Measuring the gain attributable to revenue management

This paper presents an accurate method of measuring the gain attributable to the revenue management system (RMS) for a hotel. The RMS makes use of three strategies to maximise revenue: length of stay, overbooking and rate controls. The method presented here is a direct measure of the benefits derived from the length–of–stay control due to the RMS. The measurement approach isolates and removes the impact of the marketing programmes and economic factors from the impact of the yield management solution to obtain the gain. To test this method rigorously, control data with known properties are used. The same method can also be used to obtain the gain from overbooking and rate controls.