Revenue Management for the Hospitality Industry

Preface vii

Acknowledgments xv

Part I : Revenue Management Principles 1

Chapter 1: Introduction to Revenue Management 2

Introduction 3

The Purpose of Business 5

The Purpose of Revenue Management 11

The Purpose and Design of This Book 12

Chapter 2: Strategic Pricing 35

What Is a Price? 36

The Importance of Price in the 4 Ps of the Marketing Mix 45

The Role of Supply and Demand in Pricing 49

The Role of Costs in Pricing 53

Implementing Strategic Pricing 61

Chapter 3: Value 68

The Role of Value in Pricing 69

The Relationship Between Quality and Price 75

The Relationship Between Service and Price 77

The Link Between Quality, Service, and Price 79

The Art and Science of Strategic Pricing 84

Chapter 4: Differential Pricing 91

Ten Principles of Managing Revenue 92

Differential Pricing 93

Limits to Differential Pricing 99

Applying Differential Pricing 103

Revenue Management or Revenue Optimization? 121

Chapter 5: The Revenue Manager’s Role 129

The Revenue Manager in the Hospitality Industry 130

Legal Aspects of Revenue Management 133

Ethical Aspects of Revenue Management 139

The Revenue Manager Position 147

The Revenue Management Team 156

Part II : Revenue Management For Hoteliers 163

Chapter 6: Forecasting Demand 164

The Importance of Demand Forecasting 165

Historical Data 167

Current Data 174

Future Data 185

Demand Forecasts and Strategic Pricing 193

Chapter 7: Inventory and Price Management 208

The Marketing Mix Revisited 209

Inventory Management 209

Characterizing Rooms for Optimum Inventory Management 212

Designing Unique Room Codes 215

Classifying Guests by Market Segment 216

Overbooking as an Inventory Management Strategy 227

Price Management 233

Stay Restrictions 249

Principles of Inventory and Price Management 251

Chapter 8: Distribution Channel Management 259

Managing Distribution Channels 260

Nonelectronic Distribution Channels 268

Electronic Distribution Channels 278

Principles of Distribution Channel Management 298

Chapter 9: Evaluation of Revenue Management Efforts in Lodging 306

The Lodging Revenue Paradox 307

STAR Reports 318

Competitive Set Analysis 325

Market Share Analysis 332

Additional Assessments 335

Common-Sense Revenue Optimization 340

Part III: Revenue Management For Foodservice Operators 349

Chapter 10: Revenue Management for Food and Beverage Services 350

Traditional Foodservice Pricing Methods 351

The Cost Against Cost-Based Foodservice Pricing 359

Applying Differential Pricing in Foodservices 364

Factors Affecting Value Perceptions in Foodservices 373

Chapter 11: Evaluation of Revenue Management Efforts in Food and Beverage Services 391

Food and Beverage Revenue Analysis 392

Examination of Revenue Sources 393

Measurement of Revenue Change 399

Evaluation of Revenue-Generating Efficiency 409

The Revenue Evaluation Process in Foodservices 420

Part IV: Revenue Management In Action 429

Chapter 12: Specialized Applications of Revenue Management 430

Characteristics of Organizations Applying Revenue Management 431

Service Industries Applying Revenue Optimization Strategies 440

Specialized Revenue Management Duties 441

Revenue Management and Destination Marketing 450

Chapter 13: Building Better Business 458

Keys to Building Better Business 459

Better Business Issues in Moderate to Strong Markets 472

Better Business Issues in Weak or Distressed Markets 480

Index 503