Implementation of Revenue Management: Core Concepts in Hotels of Western Australia




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    Implementation of Revenue Management: Core Concepts in Hotels of Western Australia

    Yen Doan, Nadezhda Eliseyeva and Ahmad Fareed Ismail

    641 Wellington Street, Perth, 6000, WA

    [The 2nd International Research Symposium in Service Management]

    Abstract

    Revenue management (RM) is a methodology of enterprise profitability maximisation through several concepts including yield management techniques. This article considers the hotel industry because the multi-faceted functionality of a hotels uniqueness and therefore warrants closer investigation, given that different yield models, must work in unison in order to achieve optimal organisation income. This research aim is to examine the uptake of generic core concepts of revenue management by hoteliers in Perth, Western Australia. This qualitative exploratory study involved face-to-face interviews with five senior managers of major hotels in Western Australia to assess, firstly their perception on yield management as a whole and secondly how they utilise the generic concept in their hotel. The findings show a divergence in hotelier perception and difference in perceived objective. The paper closes with implications and suggestions to include revenue management practices into operational and marketing strategies of the hotel companies.

    Keywords: yield (revenue) management, profitability maximisation uptake, core concepts, hotels, Western Australia.

    INTRODUCTION Since the 1980s some of the Yield Management techniques used by airline companies were developed into a Revenue Management (RM) approach, extensively adapted by a plethora of hospitality establishments. Although the definition of RM was reasonably apparent to the preponderance of practitioners, understood as revenue maximising through inventory allocation and targeting the most profitable customers; methods and rules of the methodology seem to be not as transparent and comprehensible. However, researches appear to agree that a mixture of an RM “cocktail” require common “ingredients” such as a sophisticated computer program, which is linked to the reservation history, knowledge of overbooking practices, internal and external company analysis, established distribution channels and practical pricing strategies. Meanwhile, a proportion of each “ingredient” seems to diverge on a company basis. To analyse the specifics of implication and individual perception of RM in Western Australia five hoteliers were interviewed in Perth. …

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