Social Media in Revenue Management (Essay Sample)

Social media in revenue management
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Introduction
Currently there are more than 1.5 billion of people around the world who can have access to the internet. The figure is projected to increase by half of the current number by the year 2015. The dozen social networks around the world ranging from Google, Facebook, Skype, Bing, trip advisor LinkedIn,Yelp and Twitter among others have turned the world into global village and at the same time are still growing. These social sites have totally changed the operation of tourism and hospitality industry (Alsrabi, 2013). They have changed how travellers find, search, trust and read information related to tourism supply. What one is likely to experience in a given hotel can now be viewed online plus its destination. It has also radically changed the relationship between different travellers (Fitch, 2005). Hotels and tourism providers can today have one on one relationship with the customers through twitter, Facebook and other social media (Stewart, & Barr, 2005). Customers have simply become the co-marketers for themselves, co-consumers, co-producers and co-designers of hospitality and tourism products by simply visiting the social media (Holjevac, 2008). Tourism and hospitality industry has been therefore confronted on the ways it communicate to its customers, the ways they distribute their products and also the way they relate with their competitors in the market (Fitch, 2005). This has created the need for redefining the models of the tourism and hospitality business, changing the management process as well as rethinking on new operational practices that can enable them exploit the market opportunity which is offered by the social media (Holjevac, 2008). They do this by integrating the social network, the customers and the content they have generated into the business operation (Martínez, Pérez & Rodríguez del Bosque, 2013). One of the greatest impacts social media has made on the tourism and hospitality industry is how their revenue is being managed. This paper critically examines the impacts of social media in the revenue management of tourism and hospitality industry (Wood and Emma, 2001).
With the emergence trip advisor, revenue managers are very busy working on their trip advisor and at the same time spending their money to respond to their business review whether they are good or bad (Fitch, 2005). At the same time, these managers are tied on assessing the value of their business listing. Many hotels are nowadays spending much of their time paying attention to their value score on their trip advisor (Holjevac, 2008). They compare what is in the value score to their overall rating and uses the score to come up with the prices of their services(Alsrabi, 2013). In fact, social media has resulted into price transparency which has been translated further into the impact on how revenue is managed (Martínez, Pérez & Rodríguez del Bosque, 2013). The customer is capable of comparing rates across market verses the quality of services offered. Initially, most revenue managers in the tourism and hospitality industry were concerned with the demand of their services and price (Fitch, 2005). This is no longer in practice since they have to think deeply about the competitors price and quality of products and the overall impacts of the competitors price and quality on the demand and price of their products (Martínez, Pérez & Rodríguez del Bosque, 2013). This is because the consumers readily access the market, communicate with their fellow consumers and also compare the price of different providers before making a choice.
Most of the competitors spent much of their time posting negative reviews about their opponents in the market. They do this in order to reduce the number of customers who might be interested in purchasing products from their competitors (Martínez, Pérez & Rodríguez del Bosque, 2013). Though this is un- ethical, social media does not offer proper policy in which these practice can be curbed hence making it difficult to regulate. It is therefore the mandate of the opponent to develop a website in which they regularly monitor their reviews and attended to the customer’s concerns.
Consumers have the ability of accessing the market and quality vie Google and other social networks. They always compare different prices with different qualities of services offered from which they make ultimate purchasing decision (Fitch, 2005). Consumers always take the risk of gathering as many information as possible related to a given hotel before bumping into purchase. In this way, the consumers asses the value of purchase verses what they are going to receive and confirming if they are matching (Alsrabi, 2013). They expect their pay to match what they are going to experience when they purchase the service (Thevenot, 2007). For this reason, tourism and hospitality industry has focused much of its expenditure on maintaining high quality of their products. They spend many resources (revenue expenditure) on quality and pricing rather than the traditional focus on quantity.
Instead of the traditional manual revenue management system, social media has made it mandatory for most tourism and hospitality industries to develop revenue management system soft wafer in which money can be paid and transfer online. Today mobile devices are used in the booking of hotels (Alsrabi, 2013). Data indicates that 70 percent of mobile hotel booking is done on the same day. This calls for the need of each hotels purchasing revenue management system software which easily reflect when one has booked arum or not (Prats, Guia & Molina, 2008).The software shows only the available room spaces and the amount of money to be paid in each case for one to book the room (Vich-i-Martorell, 2004). The use of mobile phones in room/hotel bookings and purchase of food from hotels have recently changed the use of computers (laptops/desktops) hence customers are able to do the purchasing/ booking at any given time (Prats, Guia & Molina, 2008).Hotel owners who do not have software’s which enable customers to book rooms online and in advanced are always disadvantaged the market competition (Holjevac, 2008). People also book aero planes on line by the use of either mobile phones or the computers. They don’t need to go to the airport in order to book space in the airplane or vehicle whenever they want to go for tourism but instead use the appropriate websites to do that (Mainzer, 2004).They end up not getting customers since the world has turned to be digital. However, having good revenue management system software is not a gurantee of making good profit (Nusair, Bilgihan & Okumus, 2013). Other factors have has to in cooperated like the need to purchase market intelligence, developing good business reputation and proper ways of interpreting and acting on the data. Managers are also required to evaluate their strategic leadership of the revenue management effort.
Another impact social media has had in the management of tourism revenue is on the issue of hotel reviews. Managers spent much of their time and resources in managing their hotel reviews. Sites like Trip advisor and Yelp (King, Pizam & Milman, 2003). Com is always available for access by the managers. By accessing that, they get to learn their customer’s experience (Karande & Magnini, 2011). The hotel reviews can always be positive or negatives. Some competitors always write very negative reviews on the site of their opponents hence it is the role of revenue manager to check on their reviews, improve it and makes the ones belonging to the competitors have negative comments. Through the review, the manager also responds to customer’s experience in case it was negative (Karande & Magnini, 2011). These review sites are very important for any tourism and hospitality industry as compared to other communication sites like Facebook, Skype or twitter sites (Holjevac, 2008). In case there is negative review or bad rating, lowering the price of the product will not add any property value on the view of the customer. Managers found in such scenario are always forced to keep the price up and only take what is in the market for them (Karande & Magnini, 2011). This will not yield much but is better than lowering the price because when the manager lowers the price, then the product will look more inferior (Mistry, 2012). The best method which is applied in most cases is using the property of the business to fix the problem without worrying of the cost or what it is priced (Holjevac, 2008). Recent research regarding the relationship between lodging performance and social media showed that the revenue managers need to monitor the user generated content (UGC) and use what they learn from it in improving the customer’s service so as to ensure satisfaction (Law, Cheung & Tao, 2009). Other studies show that UGC has been very valuable to hotel and lodgings more than their customer services.
There is strong relationship between pricing power and positive UGC, whether it is in the form of performance perspective or consumer behaviors. This means that when UGC is higher, then the pricing power of the hotel will also be higher ( Boo & Kim, 2010). Many hotel managers have always directed their financial strength in keeping UGC positive hence acquiring the pricing power (Law, Cheung & Tao, 2009). Before raising the price, revenue managers have always considered two things (Law, Cheung & Tao, 2009). They evaluate the value of their own price in relation to the demand and the value of the product and at the same time comparing it with the price and the quality of products of the competitors hence often work...