Essay on Revenue Management

2614 Words Feb 20th, 2006 11 Pages
There are some common characteristics of the service products which can be described as intangibility, inseparability, variability, perishablity and the inability ( Kandampully,Z et al:2000;Palmer, A:1994; Rust et al:1996)). In addition, Zeithaml& Bitner(1996) indicates that fluctuating demand should be considered in hospitality industry. Additionally, Lee- Ross and Johns (1997) claims that yield management could be used to assist the service organization to maximize revenue when the demand is fluctuating and product is perishable. Thus, due to the perishablity of the service products fluctuating demand, the hoteliers could apply yield management system in order to maximize the revenue.

Kimes (2000) claims that Yield (or revenue)
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In addition, Jauncey et al (1995:25) defines that ¡§Yield Management is an integrated, continuous and systematic approach to maximizing room revenue through the manipulation of room rates in response to forecasted patterns of demand.¡¨ According to their definitions, the accurate forecast demand, allocation capacity, market segment and optimum price are the essential issues for hotelier to manipulate different room rates in order to maximize room revenue. Furthermore, Jauncey et al (1995) suggests that the hotels need an integrate application to systematically record the history patterns of demand and analysis the data in order to predict the future demand accurately in term of the rates and the occupancy of the specific date. Furthermore, they suggest that the hotels should analysis the actual demand through an integrated application (property management system) and compare it with the predicted demand in order to set the optimum rates and manipulate these rates to maximize room revenue.

The above definitions point out the essential elements in implementing the Yield Management. Base on these definitions, several models have been proposed by different researchers. The first model was proposed by Jones and Hamilton (1992), they interviewed a number of managers and concluded that due to

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