Current
Scenario of Revenue Management in Indian Hotels
________________________________________________________________
Revenue management an upgraded version
of yield management was brought into picture by the American airlines in
nineties. This concept changed the dynamics of business and today all service
industries are focusing on optimal revenue which is again a factor related to
revenue management. Revenue management in simple words is selling the right
product or the service to the right customer at the right time at the right
place using the right distribution channel. So revenue management has 5 major
factors which is product or service, customer, time, place and distribution
channel.
Considering the Indian hotel industry,
the concept of revenue management was introduced by the foreign players majorly
Marriott Hotels. Soon all others started using it included Indian brands like
Taj & Oberoi. With the 21st century coming in light, the revenue
management concept became an integral part of the star rated hotels. But Indian
hotel industry being mostly disorganized this concept was not being used by
other small hotels.
After 2008, when many online channels
came into picture and also travel demand in India increased due to
globalization hotel industry started booming. The demand and supply gap reduced
and again hoteliers started neglecting the revenue management principles. The
only focus was on filling up the rooms rather optimizing revenue. With
introduction of online travel agent websites and Meta search engines the hotels
started depending on these channels more for room bookings. As a result lot of
revenue started draining out of hotels due to increased competition, high
commission costs and non compliance to the revenue management principles.
The covid-19 pandemic has now reduced
global travel and again there is a huge gap demand and supply. Hotels have to
reduce costs and generate incremental revenue if they want to survive. At the
same time the current competition in the market has led to the situation of
survival of the fittest. So, again the principles of revenue management need to
be adhered to by hotels. Hotels now have to imbibe revenue management as a
culture and need to imbibe it in day to day operating procedures. The hotels
now not only have to just look at revenue managers for results but involve
entire hotel employees in the process. This is not applicable for only star
rated hotels but even small hotels in the organized sector. Dependence on
travel intermediateries need to be minimal to save commission costs and also focus
on direct booking channels for getting business needs to be focused. Developing
regular customers along with up selling, cross selling and suggestive selling
are need of the day. Customizing packages with regards to guest preferences
will help in optimizing the revenue.
To conclude with, the message is
simple that having a revenue management culture in your organization is need of
the day for achieving long term goals and also for optimizing the room revenue.
Prof Pratik Satpute
Asst Professor
SCHMTT
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