Pearson New International Edition International pcl tp indd 1

REVENUE MANAGEMENT
Objective 1
Explain the revenue 
manager’s role in 
establishing room rates
by applying information 
about rate types and rate 
determination factors and 
by considering traditional 
and Web-based pricing 
strategies.
Objective 3
Present tactics used by 
revenue managers to 
influence their hotel’s 
occupancy rates and 
average daily rates and 
review how to evaluate 
the success of tactics to 
manage occupancy
and ADR.
Objective 2
Discuss how revenue 
managers use
information about
room types, market 
codes, and track
codes to help
maximize RevPar.
Objective 4
Provide an overview
of yield management 
philosophy and describe 
procedures to help 
maximize long- and 
short-term RevPar using 
yield management 
techniques.
Role of Revenue Manager: 
• Revenue Management 
• Room Rate Mgmt. 
• Room Rate Economics
Revenue Management 
Tools
Revenue Management 
Essentials
Yield Management
ROADMAP 3
Friday
Saturday
Sunday
Rooms to sell
120
25
250
FIGURE 8
Sample forecasted room demand for one specific weekend at the Altoona Hotel.
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FRONT OFFICE SEMANTICS
CTA (closed to arrival):
Term that indicates the hotel declines reservations for guests wanting to arrive
on a specific date.
The revenue manager may identify Saturday as a day that has a MLOS of two days
attached to it. As a result, only reservations from guests requesting arrival on
Saturday (or Friday) with the intention of staying for two (or more) days are
accepted. Guests who request a one-night stay with arrival on Saturday are
declined. By managing the length of stay required for a Saturday arrival, the rev-
enue manager is attempting to maximize total weekend occupancy by selling
potential guests a room on both Saturday and Sunday night. This MLOS strategy
is illustrated in Figure 9
Recall that the hotel has only 25 rooms left to sell on Saturday night. Therefore,
the revenue manager is making the MLOS decision based on the belief that the pro-
portion of potential guests who want to stay two nights is significantly smaller than
those who want to stay one night. However, the revenue manager also believes that
the market of these guests is large enough to allow the hotel to sell all of its remain-
ing 25 Saturday night rooms (and an additional 25 room nights on Friday or Sunday
because of the two-night MLOS).
Instead of a MLOS strategy, the revenue manager may decide to use a CTA
strategy. Identifying Saturday as a day that is CTA is logical if it is assumed that,
based on current booking patterns, the demand for Saturday night reservations will
likely exceed the number of rooms available for that night. If so, then it may be wise
to deny reservations for guests requesting to arrive on Saturday in favor of guests who
will arrive on Friday and request both a Friday and Saturday (or longer) stay. By
denying guests the opportunity to arrive on Saturday (closing it to arrival), the rev-
enue manager attempts to maximize total weekend occupancy by increased Friday
night sales.
Some revenue managers who use a MLOS strategy rarely use a CTA strategy.
They point out that the hotel (as in this example) that implements a CTA approach
runs the risk of denying a reservation to a guest who may have wished to stay many
days. For example, a guest who wishes to arrive on Saturday and stay for seven
nights would, with a CTA strategy in place, be denied a reservation. Clearly, the