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REVENUE MANAGEMENT

REVENUE MANAGEMENT. Unit VII. Revenue Management Formulas. Formula 1: Potential average single rate Formula 2: Potential average double rate Formula 3: Multiple occupancy percentage Formula 4: Rate spread Formula 5: Potential average rate Formula 6: Room rate achievement factor

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REVENUE MANAGEMENT

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  1. REVENUE MANAGEMENT Unit VII

  2. Revenue Management Formulas • Formula 1: Potential average single rate • Formula 2: Potential average double rate • Formula 3: Multiple occupancy percentage • Formula 4: Rate spread • Formula 5: Potential average rate • Formula 6: Room rate achievement factor • Formula 7: Yield statistic

  3. Revenue Management Methods • Capacity management: Balances risks of overbooking against potential loss of revenue from reservation cancellations, early departures, and no-shows. • Discount allocation: Restricts time period and product mix (rooms) available at reduced or discounted rates • Duration control: Places time constraints on accepting reservations in order to protect rooms for multi-day reservations (which represent higher levels of revenue)

  4. Revenue Management Formulas • Formula 8: Rev PAR • Formula 9: Identical yields • Formula 10: Equivalent occupancy • Formula 11: Required non-room revenue per guest • Rev PAG • GOPPAR

  5. Yield Statistic Formulas Formula #1 Actual Rooms Revenue Potential Rooms Revenue Formula #2 Room Nights Sold Actual Average Room Rate ___________________ X _______________________ Room Nights Available Potential Average Rate Formula #3 Occupancy Percentage  Room Rate Achievement Factor

  6. Rev PAR Formulas Formula #1 Actual Room Revenue Available Rooms Formula #2 Occupancy Percentage  Average Daily Rate

  7. Elements of Revenue Management Strategies • Group room sales • Transient room sales • Other revenue opportunities • Local and area-wide activities • Special events • Fair market share forecasting

  8. Revenue Management Meeting Participants • General manager • Sales managers • Catering managers • Reservations manager • Front office manager • Food and beverage manager

  9. High-Demand Tactics • Close or restrict discounts • Apply minimum length of stay restrictions carefully • Reduce group room allocations • Reduce or eliminate 6 p.m. holds • Tighten guarantee and cancellation policies • Raise rates to be consistent with competitors • Consider a rate raise for packages • Apply full price to suites and executive rooms • Select dates that are to be closed-to-arrivals • Evaluate the benefits of sell-throughs • Apply deposits and guarantees to last night of stay

  10. Low-Demand Tactics • Sell value and benefits • Offer packages • Keep discount categories open • Encourage upgrades • Offer stay-sensitive price incentives • Remove stay restrictions • Involve your staff • Establish relationships with competitors • Lower rates

  11. Four Revenue Management Tactics • Hurdle rate • Minimum length of stay • Close to arrival • Sell-through

  12. Revenue Management Software Revenue management software provides: • Continuous monitoring • Consistency • Information availability • Performance tracking • Special reports

  13. BIBLIOGRAPHY • Textbook of Hotel Front Office Management & Operations by Manoj Kumar Yadav. • Check-in Check-out Managing Hotel Operations by Gary K. Vallen and JoromeJ.Vallen. • Managing Front office Operations byMichael L KasavanaPhd,RichardM.Brooks. • Hotel Front Office Training Manual by SuvradeepGaurangGhosh.

  14. Bibliography • The Hospitality Industry • www.hospitalitynet.org • www.indianhospitalityonline.com/ • www.hospitality-industry.com • www.ibef.org • www.hospitalityupgrade.com

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