The paper "Internal and External Issues at Hearthstone Suites Hotel" is an outstanding example of a management case study. Revenue management has played a profound role in the hospitality industry having been previously developed and utilized in the airline industry. The deregulation process of the airline industry in the 1970s led to the development of revenue management. Today, revenue management has been expanded and it is a common business practice in many industries including hospitality. It is a technique that is profitably applied by hotels and restaurants (Ivanov 2014, p.
07). Revenue management is an important instrument that matches supply and demand in the hospitality industry. This is achieved through the division of customers into various segments based on their intentions to purchase and allocate capacity to these segments in a manner that maximizes the revenue of the firm (El Haddad, Roper & Jones 2008). This report focuses on revenue management at the Hearthstone Suites Hotel. Revenue Management Principles of revenue management are easily applicable across many industries. There are specific characteristics in each industry that determines the practicability of revenue management and its application in organizations that are using it.
In this case, the application of revenue management in the hotel industry may be different from other industries due to the unique characteristics of the sector. Revenue management involves maximization of revenue under various conditions (Hospitality Professional Association 2013, p. 04). It is a tool used by managers in increasing the sales revenues of their companies. This is achieved through the manipulation of fixed prices of the hotel rooms offered for sale in relation to the present demand and the forecasted one. Currently, customers are aware that the price they are required to pay for a room in a hotel varies.
This is because the price depends on the availability of a room and the point at which a purchase decision is made (Hospital Professional Association 2013, p. 04). Revenue management has become a very useful technique that uses various analytics in predicting consumer demand and in the optimization of inventory and available price so as to maximize revenue. In fact, the essence of revenue management is to understand the perceptions that customers have on the value of a product and accurately align prices of products, their availability, and placement with all the segments of the customer.
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