Comparable Challenges: A new approach to performance measurement

Abstract

Estimating the impact of pricing and revenue management decisions is critically needed for making a wide variety of decisions. A variety of methods and performance metrics have been proposed; many are currently used. Each has its particular virtues and drawbacks. The method described here, termed Comparable Challenges, provides quantitative estimates of how well revenue management and pricing decisions perform, while normalising for the market conditions that exist when these decisions are made. The authors believe that the present proposed approach goes further than other metrics, and that it also has widespread applicability, including non-revenue management applications. Comparable Challenges can provide insights on specific actions to take to increase the effectiveness of a revenue management programme. This is where the full value of Comparable Challenges lies — in the ability to use knowledge about performance to influence and improve revenue management decision-making.