Documentos de Académico
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History
The term "Yield Management" has been coined in the
airline industry and its objective is to manage the
product inventory (seats on a given flight, rooms for a
given night) in such a way as to maximize revenue.
In 1985, American airlines Launched Ultimate Super
saver fares to compete with low cost carriers.
They realized that Seats are highly perishable,
They adopted a technique based on demand and supply
(price Elasticity) and switched prices accordingly.
Soon this concept gained popularity and spread over to
railways and hospitality sector. Where else do you see
this concept?
90%
80% TAs, Groups eligible for discounts,
corporate discount rates
70%
60% Spl. Corporate rates for larger multiple
TAs and major companies
50%
Lets Suppose we have a hotel with 10 SGL rooms with a rack rate of
Rs.100
The potential revenue that can be earned is
10rooms X 365days X Rs.100 = 3,65,000
Lets suppose, the actual revenue generated in the previous year
was Rs. 2,35,000.
Then the Yield = Actual Revenue produced / Potential Revenue
= 2,35,000, / 3,65,000
= 0.64378 or 64.38%
No. of rooms sold
Actual Average room rate
No. of Available rooms
Room rate
Potential
OB is not a Guesswork.
Foll. factors to be Considered
I. Past history of Data related
to:
.Cancellation Statistics
.Under stay statistics
.No-show statistics
.Turn away statistics
II.
Activities in Town
3. Duration Control
Another tool - Places time constraints on
accepting reservations in order to protect
sufficient space for multi day requests.
It means that one night stay may be rejected
even though space is available.
Egs. Wednesday close to sell out but adjacent
days are not.. Here optimize revenue by
accepting a discounted rate for multi-day stays
than selling one room on rack rate for one day.
(Marginal costs low)
Egs of Vice- versa???
3. Duration Control
Contd
Depends on the occupancy trends in Commercial Vs
Resort Hotels
MLS is practiced to control the imbalance of
occupancy during the week. Egs. mega conferences,
events in the city stretch out the days.
Now-a-days, many commercial hotels in the city
have MLS during weekend.
A combination of Duration control and differential
pricing is very practical. (price is low for MLS)
Egs 3 nigh stay with discount, while one night stay
is rack rate.
Element 3
F&B
activities
All F & B activities to be carried out
considering the potential for booking
groups that need a meeting space, F
& B services and Guest rooms
In a sense the hotel can cross- sell
and the revenues that might be
generated from accepting such group
business should be considered while
pricing.
Penetration pricing
Apricing strategy where the price of a product
is initially set low to rapidly reach a wide
fraction of the market and initiate word of
mouth.
The strategy works on the expectation that
customers willswitch to the newbrand
because of the lower price.
Penetration pricing is most commonly
associated with marketing objectives of
enlarging market share and exploiting
economies of scale or experience.
1.
2.
3.
4.
5.
Improved forecasting
Improved seasonal pricing and inventory decisions
Identification of new markets
Identification of market segment demands
Enhanced co ordination between front office and
sales division
6. Determination of discounting activity
7. Improved development of short term and long term
business plans
8. Establishment of a value based rate structure
( Rate Integrity Degree to which rooms are
comparable )
9. Increased business and profits
10.Savings in labor costs and other operating
expenses (Better forecasts better HRP)
4. Rate recovery
1. The main challenge revenue managers are
facing is rate recovery.
There has been a rally of rate dropping over the
past year the rates in some markets
decreased by 20-30%, sometimes even more.
. Its tough to get back on Track once the market
is used to discounted rate offerings
. It is a separate question, if this drop in rates
generated more demand and helped the
industry or just created a loss in revenues.
7. Local Vs centralized
Local
reservation
Provided
there is qualified local
operations
Centralized reservation
Operations
RM Software
The processing of large databases is impossible without
appropriate RM software
Hotels that employ it gain strategic advantage over those that
rely on intuitive RM decisions only.
RM software helps RM managers by giving suggestions
on
price amendments,
inventory control and channel management, but it also
influences the decision making process of revenue managers.
On the one hand, the software analyses enormous data bases
and provides useful forecasts based on the optimization models
embedded in it.
RM team Human resource issues are essential in RM system
planning and implementation. Revenue managers and the
revenue management team are vital for the success of any RM
system
HR Managers to facilitate training by RM specialists with focus
on the specific knowledge in order to be effective and efficient.
Challenges
Implementation of RM system within a hotel is a
challenging and significant change that might
cause resistance among employees and the
latter should be addressed and dealt with properly.
In many companies the application of RM techniques
is within the responsibilities of the marketing
manager or a person subordinate to him.
However, large hotel chains have recognized the
importance of RM to their bottom line and have
appointed a separate revenue manager) or even
regional revenue management teams to head and
guide companys efforts in optimal management of
its revenues.
Future prospects of YM
One to one Revenue management
Sophisticated hotels will move towards this approach
where each individual will be a market segment in itself.
Future technology will help us in calculating
Total customer value is the perception of what a customer
is getting from a given product or service in comparison to
the purchase price. Egs. A product offered along with
service options has a greater value than offering just the
product for a price with no service options.
Total customer value, potential customer spend, based on
history and future potential from demographics, to
determine what rate and what options should be offered
to a potential guest
Goal Alignment
rev management strategies to align
with organizational goals to reach its
full potential
Automation
Gap between technology and
practice
Adoption of technology and use of
minds to manipulate them expertly
will help achieve success.