Cornell University on the Future of Revenue Management

by Beonprice

1 March, 2017

Cornell University on the Future of Revenue Management

If there is a university of international reference, regarding Revenue Management, it´s Cornell University, more specifically it´s School of Hotel Management. 

Staying up to date and verifying the findings of studies in the tourist sector, in addition to, deepening our knowledge in the hotel sector allows us to take advantage of the market linked to innovation and change.  Following this line of research, innovation and improvement, we would like to extract information from a  scientific report recently published by Cornell University.


Taken by more than 400 Revenue Management professionals, this survey discusses how the demand for Revenue Management has become a more strategic part of marketing and has made management more centralized within the establishment. The change has been slower than expected, but the trend that has been adopted over the past 6 years has had a positive impact. The implementation of Revenue Management, as an independent department or sub-department, behind Marketing, is a redefining factor. 


The main conclusions reached in the report are: 


  • Revenue Management will be an increasingly strategic action. The Revenue approach is evolving in relation to the necessities of demand. It is committed to developing work on market segments by booking window demands. The collection of information largely determines long-term and short-term strategies. In turn, the support shown by the different management departments of hotels and hotel chains has strengthened and increased. 

  • Revenue Management within a comprehensive management. It is determined that Revenue Management must be implemented in all revenue streams of the hotel. From this situation emerges a technological problem that acts as a barrier to integration, which makes it difficult to obtain data and, therefore, control different actions within the production tool of the hotel.

  • Those responsible for Revenue Management will be more specialized. The future tendency to be able to perform in this type of position requires analytical specialization and communicative skills. Profiles are needed that can adequately analyze data, provide strategic recommendations and communicate properly so as to be able to effectively design the roadmap of the product and establish optimal lodging prices. 

  • Revenue Managament as an indepependent department. The autonomy of the department of Revenue Management has gained prevalence over the years. There are organizations that have their own department and even others that have a special sub-department along with others such as sales, branding, marketing and e-commerce. 

  • A more centralized Revenue Management. At the hotel level it remains a challenge as well as a change of culture, mentality and adaptation due to the different obstacles that arise on a day to day basis. Some owners are not willing to pay more for the role of attracting the right talent or to move to a centralized structure. There are also organizations that find it financially challenging to raise the role of Revenue Manager. 

  • Analytical models used to set prices. Over the years, analytical models for pricing have become more popular, even though they are too complex for the vast majority of Revenue Management managers. It is expected that the market will evolve until it can fully take advantage of the knowledge these new techniques of data extraction and structuring can provide. 

  • Social networks used as a distribution channel. Although social media is not a widely used distribution channel, they are used for brand site traffic. However, the use of promotional codes in social networks, is an action that unifies branding and marketing, and possibly also the sale. 

  • Mobile technology used as a means of distribution. The distribution is in a multi-device phase and requires that the information be adapted to any environment. Factors such as last minute reservations made with smartphones and booking via the PC are two factors that are taken into account as far as mobile distribution is concerned. 

  • RevPAR will no longer be the primary performance metric. The complexity of such a changing market makes the practicality of static data difficult. However, real benefit is dependent on being dynamic and identifying information sensitive to the demand of our potential clients. RGI (Revenue Generation Index) remains, to this day, the benchmark to compare with and to take into account. 

In spite of this generic approach of the market, extracted by Cornell Universityit is convenient that the manager of Revenue Management use applied knowledge to restructure the service that is provided to hotels. A flexibility in continuous change that only innovation and technology, linked to the intelligence of the markets, can supply. 


Download the report

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