Perishability is a common concept in the tourism and hospitality industry. It refers to the idea that services offered in this industry cannot be stored, saved or reused for future use. Once an opportunity to sell a service is lost, it cannot be regained, which makes it a crucial factor in the revenue management of hotels, travel agencies and other businesses.
What Does Perishability Mean?
Perishability refers to the fact that services offered by businesses within the tourism and hospitality industry are not able to be stored or saved for later use. Instead, they must be offered and sold at the time of availability. This means that if an opportunity to sell a service is missed, it cannot be regained at a later date.
Examples of Perishable Services
A hotel room is one of the most common examples of perishable services. If a hotel room remains vacant for one night, that opportunity to sell the room and generate revenue is lost forever. Similarly, airline seats and cruise ship cabins are also perishable services.
- Hotel rooms
- Airline seats
- Cruise ship cabins
Why Is Perishability Important?
Perishability is important because it affects how businesses within the tourism and hospitality industry manage their revenue streams. They must carefully balance supply and demand for their services in order to maximize revenue.
If there is high demand for hotel rooms during a particular time period, prices will increase accordingly. However, if demand drops suddenly due to unforeseen circumstances such as bad weather or a natural disaster, prices may drop in order to encourage customers to book rooms.
The Role of Revenue Management
Revenue management plays a critical role in helping businesses within the tourism and hospitality industry manage perishability. By using data analysis tools and forecasting techniques, businesses can predict demand for their services and adjust prices accordingly.
For example, a hotel may use revenue management software to predict the likelihood of a room being booked on a particular night. If they believe there is a high likelihood of the room being booked, they may increase the price in order to maximize revenue. Similarly, if they believe there is low demand for the room, they may lower the price in order to encourage bookings.
Conclusion
Perishability is a crucial concept in the tourism and hospitality industry. By understanding and managing it effectively, businesses can maximize their revenue streams and remain competitive within an increasingly crowded marketplace. Proper use of revenue management techniques can help businesses predict demand for their services and adjust pricing accordingly to ensure that they are not missing out on potential opportunities for revenue generation.