By EyeforTravel.com Correspondent in Amsterdam<br><br>Revene management (RM) is a process that uses a RMS to proactively
By EyeforTravel.com Correspondent in AmsterdamRevene management (RM) is a process that uses a RMS to proactively analyse and control supply/demand using microeconomic theory, according to Steve Pinchuk, corporate VP revenue management, Harrah'
Published: 23 Nov 2005
By EyeforTravel.com Correspondent in Amsterdam
Revene management (RM) is a process that uses a RMS to proactively analyse and control supply/demand using microeconomic theory, according to Steve Pinchuk, corporate VP revenue management, Harrah'
Underlining the importance of revenue management from pricing, sales and marketing, and distribution perspective, Pinchuk, during the EyeforTravel.com's 'Revenue Management and Pricing in Travel Europe 2005' conference being held in Amsterdam, said that a RMS is a toolbox that contains many tools needed for the RM process. For example, he said that RMS changes the perspective of both marketing and sales, from targeting, incenting and controlling sales based on occupancy and sources of business, to targeting, incenting and controlling sales by rate buckets within each source of business block.
"A RMS applies the right tool (like a power vs a hand saw) - users must understand the task they need to do (market and business); then determine which tools to use and when to use them; then determine how far to take the application of RM theory," he said.
Pinchuk said that it's all about getting the right product to the right customer at the right time, optimising the profit from all of resources based on the allocation of the constrained resources, proactive control of your inventory (forecasting demand in advance) and market segmentation and variable pricing / revenues, and minimising displacement costs.
On selling the right product to the right customer at the right time, Pinchuk shared a two stage approach: Analysis - first determine who to sell to - proactively before demand materialises, and Controls - then control your inventory and implement your decisions.
He added, "RM is a process of optimising profits by: segmenting the market using, fences based on different product requirements (time, price, service level), use dynamic pricing (different prices for products), forecast unconstrained demand for each product/price point and determine in advance what demand to reject and accept to optimise revenues across the network."