INTRODUCTION

One of the most important commodity that the hotel sales is the rooms,
and we know that rooms are most perishable, much more than the food
and beverage eve. Hence, it is very important that we are so geared that
we are able to sell all the rooms at all times, and if not that, we are able
to sell the maximum number of rooms at all time and not only that we
are able to sell them at the optimum revenue generation situation.
Although the liberalization policy of the government has helped in
bringing more foreign visitors, yet to get and maintain a competitive
edge over others every hotels needs to be sold and marketed very well .
Hotels even in a monopoly markets needs to listen to the customers and
constantly upgrade its facilities and services and products , particularly
rooms to combat competition in the future.
Hotel is a ‘proactive business’ that means a hotel customer must
be welcomed, made comfortable and secure , looked after and made to
feel special because given a choice between two similar quality
properties a would prefer to go to the one which presents a more
hospitable or friendly and caring face to him . Of course this he will
learn by his experience of staying at the hotel once and also on hearing
from some friends or relative who has stayed in that property earlier
.The hotel should be appealing to different types of guests travelers or a
group market.
What actually a hotel is selling to its customer / guest ?Is it a product
such as room , or is it services? Is it attention and pampering or is it the
facilities and amenities , or is it both service as well as product ?
Actually a hotel means different things to different people. To be able to
sell better a hotel sales person must understand the specific needs of the
customer. For example, a receptionist shall be able to sell a room to a
walk – in guest only if he is able to judge and assess the requirements of
the guest. Apart from its main functions of handling check – ins and
check – outs , the front desk staff is also responsible for the sale of
rooms of the hotel.
In general , when we talk about the marketing and sales
departments of a hotel we understand that the function of this
department is to sell the hotel in totality the sales of its product and
services such as rooms,restaurants , conferences, banqueting space, etc.
Further when we talk about the sales of rooms in particular we find that
the aspect of sales is normally taken care of by marketing and sales
department , reservation section and front desk section of front office .
For improved and enhanced sales of rooms the front desk staff must
know about nearly every guest who stays at the hotel . During the stay
the front desk must make efforts to know what all amenities and services
oter than room , the guest need, such as extra towels or may be a wake
up call. The front desk staff is truly instrumental in ensuring the guest
comforts. More than any other group of employees , the front desk staff
really feels the pulse of market –place most . The front desk employees
which are the first and last persons always to come in contact with the
guests have tremandeous opportunity to make those impressions that
keep guest coming back.
As already said the responsibilities of selling of room in hotels in
the one of the primary functions of the front office department . Further
depending upon the size of the hotel this function may also be taken care
of by marketing and sales in a large hotel .Also in small hotels where
there is no separate reservation section the sale of room may be look
after by the front desk of the hotel.
Selling in individualized and personal .Effective salesman does
not sell , infact he induces people to buy .Susessful salesman have
known for a long time that prodetive seeling involves a continual
exchange of values .The reason any business including the hospitality
business exists today is that it provides certain values that the customer
want .The values may be distinctive and luxurious lodging , convenient
location and courteous service , etc. Hence the basic purpose of the front
office staff is to relate the values in terms of rooms that the staff offer in
respose to the demands of his values in terms of rooms the degree of
success enjoyed by any hotel is measured by this relationship , in other
words on this continual exchange of value. This will be reflected when
the guest keeps coming back . The selling effort of the room by the staff
are made keeping in mind primarily the interest of the seller which
means the hotel while marketing identifies existing of anticipated needs
of customer and then attempts to satisfy them . The hotel must decide
which segment of the diverce market place it wants to do the business
with and find out the specific needs of each of these segments and then
should cater to these needs. Hotels should market itself to the desired
segment. Marketing and sales are two distict , yet interrelated function ,
and both are equally important .
The hospitality industry is concerned with basically the
provision of two things 1. Lodging 2. Food and beverage .The term
lodging means room and lodging sold to guest either by central
reservation of office or by marketing department and the reservation
staff of the hotel .Sometimes an outside agency
Such as meeting planner , conference organizers , travel agents , tour
operators and hotel representatives etc also are instrumental in room
sales . Anything that is offered for sale is a product for eg. A room in
case of a hotel .Further the term market refers to the potential population
from which the customer for a product are derived . A source that sells
products directly to the public is retail outlet , for eg. Individual guest
,whereas a source that sells that sells to retal sources but not to the public
is a wholesale outlet , For eg, a tour operater who purchases rooms space
from the hotel , and in turn sells them to retail travel agent , the person
who purchase and use the product are called consumers or end users .
Now a tour operater who purchases room from the hotel is the customer
and further the individual person to whom he sells the rooms and who
come and stay in the hotel are called end user .

ELEMENTS OF MARKETINGS
Marketing consist of activities that are conserned with attracting the
customer and further are able to motivate them to buy. Marketing
basically has three elements:
1 Product
2 Pricing
3 Promotion
1 PRODUCT: Usually term “room is sold “ to the guest is used
when we refer to a guest occupying a room in the hotel , but
actually this guest occupies is only temporiarily and does not
assume any physical ownership. The hospitality product in fact
here is not the physical room but is the experience created by the
physical surrounding and all the associated services that the hotel
staff provide during the guest stay . It is important to note that a
product based on experience depends largely on the ability and the
personality of the seller . Now since the experience can not be
reversed the attitude of the selling staff is very important .
Customers needs are satisfied by the benefits and not by the
products themselves , for e.g the security , comfort and
convenience provided to the guest when he stays in the room.
Selling Hotel Rooms

1. Step 1

Train on site. There are accrediting schools that offer hotel sales
training such as the University of Phoenix, but training on site will
offer a better understanding of the hotel. This will give you complete
knowledge about the hotel and their reservation system. On site
training will provide you with the all the hotel information, including
the room rates, packages and room descriptions.

2. Step 2

Provide excellent customer service for each guest who calls. Give
each guest respect and courtesy and speak in a professional manner.
Smile when you are talking to guests, whether in person or on the
phone, as this will help build a relationship, which could lead to sales.

3. Step 3

Quickly identify the guest's needs and desires for her reservation.
Listen closely to what the guest tells you and match her needs to a
hotel room. For example, she may request a ground floor room or one
with a refrigerator, or a room with an ocean view. However, if that
room is not available offer a compromise based on the information
that you have received from the guest.

4. Step 4

Offer the guest alternatives to lower his room rate if he seems

hesitant. Ask the guest questions about any type of memberships he
may have that can lower the rate, such as AAA. However, if a lower
rate is not available, offer room packages that the hotel may have.

5. Step 5
 If the hotel offers any complementary services such as free breakfast
or evening h'or doeuvres give the guest that information. Provide
specifics about any special services that the hotel has to offer such as
a spa treatments

Revenue Management techniques in hospitality industry –

The hospitality industry is part of a larger enterprise known as the travel

and tourism industry. It is one of the oldest industries in the world. In
early days, traders, explorers, missionaries and pilgrims needed a break
in their journeys requiring food, shelter and rest. People opened their
homes and kitchens to these weary travellers, and an industry was born.
Although accommodation today is varied and their services have
changed and expanded over the ages, one thing about the hospitality
industry has remained the same, guests are always welcome! From a
friendly greeting at the door, room service, breakfast, to a host of
facilities' the hospitality industry offers travellers a home away from
home. Hospitality is defined as “the friendly reception and treatment of
strangers". For most people, hospitality means entertaining guests with
courtesy and warmth. Hospitality is also an industry made up of
businesses that provide lodging, food and other services to travellers.
The main components of this industry are hotels, motels, inns, resorts
and Restaurants. In a broad sense, the hospitality industry might refer to
any group engaged in tourism, entertainment, transportation or lodging
including cruise lines, airlines, railways, car rental companies and tour
operators. However the two main segments are the lodging industry also
called the hotel industry, and the food and beverage industry, also called
the restaurant industry. The lodging industry is made up of businesses
providing temporary housing, and such a business is called a lodging
establishment and the people who stay in it are called guests or clients.
What is Revenue Management?

Revenue Management is a technique to optimize the revenue earned

from a fixed, perishable resource. The challenge is to sell the right
resources to the right customer at the right time. Revenue Management
implements the basic principles of supply and demand economics in a
tactical way to generate incremental revenues. There are three essential
conditions for revenue management to be applicable:
• That there is a fixed amount of resources available for sale.
• That the resources sold are perishable. This means that there is a time
limit to selling the resources, after which they cease to be of value.
• That different customers are willing to pay a different price for using
the same amount of resources. Revenue Management is of especially
high relevance in cases where the constant costs are relatively high
compared to the variable costs. The less variable costs there are, the
more the additional revenue earned will contribute to the overall profit.
To illustate this, we can take the example of the luxury hotel which
charges different prices for different customers. In India it is generally
practiced in star hotels to maximise the revenues. the customer who is
price sensitive and time conscious generally pays lesser tariffs than a
customer who is willing to pay more and books the room one or two
days before the stay. Revenue Management in other words tries to
maximise revenues by managing the tradeoff between a low occupancy
and higher room rate senario versus a high occupancy and lower room
rate .Robert Cross, Revenue Management, Hard Core Tactics for Market
Domination

How does Revenue Management work? Identify the market segments:

A Market Segmenting a market Price Price Market Segmentation Qty
Sold Hotels should identify the type of customers and the price they are
willing to pay for utilising the service. This can be done on the basis of
the following parameters.
Physical characteristics

High Price Low price

View Pool view, ocean view, hill view Non scenic view Size Bigger
rooms with more facilities Small rooms with few facilities Temporal
Weekday bookings Weekend bookings Logical Fences Length of stay
Short stay. One or two days. Longer stay. Flexibility Cancellations and
rescheduling are allowed at a low penalty. High penalty for cancellation
and schedule change Time of purchase Bookings are made very close to
date Bookings are made quite early Privileges Are rewarded loyalty
privileges No privileges Size of Business provided Corporate business
customers booking frequently Self funding vacationers booking rarel
Point of sale Phisical delivery and confirmations By email or phone.
Changing Demand over Time eg. Perishable Products Demand.

Demand forecasting:
Pricing and demand are inter-related and need to be coordinated. In the
hospitality industry, demand for a room is cyclic in nature and follows a
trend. Revenue management models help pinpoint demand by
minimising uncertainity and producing the best possible forecast.

Allocation:
The revenue management also puts light on the allocation of inventory
(hotel rooms) among different segments. For example , if a hotel has two
price categories of rooms, say Rs.4500 and Rs. 6000. Since the pricing is
different for the two rooms, these rooms are each targeted at a different
customer set. Based on the historical preference pattern of customers in
each segment, it would be possible to estimate the number of customers
who would be willing to pabuy these rooms at a given price with a
reasonable variance.For example,an average 50 customers may be
willing to pay Rs. 6000 for some rooms, but it could also mean that the
actual number of customers who turn up for Rs. 6000 could be 60 or
even 40 with some probability, or 80 or 30 with a lesser probability.
Two Prices:

Two Market Segments

Price
P1
P2
Q1 Q2 Quantity Supplied

Overbooking:
Overbooking is a practice of intentionally selling more rooms than
available in order to offset the effect of cancellations. For example,
suppose in the hotel industry, there are 180 rooms available, there is no
certainity that all the rooms would be booed at a point of time. In the
same way, during the season, there is a possibility of over booking.
Therefore if the booking is done 181 customers instead of 180, the hotel
may end up with only 173 or less than 180 customers.since the
probability of exactly 181 customers turning up is low, the revenue from
that aditional customer generally compensates more than the expected
cost. For this example, the optimal number of customers that can be
booked would be 186 as illustrated in the following figure.

Overbooking: Determining the optimal level

Revenue
Revenue
Gain Net Revenue
Sales Revenue
Overbooking cost
Capacity Overbook Qty
Revenue Management as a Business Process
Classification of Hotels
Hotels are classified into five main types:
• Economy / limited -service hotels
• Mid-market hotels
• All-suite hotels
• First class or executive hotels
• Luxury or deluxe hotels

For the purpose of our research, Economy and Executive hotels are
selected.Normally hotels have four rate categories: (1) Rack rates, (2)
Group and tour rates, (3) Special and promotional rates and (4) package
rates.
(1) Rack rates are normal room rates. It is based on the category of the
room, type of bedding and occupancy. Unless specified, guests are
quoted the rack rates and are charged for the same.
(2) Group and Tour rates are a discounted room rate for an organisation,
which has blocked a large number of rooms. Most hotels have group
rates that are lower than the rack rates. This rate is generally extended to
a trade association or fraternal organisation that has scheduled a
meeting, seminar or conference at the hotel. Discounts are also offered
to a tour operator, in return for a commitment to purchase a minimum
number of rooms over a given period of time.
(3) Special and promotional rates are offered to corporate travellers,
traveling sales representatives, military personnel, airlines staff or other
regular clients. Some times special rates are also offered along with an
advertising campaign or to promote the hotel during lean periods.
(4) Package rates are offered to the public along with other services such
as banquet or a ball, or recreational facilities or a special event. Such a
package normally includes accommodation, tickets to the concerned
event and transportation from hotel to the venue and back. Other popular
packages offered by hotels are honeymoon, weekend, Christmas, New
Year or any other sports activity. The package rate is normally lower
than the combined component or rack rate.

Selling Hotel Rooms

6. Step 1
Train on site. There are accrediting schools that offer hotel sales
training such as the University of Phoenix, but training on site will
offer a better understanding of the hotel. This will give you complete
knowledge about the hotel and their reservation system. On site
training will provide you with the all the hotel information, including
the room rates, packages and room descriptions.

7. Step 2

Provide excellent customer service for each guest who calls. Give
each guest respect and courtesy and speak in a professional manner.
Smile when you are talking to guests, whether in person or on the
phone, as this will help build a relationship, which could lead to sales.

8. Step 3

Quickly identify the guest's needs and desires for her reservation.
Listen closely to what the guest tells you and match her needs to a
hotel room. For example, she may request a ground floor room or one
with a refrigerator, or a room with an ocean view. However, if that
room is not available offer a compromise based on the information
that you have received from the guest.

9. Step 4

Offer the guest alternatives to lower his room rate if he seems

hesitant. Ask the guest questions about any type of memberships he
may have that can lower the rate, such as AAA. However, if a lower
rate is not available, offer room packages that the hotel may have.

10. Step 5

If the hotel offers any complementary services such as free breakfast

or evening h'or doeuvres give the guest that information. Provide
specifics about any special services that the hotel has to offer such as
a spa treatments
Revenue Management techniques in hospitality industry –

The hospitality industry is part of a larger enterprise known as the travel

and tourism industry. It is one of the oldest industries in the world. In
early days, traders, explorers, missionaries and pilgrims needed a break
in their journeys requiring food, shelter and rest. People opened their
homes and kitchens to these weary travellers, and an industry was born.
Although accommodation today is varied and their services have
changed and expanded over the ages, one thing about the hospitality
industry has remained the same, guests are always welcome! From a
friendly greeting at the door, room service, breakfast, to a host of
facilities' the hospitality industry offers travellers a home away from
home. Hospitality is defined as “the friendly reception and treatment of
strangers". For most people, hospitality means entertaining guests with
courtesy and warmth. Hospitality is also an industry made up of
businesses that provide lodging, food and other services to travellers.
The main components of this industry are hotels, motels, inns, resorts
and Restaurants. In a broad sense, the hospitality industry might refer to
any group engaged in tourism, entertainment, transportation or lodging
including cruise lines, airlines, railways, car rental companies and tour
operators. However the two main segments are the lodging industry also
called the hotel industry, and the food and beverage industry, also called
the restaurant industry. The lodging industry is made up of businesses
providing temporary housing, and such a business is called a lodging
establishment and the people who stay in it are called guests or clients.

What is Revenue Management?

Revenue Management is a technique to optimize the revenue earned

from a fixed, perishable resource. The challenge is to sell the right
resources to the right customer at the right time. Revenue Management
implements the basic principles of supply and demand economics in a
tactical way to generate incremental revenues. There are three essential
conditions for revenue management to be applicable:
• That there is a fixed amount of resources available for sale.
• That the resources sold are perishable. This means that there is a time
limit to selling the resources, after which they cease to be of value.
• That different customers are willing to pay a different price for using
the same amount of resources. Revenue Management is of especially
high relevance in cases where the constant costs are relatively high
compared to the variable costs. The less variable costs there are, the
more the additional revenue earned will contribute to the overall profit.
To illustate this, we can take the example of the luxury hotel which
charges different prices for different customers. In India it is generally
practiced in star hotels to maximise the revenues. the customer who is
price sensitive and time conscious generally pays lesser tariffs than a
customer who is willing to pay more and books the room one or two
days before the stay. Revenue Management in other words tries to
maximise revenues by managing the tradeoff between a low occupancy
and higher room rate senario versus a high occupancy and lower room
rate .Robert Cross, Revenue Management, Hard Core Tactics for Market
Domination

How does Revenue Management work? Identify the market segments:

A Market Segmenting a market Price Price Market Segmentation Qty
Sold Hotels should identify the type of customers and the price they are
willing to pay for utilising the service. This can be done on the basis of
the following parameters.

Physical characteristics

High Price Low price

View Pool view, ocean view, hill view Non scenic view Size Bigger
rooms with more facilities Small rooms with few facilities Temporal
Weekday bookings Weekend bookings Logical Fences Length of stay
Short stay. One or two days. Longer stay. Flexibility Cancellations and
rescheduling are allowed at a low penalty. High penalty for cancellation
and schedule change Time of purchase Bookings are made very close to
date Bookings are made quite early Privileges Are rewarded loyalty
privileges No privileges Size of Business provided Corporate business
customers booking frequently Self funding vacationers booking rarel
Point of sale Phisical delivery and confirmations By email or phone.
Changing Demand over Time eg. Perishable Products Demand.

Demand forecasting:
Pricing and demand are inter-related and need to be coordinated. In the
hospitality industry, demand for a room is cyclic in nature and follows a
trend. Revenue management models help pinpoint demand by
minimising uncertainity and producing the best possible forecast.

Allocation:
The revenue management also puts light on the allocation of inventory
(hotel rooms) among different segments. For example , if a hotel has two
price categories of rooms, say Rs.4500 and Rs. 6000. Since the pricing is
different for the two rooms, these rooms are each targeted at a different
customer set. Based on the historical preference pattern of customers in
each segment, it would be possible to estimate the number of customers
who would be willing to pabuy these rooms at a given price with a
reasonable variance.For example,an average 50 customers may be
willing to pay Rs. 6000 for some rooms, but it could also mean that the
actual number of customers who turn up for Rs. 6000 could be 60 or
even 40 with some probability, or 80 or 30 with a lesser probability.

Two Prices:

Two Market Segments

Price
P1
P2
Q1 Q2 Quantity Supplied

Overbooking:
Overbooking is a practice of intentionally selling more rooms than
available in order to offset the effect of cancellations. For example,
suppose in the hotel industry, there are 180 rooms available, there is no
certainity that all the rooms would be booed at a point of time. In the
same way, during the season, there is a possibility of over booking.
Therefore if the booking is done 181 customers instead of 180, the hotel
may end up with only 173 or less than 180 customers.since the
probability of exactly 181 customers turning up is low, the revenue from
that aditional customer generally compensates more than the expected
cost. For this example, the optimal number of customers that can be
booked would be 186 as illustrated in the following figure.

Overbooking: Determining the optimal level

Revenue
Revenue
Gain Net Revenue
Sales Revenue
Overbooking cost
Capacity Overbook Qty
Revenue Management as a Business Process
Classification of Hotels
Hotels are classified into five main types:
• Economy / limited -service hotels
• Mid-market hotels
• All-suite hotels
• First class or executive hotels
• Luxury or deluxe hotels

For the purpose of our research, Economy and Executive hotels are
selected.Normally hotels have four rate categories: (1) Rack rates, (2)
Group and tour rates, (3) Special and promotional rates and (4) package
rates.
(1) Rack rates are normal room rates. It is based on the category of the
room, type of bedding and occupancy. Unless specified, guests are
quoted the rack rates and are charged for the same.
(2) Group and Tour rates are a discounted room rate for an organisation,
which has blocked a large number of rooms. Most hotels have group
rates that are lower than the rack rates. This rate is generally extended to
a trade association or fraternal organisation that has scheduled a
meeting, seminar or conference at the hotel. Discounts are also offered
to a tour operator, in return for a commitment to purchase a minimum
number of rooms over a given period of time.
(3) Special and promotional rates are offered to corporate travellers,
traveling sales representatives, military personnel, airlines staff or other
regular clients. Some times special rates are also offered along with an
advertising campaign or to promote the hotel during lean periods.
(4) Package rates are offered to the public along with other services such
as banquet or a ball, or recreational facilities or a special event. Such a
package normally includes accommodation, tickets to the concerned
event and transportation from hotel to the venue and back. Other popular
packages offered by hotels are honeymoon, weekend, Christmas, New
Year or any other sports activity. The package rate is normally lower
than the combined component or rack rate.

PRODUCT DEFINATION
COMPETITIVE
PRICING
DEMAND
FORECASTING
Distribution
Management
Business
Mix
Manipulation
Analysis of star and economy hotels on the basis of tariff plans:
Five Star hotels:
Name and location Single
Occupancy
Double
Occupancy
Facilities (Room and Breakfast)
Hotel Marine Plaza, Superior 11,000 12,000
Marine Drive Executive 12,000 13,000
Restaurants, conference
rooms, swimming pool etc.
Holiday Inn Superior 8,800 11,600
Executive 16,000 20,000
Same as above
Hotel Sun and Sand Superior 8000 8500 Same as above
Executive 12000 12000
Hotel Sea Princess, Juhu Superior 4500 5250 Same as above
Executive 9500 13,500
Ramada Palm Grove Superior 6000 7000 Same as above
Executive 8000 9000

Economy Hotels:

Single occupancy Double occupancy

Hotel Highway Residency,Andheri 2350 2550
Hotel Amigo, Mumbai 2450 2550
Hotel Bentleys, Colaba 2000 2200

Hotel Godwin,Colaba (Three Star hotel)

The hotel has been accredited as a 3 star hotel and is situated in colaba.
They find most of their customers
from Gulf. HOTEL GODWIN, a 3 Star Hotel with 52 rooms has been
serving the travelers and business community for well over 30 years and
from the testimonials of its patrons, both Indian and Foreign, it is
considered a real HOME AWAY FROM HOME. HOTEL GODWIN
occupies an ideal location from the point of view of businessmen and
tourists. Adjacent to Colaba Causeway, the fashionable shopping centre
in South Mumbai, it is close to the tourists attractions like the Gateway
of India; Museum, the business centers of Flora Fountain, Churchgate
Reclamation and Nariman Point, Offices of National & International
Airlines, and headquarters of both the main Railway line close by.
Prominent Clubs, Cinemas & Restaurants are near by.
• They get the customers through travel agents in Mumbai and the other
parts of India.
• The average occupancy rate is 60%
• Most of the customers are tourists.
• To get more customers they provide discounts in the off-season.
• They charge different tariff to different customers.
• Usually they get repeated customers.
• They do overbook the rooms to maximize the revenues.
• There are 65 employees in the hotel.

Revenue management Strategies adopted by the hotels

Findings
• It is believed that the hotels, which are functioning at the large scale,
are good in revenue management and they apply most advanced
techniques to manage their revenues. But through thisresearch on star
and economy hotels, it can be said that the star hotels provide the state of
the art facilities and services to the customers and very hygiene food to
the customers. But when it comes to the occupancy rates measure in
terms of foreign tourists, the economy hotels are exceedingly doing well.
• The star hotels attract more business class customers by providing
good and efficient services to them. The supply is more than demand in
case of star hotels.
• Economy Hotels give importance to the cultural values of the country.
• The concept of overbooking is followed in both kinds of hotels.
• The market segmentation is not there in case of economy hotels. But it
is practiced in star hotels.
• In both type of hotels the maximum number of customers are tourists.
• Rooms are booked directly through internet by the customers in case of
economy hotels and indirectly through the travel agents in case of star
hotels.
• Economy hotels do not practice revenue management techniques
neither through its differential pricing nor through market segmentation.
They just manage their revenues by applying the concept of logical
booking. This can be seen by the following table.

Economy hotels: (revenue earned if given to a single person)

Check In & out 12 noon.
Therefore profit per day on a single room =Rs. 6000
Star Hotels: check in & out 12 noon.
(Revenue earned if given to a single person)

Occupancy Check in Check out Tariff for a single person Revenue

per day
1 12 Noon 12 noon Rs 4500 Rs 4500
Therefore profit per day on a single room= Rs. 4500
From the above table it can be analyzed that the revenue management
styles of the different hotels are different. Economy hotels book the
rooms on the basis of the check in and check out timings of the tourists
and go for maximum utilization of the Resources. Basic formulas
applied by the hotels to calculate the revenue and room rates:
Calculation of total revenue on the basis of the above formula:
Available No. of rooms Occupancy percentage
No. of days
in the year
Total Revenue Average Room
Rate
Star hotel (Hotel Godwin) 60% 365 Rs.40541280 Rs.3560
Economy Hotel (Hotel Bentley’s) 110% 365 Rs.29711000 Rs 2000
If one room is occupied thrice a day, then the economy hotel can have
maximum revenue compared to that of the star hotels. The calculation is
as follows.
Economy Hotel (Hotel Bentley’s) 110% 365 Rs.89133000 Rs.6000
Challenges or problems in Revenue management
The revenue management techniques and the models of overbooking if
applied aptly would definitely maximize the revenues of the hospitality
industry. But there are some hindrances that the hotels have to
overcome. They are given below:
• Measuring performance of an RM system is a major issue. Occupancy
rates and yield are measures that are affected by external competition.
Therefore an ideal measurement can be done using the opportunity
model. I.e., if the hotel segments the market and fixes different rates for
different customers, then it has to see that the revenue is generated from
those rooms and it has to be utilized ideally.

Occupancy Check in Check out Tariff for a single person Revenue

per day
1 5 AM 12 Noon Rs 2000 Rs 2000
2 2 PM 7 PM Rs 2000 Rs.4000
3 8PM 12Noon next day Rs 2000 Rs.6000
• Some customers do not like the practice of differential pricing. In
evaluating the efficiency of RM system, the trade off between generating
short-term profits and creating long-term customer loyalty needs to be
studied carefully.
• Revenue management can have impact on the motivational level of the
employees.

Revenue Strategy

The objective of a revenue strategy is to capture the optimal profitability

that can be produced from the projected demand. Interdepartmental
Integration which helps in achieving the revenue strategies.

Conclusion

From the research paper and findings, it can be concluded that the future
of revenue management will evolve the following aspects:
One-to-one Revenue Management
• Sophisticated hotels will evolve to one-to-one revenue management;
each individual will be a market segment in themselves
• In the future, technology will support calculating the total customer
value and the potential total customer spend, based on history and future
potential from demographics, to determine what rate and what
availability to offer to a potential guest
Total Customer Value Integration
• The future of revenue management will include a focus on the Revenue
Per Available Guest (RevPAG) and total customer value
• The next generation of revenue management systems will create an
offer based on the value of, or potential value of, each individual
customer
Function Room Yield
• Forecasting and yielding of function space will be a focus in the future
for hotels
• Many large hotel companies and revenue management systems are
working to develop effective models in this area.
Cost of Business Analysis
• Different revenue streams and channels do not yield the same profit,
even when the rate is exactly the same
Revenue
Management
Service
Delivery
Sales
& Marketing
• In the future, channel cost will be incorporated into rate and inventory
decisions for each channel individually Goal Alignment
• The goals of the entire hotel team, from property level to corporate,
will need to be aligned in
order for revenue management to reach its fullest potential. Automation
• There is a gap between the sophistication of the revenue management
practice and the technology available to support it
• We need to adopt the new technologies as they are available and use
our minds to manipulate them expertly to achieve ultimate success In
short, the main aim of revenue management makes the following things
possible
• Ensures a systematic approach
• Ensures pricing and rate integrity
• Values sound inventory management
• Establishes a solid distribution network
• Recognizes total lifetime value of business
• Recognizes superior service experiences affecting profitability.

Acknowledgements

Manager of Bentleys Hotel, Colaba, Mumbai

Manager of Hotel Godwin, Colaba, Mumbai