Revenue Management

Meta-analysis of Revenue Management in Hotel Industry

Introduction

As indicated in many print media and other material, the practice of revenue management has grown tremendously in the recent past. It has become applicable to almost all the industries that deal with perishable inventory. Revenue management started back from 1970s from airline industry during deregulation. From that time we have seem growth and adaptability of the practice by many players in most industries notably airline, cruise business, car rental and hotel industry. All the companies and businesses that adopt revenue management are characterized by conditions that must be there if they have to effectively realize the benefit of revenue management. Xuan 2012 argued that to practice effective revenue management, there are conditions hotels are supposed to put into considerations. These conditions includes relatively fixed capacity, perishable inventory, and reservation made in advance, low marginal cost variable demands and segmented markets. Fixed capacity dictate that hotels cannot sell more than what can they can have (Gabor, 2010). On the other hand, perishable inventory means that the products the hotels sell are time-sensitive and after they sell to a certain customer, they do not have the ability to replenish it and sell again (dezinci 2008).

Revenue management applies different strategies to maximize profit from fixed products. Such strategies as explained later in this paper include overbooking, pricing, market segmentation and discount allocation (Zhechev, Vladimir, and Todorov 2010). All this required skills and revenue managers are equipped with skills and knowledge in data analysis to make proper decisions and come up with effective forecast that are used in optimization.

In this paper, I aim at analyzing the use of revenue management in hospitality industry, bring out the ethical issues, advantages, and disadvantages of revenue management, and discuss about the future of revenue...