Pearson New International Edition International pcl tp indd 1

REVENUE MANAGEMENT
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FRONT OFFICE SEMANTICS
Bottom-up selling:
Tactic to first sell the hotel’s least expensive rooms.
Top-down selling:
Tactic to first sell the hotel’s most expensive rooms.
Web-Influenced Pricing Strategies Contemporary hoteliers understand that
properly pricing their rooms is critical to attracting first-time and repeat business.
Close examination of many tactics used by revenue managers reveals that they often
use one or more of the following nontraditional methods to establish rates:
•
Competitive pricing. Charge what the competition charges.
•
Follow the leader pricing. Charge what the dominant hotel in the area charges.
•
Prestige pricing. Charge the highest rate in the area and justify it with better
products, better service levels, or both.
•
Discount pricing. Reduce rates below that of the likely competitors without con-
sidering operating costs.
All of these pricing systems appear to be seat-of-the-pants approaches, because
they reflect supply, demand, and the psychological aspects of consumer behavior with-
out considering a hotel’s cost structure. Closer examination, however, reveals that they
are also logical responses to a simple but vitally important observation: The world of rate
determination as known by previous generations of hoteliers is gone forever. The best revenue
managers understand this. Hotel investors continue to use traditional accounting
formulas to determine whether specific hotels are a wise purchase. Determining the