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What is Revenue Management?



In a nutshell, revenue management is the "ART OF TURNING AWAY BUSINESS". That means if you have the proper market intelligence as well as your historical and current data analysis, you will be able to position your rates competitively and be able to determine which request to accept and which to turn away and maximize your revenue.

Everybody is trying to even out the peaks and troughs of demand by increasing rates during high periods and decreasing rates in low periods or implementing rate fences to achieve the same result.

Some organizations decide to purchase Revenue Management Systems, because they believe it is the right way to go. Revenue Management Systems collect historical data and combine it with recent trends in order to forecast the future. That means if you did not have the right product structure, the right market segments and right pricing structure, you will use a bad historical data and the result will be a bad forecast.

When demand is a low we sell products and when the demand is high, we sell availability. For maximum profitability it's vital to know how much someone who really values that particular product on this particular date with this amount of lead-time is willing to pay for it, and then to have the courage and confidence to hold out for that particular demand to come.

You may ask yourself, where do I get that confidence!! Well, from the knowledge that you have an accurate and healthy historical data, together with your own analysis on how current circumstance is compared to the historical data, and a clear understanding of the purchasing behaviour of your particular customer mix.

In other words, your Revenue Management allows you to make informed decisions for rate allocation and inventory distribution, not just relying on gut feelings.