Glossary
Revenue management
The discipline of selling the right unit of fixed, perishable capacity to the right customer at the right price and time.
Also called: yield management
Revenue management is the practice of maximizing revenue from a fixed, perishable inventory, a hotel room tonight, an airline seat on tomorrow's flight, that has no value once the date passes. It originated in the airline industry as "yield management" and later spread to hotels, car rental, cruise lines, and event ticketing.
The discipline works by forecasting demand at different price points and allocating capacity across customer segments and booking channels, often holding back some inventory for late-booking, higher-paying customers while releasing cheaper rates early to build a base level of bookings. dynamic pricing is the mechanism that executes these decisions in real time; revenue management is the broader strategy and forecasting discipline that decides what the pricing engine should be trying to achieve.
Success is tracked through metrics like revenue per available room, occupancy rate, and average daily rate in hospitality, with practitioners constantly trading off rate against volume rather than optimizing either alone. A frequent pitfall is over-relying on historical booking patterns during unusual periods, such as a local event or economic shock, when past demand curves and price elasticity estimates no longer hold and forecasts need manual override.
Last reviewed September 22, 2026