High time for hotels to integrate revenue management with customer relations

Tourism in Hong Kong has been facing severe slack growth, with inbound tourist numbers dropping continuously over the past two years. In 2016, visitor arrivals declined by 4.5 per cent over 2015 to 56 million.

Correspondingly, hotel room occupancy has been dropping from the peak of 90 per cent in 2014 to 87 per cent last year (up to November). Competition is fiercer than ever. And it is high time for hospitality industry professionals to look deeper for ways to increase their bottom line through developing a better understanding of their customers and revenue management strategies.

Revenue management for hotel rooms refers to the process of selling the right type of rooms to the right type of customers at the right price and at the right time through the right distribution channel. Focus in revenue management is on the management of demand and capacity.

Revenue management is applicable to other service industries as well whenever the inventory is perishable, demand is fluctuating and predictable, capacity is fixed in the short term, customers are segmentable, products can be sold in advance and marginal sales cost is low. Over the years, revenue management in the hospitality industry has become more strategic, analytic and customer centric.