Idea Wednesday, June 5, 2019 2727 hits

Revenue Management mobile application

Revenue (Yield) Management is a very popular and successful pricing strategy in developed touristic countries. Revenue Management is also important for the benchmarking process, which shows the success of a hotel compared to its competition.

Based on the definition which Wober (2002, Benchmarking in the Hospitality Industry. Wallingford: CABI Publishing) gives in his book, benchmarking can be defined as a systematic process of comparative measurements in order to achieve continuous improvement. In a modern enterprise, benchmarking can be applied to a wide range of areas, among which the important ones are: testing customer satisfaction, business processes, financial and non-financial operating results of particular segments of a company, employee loyalty, etc.

According to DeFranco (2006, Benchmarking: measuring financial success in the hotel industry, Accounting and Financial Management, Elsevier, 87-104.), Benchmarking statistics in the lodging industry started in 1937, when Harris, Kerr, Forster & Company, the predecessor of Pannell, Kerr and Foster (PKF) published the Trends in the Hotel Business: Statistical Review 1929–1936. She also provides some of the most popular current sources of information on business results such as Ernst & Young, HVS International (Global Hospitality Consulting), PKF Hospitality Research (PKF-HR) and Smith Travel Research (STR).

The concept of benchmarking is now widely present in the hospitality practice, with the aim of recognizing and eliminating its own shortcomings and limitations, maintaining leverage and gaining a leading position while honouring the codes of ethics which require that one should not abuse the trust, should not blackmail, and should reciprocate provided information (Janković, S., and Poldrugovac, K. (2015). Benchmarking: potraga za najboljom praksom u hotelijerstvu, Praćenje I usporedba rezultata hrvatskih i slovenskih hotela, Koper, Založba Univerze na Primorskem, 121-142.).

Benchmarking can be internal and external. External benchmarking, which is essential for the concept of the idea, is based on the comparison of competitive objects that have some common characteristics which make them worth comparing and as such constitute a competitive set. A Competitive set (or Compset) is a group of hotels that are seen as direct competitors to a particular hotel. Hotels will often compare their performance against compset hotels, in order to find ways to make their own offer more competitive. It is necessary to determine which hotels compete with the subject hotel and to what degree, and it is likewise important to eliminate those hotels that are not competing for the same demand (https://www.xotels.com/en/glossary/compset). Competitive sets must include a minimum of four participating properties, excluding the subject property (STR, COMPETITIVE SET/TREND REPORT GUIDELINES). The criteria to define a compset are (Forgacs, G. (2010). REVENUE MANAGEMENT: Maximizing Revenue in Hospitality Operations, The American Hotel & Lodging Educational Institute):

1) Geographic location

2) Amenities

3) Rates

4) Ratings

5) Brand affiliation

Having in mind all previously mentioned claims about the meaning of RM concept in the hotel industry, about its prevalence, but at the same time insufficient usage and understanding, a question that occurs is how to promote it further within both local and global limits. Being aware of the time we live in, which is undoubtedly characterized by the faster life rhythm, this insufficiently exploited area of smartphones, tablets and applications intended for their operating systems can be used as a potential opportunity for popularizing this concept. Development of RM (REVENUE MANAGEMENT) mobile application can be considered a potential solution and an idea whose concept will be explained in details.

This app would potentially consist of two parts. The first one, in which the accent would be on the theoretical aspect, and which would, among other things, thoroughly explain the concept of hotel RM (exclusively intended for beginners or people from practice who have never encountered this concept), the history and development, important terms, formulas, innovations, results of previous researches published in relevant scientific journals – everything that could help hotel managers in their better understanding and implementing of this concept, as well as to other persons possibly interested in this topic.

The second part could develop a specialized data base with all the data for comparing (benchmarking) of the hotel performances, to which the access would be paid (just like the in-app shopping), while the user would be enabled to choose the comp set, that is the hotels to be compared to. In this respect, different criteria would be offered to choose adequate hotels from which the comp set would be comprised (criteria with the most prevalent usage are previously stated).

It might be considered, as an interesting and potentially useful way of interaction, to introduce an option for chatting, experience exchange, asking questions among the app users, and so on. In-app languages would in the beginning be Slovenian and English, while in perspective other languages could be added, for example Serbian and Croatian. This would among other things depend on interested organizations and institutions which would find their own interest in supporting this project, as well as on the available funds.

Photo by 3dman_eu on Pixabay

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