The Evolution of Revenue Management: Where it came from, and where it is going

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | February 26, 2012

While hospitality based revenue management was originally designed to deal with mainly single and independent hotels, the product has evolved significantly to handle the rapid growth of the internet and third party booking sites. While once seen as a niche offering only used by certain parts of the market, revenue management now plays a major role in the operation of a successful hotel or resort.

Understanding the ability of revenue management to constantly evolve to meet the changing nature of the hospitality industry provides an insight into the many benefits that the product can provide to a hotel or resort with.

There is no better time to understand the durability and evolvement of revenue management as whole than during this current period of prolonged economic uncertainty. While many services and solutions provide great benefits to hotels in specific economic situations, such as during a stand along boom period or during a recession, revenue management is designed to evolve and meet the challenges of the times whatever they may be.

Revenue management in the hospitality industry was originally designed with a view to filling as many hotel rooms as possible, with no view to the long term effects of the pricing decisions undertaken. Many say that its original inspiration came from the American airline industry, which saw the need for more effective sales and pricing support solutions during the original period of airline competition which took place in the mid 1980's.

The hospitality industry was quick to see the wide ranging benefits of having such pricing and sales strategies in place, albeit in a basic and simplistic form compared to the modern day version we now see.

Hospitality based revenue management solutions were designed according to the most 'simple supply and demand economics' according to Neil Salerno, Hotel Marketing Coach (i). The original use of the product offering was designed to meet demand during particular times, whilst there was no real planning for the future as there is in today's industry.

Choose a Social Network!

The social network you are looking for is not available.

Close

Hotel Newswire Headlines Feed  

Paul van Meerendonk
Brian Mitchell
Grazia Sorice Ochoa
Vanessa Horwell
Bob Carr
Lawrence Adams
Roberta Nedry
Dennis M. Baker
Peter Anderson
Bonnie Knutson
Coming up in June 2019...

Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.