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Yield Management in Hotels Report

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Updated: Mar 25th, 2019

Examination of the concept and procedure of yield management used in the hotel industry today

Examination of the concept of yield management in the flourishing hotel industry is extremely essential in obtaining maximum yields from this industry. I will commence by explaining in much details what we mean by yield management especially in the hotel industry. To be precise, this term generally refers to an activity greatly used in the lodging and transportation industries in an attempt to maximize profit.

It is generally a measure to skyrocket revenues and the profits. It refers to a procedure that deals with establishment of different prices for the services that are the same and then subsequent allocation of these services in a manner that increases the revenue. Within a hotel set up, there should be a preliminary way of room allocation for a given period. This measure will ensure that there are many alternatives in terms of pricing. This will result into accountability for all the rooms found in that particular hotel (Kumar 2010).

Yield management concept has never been new to hoteliers. Both staff with much experience and those with little experience carry out this practice. They do this with a talent that is variable. They anticipate demand that is overall for given periods like days, weeks or even years.

Revenue/yield management is normally a discipline that is economic in nature. It is normally relevant to a myriad of industries that offer service to clients. In this case, service segments in the market pricing are added to analyze statistics. This enhances expansion of the market for an increase in the revenue or yield per each unit of capacity.

Forecasting of demand characterizes management of yields in hotels. It utilizes optimal procedures in the determination of requests on booking to comply with the objective of maximizing profit. Nearly all main hotel chains like Hilton practice simple or compound yield management procedures.

This is to ensure maintenance of control systems in the inventory. These hotels have come up with their own hardware and software measurements combined with corporate systems in screening of the market for profit maximization (Ismael 2002).

Strategies used in hotels to maximize occupancy and maximum rate to achieve maximum revenue

In order to maximize profits, serious hoteliers pay a lot of attention to the following key areas: Bookings, cash flow, and customers. In most cases, they are the top and key areas for the hotelier to ensure profit maximization. The hotelier should put the above items into reality in order to make them tangible and functional.

They also require much effective strategies, which can work well on all aspects of operations in a hotel. These strategies can be applied in sales, profit management, and marketing. Therefore, the following are the strategies that hoteliers need to put into application to ensure maximum yields (Jagels 2006).

One, they require to practice what we call revenue management strategy. It is very important for hoteliers to possess an effective and efficient profit management strategy. This is to ensure that the enterprise is imperative in the much competitive market of today. A good system also ensures that managers avoid controlling prices and other important variables in a manner that is proactive instead of a manner that is reactive.

The second strategy is a strategy whereby hotel managers forget completely about the computer set system. They should in turn embrace the online set system. Forgetting the traditional computer set system completely is inevitable for them. The focus should be on the comparison of their price with that of all their competitors within a given destination. Through possession of the whole picture, there would be a rise in their capacity in terms of generation of bookings that are very high.

The third strategy is the strategy called, “Go fourth and integrate”. Integration is important in increasing efficiencies of all operations in the hotel. Instead of using multiple systems or even tools that cannot coincide with each other, they should use a more consolidated system.

Putting this system into place avoids that scenario. It should be very much user friendly and should give high optimization flexibility in terms of pricing. There should also be a distribution that is online and a webpage that is competitive in terms of positioning and control of the inventory (Jagels 2006).

Another strategy put into use is having a booking channel that is new. This becomes possible through getting your mobile on. Hoteliers should consider coming up with a website called mobile Commerce.

In this particular website, customers can hastily access the hotel and the information they require. They can directly book from their respective mobile phones. This saves on cost and time.

There should also be proper management of different channels in the hotel. Hotels should ensure availability of room inventory that is present for buying in all channels. These channels are normally available. In order to seduce the customers to come to their respective hotels, the rates across all the available networks should be equal.

The use and role of technology in yield management in hotels

Systems of technology enhance hotel stakeholders with tactics to improve sales and revenue. Proper management of revenue normally ensures improvements in profit margins. Through subdivision of a particular meal into its constituent sections, a manager may get to know exactly the particular systems to put into application at a given stage in order to provide the highest revenue margins in a given hotel.

In technology adoption, it is always necessary for the managers to carry out analysis in finance. This will aid in determining whether the cost of technology will be greater than that during the period the business began. This is reflected in terms of improvements in revenue. Given that monetary mathematics is favourable, the hotel management should think of returns to both the hotel customers and employees.

They must also factor in the issue of consumer and employees views. This should be in terms of utility in technology and their ease in terms of use. In devoid of these important articulations in place, technology will be at a point of having little success despite how much promising the financial benefit may be.

“The latest eTRACK Full Year 2009 report on hotel bookings demonstrated that today, online channel is the sole channel of growth in the hospitality industry (Jagels 2006, p.39). This enhances shifting from offline to online bookings in the hotel industry because of reducing voice channels.

Technology at Hilton Hotel Corporation

Hilton Hotel Corporation runs a chain of hotels in almost all continents in the world. It is therefore a worldwide business venture in the hotel industry. In May 2003, it came up with an IT system that they called OnQ (Cuneo 2003) The Hilton considered that there was need to embrace technology as their future financial prosperity in terms of profit margins depended on it.

The top management recognized the fact that to continue growing, technology was inevitable. OnQ was able to integrate all the office operations. There was an initiative to provide picture profiles of hotel customers to the hotel workers. The guest profile was an inclusion of customer’s recent stays and a writing of any difficulties the customer may have experienced.

Other technologies used at the Hilton include computers, mobile telephones and many others. Both customers and hotel staff make telephone calls when it comes to booking of rooms. Computers are normally used in data entry and recording. The hotel staff enters customer details into their database to monitor the customer stay at the hotel facility. It is also very important for the hotel management to ensure that there is security surveillance.

This is to enhance customer safety during his or her stay within the hotel premises. Digital cameras installation within the rooms and at strategic points within the hotel building ensures observation of each activity that take place inside the hotel. In case of a crime being committed within the hotel premises, it will be easy for hotel staff to establish under which circumstances the crime occurred.

In conclusion, without embracing technology with both hands, stakeholders in the hotel sub sector will continue to report a decrease in revenues. Technology is thus a thorny issue that hotel management has to be keen on to ensure yield management (Cross 1997).

Reference List

Cross, R., 1997. Revenue Management: Hard-Core Tactics for Market Domination. New York, NY: Broadway Books.

Cuneo, E., 2003. Hilton’s $50 Million Answer. 2nd ed. Chicago: John Hopkins Publishers.

Jagels, R., 2006. Hospitality Management Accounting. New York: John Wiley and Sons Ltd..

Ismael, A., 2002. Front Office Operators and Management. New York: Thomson Delmar.

Kumar, E., 2010. Marketing Of Hospitality and Tourism. New York: Thomson Delmar.

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