This chapter discusses the importance of revenue management in operating a hotel. The two primary ways of maximizing profits is first to maximize revenues and second to control and minimize expenses. Understanding the policies, procedures, and tools that are available to maximize revenues and being able to use them effectively are valuable skills for any hospitality manager, particularly in the rooms department. A hotel that is meeting or exceeding revenue budgets is a much more enjoyable place to work and provides managers a better opportunity to maximize profits because revenues are helping rather than hurting profitability. It is challenging for hospitality managers to maximize profits when a hotel is under-performing based on its revenue budgets and forecasts.

Revenue management relies on historical room revenue information contained in a computerized program called Yield Management or Demand Tracking. Yield management programs contain historical information organized by day of arrival (DOA) and compare the current year's booking pace to the historical average. The booking pace determines appropriate selling strategies that a hotel can put in place to maximize room revenues for a specific day of arrival.

This chapter covers the different aspects of revenue management. All managers need to have a good understanding of how their hotel generates revenues. It will help them understand how their particular department fits into the total operations of the hotel.