Compose a 1500 words essay on How does pricing strategy and price optimisation become strong elements in revenue management to the independent boutique hotels in London. Needs to be plagiarism free!
This piece of research paper explains how does pricing strategies and price optimisation become strong elements of revenue management in hotel industry, especially in independent boutique hotels in London. This paper details various pricing strategies like price optimisation, price discrimination and describe how these can help hotels to increase revenues as well as create customer focus.
Revenue management is a process of managing capacity profitability that a hotel is involved in selling right inventory to the right customers at right time and for right price. One of its basic elements in allocating undifferentiated units of capacity to the available demand to generate maximum profit (Ingold, Yeoman and McMahon-Beattie, 2000, p. 3). Past and current levels of booking records are used to help the firm forecast demand and to maximize the profits as part of revenue management (Avinal, 2004, p. 52).
Tranter, Hill and Parker (2009) emphasized that the hotel industries should develop a customer-centric approach to pricing. The pricing strategies that hotel industries adopt should be basically centered upon the perceptions and buying behaviour of the customers rather than solely focusing upon the products, service and profit margins (p. 117). In today’s highly competitive marketing environment, hotel industries have realized the importance of customer focus and customer centric approach along with its pricing strategies. Most boutique hotels perceive customer value as centre to its marketing concept and pricing strategies.
One of the very common pricing strategies used in hotel industries is demand-based pricing, in which the hotels research the quantities of the products or services that would be purchased at different prices. This pricing method helps hotels to ensure that amounts produced can almost be sold out, but, making accurate demand estimation