Sample Management Research Paper on Revenue Management Redefined

Plagiarism Declaration

The report submitted herein is my original work and has not been copied from any other person’s work whether unpublished or published. Moreover, it has never been presented for approval at Sydney Harbour Marriott Hotel or elsewhere. Finally, I affirm that I understand the regulations concerning plagiarism in the field of revenue management.


Executive Summary

The revenue management has its principal objective as being timely in offering the desired food service to the consumers. Before coming up with the system, it is important to have an understanding of the customers view point on the products. This view point would be essential in making decisions on the on the value of the outputs. Moreover, it is a significant factor in price determination.

Table of Contents

Plagiarism Declaration                                                            1

Executive Summary                                                                1

Introduction                                                                            3

Body                                                                                       3

Switches of revenue management                                          3

Pricing levels                                                                           4

Systems of inventory                                                              4

Promotion                                                                               5

Channels                                                                                 5

How to manage revenue                                                         6

Data collection                                                                        6

Optimization                                                                           7

Dynamic Re-evaluation                                                          7

Segmentation of the market.                                                   8

The forecasting process of revenue management.                  8

Conclusion                                                                              8

Recommendations                                                                  9


Revenue management is an essential system in any business venture. It is very useful in prediction of consumer behavior in the Hotel management at small scale market level. The revenue system will aid the hotel management in having a well-defined methodical system for control of finances. The revenue management has its key objective as being timely in offering the desired food service to the consumers. Before coming up with the system, it is important to have an understanding of the consumers view point on the products. This view point would be essential in making decisions on the on the value of the products. Moreover, it is an important factor in price determination.

The revenue management has proved to be as important in hotel setting as it helps the hotel management in very busy hotels to standard best prices. For this reason, therefore, the managerial team would be at liberty to spread their branches and not loose forecast on the dependability of their reports. The primary aim of any business venture is usually profit making, and revenue management provides the best answers on how to make profits based on demands of services and goods provided in the hotel.


Switches of revenue management

It is important to note that revenue management entails an array of activities whose sole aim is to increase income. The hotel management can make use of such activities since all of them are always at the disposal of the management. These activities include and are not limited to:

Pricing levels

The hotel management from time to time will be required to update the prices they charge from time to time. While doing price update, the management has to consider the value that will be created by customers. The organization will thus determine the anticipated value for their consumers by putting in place certain prices that would lead to the realization of consumers’ satisfaction. On the other hand, pricing may be done by companies against competitors or parallel to products other products produced by the same company (Bell, P., 51).

The value created however has to follow trends of pricing in the market while at the same time offering values to the hotel management and their customers. The market conditions that affects the pricing are usually the normal forces of supply and demand. The prices created must be dynamic so as to be able to change as market forces change. However, the changes should not affect the value attracted by the goods. During pricing, there should be a tactic and a pricing strategy. The pricing strategy is used to determine what the hotel or company would do. The tactic, on the other hand, encompasses how the hotel will realize the value intended (Bollapragada, S., Cheng, H., Phillips, M. and Garbiras. M., 24)

Amidst all these strategies and tactics, the management has to constantly do price optimization. This done by putting considerations on the price ratios and inventory while being sensitive to the effects of price changes on consumers demand to achieve high levels of profit margins. If a dynamic and robust pricing strategy are put in place, it goes without saying that the management would be able to high profits and still fully satisfy the consumers’ wants.

Systems of inventory

The inventory system is essential to the hotel management when it comes to the preeminent ways of pricing. Whenever there is the need to increase volume or number of consumers the hotel management would reduce prices or offer discounted goods or services. In some situations, however, the hotel would lower the prices with an aim of acquisition of shares in the market, and this will cause an increment in returns. During peak seasons, the hotel has to do overbooking so as collect high profits and avoid problems that might arise due to the cancellation of booked rooms.  Even if some consumers cancel their tickets due such periods, the company would still realize the projected proceeds (Lego here, Patick., 21)


The hotel has to invest highly in promotional activities as it will enable the administration to realize high sale volumes since the values of their services are reduced during such periods. The reduced costs ordinarily attract many consumers. The revenue management team have an obligation to estimate the rate of response of consumers to promotions to be able to determine the period of promotion that would still bring in growth in profits. The objective of the advertisement is to cause profit upsurge even when consumers are reluctant to go for services offered by the hotel. After promotions, most consumers would be willing to sign long-term contracts with the hotel, and this will lead to the realization of revenues for quite a long time.


The revenue collected or expected have to be channeled through suitable systems of distribution. The channels are tailored to meet the wants of the different consumers who desire the services of the hotel. For instance, those who book space online and those who do physical booking differ in their sensitivity to changes in pricing. The two teams of people, therefore, must be offered different channels that entail costs that cost realization of different profit margins. The revenue management team has to come up with better ways of realizing more profits without losing trust the consumers have developed (Agrawal, V., and Ferguson, M, 111).

The promotion has to be conducted as a serious advert both online and physically. The key thing is to have control of items put on the print media for advertisement. The hotel management has to be willing to sacrifice to get advertisement space since such spaces are paid for during a particular period. The more a company invest in the advertisement, the greater the mass of clients it attracts to the hotel. This, therefore, shows the great need to invest in advertisement even as the revenues are managed to ensure the realization of returns (Cross, R., Higbie, J. and Cross, Z.,212).

How to manage revenue

The revenue management is a process that requires a lot of keenness and a good managerial team. The process includes and is not limited to the following processes:

Data collection

The first and most important process in the management of revenue is the data collection process. The data collected has to be extremely relevant so as to ensure the accuracy of the information recorded. The data collected has to be stored for purposes of future references. The data is essential for future determination of prices, inventory purposes and forces of demand. The data collected also has to be concerning prices of products, the nature of products and competition available in the market. After collecting the data, thorough analysis has to be done to ensure the data is up to date and very relevant (Marriott, Jr., J., and Cross, R.232).

The data collection method has to be relevant and specialized so as quickly emerge the needs of the consumers in the market. A good example of such system is found in the governance of European Union in which the European Commission regulates the operations of the businesses and government parastatals. This regulation by the European Union helps to ensure a fair competitive environment in the hotel activities. It is also useful in achieving standards that are required. The hotel has to set standards with which it will be operating. The standard has to be maintained at all cost or improved so as to continue satisfying the consumers. The hotel management has to provide the above information to the employees to ensure the smooth running of the hotel system.


While forecasting suggests what customers are likely to do, optimization suggests how a firm should respond. Optimization is in all cases considered the greatest pillar of revenue management process. It leads to analysis and evaluation of all the available options in the business.  During optimization, the management puts all the available choices in the balance to come up with the most viable option. The first is influential of the objective function to optimize. The hotel business must adopt between elevating prices, total sales, involvement borders, or even customer generation values. Secondly, the company must decide which optimization technique to utilize. For example, many firms employ linear programming, a complex method for determining the best outcome from a set of linear relationships, to set prices to maximize revenue. Regression analysis, another statistical tool, involves finding the ideal relationship between several variables through complex models and analysis. Distinct choice models can serve to envisage consumer performance to goal them with the right foodstuffs for the best prices. Tools such as these allow a firm to optimize its product offerings, inventory levels, and pricing points to achieve the highest revenue possible (Chase, Nicole, 452).

Dynamic Re-evaluation

The revenue management for the hotel needs to have a stable, flexible evaluation system. The re-evaluation always has to keep checking the market prices and align them with the projections of the company. If the management system is dynamic enough, the hotel would be able to make projections that are of great benefit to the hotel fraternity. The evaluation system must be so flexible so as to meet the changes that arise in the market.

Segmentation of the market.

Once the data is much-needed data is collected, the next most important process is the segmentation of the market. This process is essential for maximizing the profits expected by the hotel management. It is also crucial in the control of the prices charged in the market. The success of the hotel management is based on the ability to disperse the consumers into groups based on their capacities to pay a certain amount for the services. It is important to understand that the revenue management is essential in the determination of services prices in very small market systems and larger market systems as well based on the situations prevailing in the market. The most important thing is the success of the hotels whether. There are critical tools necessary to create the set of information that can be clearly be analyzed by the entire management system. Market segmentation lays a good foundation for the next the next process of management of revenue which is the forecasting process. This has to be in line with the tool of cluster analysis which is essential in the segmentation process.

The forecasting process of revenue management.

Forecasting involves the projection of the conventional financing in the hotel management process. It is paramount and should be allocated enough time and resources for the success of the revenue system. Its administration and implantation are time intensive and extensive. The forecasting process has to be both qualitative and quantitative to ensure maximization of profits. The process, however, has to be timely and encompass all the needs of the market not forgetting the available resources in the market.


The revenue management is an essential element of part of any business system. The management of income has proved to be as valuable in the hotel setting as it helps the hotel management in very busy hotels to standard best prices. For this reason, therefore, the managerial team would be at liberty to spread their branches and not loose forecast on the dependability of their reports. The primary aim of any business venture is usually profit making, and revenue management provides the best answers on how to make profits based on demands of services and goods provided in the hotel.


I would recommend the hotel management to adopt the above processes of revenue management so as to be able to maximize profits.


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