Yield management in hotels
Yield management is a concept that hotels adopt to maximize their revenues by allocating available rooms to the right guests. Yield management has changed the way hotels are managed through the use of websites. The management makes use of structured reward systems.According to a study by Ahmad (2005) a hotel can make more money if the yield management system is properly implemented.
We will write a custom Essay on Hotel/Resort Development and Management specifically for you
301 certified writers online
The hotel room supply has increased in the past four decades and this has seen hoteliers gravitating around a differentiated room rate approach for seminars, trade fairs, local customers and groups. This differentiated room rate approach is based on yield management.
The internet has affected room rate in that, hoteliers have diversified room rates during low seasons in an effort to defray major overhead costs. Yield management assists hotelier to set highest prices for a specific time and date.
Through the use of computerized yield management programs, hoteliers are able to understand, anticipate and respond to guests demand and this maximizes profits.
Yield management systems are usually scalable and modular and they thus, they enables hoteliers to manage their businesses through such sites as www.micros.com.
Also, hoteliers can adopt a scaled-down approach to manage their businesses.This approach basically does not require much information technology expertise and hosted remotely and accessed by using the internet(Kapoor.2011, P.260).
Hoteliers have refined their marketing strategies in that, they have created loyalty cards and also developed online reservation sites like the Travel Accor Reservation System (TARS) which enables the availability of common room and common room visibility.
The internet has affected room rate as follows; yield management has enabled market segmentation i.e. through internet, it is easy to identify distinct groups of guests with different behaviors.
Hotel management can control yield management by taking three control actions i.e. developing a feedback plan, providing guideline for the organization and using organization check. With regards to feedback plan, control is aimed at reconfirming that the basic assumptions relating to environment exists.
The objective of this control is thus to confirm the essence of a particular strategy and to ensure that the strategy is running. This control ensures that the yield management system of a hotel is applicable with regards to the target market (Vashist & Ahmed, 2007, P.65).
Guidelines for the organization type of control verify if the organization has taken the right direction that will facilitate attainment of the objectives. This control thus verifies if the profit maximizing strategies of a hotel are still relevant and if they can be applied(Sfodera, 2006, P.11).
Organization check type of control verifies the usefulness of a yield management system in hotel firms and how it interrelates with other systems within the organization.
This control verifies if it is possible to implement the operational conditions of yield management model and also ensures that the staffs who are involved interact with the rest of the hotel firm (Sfodera, 2006, P.11).
The influence of the development of the Internet and associated technologies in hotels
The following are the services and applications of internet and associated technologies in hotels; the use of internet and associated technologies has enhanced online hotel reservations. The proliferation of internet and associated technologies in late 20th century has led to a wide variety of new marketing tools.
Get your first paper with 15% OFF
The internet has allowed hotels to come up with their own websites and thus to display detailed information and photos regarding their locations and amenities. This has thus facilitated online booking as guests can book for hotel rooms from anywhere.
Many hotel chains across the globe such as Marriott, Thistle and ACCOR receive most of their reservations through third websites. These hotels do not charge commissions and other charges for reservations.
According to a research done by Bidgoli (2010), hotel firms can significantly reduce their cost of distribution by enhancing their e commerce.
For instance, Marriott hotel chains saves up to US$2 on each online booking by using its own booking engine rather than using an outside booking source. Hilton hotel chains saves up to US$25 on each online booking. This is much higher as compared with their traditional booking agency (Olsen & Zhao, 2008, P.354).
Shopping online for hotel rooms is usually done by either the following two ways i.e. booking through the hotel’s main website or booking through an independent agency.
The main aim of online reservations is to provide consumers with travel information, allow them to make reservations speedily and cheaply (Poole, 2005, P.28). In order to get started, one is required to create his or her profile.
One is required to fill his name, credit card number, address, arrival time and any dietary preferences. This information is usually stored and applied whenever one books hotel reservations.
This process hotel is greatly enhanced when hotels integrate their websites with their Customer Relationship Management function as it offers guests with the ability of storing their profiles and hence enabling the provision of added value elements and personalized products (Samson, 2009, P.84).
Hoteliers can increase their online reservations by advertising their internet presence aggressively. They can also capitalize on collaboration as well as partnership marketing. There are over 40,000 websites from which guests can make a booking for a hotel room.
However, there are challenges that are associated with online hotel booking including brand perception, rate integrity and value of consumers.
With the emergence of Bluetooth technology and wireless devices, customers are able to interact constantly with hotels. This has lead to increased transparency and as a result forcing hotel firms to reconsider their pricing strategies (Shajahan, 2007, P.252).
The use of internet and associated technologies enables hotel firms to search for new customers. The main goal of hospitality firms is to search for new customers. Knowing the needs of customer’s needs and habits enables hotel managers to maintain their client base.
The adoption of the internet usage and associated technologies such as websites has played a great role in changing the management of hotels. Internet and associated technologies refers to a complex web of networks.
Internet services are comprised of e-mail, file transfer protocols, newsgroup as well as other exchange and information transfer services which includes World Wide Web e.t.c (Khosrowpour, 2003, P.504).
Most hotel firms use resource management systems that provide the senior leadership team with the ability to serve their customers well. Internet and associated technology has become more accessible even to smaller hotel firms through consultants and service contractors.
The use of internet and associated technologies has enabled both small and big hotel firms to market themselves nationally and internationally (Hill & Jones, 2007, P.289).The adoption of internet and associated technologies has enabled the hotels to experience growth.
The use of internet and associated technologies enhances excellent customer service. Hotel industry is characterized with a service product. The delivery of excellent customer services is an integral pat of hotel firm’s strategy. In most instances, excellent service is associated with customer loyalty.
Consumers tend to be dissatisfied once the services fall short of expectations. Smart hotel firms aims at delighting their customers by exceeding their expectations (Khosrowpour, 2003, P.504).
In today’s business environment, hotel firms base their successful operations by drawing a lien between the level of service provided to customers by the staff and what the guests actually need.
According to a study by Bowie & Buttle (2004) hoteliers have become aware of the positive impact of the use of internet and associated technologies. Excellent customer service is one of the benefits that may be derived as a result of internet use (Bowie, & Buttle, 2004, 19).
The use of internet and associated technologies in hotels enables e procurement. Hotel firms depend on regular supplies of quality goods and ingredients.E procurement is aimed at integrating the purchasing process of a hotel electronically.
Once the demand is predicted by the use of past data and reservation levels, it is possible to generate orders automatically. Also, departmental heads who are involved in the purchasing process are paid their wages with little or no human involvement. This in turn helps to reduce the distribution costs.
Thus, e-procurement is directed towards ending the hurdles that are associated with inefficient purchasing systems by the use of cost control systems and automated order processing systems (Nguyen, Trawinski & Jung, 2011, P.299).
The internet and associated technologies are used in hotels in search for market information. The use of internet as a means of collecting information is growing rapidly.
The internet has enabled hoteliers to collect information regarding the number of people who visits their Web sites. Some popular hotel Websites attract more than one million visitors globally (Pride & ferrell, 2006, P.583).
This information enables the hotel firms to customize their website, improve their product design, forecast product demand, and profile current customers and to identify new market segments. The information that is collected from Web site is an important aspect as far as planning is concerned.
The internet is itself a wide collection of information with some of the information being static i.e. the information remains constant over time and some is dynamic implying that it can change over time.
Both set of information provides valuable information to hotel firms if it is well collected and analyzed (Mills, 2005, P.24).
The use of internet and associated technologies enhances personalization. Personalization involves maintenance of perfect relationship between hotels and the guests who visit them which could bring profits to the hotels and good treatment to clients with the aim of making profits.
Personalization leads to greater customer retention and growth. Hoteliers have realized the fact that customers perceive value and satisfaction. This is achieved by the use of internet and associated technologies as they have enabled hoteliers to serve customers at minimum cost (Bidgoli, 2004, P.151).
As a result of the use of internet and associated technologies, hotels are able to increase their occupancy rates. The use of internet and associated technologies helps to increase sales in hospitality industry.
A research that was done by stated that internet use on hotels has a significant impact with regards to selling of the hotel rooms (Dwyer, Forsyth & Dwyer, 2010, P.569).
Hoteliers around the world have also realized that by providing their customers with internet facilities in their hotel rooms. The hotel sector is a hotly contested one and so, hoteliers should offer their guests with a distinctive array of internet services including high-speed wireless internet access (Reynold,2003,P.268).
By providing customers with the ability to access wireless internet from their rooms, most hotels have increased their revenues. Hoteliers have recognized the competitive advantage as a result of providing their customers with high-speed wireless internet access in their rooms.
Hotels that offer high-speed wireless internet access for their customers particularly business customers are able to increase their occupancy rates. Also, the provision of wireless broadband services leads to guest satisfaction. Satisfied guests are very beneficial to hotel and they have minimal complaints (Pan, 2000, P.10).
Hotel industry environment
Hotel firms are usually surrounded by forces that emanates from within and outside.These forces are known as business environment and they include microenvironment and microenvironment.
The macro environment is comprised of political forces, economic forces, social forces, technological forces and legal forces (Malhortra, 1997, 114).
Hotel firms require being aware of the internal and external environment in which they operates. Hotels should be aware that the environment has an effect on the development decisions that they make. Hotels should operate in a flexible environment so as to cope with the dynamic business environment.
A SWOT analysis provides detailed concept of the hotel business environment. A SWOT analysis is a short form of strengths, weaknesses, opportunities and threats which have an impact on the strategy development (Lytras et.al. 2009, P.474).
Strengths and weaknesses relate to the internal environment and on the other hand, opportunities and threats entail the external environment. Strengths entail those aspects that the hotel firms are good at doing and include the following; the first strength with reference to hotel industry is brand recognition.
Brand recognition is a crucial marketing strategy. The increase in international travel in the last decade has intensified competition among brand-name hotels. Usually; people prefer hotels that are familiar when they visit foreign countries (Hall, 2006, P.120).
This is because people know the standards of services and the quality of products of famous hotels. The creation of a brand-name hotel can make service or a product to be known to local customers in a foreign nation (Clancy, 2002, P.74). As local people visit other states, they prefer to eat and stay at hotels they know.
For instance, many United States brand-name restaurants are now based in Taiwan and they serve both the local community and international tourists alike. The Taiwanese thus are familiar with the quality and standards of US major hotel chains such as Hilton, McDonald’s and Ramada.
When they travel to US, the Taiwanese prefers to stay in brand-name hotels they are best familiar with in Taiwan. The hotel firms thus enhance international business at local level. This is the reason as to why every hotel seeks to position itself aggressively in international markets (Hassanien, Dale, & Clarke, 2010, P.39-41).
Market share is the other strength of hotel firms. Market share represents the percentage of the entire market output that is produced by a single hotel firm.
Market share plays an important role of identifying the various positions of a firm towards its competitors. Hoteliers make use of the rooms that are readily available while calculating their fair market share (Hassanien, Dale, & Clarke, 2010, P.39-41).
Specific expertise such as research and development of new products and services is strength of hotel firms. New product and service development enables success within the chain affiliated hotels (Paul, 1966, P.366).Most hoteliers have realized the advantage of product development.
The main reasons for product development strategies of hotel firms are mainly for differentiation purposes (Knowles, Diamantis & El-Mourhabi, 2004, P.162).Differentiation enables a hotel firm to distinguish its products and services form those that are offered by the competitors in anticipation that the customers will perceive value.
Due to the intangibility nature of products sold to customers by hotels, differentiation involves creating awareness about the existence of a unique product or service in the mind of customers (Hassanien, Dale, & Clarke, 2010, P.39-41).
Weaknesses entail the shortcomings that make it difficult for a hotel firm to achieve its goals. For a hotel business, weaknesses include the following; Staff turnover is a weakness with regards to a hotel firm. Usually, weak management makes it hard for a firm to attract and retain skilled staff members.
When skilled workers leave an organization, they often leave it at a competitive disadvantage state. Excessive employee turnover in hotel firms is characterized with high costs.
It also affects the hotel’s relationship with guests and thus it is a major weakness. Poor location is another weakness for a hotel business (Hassanien, Dale, & Clarke, 2010, P.39-41).
Opportunities relate to the aspect that enables a hotel firm excels in attainment of objectives and they include the use of internet and associated technologies. Threats entail that aspect that inhibits a hotel firm to attain its goals and includes the entrant of a rivalry firm e.t.c. (Hassanien, Dale, & Clarke, 2010, P.39-41).
Impact of trade unions on hotel management
The law relating to employment is based on a mutual consent. Both the employers and the employees agrees on certain terms such as pay and other benefits.Usually,the role of employees is to carry out their duties in accordance with the contractual terms (Smith, & Thomas,2007,P.2358).
In the past 4 decades, legislation has made some substantial intervention on the employment matter. As a result of substantial intervention, employment has been enhanced in that there are now notice periods, minimum hourly wages, entitlement to leave and holidays among other standard terms.
Discrimination in workplace on basis of age, gender, and race has been kept in check. Despite these protections, inequality exists between the employers and the employees.
This has led to an important role for trade unions in hotel sector. According to a research by Lee(2008) trade unions refers to an organization that is comprised of employees and it is concerned with organizing and representing employee’s interests in their places of work and society.
Trade unions have collective strength and thus, they are concerned with negotiating good terms on behalf of the employees. Indeed, trade unions have focused on the difference that exists between those at the apex and those at the floor of earnings ladder.
The issue of pay inequality has been the main focus of labor unions in hospitality industry. Efforts have been directed at increasing the wages for those staff members at the base of organizational hierarchy (Forsyth & Stewart, 2009, P.123).
Most of hotels employees have been registered as members of a trade union irrespective of the country of their origin. In some countries, the constitution allows the employees to go on strike as long as they adhere to the rules and regulations in labor laws.
In regard to this, the management of these hotels and resorts are usually left with no option other than to comply and increase the employees’ wages (Ramlogan, R& Persadie, 2004, P.231).
Labor unions can also cause market distortions by raising employee’s wages beyond competitive levels.
The use of internet and associated technologies has played an important role of enhancing the hotel’s procedures.
Both employees and managers perceive the adoption of internet and associated technologies as an important business tool that facilitates communication with guests and thus providing the hoteliers with an opportunity of understanding the needs of customers.
Studies such as that of Pan (2000), suggest that the use of internet and associated technologies enhances excellent customer service which in turn leads to customer loyalty. Internet and associated technologies is often used for advertising and making reservations.
The internet and associated technology has become an integral tool of communication and Marketing among the hoteliers. Hotels which do not embrace the use of internet and associated technologies risk losing their competitive advantage.
On contrary, it is important to conclude that ,there are cost and time drawbacks as a result of the use of internet and associated technology in hotel firms. Usually,much time is wasted in training employees on the use of internet and associated technologies.
In order to maintain personal touch with the clients, much time and cost are involved. Also; the use of internet and associated technologies has not loved up to its promise.
This is due to the fact that, as clients become accustomed to making reservations via the internet, there are security concerns with regards to data and information stored on the internet.
The use of internet and associated technologies becomes beneficial if used well in providing the customer with the information that they are in need of and that which will benefit the hotel. Hoteliers should also be willing to respond to feedbacks from customers. They should lean towards taking a personal approach.
Yield management has several benefits such as it enhances price differentiation, it enhances strong customer relationship marketing e.t.c.Finally, trade unions have continued to advocate for highest wages for hotel staff across the globe.
Ahmed, M. (2005).Encyclopedia Of Hotel Management (Set of 7 Vols.).New Delhi: Anmol Publications PVT. LTD.
Bidgoli, H. (2004).The Internet encyclopedia, Volume 1.Hoboken: John Wiley and Sons.
Bidgoli, H. (2010).The Handbook of Technology Management: Supply Chain Management, Marketing and Advertising, and Global Management. Hoboken: John Wiley and Sons, 2010
Bowie, D & Buttle, F. (2004).Hospitality marketing: an introduction. London: Butterworth-Heinemann.
Clancy, M. (2002).Exporting paradise: tourism and development in Mexico. London: Emerald Group Publishing.
Dwyer, L, Forsyth, P & Dwyer, M. (2010).Tourism Economics and Policy.Clevedon: Channel View Publications.
Forsyth, A & Stewart, A. (2009).Fair Work: The New Workplace Laws and the Work Choices Legacy: Sydney: Federation Press.
Hall, C. (2006).The geography of tourism and recreation: environment, place and space. London: Routledge.
Hassanien, A, Dale, C & Clarke, A. (2010).Hospitality Business Development. London: Butterworth-Heinemann.
Hill, C & Jones. (2007).Strategic management: an integrated approach. London: Cengage Learning.
Kapoor. (2011).Service marketing: Concepts & Practices. New Delhi: Tata McGraw-Hill
Khosrowpour, M (2003).Information technology and organizations: trends, issues, challenges and solutions, Volume 1.London: Publisher Idea Group Inc (IGI).
Knowles, D & El-Mourhabi, J. (2004).The globalization of tourism and Hospitality: a strategic perspective. London: Cengage Learning EMEA.
Lee, K. (2008).Straightforward Guide to Employment Law. New York: Straightforward co Ltd.
Lytras, M.et al. (2009).Best Practices for the Knowledge Society – Knowledge, Learning, Development and Technology for All: Second World Summit on the Knowledge Society, WSKS 2009, Chania, Crete, Greece, September 16-18, 2009. Proceedings. Berlin: Springer.
Malhortra, R. (1997).Encyclopedia of hotel management and tourism, Volume 1. New Delhi: Anmol Publications PVT. LTD.
Mills, J (2005).Handbook of Consumer Behavior, Tourism, and the Internet. London: Routledge.
Nguyen, N, Trawinski, B & Jung.M. (2011).New Challenges for Intelligent Information and Database Systems. Berlin: Springer.
Olsen, M. & Zhao, J. (2008).Handbook of Hospitality Strategic Management. London: Butterworth-Heinemann.
Pan, H. (2000).High-speed internet access.Vol.16.No.7.Washington: Information Gatekeepers Inc.
Paul, J. (1966).International marketing: Text and Cases.Noida: Tata McGraw-Hill.
Poole, M. (2005).Frommer’s Los Angeles 2006.New York: Frommer’s.
Pride, W & Ferrell, O. (2006).Marketing: concepts and Strategies. London: Cengage Learning.
Ramlogan, R & Persadie, N. (2004).Commonwealth Caribbean business War. London: Routledge.
Reynold, J. (2003).Going Wi-Fi: a practical guide to planning and building an 802.11 network. Massachusetts: Focal Press.
Samson, K. (2009).Frommer’s Arizona 2010.New York: Frommer’s.
Sfodera, F. (2006).The spread of yield management practices: the need for systematic. Berlin: Springer.
Shajahan, S. (2007).Management Information Systems. New Delhi: New Age International.
Smith, I & Thomas, G. (2007).Smith & Wood’s employment ban. Oxford: Oxford University Press.
Vashist, S. & Ahmed, M. (2007).Hotel Accounting. New Delhi: Anmol Publications PVT. LTD.