Lodging Technology

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Lodging Technology

Lodging Technology


The prime factors of focus for any business unit are to what to sell, where to sell, when to sell and what should be the cost of the product which is being sold? Revenue management system is a comprehensive system which calculates the facts of business and provides optimum solutions and theories to increase the sales of the business and increase the revenues of the system.

Lodging industry or the hotel industry is a business industry in which the products of sale are not goods but services. The investment is majority the initial investment which is mainly the purchase cost and the construction cost is followed by operating cost which includes salaries, utility bills and maintenance charges. The sources of income are dependent upon customers who rent rooms in the hotel and further use the products of food, laundry and rent a car facility of the hotel.

The key role of a hotel revenue system is to extract the data available about the expenses rendered by the hotel and identify the sales product and derive an optimum solution through which not only the product sales are increased but also ensures that the maintaining and operating costs of the system are reduced (Jagels, 2004).


Revenue Management Levers

The levers of the revenue management system have the role to identify the factors which govern the revenue of a business unit and if they are tuned effectively the revenue of a business unit in this case a hotel can increase.


This lever of the revenue management system changes the price quotations of the hotel and incorporates disciplined pricing tactics to ensure that maximum customers lodge in the hotel and a certain price is kept which ensures profit for the company. Pricing tools ensure that the price is kept at a low point and with changing dynamics of the market the price of the product also changes.


Inventory lever controls the factor of how much to cost a certain good or service of the industry. It specifies the logic of best price and maximum capacity availed. One of the tactics involved in inventory is to decrease the price of rooms in case of hotels to capture substantial market share and then increase the price logically to increase the revenue.


One of the key attributes in this case is to reduce product price and market it or promote it to capture large volumes of turnover. The marketing lever of revenue management adds an additional cost in the cost i.e. of marketing, but the amount of turnover of customer due to marketing not only covers the marketing cost but also increases the revenue significantly.


In the case of hotel management the channels are specifically more important. As walk in customers are treated with a different tariff rate while existing customers or members are offered various discounts and complementary packages to facilitate retaining customers. Similarly, companies who send their delegates on regular basis are offered least packages as they are regular customers and the profit margin from them is reduced to ensure ...
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