Preserving Your Revenue-management System as a Trade Secret

Abstract

Make sure that your revenue-management system is safe from trade-secret piracy.T he 1990s saw the wide implementation of sophisticated revenue-management systems in the hospitality industry, made possible by the development of computer technology.These systems involve considerable investment of financial and human resources.Based on our interviews with revenue-management employees from various hotel companies, we are concerned that hotels are not taking sufficent steps to protect their revenue-management systems from misappropriation by their former employees and, by extension, their competitors.This article examines how revenue-management systems can be protected as trade secrets and offers some tips to keep them from getting into the wrong hands.Most of the revenue-management employ-ees whom we interviewed were not required to sign any kind of confidentiality agreement that specifically protected their employers' revenue-management systems.In this article we discuss how to prevent breaches of hotels' revenue-management systems by protecting them as trade secrets.Revenue management, defined.Used most commonly by airlines and hotels, revenue management involves matching the supply of a perishable commodity with the demand for that commodity by using strategies that manipulate the price and timing of consumption.One popular expression of this concept is "the application of information systems and pricing strategies to allocate the right capacity to the right customer at the right place at the right time." 1 The determina-