Advance Demand and a Critical Analysis of Revenue Management

Irene C.L. Ng

The Service Industries Journal, 2007, vol. 27, issue 5, 525-548

Abstract: This paper presents a theoretical framework of advance demand through six propositions. The framework introduces the concept of acquisition and valuation risks and suggests that advance demand distribution is rooted in the trade-off between them. Furthermore, since advance buyers may not consume, firms may be able to re-sell relinquished capacity. The study then proposes how refunds could provide additional revenue to firms. The study further suggests theoretical reasons why and when service firms are able to practise revenue management, suggesting that RM tools such as overbooking and demand forecasting may not be the only tools for higher revenue.

Date: 2007
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DOI: 10.1080/02642060701411682

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The Service Industries Journal is currently edited by Eileen Bridges, Professor Domingo Ribeiro, Ronald Goldsmith, Barry Howcroft and Youjae Yi

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