01. RM basics

Question 1

What is the goal of revenue management?

Answer 1

Selling perishable products to the most profitable mix of customers to maximise revenue. RM aims to stimulate demand when demand is low and maximise Revenue when demand is high.

Question 2

What is Unconstrained demand

Answer 2

is the demand you get when adapting factors such as price. By increases in price, you are changing the demand, in a way constraining it, thereby allowing less customers to book your hotel. e.g., full capacity also result in people who want to stay in your hotel unable to do so.

Question 3

Ancillary Revenue

Answer 3

Ancillary revenue is revenue that is derived from goods or services other than a company’s primary product offering. E.g. Everything other than Room Revenue

Question 4

REVENUE MANAGEMENT MIX: 5 RIGHTS

Answer 4

Right Product – Right Time – Right Distribution Channel – Right Customer – Right Price

Question 5

5 Revenue Management Process

Answer 5

Deman forecasting
Optimisation 
Group controls 
Evaluation/reporting 
Feedback

Question 6

Where do we need RM?

Answer 6

Fixed capacity 
Perishable inventory 
Ability to forecast
Flactuating demand 
Cost structure 
Segmentable markets

Question 7

3 Specific problem with RM management

Answer 7

1. Multiple night stays (LOS):
   - Sometime even if the guest is playing a lot more, if he is staying for one night it is still better to allocate a guest who can stay for a long time.
2. Multiplier effect: Look at the total revenue instead of just room revenue.
3. Booking Lead time

Question 8

what are Inventory Allocation Basics

Answer 8

Room price * booking probability = Expected value

RM allocate inventory between different price levels to max profit in weak demand times

Question 9

From Data to Wisdom

Answer 9

• RM based pricing strategy uses historic data and mathematical models to predict demand at future points in time

Question 10

what’s Experience economy ?

Answer 10

Trend of Brands moving toward providing experience to increase revenue.