What is Revenue Management?
Revenue management is pricing and inventory management guided by historical data and predictive algorithms. The goal of the strategy is to improve both the speed and accuracy of decision making. Better decision making translates into more revenue. Revenue management is best known within segments of the hospitality industry, including; hotels, car rental companies and cruise lines. Revenue management originated in the airline industry, where it was referred to as yield management.
Typically the key component of a revenue management strategy is easily gathered, historical data on the sales process for your industry or business. This data reveals patterns that are both easily seen and often invisible to the naked eye. Those less visible patterns can be filtered to the surface by technology commonly referred to as a revenue management system. Once these patterns are identified they become opportunities for improved pricing and inventory management. And frequently the revenue management system the business is using has predictive algorithms that guide the manager to make better decisions than they would have if they relied only on their gut or personal experience.
Quite frequently the training a person receives for revenue management can be overly complicated. If an analogy helps, a person can become very proficient at driving a car without a thorough understanding of engine, differential and transmission mechanics. Revenue management training that focuses on key performance measurements can frequently bury a person in acronyms, parallel strategies and goals that can distract from the simple objective of making more revenue. Likewise training can become too dependent on the predictive technology used to gather data and guide decision making. And finally, your business may be unintentionally designed to prevent revenue management from working. To avoid these pitfalls a good revenue manager never loses site of common sense and the laws of supply and demand.
Chasing Revenue – The Birth of Revenue Management is not a text book or training course. Chasing Revenue is a historical account of where revenue management came from and how it first intersected with the modern, online distribution of product that we now call eCommerce. Understanding this history and the pillars of common sense and supply & demand are crucial to anyone who wants a firm foundation in the discipline. Chasing Revenue demystifies the charlatans who pitch complex theories as both an art or a science.
You can find numerous how-to books on the subject of revenue management. Each of them will have a different spin on what works best and what is most important. But nowhere else will you find the authentic building blocks that put it all together in the first place. Chasing Revenue was written by Gregory Cross, the founder of revenue management at both Hilton Hotels Corporation and Hyatt Hotels Corporation. These timeless lessons are rooted in common sense and supply & demand. Truth to power can only be written by those who lived it.
Chasing Revenue presents how the Internet and an entirely new group of companies revolutionized how hotels sell their products. A humble, compelling, and unflinchingly honest sharing [of} both successes and the harsh reality of office politics that many business people will recognize and relate to, regardless of the industry they work in. Chasing Revenue is more than the evolution of hotel revenue management. Chasing Revenue tells the story of a visionary hotel executive’s early recognition of how the then-nascent business practice could generate billions of dollars of incremental revenue.
The push and pull between suppliers and their distribution partners in the travel industry is the original ‘frenemy’ battleground of the internet. This history of hotel revenue management and digital distribution includes business and strategy lessons relevant today. As technology has brought disruption to so many sectors of our economy, Chasing Revenue provides valuable insights relevant in sectors much broader than online travel.