The Application Of Revenue Management To Car Rental Industry

Revenue Management is a theory that synthesizes operational research, game theory, statistics and management to optimize the enterprises'revenue by means of demand forecasting, optimizing, pricing and capacity control. It dates back to the deregulation of the U.S. aviation industry in the late 1970's, and was widely used at that time. As a result of the successful application of Revenue Management in aviation industry, more and more industries have adopted Revenue Management and reaped immense profit by utilizing it.Car rental is a booming industry in modern society, whose prospect of implementing Revenue Management has drawn the attention of a great number of foreign scholars. Domestically, due to the early development stage of the research on Revenue Management, relevant research is limited in aviation, hotel and other few industries that are intensively studied by foreign scholars. However, as the specifications on domestic car rental industry carries on and the private capital gets the accessibility to this sector, the conditions for domestic car rental to apply RM are going to be fulfilled and the future is even brighter.Firstly, this article sets car rental company as the research target, and establishes a framework of applying Revenue Management in car rental industry through industry analysis. This framework is divided into four parts: capacity control, pricing demand, overbooking and forecasting.Secondly, the article makes further research on capacity control and pricing. Based on the class of BCMP networks, we researched the optimal fleet-sizing strategies for a car rental system. Based on the vertical differentiated model arising from Tirole, we researched multi-class products pricing model in car rental, which is an expansion model of the classic vertical differentiated model with customer choice behavior.The results of this article could be directly applied to car rental information management, car rental policy making and the development of related software. It also plays as a reference for the following research on this specific subject.