Continued from Part-2
Revenue management can be better applied in industry; practitioners need to have deep understanding of fundamental economic hypothesis, like opportunity cost, supply plus demand, consolidation, competition, etc. It is presented by Dana (1999), how the techniques of revenue management techniques, like price dispersal, could transfer demand even at that time when peak time is not recognized. Firms need to struggle with each other for acquiring consumers, thus, decisions of revenue management of a firm inevitably have an effect on demand for other firms of the similar industry.
The unexpected turnaround in fortunes of lodging industry from the year 2016 to 2016 created the concentration on contract renegotiations, consumer rate resistance, , price and competition wars like a main concern for revenue managers. There is an opposition with 2016 study conducted by Cornell University, where technology issues and human resources were leading the finance related issues. The current awful financial condition created it for the maintenance of price positioning by revenue managers, as fall in demand has transferred substantial pricing power towards consumer. Even though there are several hotels that could compete efficiently on price, revenue managers might too draw on many competitive techniques (non-price), comprising addition value. Another approach of pricing needs to create a targeted rate promotions series that are secluded by rate barrier as well as planned to catch the attention of guests who are price-conscious. One more method is to pack services in packages that cover room rents. Non-price techniques comprise competition considering the quality as a base, making planned partnerships, taking benefit of faithful program, raising the sources of additional revenue as well as developing added market sections.
Even as it is agreed by them that consumers have attained significant bargaining capacity, a research conducted by Cornell University observe a bigger position for RM because the economy gets better. In between, RM have a main task to find out the approaches to counterbalance the business loss by making extraordinary rates that are secluded by rate barriers to catch the attention of diverse market sections or to supplement obtainable packages to keep present business.
Looking forward, Revenue Management need to be aware that consumers would be powerfully concentrate on cost and less on loyalty of brand. The general string in this outlook of hotels’ prospect is that Revenue Manager is a precious tool for managers and marketers of hotel because they consider strategic price positioning and tactical price setting. The managers understood the fact very well that revenue management could not be beneficial in every case. In addition, revenue managers need to widen the viewpoint for revenue management to comprise as many consumer contact points as is suitable. It means, a marketing principle’s combination is represented by this, with the tactics of revenue management. With the return in demand, RM approaches’ application would be capable to assist hotels determine way back to rate honesty. On the basis of this idea, now the time is to set the strategies for price and prepared with tactics of revenue management at the time of recovery.
Continued to part--4