Recommendations On How To Improve Hotels Revenue Management

Name: Tutor: Course: Date: Memorandum To: The supervisor From: Finance expert Date: 22/9/2019 Subject: Recommendations on how to improve hotels revenue management Revenue management is mainly focused with improving and advancing financial results of any organization but it common in companies such as hospitality that are necessitated to cope with a perishable inventory as well as high fixed costs. For instance, restaurants and hotels have a specific number of rooms and their fixed costs have to be met despite the number of room sold. It is important to note that in such companies and businesses, revenue management plays a huge role in predicting demand, optimizing inventory, and determining price availability (Ivanov, p.176). Therefore having ineffective revenue management practices would facilitate losses and failure of the business. There is a need for evaluating recommendations that can be implemented by businesses such as hotels to increase their revenues and profits. Background Revenue management involves the use of discipline analytics in organizations with a goal of predicting consumer behaviors and comprehending how products and resources can be optimized to maximize revenue growth. It is vital noting that revenue management approaches focus on identifying the segments which can facilitate the generation of most revenues for a company as a whole (Burgess, p.145). For instance in a hotel, revenue management examined other means of increasing the revenue of the firm and should not be dependent only on the rooms. Additionally, increased revenues are associated with improved profits. Revenue management makes it possible for a business to implement data-driven approaches which influence the decision on how inventories are managed. This helps in ensuring that informed decisions are implemented by the company; this is key in facilitating a company’s efforts to drive its revenues upwards. Ideally, organizations that are not guided by revenues management practices find it impossible to comprehend the dynamics of demand, and this makes it difficult for organizations and business to identify and exploit opportunities (Cetin, p.133). Without revenue management, hospitality firms might encounter problems related to forecasting, allocations, and prosing. Also, revenue management helps in comprehending the various revenue centers in a hotel (Ivanov, p.178). These may include fitness facilities, function rooms and casinos among other areas which also provides revenue to the firm It is necessary to note that revenue management necessitates technological support such as optimization algorithms which is key in ensuring that desirable results are achieved in a company (Kimes, p.8). Revenue managers, on the other hand, need to understand essential finance practices which, when combined with revenue management help in setting hotel prices and determining the willingness of the guests to pay. These activities help in promoting the viability and profitability of the business. Big data systems are used by revenue management personnel in understanding customers’ behaviors such as past bookings, search patters as well as their post-purchase evaluations. Additionally, the realization that companies should aim at optimizing their entire businesses and not only rooms shows that it is important to make changes to the current revenue optimization strategies (Wang, p.4). The implementation of big-data-based systems would help managers in obtaining information about customers, and this would help in making better decisions in the firm. Integrating revenue management with technology in the firm may help in simplifying the analysis of customer data without the need of having additional interfaces which are aimed at re-analyzing the data. Guest information is mined to offer insights about the guests. Audience The recommendations provided about the changes that can be implemented on revenue management approaches will be more appropriate for revenue managers and other organizational leaders who are responsible for making decisions regarding how business can increase their revenue and profits. The information is also necessary for managers to determine the decisions which may be implemented to ensure continuity of the business. Group Preference The project will be undertaken on an individual capacity. Annotated bibliography Burgess, Cathy and Keith Bryant. "Revenue management – the contribution of the finance function to profitability." International Journal of Contemporary Hospitality Management 13.3 (2001): 144-150 The existing revenue and management literature focuses mainly on issues related to operational matters. Profitability issues have also been evaluated in the recent past, bu...