Yield Management in Hotel Industry: Key Component of Income Age

by Nina P. Digital Marketing

A hotel that is overflowing with guests isn't always a successful hotel. Yield management revenue is a defining characteristic of a prosperous hospitality enterprise. Hotels must use a variety of revenue management approaches and initiatives to improve their bottom line.

What is Hotel Revenue Management?

The goal of revenue management is to daily sell the product at the best price by anticipating consumer behaviour. In light of this, the concept of hotel revenue management is as simple as possible: selling the right room to the right customer at the right time, at the right price, on the appropriate distribution channel, with the best commission efficiency. Yield management and revenue management are sometimes used interchangeably, although they are not the same thing.

The Interrelated Elements That Define Revenue Management Include

Customer segmentation,
Demand forecasting,
Inventory management,
Yield management pricing, and
Pricing

What Is Yield Management In Hotels?

Increased Revenue

In the hospitality sector, yield management enables you to maximise occupancy. Even with a lower occupancy rate, it nevertheless guarantees a larger revenue. (Irrespective of the strong or poor season. Your revenue can be greatly increased with a sound yield management approach.

Decreased Errors

There is no risk of making mistakes while setting the pricing of the rooms when using hotel yield management software. Any incorrectly estimated hazards are eliminated by precise demand forecasting.

How To Implement A Hotel Yield Management Strategy?

It becomes crucial to set the RIGHT room prices for each hotel. In contrast to other industries, the hospitality sector has fixed resources, namely the number of rooms. Hotels must adhere to a sensible pricing strategy for rooms as a result.

Decide the Occupancy Slabs

Based on seasons

The year is typically divided into two seasons: the high season and the low season. Festivals are regarded as the busiest times of year for hotels. Hotels' reservations increase during festivals.

Based on location

The location of a property is a significant consideration as well. Let's imagine a hotel is close to a stadium or a major conference centre that frequently hosts events like Sunburn, cricket competitions, events, and expos.

It goes without saying that there is a good likelihood of getting more reservations during such events. Therefore, you can prepare a list of these yearly events. Apply the yield management software as stated in the points above as the event draws near.

Based on Past Occupancy

You can dive down to your hotel's previous occupancy levels and percentage in addition to the occupancy. Let's say that your average occupancy during the high season of last year was 80% and that it was 40% during the low season. You'll undoubtedly be able to determine your minimum and maximum occupancy percentage from these statistics for the previous year. The slabs can therefore be made wisely.

Management of yield is essential for any hotel seeking to increase income. For precise and practical forecasting, it's an essential pricing method. This is the best tool to utilise if you're trying to strike a balance between availability and pricing, or between supply and demand.

RateGain can assist if you're trying to find hidden revenue opportunities. To promote pre-arrival hotel upgrades and additional ancillaries, connect with them and get the right yield management software now.