What is Revenue Management

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Revenue Management: the art of selling the right room, at the right time, to the right customer, at the right price.

Revenue Management is a discipline that has been growing in popularity amongst all the service industries.

It derives directly from the so called “Price Discrimination” practice.
Price discrimination occurs when goods or services are transacted at different prices from the same provider.
This concept can be studied in every Microeconomics course as a feature of a monopoly market In order to allow this practice in an oligopoly market, such as the airline or hotel industry; it is needed a good collection of critical data together with market segmentation, in order to boost revenue, keeping production steady.

In simple words, having kept the capacity at the same level, firms which have successfully implemented the concept of revenue management, have increased revenue per single unit Revenue management can be used in a wide variety of industries, as long as · the goods or services are highly perishable (a room or a airplane seat can only be sold today, if unsold, cannot be stored for another day when demand is high) ·

it is possible to divide the market in different segment (to go back to the concept of price discrimination, I can offer a suite to a wealthy individual, quite a few deluxe rooms to a company organizing a conference for its own managers, and the remaining standards rooms to s Tour Operator for the tourists looking for a bargain) · the number of goods on offer are fixed (I cannot build a hotel room overnight)

we can summarize that Revenue Management is is the process of understanding, anticipating and reacting to consumer behaviour in order to maximize revenue or profits .

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