Revenue Management’s Framework

To me there are two fundamental differences between production and servuction. The first one is the participation of the customer in ALL the aspects of servuction with powerful impact in the 4P’s of Marketing (Product / Price/ Promotion /Place). We reviewed that when we talked about service recovery.

The second difference is the intangibility of services, which make them unable to deposit. What you don’t’ sell today is lost forever! This idea was the origin of Yield/Revenue Management.

A holistic approach of Revenue Management, mix participation of the customer in the 4P’s and intangibility and create a corpus which is a must for any Touristologist!

I gave my first seminar about Revenue Management in 1993, even though, at that time it was called Yield Management .To tell the truth I still prefer to call it in this way. To me (you have to remember that Economics is my bedrock as a Touristologist) it is better to improve the Yield than the Revenue but you know this is just me!

The seminar was an in company training for a 5 star hotel. I was lucky enough to be surrounded by a small number of great professionals in the field of Marketing and Hotel Management and we began to prepare the material for the course. So, we put together all the knowledge, tools and methodologies that would help us and, more important, our customer to understand Yield/Revenue Management and to know how to apply it inside a 5 star hotel.

I love to work with small teams of self-motivated professionals. As Steve Jobs always said “A small team of A+ players can run circles around a giant team of B and C players.”

We create a kind of definition and a proposal of framework, that after 20 years of seminars, consultancy and projects have ended up in something like that, which I summarize in a slide format… 

In this definition of Revenue Management the two fundamental variables are…

A) Service as a dynamic package. Nowadays, hotels are a commodity; if you want to be apart from this scenario you have to provide customized packages which fulfill tourists’ needs related to the trip AND the things a tourist can get through it. The other way is to identified the hotel service as her/his lifestyle and transform to just sleep/meet/eat/drink in identity refreshment as Chip Conley did

B) How and where you communicate and commercialize this service to the customer. Specialized tourism and long tail are of big importance here.

We also create a framework, which we can consider the bedrock of Revenue Management.

When it was finished it was love at first sight! Revenue management uses almost all the things that awake/arouse my intellectual curiosity:

Strategic marketing, from the visionary idea to the final execution with the 4P’s.  From getting information to transforming it into knowledge…

Web-Engineering: Well, in 1993 it was all about ERP (PMS if we think in Hotels) and CRM. Nowadays adding, syndication, web scraping, social media, mobile…

Strategic Finance: Implementing USAH /USALI concepts, selecting and customizing ratios (GOPPAR/REVPAR…) and methodologies as accountancy segments . How  on earth is it possible that still exist people running business believing that revenues is the only important thing? Is it so difficult to understand that you can end up broke or drowned in the Bermuda Triangle.

BUT the most relevant thing I clearly saw was that Revenue Management means great opportunities for my Touristologist. So, I started a romance with Revenue Management and nowadays we are happily married!

Touristologist! Embrace Revenue Management it is a good companion in your professional life!