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The Future of Revenue Management and Pricing

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The Future of Revenue Management and Pricing
www.palgrave-journals.com/rpm

FUTURES The future of revenue management and pricing science
Phi Hoang Received (in revised form): 1st August, 2006
Walt Disney World E-mail: Phi.Hoang@disney.com

Phi Hoang is currently Director of Decision Science for Revenue Management at Walt Disney World where he is responsible for overseeing the strategic direction for applying operations research and statistical techniques to solve complex revenue management and pricing problems. He has been with Disney since 1995 and has played various leadership roles in Revenue Management and Information Technology. He holds a Master’s Degree in Business Administration from the University of Houston focusing on decision and information technology.

ABSTRACT KEYWORDS: consumer choice modelling, revenue management, price optimisation, measurement

There are five major areas where the future of revenue management and pricing science will be focusing on. This paper is not meant to recommend the right solution to any particular problem, but its main purpose is to highlight the areas where revenue management and pricing science are still in their infancy, but can be poised to explode and provide high value to organisations.
Journal of Revenue and Pricing Management (2007) 6, 151–153. doi:10.1057/palgrave.rpm.5160069

PRODUCT TO CUSTOMER-FOCUSED MODEL Traditional revenue management models focus on predicting demand for products through historical observed demand for those products. These models typically assume the demand for these products are independent of each other; that is, they ignore what alternative products (and their associated prices) were available to the customers at the time of their purchase. Also, little attention has been given to estimate customers’ flexibility in shifting products if their original requests were not met. In the hotel industry, this could mean not only offering an alternative room category, hotel, package, or dates, but also in which order. Ordering is
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