Yield management at your service
As a hotel manager, you should be familiar with the concept of yield management. At the very least, if the words yield management are not part of your day to day vocabulary, you still should be aware that you need to implement certain policies in order to fluctuate your rates according to different criteria, such as demand and the dates on which your clients make a booking. This is what yield management is all about. To have your occupancy rate reach its maximum potential, you must consider your hotel’s ability to attract clientele. For example, if you kept your high season rates during the low season, your hotel will never reach its full capacity. These adjustments are necessary to allow your hotel to achieve its full potential.
But what is really yield management?
In the hospitality industry, we are also concerned with revenue management, which is used in a broader context when talking about yield management.
Yield management is a technique in which you adapt your room rates according to a number of criteria in order to maximize your occupancy and your income. The idea is to find and display the best rate in real time to reach an equilibrium. You don’t want this rate to be too low because you would lose money even if your hotel was at full capacity, or too high, because too many rooms would remain vacant. Say there is a popular event going on near your hotel. You can then raise your rates as you benefit from a high demand. On the other hand, say you find yourself in a quieter period, in which case it is preferable to lower your rates. It is therefore obvious that the person in charge of altering your rates should have an extensive knowledge when it comes to popular events and happenings near your hotel. Knowing the precise dates of these events is not necessarily crucial, however you should still be aware of the type of events, participants and deals made with neighbouring hotels. Fortunately, you are able to gather and centralize all this data using the yield management tool of your PMS system.
Which elements should you consider for yield management?
In order to apply the concept of yield management to your hotel, you need to take into account a few factors.
Rate adjustment method
Comparing your performance to the previous year
The time of booking
All these yield management concepts can and will be very effective if you are equipped with the right tools. Your PMS System must be able to provide you with current and past data and also predict your future data to guide you in the right direction. Your competition analysis must be done carefully to ensure you do not miss relevant data, and you must pay attention to customer behaviour and the reasons that they might book elsewhere.
Ultimately, do not confuse yield management with pricing policy. Yield management allows you to adjust your rates in the few days preceding bookings. It is therefore interesting and useful to combine pricing policy and yield management to maximize your income. The final adjustments in your pricing strategy will allow you to distinguish yourself from the competition and always be one step ahead.