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‘Revenue Management has now come of age’ - Pankaj Dhoundiyal, Guest Service Manager, Fairmont Jaipur

Friday, February 21, 2014, 15:00 Hrs  [IST]


The primary role of Revenue Management in any organisation is to maximise the organisation’s revenues and profits. In hotels, the Revenue Management department chiefly focuses on the rooms division, which forms the major source of revenues for the hotel. As a consequence of a streamlined approach that focuses on different segments, hotels these days have been successful in increasing the room revenue. From being an extended reservations department to becoming an individual department that focuses on increasing the top line and bottom line, today Revenue Management in hotels has truly come of age. It is also being said that Revenue Management department is increasingly using techniques and strategies that maximise revenues and profits from other key sources by bundling them with rooms division such as the convention space or conference rooms of the hotel. Apart from rooms, hotels today are active in streamlining Revenue Management practices from point of sales arenas of the hotel such as restaurants, spas, bars and more.

Having worked closely with front of the house and reservations in my career, I have realised that the knowledge of revenue and strategic approaches are equally vital and can be used well with operation knowledge to generate better revenues for the hotel. It can assist in incorporating traditional as well as modern thinking in sustaining better revenue practices at work and work towards the common goal of the company and professional development of the human resource. Concepts like non-traditional applications to pricing strategies and forecasting controls forms the core of Revenue Management and in yields profits for the hotel.

revenue_management_1.jpgThe main focus is to develop and sustain such practices and personnel which can shift the paradigm of Revenue Management from room revenue to total revenue. This enhances and derives the company’s overall focus of achieving better profitability in a more systematic manner.  

However, all this comes with challenging the conventional mind set towards Revenue Management and its approach in the industry. Airlines have been successful in implementing revenue generating practices which are accepted in the country such as non refundable tickets or charges for amendments etc.  Airlines have been using Revenue Management longer than other industries have, and customers seem to be used to the fact that they are charged different fares for the same flight and that they will receive specific benefits if they accept certain restrictions. In a sense, even though they are buying a similar seat, they are buying different products, because of the associated restrictions. Similar acceptability in the hotel industry remains a challenge in our country where charging different prices for a similar product in a different period is not easily accepted by the community.  

revenue_management_2.jpgRevenue Management in the hotel industry is still seen as an extension of a reservation unit where prime focus is to fill inventory. The focus of differential pricing to maximise revenue and profit is still looked down upon in this industry. Using the power of Revenue Management if a hotel wants to grow, it must practice processes such that customers view the transactions as fair. If a hotel is considered to be operating in an unfair manner, it risks pushing away its customers. With such practices the hotel may receive short-term benefits but the practice will definitely be unprofitable in the long run.

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