Home Uncategorized What is Revenue Management and Why is it Important for Hospitality Professionals?

What is Revenue Management and Why is it Important for Hospitality Professionals?


By Sheri Hernandez
Program Director, Hospitality Management at American Public University

Revenue Management in the hospitality industry has seen a new focus in the last several years. The focus has shifted from analyst to strategist as the need for proactive revenue management is a function vital to the health and growth of the organization. The basic premise is that revenue management aims to supply the right product or service to the right customer at just the right price.

When a strategist sets the price point whether for a hotel room, airline ticket, or even a hamburger, it must match a customer’s willingness to pay for the perceived value of the product or service. For hospitality in particular, our pricing strategies must take on a customer-centric view that demonstrates added value for the customer rather than just setting a company-centric price that is focused solely on profit.

Hospitality goods and services are what are considered to be a constrained supply. This basically means that the company cannot necessarily offer up another hotel room on a Saturday night, or a table in a restaurant at 7 p.m. when consumer demand for them increases. Among other responsibilities, revenue managers will help set menu or room prices to ensure that the customers they are serving are getting what they perceive to be a fair value.

For example, have you ever visited the same hotel at different times of the year only to find that the room rate has jumped or declined significantly? That is because hotel rooms don’t have a preset shelf-price and pricing must be flexible enough to change with consumer demand. That’s just one small part of the complex revenue management process at work.

If you have an analytical and creative mind, have an awareness of customer perceptions and want to be an influential part of a hospitality management team that ensures the success of the organization, revenue management may be the right fit for your career path.

[related: What are the Careers in Ecotourism and Travel?]

About the author

Sheri Hernandez is the Program Director for the Hospitality Management Program at APU. She has extensive knowledge of restaurant operations, purchasing, and training. She combines her skills as a Restaurant Manager with her career experience in Financial Commodity Risk Management, Consulting and Purchasing to enable her educate her students with a customer-focused, yet financially sound approach to Hospitality Management.