Revenue management is a theory, an act and a process that involves predicting consumer behavior and making decisions to maximize revenue in an organization. Many types of businesses use revenue management, and it is designed for businesses to obtain the highest possible amount of revenue, every day through strategic planning.
Revenue management works by the manager gathering all of the appropriate data regarding the business and the market. It is his job to analyze this information and determine ways to do business. In the hotel industry, the manager uses several techniques and principles to maximize revenues. He aims for a fixed, or full, capacity on rooms, sets different prices based on availability and demand, and must make strategy plans for future revenues.
One strategy a hotel manager might use is signing up with discount Internet websites that sell hotel rooms. This might involve selling rooms at cheaper rates; however, in the long run, the total revenues might actually increase.
Involved in revenue management also includes time management and performance management. People having revenue management jobs must incorporate principles from all of these management aspects to fully maximize revenues in the organization. These workers must be able to think strategically, and make decisions that will ultimately benefit the company with greater revenues in the future, and not simply in the present.