Revenue management - Assignment Example

Future of Revenue Management in 2020 Having an effective revenue management system is part of conducting business for most enterprises in the hospitality industry, such as, hotels (Nessler 86). In a competitive market, the use of right strategies makes the difference between the competing firms. In the hospitality industry, revenue management (RM) is described as a systematic process that is designed to increase revenue by selling the right room at the right time to the right person and for the right price (Hayes and Miller 12).

The use of RM has been found to directly increase sales by up to 5-10%. Therefore, by 2020, it is projected that there will be a shift in landscape in RM. To ensure the success of RM strategies, the revenue managers in the hospitality industry need to be convinced of the ability to deliver return on investment and made aware of the resources needed to maximize potential. The hotels should also make sure that their organizational structure supports the RM policy. Besides, there needs to be a cultural understanding which major department like sales, marketing, and revenue work together to share information crucial to revenue management success.

Furthermore, it is forecasted that the application of RM will become more strategic and will be supported by the increasingly sophisticated technology. This is because it includes more of income streams of the hotel. In this regard, by 2020, revenue management is likely to be applied to function-space and also incorporate revenue streams including restaurants and spas, as well as golf courses. Consequently, the RM function will become more central to operations of the hotel, and will quite to be expected be a separate department under supervision of the general manager.

The core, strategic role of revenue management will need upgraded measurement techniques (Hayes and Miller 55-68). This implies that other than revenue per available room (RevPAR), the future RM might have a profit-oriented metric, for instance, total revenue per available room or the gross operating profit per available room (GOPPAR). As for the future revenue managers, they will require analytical, leadership, and communication skills. A formal RM education as well as negotiation skills would also be helpful.

According to (Nessler 86), the managers would also use tools or internal compression which will aid them establish the unconstrained demand and close out close non-profitable channels. Since RM will move from tactical to a more strategic role, analytics along with supporting technology will play a crucial role in the business decisions (Hayes and Miller 46). In order to deliver truly effective RM support, the system providers will reduce the outputs managers have to analyze every day. Moreover, qualitative and quantitative data would be brought together as a necessity due to the increased influence of social media along with user-generated content.

The guest reviews could also be done via social networking sites.There is a growing ability to host RM systems in Software as a Service (SaaS) which will significantly enhance the ability of the manager to utilize dynamic pricing and react to real-time changes in the marketplace. By 2020, it is projected that there will be a strong two-way communication between the corporate and staff and real-time financial reports as crucial components in performance, such as, a wider-scale implementation of guest-texting programs that will also open up communication with the employees.

More than 800 million people have smartphones. With the rapid development of technology, another important revenue-generating initiative available for the hotel industry by 2020 is the development of mobile applications for the hotel’s services. This is not only an online marketing strategy that increases the number of customers coming to the hotel but also increases the rooms’ revenue and profits. Works CitedHayes, David K. and Allisha Miller. Revenue management in the hospitality industry.

New Yrok: John Wiley & Sons, 2010.Nessler, Dennis. Revenue management strategies can maximize hotel performance. New York: Kokua Hospitality, 2015.