The concept of revenue management is relatively new in the hospitality industry; the first Cornell Quarterly article referencing it was published in 1988*. Today, every hotel company imaginable has their own revenue management department, as if their very survival depends on it. Restaurants on the other hand, seem relatively reluctant to adopt such techniques.Revenue management is, “in essence…managing (of) customer behavior at the individual level via price and availability of constrained resources to maximize profits”**. In other words, it is the practice of revenue optimization. Hotels change their pricing consistently depending on supply and demand, yet food and beverage prices remain relatively static.
The practice of discounting during low demand periods (happy hours and early bird specials) highlight the very essence of revenue management techniques, and can have success. On the flip side, the idea of charging a premium (increasing the price of food during peak times of the day or during weekends,) remains very negatively viewed by restaurant consumers***.
Is it equitable to charge a premium for a table with a view of a landmark? Could a high end food and beverage outlet succeed by charging different amounts to different guests, depending on where they sit and what time they dine? Could this practice succeed in a wine bar in NYC, or just in a TGI Fridays at a baseball stadium? Please feel free to comment.
* Cornell Hospitality Quarterly, "Improving Hospitality Industry Sales" February 2010 55.
** Cornell Hospitality Quarterly, "Improving Hospitality Industry Sales" February 2010 54.
*** Cornell Hospitality Quarterly, "Percieved Fairness of Demand-based Pricing for Restaurants" February 2002
