Ulyana Velikova

A glance into the future of revenue management Ulyana Velikova Table of Contents 1)What is revenue management?................................................................................................................1 2)Application of Revenue Management in real life...................................................................................2 a)Hotels.................................................................................................................................................2 b)Airline industry..................................................................................................................................3 c)Car rentals..........................................................................................................................................4 3)Future of revenue management...............................................................................................................5 a)Block-chain technology......................................................................................................................5 b)Artificial Intelligence.........................................................................................................................5 c)Big Data..............................................................................................................................................6 4)Conclusion..............................................................................................................................................6 1)What is revenue management? Revenue management helps to predict consumer demand to optimize inventory and price availability in order to maximize revenue growth. The purpose of Revenue Management is not selling goods today at a low price to sell it tomorrow at a higher price. Revenue Management also means selling goods at low price today if you do not expect higher demand rather than not selling your goods at all. A good example for this is the Airplane companies. After making their calculations they see what number on average seats stay empty during flights.Using Revenue management, they can avoid this and sell (almost) all seats using a different strategy and tactics-lower prices, better marketing, targeting right customers…the strategies and tactics can be different. For an example, different clients (of air-companies) are targeting by different desires and the strategy must be different. Lower-class passengers are more sensible to the price of the tickets in comparison with the business class-so one good promotion with a lower price will help a lot to sell all/majority of the empty seats in the plane. The business class passengers are not so sensible about the price of the thickets-for them the more important things are: -Possibility to change their flight in the last moment (if they have another arrangement and they cant fly on this date) and rearrange it on other suitable date for them -More luggage -More benefits and luxurious things and destination. Doing this allows airlines to always price according to what the market determine is appropriate as opposed to have fixed prices throughout. This has a lot to do with why planes are usually full or close to it. Airlines use complex algorithms to constantly analyze the market and determine what prices customers are willing to pay. This not only keeps airlines competitive but also ensures that the flow of customers isn’t affected solely by occupancy. For example passengers from Economy class are very sensitive about the prices-if one family of four people wants to travel, they are very aware of the price, because they have to buy so many of them, but one business man who has an important travel and who took the ticket in the last moment, he is more likely to pay premium price and choose more expansive seat. By targeting audiences differently based on their perceived price sensitivity, airlines are able to make exclusive offers that certain customers are more likely to take advantage of than others. c)Car rentals In comparison with hotels and airplanes, Revenue Management has a lot of similarities to car rental too. They can be booked in advance; the product is perishable. The major difference is the relatively flexible capacity since the number of cars can be increased or decreased in the relatively short period. Revenue Management is supposed to exploit the interrelation of market segmentation and generating revenue. Companies achieve differential pricing by setting rate fences and restrictions that will expose the customer’s willingness to pay. Fencing works in a way where fences prevent higher-valued (high willingness to pay) customers to be able to purchase products meant for lower-valued (low-willingness to pay) customers. In the car rental business, this is for example restriction for a rate where the customer is forced to keep the car over Saturday. Also, business customers often prefer the bigger, high-quality car as oppose to the leisure segment that prefers the cheapest (smallest) option. With different cars, car rentals ABOUT THE AUTHOR Ulyana Velikova. E-mail-LinkedIn profile: https://www.linkedin.com/in/julia-rai-rai-b9b762150/ Long years entrepreneur, I have a huge passion for this. From starting a business from humble beginnings to write articles/advises and sharing my experience with others. As a typical entrepreneur, I have not one, but several activities in which I have a huge passion :))) I like to do professional researches and articles and I have a huge passion about finances, investment and entrepreneurship. I also do translation as my business for more complicated translation (medical and technical one, etc.) Bulgarian, English, Russian. In my free time I like walking, jogging, reading crime novels and meeting with interesting people. If you have the same passions and interests as me, you can follow me on my LinkedIn https://www.linkedin.com/in/julia-rai-rai-b9b762150/