Chapter 1 | Introduction to Revenue Management

Question 1

Purpose and Objective of RM

Answer 1

Achieve maximum level of revenue

Question 2

Necessary conditions for RM

Answer 2

1. Perishable inventory
2. Fixed capacity
3. Variable demand
4. Segmentable market
5. Advanced booking

Question 3

RM in hospitality

Answer 3

Price
Customer
Product
Time
Capacity/duration
Distribution Channel
"The right price to the right customer for the right product at the right time within the right capacity through the right channel"

Question 4

Differences between hotel RM and airline YM

Answer 4

1. More uncertainty
2. More group bookings
3. More distribution channels
4. Less control over channels
5. Other revenue generation units

Question 5

Strategic RM

Answer 5

1. Understand different customer groups and market segments
2. Optimize profits - incorporate group and other revenue generation business
3. Manage distribution channels

Question 6

Airline’s solutions to cannibalization

Answer 6

Rate fences

Capacity control

Question 7

RM job descriptions

Answer 7

1. Establish prices
2. Forecast demand
3. Manage inventory
4. Manage distribution
5. Evaluate results
6. Provide recommendations
7. Communicate with other departments and management about RM strategies and decisions