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    Yield Management

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    Bhaskar Roy
    This document discusses revenue management in the hotel industry. It begins with an overview of key metrics like occupancy percentage, average daily rate (ADR), and revenue per available room (RevPAR). It then provides a brief history of how revenue management originated in the airline industry and was adapted by hotels. The rest of the document outlines the goals, components, strategies, and challenges of revenue management, focusing on concepts like yield, forecasting room availability, block-out periods, and balancing maximizing rates versus occupancy.

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    Yield Management

    Uploaded by

    Bhaskar Roy
    2K views17 pages
    This document discusses revenue management in the hotel industry. It begins with an overview of key metrics like occupancy percentage, average daily rate (ADR), and revenue per available room (RevPAR). It then provides a brief history of how revenue management originated in the airline industry and was adapted by hotels. The rest of the document outlines the goals, components, strategies, and challenges of revenue management, focusing on concepts like yield, forecasting room availability, block-out periods, and balancing maximizing rates versus occupancy.

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    This document discusses revenue management in the hotel industry. It begins with an overview of key metrics like occupancy percentage, average daily rate (ADR), and revenue per available room (RevPAR). It then provides a brief history of how revenue management originated in the airline industry and was adapted by hotels. The rest of the document outlines the goals, components, strategies, and challenges of revenue management, focusing on concepts like yield, forecasting room availability, block-out periods, and balancing maximizing rates versus occupancy.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    2K views17 pages

    Yield Management

    Uploaded by

    Bhaskar Roy
    This document discusses revenue management in the hotel industry. It begins with an overview of key metrics like occupancy percentage, average daily rate (ADR), and revenue per available room (RevPAR). It then provides a brief history of how revenue management originated in the airline industry and was adapted by hotels. The rest of the document outlines the goals, components, strategies, and challenges of revenue management, focusing on concepts like yield, forecasting room availability, block-out periods, and balancing maximizing rates versus occupancy.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 17

    Revenue Management

    YIELD MANAGEMENT

    ANAND BANDA
    OBJECTIVES

     Review occupancy percentage and its


    effectiveness
     Review average daily rate and its effectiveness
     Review RevPAR and its effectiveness
     Discuss history of revenue management
     Discuss use of revenue management
     Outline components of revenue management

    YIELD MANAGEMENT
    ANAND BANDA
    History of Yield Management
     Airline industry’s use of yield Management

    Deregulation of airlines in late 1970s “Take It or
    Leave It”
     Certain periods, certain seats, certain flights…

     similarities of the airline industry and hotel


    industry
    • Volatile product
    • Demand periods which places the producers in a
    favorable position
     Indicate differences of the airline industry and
    hotel industry in using yield management
    • Hotel groups can spend large amounts of money
    on-site for food and beverage
     Yield management: Yield management is
    a process to achieve maximum room rates
    and most profitable guest (profit from
    guest spending on hotels food & beverage
    outlets, health club, gift shop etc). It is a
    part of successful administration of
    reservations system, which helps
    managers to produce a favorable income
    statement.
    Use of Yield Management
     Goals of yield management
     Maximize profit for guest room sales
     Maximize profit for hotel services
    (food, beverage, and convention services)

     maxim Revenue Management Solutions (MaximRMS)


    Definition of Occupancy Percentage
     Occupancy Percentage - reveals the success of a hotel’s
    staff in attracting guests to a particular property
    __Number of Rooms Sold x 100
    Number of rooms available

     Double Occupancy Percentage – measure of a hotel staff’s


    ability to attract more than one guest to a room; thus a higher
    room rate and additional income
    Number of Guests – Number of Rooms Sold x 100
    Number of Rooms Sold
    YIELD MANAGEMENT ANAND BANDA
    Definition of Average Daily Rate
    ADR
     Average Daily Rate (ADR) - A measure of
    the hotel’s staff efforts in selling available room rates

    Total Room Sales


    Number of Rooms Sold

    YIELD MANAGEMENT ANAND BANDA


    Definition of RevPAR
     RevPAR – ability of a hotel to produce income and how many
    dollars each room is producing.

    Room Revenue
    Number of Available Rooms
    or
    Hotel occupancy % x ADR

    YIELD MANAGEMENT ANAND BANDA


    Discussion Question
    Utility of Occupancy percentage, ADR, and RevPAR?
    • Used to project room revenues
    • Demonstrate how room revenue is calculated
    • Leads into Revenue Management
    Components of Revenue Management
     Yield – the percentage of income that could be secured if 100% of
    available rooms are sold at their full rack rate (highest room rate posted for
    a room in a hotel)
     Revenue Realized
    Number of Rooms Sold x Actual Rate
     Revenue Potential
    Number of Rooms Available for Sale x Rack Rate
     Yield = Revenue Realized (# Rooms Sold x ADR)
    Revenue Potential (# Rooms Available x Rack Rate)
    Components of Revenue Management (cont’d.)

    Yield = Revenue Realized (# Rooms Sold x ADR)


    Revenue Potential (# Rooms Available x Rack Rate)

     Compare and contrast the concepts of yield


    and occupancy percentage
    Optimal Occupancy and
    Optimal Rate
     Optimal occupancy- Achieving 100%
    occupancy with room sales which will yield
    the highest room rate.
     Optimal Rate - A room rate which
    approaches the rack rate.
    Strategies
    components and strategies to employ when using
    yield Management
     High demand for rooms = Maximize room
    rates
     Low demand for rooms = Maximize room sales
     establish target numbers sales, manipulation of rates in
    the electronic distribution channels as well as revenue
    drivers within the organization (central reservations,
    property-level reservations, and sales department, and
    web site)
    Forecasting
     Importance of daily accuracy in forecasting.
     Room availability forecast formulae:
     Once the relevant occupancy statistics have been
    gathered the number of rooms available for sale on any
    given date can be determined by the following formulae
     Total no of rooms
     - no of ooo rooms
     - no of stay overs
     - no of reservations
     - no of reservations x % of no show
     + no of under stays
     - no of over stays
     = ROOMS AVAILABLE FOR SALE
    Block-Out Periods
     Block-out periods - Tagging certain dates
    in a time period when rooms have to be
    sold at a certain rate and/or certain
    number of minimum room rental nights.
     It is also called as Blanket reservation
    Management Challenges In Using
    Revenue Management
     Alienation of Customers
     Minimum stay requirements
     Price gouge
    THANK YOU

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