How did we get here? The history of hotel revenue management.

Revenue management is a business strategy that has gained significant importance over the past few decades, especially in the tourism industry. But how did this technique, which greatly assists us in earning more money, come about?

The history tells us that the origins of revenue management date back to the U.S. airlines in the 1980s. It was then that they began to use different techniques to sell more seats on their flights. Why at that time? It’s when the airlines realized that they had a fixed number of seats on each plane, and once the plane took off, the seats that hadn’t been sold translated into lost revenue.

To solve this problem, they thought:

– If we can determine when people will take more flights, we can sell more seats precisely at that moment, but… wait, wait, if we know when more flights will be booked, we could even charge more for those last available seats!

Thus, revenue management was born, ensuring that the price adapts to demand and maximizing the income generated by each flight. No more empty seats!

Over time, hotels encountered the same issue. So, seeing how the airlines were doing it, they adopted their methodology, and they were not mistaken; it works wonders for them.

Thanks to revenue management, hotels could segment the market, analyze demand, and control room availability to adjust prices in real-time and maximize revenues. This way, they could offer higher prices during high demand periods and lower prices during low demand, essentially earning more money from their bookings. Who wouldn’t love a hotel that bills double or triple?

In summary, revenue management emerged in response to hotels’ need to maximize their revenues in a highly competitive market. Revenue management has become an essential tool for hotels to effectively manage their capacity and pricing, thereby maximizing their revenues.

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