment level per capita and long-term prospects for the economy Gross Domestic Product (GDP) per capita”, which are all very important in determining internal revenue management models. ...
This point is buttressed further by the Quick MBA Network that mentions issues under social factors to include “health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety.” Technological factors will eventually play a central part of the revenue management in the sense that it is going to be the single most important interactive medium by which potential customers are going to be contacted. Customers are also expected to be abreast with innovations and programs of the hotel by accessing data and information on the hotel through the use of the internet. Most commonly, it is expected that online reservations and group bookings will be made via the internet. The Net MBA (2011) mentions other forms of technological issues such as “Recent technological developments, Technology's impact on product offering, Impact on cost structure, Impact on value chain structure, Rate of technological diffusion.” Revenue Management Model In today’s competitive economic era, revenue management has been identified as an extremely important means for hotels to make up for their apportioned resources and income. Revenue xls (2007) has it that “revenue management models are intended to optimize the pricing of hotel rooms, airline seats, and other “perishable” commodities for a given duration by taking into account demand variability over time and capacity constraints.” The major model to be adopted would be the stochastic model, which was first used on the airline industry by De Boer et al. (2002) for the airline industry. A qualitative rather than a quantitative form of the model shall however be used. Under the model, the following areas will be considered. The ...Download file to see next pagesRead More
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