Revenue management practices in hospitality industry

Nowadays, a great number of enterprises develop mathematical methods to maximize their revenues due to intense competition in the current global business environment. In this context, revenue management is an essential practice used in several industries to maximize the revenue. In hospitality sector, revenue management applications are quite needed for optimum capacity allocation and price decisions. Since there are lots of big international companies developing professional models in global business environment, it is vital to set systematic policies for small local companies. From this point of view, this study determines booking limits and protection levels for a hotel by using real data obtained from a Turkish hotel, and also develops an optimum capacity allocation policy in different demand densities. Expected Marginal Seat Revenue (EMSR-b) which has not been used in previous studies in this area is applied as a modeling technique. In simulation study, occupancy rates of hotel and characteristics of customer reservations are used as inputs.As a result, it is observed that EMSR-b shows best performance at a specific level of demand density, and also it increases total revenue up to that specific level of demand density. After that level, total revenue gradually decreases due to application of EMSR-b method.Keywords: hotel revenue management, Expected Marginal Seat Revenue (EMSR-b), booking limit, protection level, nesting, capacity allocation