Revenue Management in Hotels

Abstract

In hotel industry, the goal of revenue management is to maximize the revenue by forecasting the future demand based on the current and past reservation data. This paper explores revenue management, revenue management systems (RMS), and success factors in implementing RMS. Fundamentals of revenue management are introduced as well as the benefits of revenue management systems. Some key factors of implementing revenue management systems discussed in this paper are measuring performance, management's commitment, and integration with property management systems.     

Advancing laddering and critical incident technique to reveal restaurant niches

This study, based on means-end chain and dramaturgical theories, aims to reveal critical attributes/incidents that influence consumers to dine in a restaurant and proposes a complete picture for restaurant operators to understand consumer inner thinking that can be used to carve out their restaurant niches. By using the laddering and the critical incident techniques, this study proposes a theoretical explanatory scheme to identify the most critical attributes/incidents for the restaurant operators. From the perspective of dramaturgical theory, the results of the hierarchical value map show that the most common attributes/incidents dining in the restaurant are related to the physical facilities or customer–staff interaction system. Such a map can help restaurant operators easily and quickly capture their strengths and weaknesses from the relationship between restaurant features and customer value demands. If managers would like to know more specific critical attributes/features for their restaurants, they may simply follow the same procedure outlined in this work to find out what is the niche for their services and establishments, in order to survive in a highly competitive environment.     

No time left for you: time-management strategies for restaurateurs

A survey of 74 restaurant managers and operators in the United States highlights the importance of effective time management. Of 69 restaurateurs who use time-management techniques, 49 estimated that time management boosts their bottom line by at least 15 percent. Ironically, most of the managers rated the effectiveness of their time-management skills as only poor or fair. Effective time management begins with recording and analyzing the actual way that time is used. Recording activities in time intervals of 15 minutes and then sorting those activities according to the priority of the activities gives a manager a picture of where the day goes. From that analysis, a manager can determine the source of time wasters. Time-management techniques involve three key elements: breaking bad time-management habits; learning to delegate; and eliminating interrupters.     

Technology revenue management system for customer groups in hotels

This paper discusses revenue management; a technique that focuses on decision making that will maximize profit from the sale of perishable inventory units. New technologies management plays an important role in the development of revenue management techniques. Each new advancement in technology management leads to more sophisticated revenue business capabilities. Today decision support revenue management systems and technologies management are crucial factors for the success of businesses in service industries. This paper addresses the specific case of customer groups in hotels. This paper introduces a new decision support system that sets the revenue maximization criteria for a hotel. The aforementioned system includes a set of demand forecasting methods for customers and addresses a general case considering individual guests and customer groups. The system also incorporates deterministic and stochastic mathematical programming models that help to make the best decisions. The actual revenue depends upon which reservation system the hotel uses. A simulation engine makes a comparison between different heuristics of room inventory control: the results include performance indexes such as occupancy rate, efficiency rate, and yield; it compares results and chooses one of them. The system proves its suitability for actual cases by testing against actual data and thus becoming an innovative and efficient tool in the management of hotels' reservation systems.     

Bonus gift card programs: a methodology to measure the impact on revenue and profit

Many retailers are now offering bonus gift cards to entice customers to buy more regular gift cards. The most common offers are a $5 bonus card with $25 worth of gift card purchases or a $10 bonus card with $50 worth of purchases. Unlike regular gift cards, bonus gift cards are not paid for by other customers. Bonus cards provide $5 or $10 of free credit to a customer at the firm’s expense. Most retailers do not understand the potential for cannibalization of revenue and profit when gift card redeemers use a bonus card for a purchase they would have made without it. Nor do they know what proportion of redeemers represent these cannibalized sales versus the proportion of redeemers that represent incremental purchases. We use an in-market study with a large national restaurant chain to demonstrate a methodology and model to properly evaluate the effect of bonus gift card programs on revenue and profit. We found that although bonus gift cards provide incremental revenue, they can significantly reduce profit particularly in certain retail segments. For those who wish to implement a bonus card program, we provide suggestions to maximize the potential for success.     

Modeling no-shows,cancellations, overbooking,and walk-ins in restaurant revenue management

Few studies have examined overbooking in the restaurant industry. The authors observed the business situation in a restaurant in Hong Kong over 2 years, noted how demand exceeded supply on a regular basis, and analyzed the reservation data. The reservation data were used to estimate the no-show/cancellation probability and walk-ins for lunch and dinner on different days of the week, to illustrate the model, and to arrive at the optimal booking limits. A conceptual model was developed which would take into consideration the business situation, no-shows, cancellations, and walk-ins to determine the booking limit for maximizing the expected total revenue.     

Tourism: The Use of Production Management Techniques

Manufacturing industry has over many decades achieved enormous improvements in productivity and the quality of goods through applying a wide range of techniques. Many of these techniques can find appropraite uses in a service industry like tourism and bring about the same beneficial effects as in manufacturing. Theresultsofa questionnaire survey to establish whether a selection of these techniques are used by hotels, travel agents and tour operators are presented. The findings indicate that the techniques listed are not generally in use, apparently mainly because of lack of knowledge.     

Performance evaluation of CPA firms in Taiwan from the perspective of industry-specific client groups

This paper explores the operating efficiency of certified public accounting (CPA) firms from the perspective of industry-specific client groups. The decision making units are 49 partnership CPA firms selected from the database of 2010 Public Accounting Firms Service Investigation Report. This paper integrates three analysis methods: Data envelopment analysis, an independent sample t test, and multiple regression analysis. It aims to offer the operators of CPA firms with a reference for improving operating efficiency. It also identifies important industry-specific client groups for the sustainable operation of the firms, and analyzes the impact of operating efficiency on operating revenue and total revenue. It is believed that the results of this paper could provide decision references for future client relationship management and exploitation of new client groups.     

Buyer-Seller Interaction,Capacity Management,and Relationship Marketing

Abstract

This paper provides insight into the dynamic sales processes that occur in the restaurant industry. Its primary purpose is to provide hospitality marketers and managers a framework tor improving overall sales in food and beverage organizations. After outlining this framework for increased restaurant sales, a detailed overview of buyer-seller interaction, relationship marketing, and restaurant management literature is provided to give the reader an understanding of previous Studies.     

Restaurant Managers’ Adoption of Sustainable Practices: An Application of Institutional Theory and Theory of Planned Behavior

The restaurant industry uses vast amounts of resources, but only a paucity of research discusses sustainability issues from restaurant management point of views. By applying both institutional theory and theory of planned behavior, this study addresses this gap by asking casual restaurant managers what motivates them to adopt and implement sustainable practices and by examining managers’ behaviors when facing environmental pressures. The study revealed restaurant managers were most influenced by pressures from their suppliers, customers and to a lesser extent from their employees and by expectations of society at large. Future research should investigate a nationwide sample of restaurant managers.     

Entrepreneurial Enterprises,Large Established Firms and Other Components of the Free-Market Growth Machine

The paper studies the principal influences accounting for the unprecedented growth and innovation performance of the free-market economies. It indicates that vigorous oligopolistic competition, particularly in high-tech industries, forces firms to keep innovating in order to survive. This leads them to internalize innovative activities rather than leaving them to independent inventors, and turns invention into an assembly-line process. The bulk of private R&D spending is shown to come from a tiny number of very large firms. Yet the revolutionary breakthroughs continue to come predominantly from small entrepreneurial enterprises, with large industry providing streams of incremental improvements that also add up to major contributions. Moreover, these firms voluntarily disseminate much of their innovative technology widely and rapidly, both as a major revenue source and in exchange for complementary technological property of other firms, including direct competitors. This helps to internalize the externalities of innovation and speeds elimination of obsolete technology. Some policy implications for industrialized and developing countries are also discussed.     

Restaurant franchising and top management team

The primary purpose of this study was to investigate how top manager attributes account for the implementation of risk-averse strategy by applying a conceptual framework based on upper echelons theory. We selected franchising as a representative risk-averse strategy based on resource scarcity, agency, and risk-sharing theories. We chose the top management team (TMT) as a proxy for the upper echelon to examine the theoretical argument. The study period was from 2000 to 2013, and 29 restaurant companies were included in the research. Related data were derived from EXECUCOMP, COMPUSTAT, Annual 10-K, and publicly accessible resources (e.g., LinkedIn and Business Week). Feasible generalized least squares and random effect regression models were used to analyze the data. The results suggested that the formal education levels of top managers negatively affected franchising implementation, whereas the tenure of TMT members positively influenced restaurant franchising.     

An approach to prioritize customer-based,cost-effective service enhancements

Service firms routinely enhance their offerings to satisfy and retain current customers and to attract new customers. We show theoretically that service improvements can be prioritized by simultaneously taking into account the likely incremental revenue (through increased customer value) and the incremental cost of making the improvement. The customer values obtained from a sample of respondents, and cost estimates obtained from managers of the service providing organization are combined to prioritize improvements using a ‘bang for the buck’ (i.e. value/cost) rule. Such a prioritization would be helpful to come up with a ‘short list’ of service improvements. The items on the short list can be evaluated in detail for their ‘Return on Quality’. The approach for prioritization is illustrated in the context of improving passenger train service between a pair of cities in India. An adaptive self-explicated approach is used for obtaining customer values and cost estimates. The customer values so elicited display substantial cross-validity.     

Attitudes of Korean College Students Towards Quick-Service,Family-Style,and Fine Dining Restaurants

Abstract

A research instrument was developed to identify attitudes of Korean college students towards quick-service, family-style, and fine dining restaurants. Of the 350 questionnaires distributed, 292 (83%) were returned and usable. Respondents had the most positive attitudes toward fine dining restaurants, followed by quick service and family-style restaurants. Family-style restaurants, however, were most frequently patronized by respondents for their regular meals. “Good taste” was found to be the determining factor in selecting a restaurant for regular meals among Korean college students. Implications for Korean restaurant operators, researchers, and restaurant operators in other countries were provided.     

我国中餐业特许经营的问题与管理对策

特许经营是中餐业经营的新方法。这种方法极大地满足了顾客的需求 ,促进了我国中餐业的发展。可以预言 ,随着我国经济的发展 ,中餐业特许经营将成为我国 2 1世纪主要的经营方式 ,将对我国经济和社会做出巨大的贡献。目前我国中餐业特许经营出现了一些问题和困惑 ,阻碍了其快速发展 ,我们必须认真对待和解决。同时应重视整合我国中餐资源 ,加强宏观管理 ,使我国中餐业特许经营不断发展和壮大。     

Airline Codeshare Alliances

The paper juxtaposes the challenges that airline codeshare alliances create for analytical information systems on the one hand and their motivation from a marketing perspective on the other. The authors review the state-of-the-art literature on potential marketing benefits and analyze the impact on airline planning systems. In this regard, revenue management systems are of particular interest. Based on a simulation study, the authors infer a severe impact of decentralized codeshare controls as currently widely implemented in the industry on revenue management performance. In the scenarios examined, complementary codesharing reduces alliance-wide revenues by up to 1 %. Losses increase when a carrier experiences high local demand or a high degree of codeshare demand, and disseminate over the whole network. Virtual codeshares also cause losses of 0.3 % to 1.5 % depending on the discount level offered by the marketing carrier and on the demand structure. Finally, the authors formulate a set of managerial implications based on these findings.     

The financial impact of loyalty programs in the hotel industry: A social exchange theory perspective

With increased competition across the hotel industry for frequent travelers, who generate a disproportionate portion of revenue, loyalty programs appear to be a rational response to the competitive environment. The question remains, however, as to whether these programs are effective at increasing the profitability of hotel operators. This study analyzes the impact of customer loyalty programs on the industry specific performance metrics of occupancy rate, revenue, and operating margin. Utilizing a comprehensive database of 36 different hotel brands (e.g., Marriot, Hilton) encompassing 31 loyalty programs and 435 different hotel properties, we examine whether a loyalty program is indeed an effective tool to increase operating margin. In summary, empirical results suggest that investment in hotel loyalty programs has a positive impact on occupancy rates and profitability. And although the overall effect is modest, these results have several managerial implications for the hotel industry.     

Big social data and customer decision making in vegetarian restaurants: A combined machine learning method

Customers increasingly use various social media to share their opinion about restaurants service quality. Big data collected from social media provides a data platform to improve the service quality of restaurants through customers' online reviews, where online reviews are a trustworthy and reliable source that helps consumers to evaluate food quality. Developing methods for effective evaluation of customer-generated reviews of restaurant services is important. This study develops a new method through effective learning techniques for customer segmentation and their preferences prediction in vegetarian friendly restaurants. The method is developed through text mining (Latent Dirichlet Allocation), cluster analysis (Self Organizing Map) and predictive learning technique (Classification and Regression Trees) to reveal the customer’ satisfaction levels from the service quality in vegetarian friendly restaurants. Based on the obtained results of our experiments on the data vegetarian friendly restaurants in Bangkok, the models constructed by Classification and Regression Trees were able to give an accurate prediction of customers' preferences on the basis of restaurants' quality factors. The results showed that customers’ online reviews analysis can be an effective way for customers segmentation to predict their preferences and help the restaurant managers to set priority instructions for service quality improvements.     

Collaborative business models: Aligning and operationalizing alliances

It is not unusual for companies to generate substantial revenue through alliances. However, alliance failure rates are high, leaving much revenue at risk and value unrealized. The big challenge facing managers is to align company interests with alliance interests. Such alignment can only be achieved when executives pay considerable attention to building the right collaborative business model. In this article, we synthesize the insights of the existing literature to arrive at three collaborative business models—sharing, specialization, and allocation—that managers can use to address the specific requirements of their alliances. Because the literature provides limited insight regarding how to operationalize these models, we highlight what managers need to focus on when operationalizing each of these models. We find that the choice for an overall business model is relatively straightforward in most cases but that operationalization of business models requires more complex combinations of management techniques. Finally, we show how the three collaborative business models can be combined to build hybrid models.     

Influence of price and brand image on restaurant customers’ restaurant selection attribute

The study examines the influence of price and brand image on three major restaurant quality attributes (ambiance, food quality, and service quality). A total number of 363 cases from the survey were used to assess the proposed model for structural equation modeling. The results of this study indicated that brand image significantly affected customers’ restaurant attribute preference. Living status (residents vs. tourists) partially affected customers’ restaurant attribute preference. This study provides valuable information about restaurant customers’ preferences. The results also demonstrate how restaurant operators attract new customers and retain existing customers by improving their ambiance, food, and service quality.