dustries mainly deals with perishable products, such as hotel rooms, meeting room in a hotel and banquet hall, and thereby, utilize the term revenue management to combine fixed capacity and inventory of the hotel. Revenue management strategy helps to discriminate between the customer who seeks for low cost and minimal service, with some other those are radically paying more attention on high quality service and convenience level.
Kimberley et al. (2010) describes revenue management as a means to innovation. It helps hotel managers to create new product and service and also the associated pricing strategy. According to Talluri and Ryzin (2004), revenue management strategy accounts for 53-75 % of its total revenue, although in reality there are some hotels that have experienced much higher impact. In a hotel, the revenue management strategy helps to control and manage the overall revenue efficiently. It is very important especially for the big hotel chains, to reach their customer’s expectations and manage technological tools such as computer program and reservation system in an appropriate manner. Thus, hotel sector needs to make sure that rates charged by them are suitable for the market, seasonality and competitor set.
Revenue management strategy is extremely advantageous to company as it allows an organization to provide personalized service to its customer irrespective of the capacity of the customers. Investment in this strategy helps to categorize the significant market segments and creates valuable market opportunities (Irene, 2005). Revenue management is not about setting and updating the price strategy, but updating the availability of price strategy during the booking period. Revenue management helps the hotel to customize their pricing strategies according to the individual needs of the customers. This helps the hotels to extract consumer surplus and transforms it into organizational surplus, which results in increasing the overall profit of the ...Show more