Chapter 5: The Revenue Manager’s Role
The Federal Trade Commission Act (1914): established
Why RM is different in hospitality?
Main Differences Between RM Characteristics in
Lodging and F&B
Legal Aspects of RM
- Laws dictate what RM can and cannot do. Ethics
regulate what they should or should not do.
Federal Antitrust Legislation: laws and regulations
aimed at preventing abusive business behavior or anti-
competitive practices, including those related to unfair
pricing
The Sherman Antitrust Act (1890): prohibits any
agreements among competitors to fix prices, rig bids, or
allocate customers
Rate parity, fair or collusion?
Wide vs. Narrow rate parity
Legal Aspects of RM
for the express purpose of enforcing then Sherman
Antitrust Act. Can order a firm or group of firms to
cease any practice has not been declared illegal by the
court.
The Clayton Act (1914): mandates that a business must
apply its prices fairly – that is, not cannot illegally
discriminate in its pricing policies
The Robinson-Patman Act (1936): prevents sellers from
giving discount prices to volume buyers if the volumes
required for the discount are so high that only one or two
buyers could meet them. It also outlaws predatory
pricing.
State laws related to price gouging
Ethical Aspects of RM
- Are the actions I am taking ethical?
- Are the profits resulting from my actions
ethical?
- Are my prices presented fairly?
- Are my prices perceived as fair by customers?
Things to remember:
- Prices should be presented fairly
- Buyers prefer rewards to punishments
- Discounts are viewed more favorably then
surcharges
- A seller’s pricing offer must be easily explained
and understood
The RM position and process
Typical RM responsibilities by industry
Reporting relationships
- DOSM
- Rooms manager
- Controller
- Property manager
- Corporate-level executive
The RM teams
- Organization administrators
- Sales and marketing staff
- Financial administrators
- Line-level employees
- Intermediaries and channels
- Guest and buyers