The Practical Guide to RM – Chapter 7
This white paper explores the management of special offers, a powerful but often overlooked lever....
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Optimization levers in Revenue Management
The RM Practical Guide – Chapter 4
In Revenue Management, forecastingisonly a starting point. The true goal is to feed an optimization engine capable of activating all available levers to maximize revenue. Depending on the industry, these levers mayvary, but the underlyinglogicremains the same: finding the right balance betweenoccupancy rates and averageprice.
Some levers are designed to increase volume, whileothersaim to improve the averageprice. They do not all have the same scope, and itis essential to prioritizetheir activation when multiple levers are eligiblesimultaneously. This chapterprovides a practicalexplanation of the different types of levers, how theywork, toolssuch as bidprice or decisiontrees, and hybridmethods for combiningthemeffectively to generate the maximum impact on your revenue.
What you will learn from this guide:
→ Volume levers to activate in order to maximize your occupancy rate without reducing your revenue.→ Levers for increasing the average price and how to combine them intelligently to optimize your RevPAR.→ The concept of bid price, its strategic role in Revenue Management, and how to integrate it into your pricing.→ Price elasticity: understanding and measuring your customers’ sensitivity to price changes.→Using decision trees and hybrid methods to refine your strategies and find the right balance between volume and price.
